To help explore the mysteries of Social Return on Investment, we talked to Wendy Gibbs of Inspire2Enterprise. There are many preconceptions about Social Return on Investment (SROI) that make it off-putting. For many smaller organisations for example, it may be the amount of time required by a member of staff to gather and analyse the […]Read More ›
How Lean Startup Methods Worked For Me
Note: This post was modified for socialfinance.ca. The original post is the most popular post to-date on Bonnie Foley-Wong’s blog.
I had first heard of “lean startup” in 2010. I met Sal Virani at an unconference (a participant driven meeting that avoids one or more aspects of a conventional conference) for social entrepreneurs in London, UK and he had just hosted the inaugural Leancamp. It was at that same unconference that I first learned about the Business Model Canvas.
Before I started my own venture in December 2011, I was an independent consultant in London and then a lender to social purpose businesses in Vancouver. I referred to the components of the Business Model Canvas to evaluate the business models of my clients and borrowers and to explore whether they were making an impact through value proposition, by customer segments served, by choice of key partners, or through relationships and activities with customers and partners.
When I began my new journey to develop my venture, I crossed paths again with Sal. He happened to be running the second Leancamp in London and I was serendipitously going to be in town, so I immediately signed up. At Leancamp I learned about the Seven Domains Model and heard Eric Ries speak. I started reading Impact Investing by Bugg-Levine & Emerson AND The Lean Startup books simultaneously, all the while putting the tools to practice on my own venture.
Five months later, I stumbled across some tweets by @Ashoka wondering if Lean Startup was most often applied to technology startups and whether it worked for social entrepreneurship. It’s not the first time I’ve heard social entrepreneurs or non-traditional tech entrepreneurs question the applicability of Lean Startup methods to their own fledgling ventures.
In my opinion, the Lean Startup concept is applicable to any startup. It is not about being frugal or cheap. Lean refers to the process of developing a product or service with the minimum essential features and testing it with customers to get feedback quickly. The aim is a lean process of building, testing, refining, and iterating rather than a perfect product. My venture, for example, is a non-tech, service-based business in the investment services sector.
Whether you’re building a sophisticated venture or a more straight-forward consumer app, there is likely a Lean Startup approach for you. The challenge for you is to figure out what the Minimum Viable Product is that will get you in front of your customers. For non-tech ventures, this may require some creativity, however it may not even require having a complete product or service. By letting go of any ideas about a perfect product or service, your first contact with customers will be an opportunity to get valuable and important feedback.
Pique Ventures started off as an idea to make it easier to move capital to start-up social ventures. Five iterations later, Pique Ventures is an intelligent network of investors who are committed to practising a more integrated approach to managing their investments. I tested each iteration by simply describing the model to anyone I met. With each iteration, I tried to get in front of potential customers and used the positive and negative feedback to improve the business model.
The components of my business model were moving pieces that I kept inching closer to each other, experimenting towards something that worked and was in keeping with my overall vision. I now have a clearer picture of not only my business model, but also my theory of change and the ecosystem within which my venture would be successful.
Here are my suggestions for someone thinking about using Lean Startup methods to develop a social enterprise or social purpose business:
- Gather a bunch of trusted friends or advisors together and create a number of Business Model Canvases for your enterprise ideas. Try out several Business Model ideas without getting too attached to any one model. As Steve Blank said: “No business plan survives first contact with customers”.
- Also create a Seven Domains Model for your venture. (If you want to understand how the Business Model Canvas and Seven Domains Model relate to each other and the more traditional business plan, take a look at this.)
- Develop a Minimum Viable Product – keep it simple! Your MVP could be as simple as describing it to your potential customers. It could be an event, a weekly newsletter or even a spreadsheet!
- Test your hypotheses on people who might be your customers. Get real customer feedback early on. This is vital!
- Keep iterating until you can see clearly what your offering is, who your customers are, how they are going to pay, and how you’re going to deliver it.
- You’ll still be in feedback territory until someone pays for your product or service – even then, you won’t know if it is a one-time thing, whether you can replicate it, or whether it is sustainable.
- Sell your product or service to many other customers – now you have a marketable product or service. Build, grow, keep learning!
Photo credit: http://www.flickr.com/photos/pedrobelleza/6255124245/