Will Your Startup Fail? Find Out Fast with Lean Development

Charles Costa
Charles Costa

Building software for the web is different from many other fields because it’s possible to create a revolutionary product with nothing more than an idea, a computer and a bit of time.

You don’t need millions of dollars for real estate, permits, lawyers and other bottlenecks.

Just sit down, write your code and success will come.

Or so it seems…

But as we’ve discussed previously, web development is an area where programmers can easily go astray.

The Hidden Costs of Failed Ideas

One of the biggest traps that entrepreneurial software developers fall into is failing to factor in the opportunity costs of pursuing a misguided idea against their productive billable rate.

Put simply, if you are billing $100 an hour and you decide to spend 100 hours on a side project, you are potentially missing out on $10,000 of revenue.

The solution to this problem is simple.

Lean development teaches how to break your ideas into manageable chunks and validate each portion before moving forward with your project.

While Agile development methods have helped developers slash development times while improving quality, Lean development principles are much easier to embrace while still delivering significant benefits.

What is Lean Development

For those unfamiliar with the term, Lean principles are based on the idea that
“an imperfect something is better than a perfect nothing.”

By building a basic prototype of an idea, you can at least determine if there is a market for your product and how best to target it.

In the past, companies often went all-in on projects, spending millions of dollars to construct online stores and other ideas. While this approach made for great headlines, it ultimately led to the demise of many businesses.

Today, in an era of limited budgets, developers need to prioritize development such that they are only focusing on features which add immediate value. By focusing on constructing a “minimal viable product” (MVP), Lean principles help to cut down on uncertainty.

In Lean development, projects are built over multiple stages, and each stage is tested to ensure the project is headed in the right direction.

By only continuing with the project if there is demand for the product, you can improve your success rate while also simplifying the product development process.

Lean Principles

According to the official Lean development website, there are five principles which make up the Lean development methodology:

  1. Entrepreneurs are everywhere. Innovation is possible whether you are an employee in an enterprise corporation or a professional doing your own thing.
  2. Entrepreneurship is management. Startups require management that is tailored to what the company does.
  3. Validated learning. Startups exist to learn how to sustain a viable business. This objective requires ongoing tests to ensure the venture is on the right track.
  4. Innovation accounting. To ensure success, entrepreneurs need to be held accountable for their progress. This is done by tracking and analyzing key metrics.
  5. Build-Measure-Learn. Startups need to turn ideas into projects and measure how customers respond. From there it is up to the business owner to determine whether to change course or continue.

How to Test Your Ideas

Testing your ideas doesn’t have to be complex. With Lean development, you want to keep things as simple as possible because you never know when you’ll have to scrap everything you have.

Fortunately you can validate your ideas with simple tests.

Start without writing code

One of the biggest mistakes developers make when handling their ideas is to start writing code as soon as an idea comes up. While showing your potential customers a prototype seems like a good idea, until you actually know what your customers want, you’ll be coding blind.

When you’re first starting out, focus on constructing a wireframe and making sure that your layout is usable and that you’re only including essential features you know your prospective customers will use.

In most cases, you should repeat this process multiple times until you know for sure that you’re ready to start the full development process.

Know When to Cut Your Losses

Remember, if you find that your customers are telling you they don’t have interest in your product, or you find that it’s morphing into something that is beyond your budget, cut your losses and move on to something else.

When entrepreneurs encounter sunk costs–the resources that are already spent on a project and cannot be recovered–they’ll often keep moving forward because they think they can make a comeback.

A great example of sunk costs at work is trying to win your losses back at the blackjack table. When you’re $10 down, it’s tempting to wager $20 to hopefully turn a profit. As you keep losing, your wagers get larger and larger until you run out of money.

Ultimately Lean principles can help ensure you’re only pursuing worthwhile projects, but that only happens if you know when to cut your losses. As great as your concept might sound in your head, if you can’t find customers willing to pay for your service, then you’ll need to change direction or scrap your entire idea.