Many people will probably have heard about the Lean Startup approach. It has spawned a whole range of accelerators, boot-camps, books and services.
It asks founders to treat their ideas like a scientific experiment and test business assumptions as early as possible and as often as possible – until you get what is called a ‘Perfect Market Fit’. Up to that point, you iterate through and build upon a series of product prototypes, called ‘Minimum Viable Products’.
The approach has successfully been applied by a range of Internet startups around the world. It is particularly powerful in environments where once disparate activities or resources can be harnessed towards a common goal. The corner stone of many of these startups are built around managing the masses and finding ways to scale its breadth and depth to create a successful business. Companies such as Dropbox have ridden this wave to millions of dollars.
Many of these success stories also have a large Business to Consumer (B2C) component – where the mass sampling and testing approach is particularly powerful. Assumption mistakes are also easily forgiven.
But, where does this leave the humble entrepreneur looking to build a Business to Business (B2B) start-up? Can the Lean Startup approach be just as easily applied?
How the B2B market differs from B2C
A couple of key factors mark out a B2B environment from a B2C.
Firstly, businesses are much more risk averse. Your average person on the street will happily be a guinea pig for your new product prototype, but purchasing the wrong product for a business can put that company at risk – even cost someone their job.
It can mean the difference between throwing away a new brand of fizzy drink or, reversing out a freshly installed system that is causing widespread productivity problems. More than one person is also usually involved in deciding what gets bought and how things are done.
For small businesses, this may be straight forward. For larger businesses, it may feel like you are stuck in a labyrinth – with a cast of thousands wanting to have their say on what your product should and shouldn’t do.
The Lean Startup approach for B2B entrepreneurs
Building a lean startup in B2B environments requires a strategic mindset. Laser focus is one crucial element. Each industry has its own set of rules, practices and structure.
Startups need to be deliberate in who they approach and how they approach them. Getting your foot in the door is also just the beginning. Demonstrating an understanding of each organisation’s view of the world, particularly where they are and where they want to be, inevitably takes time.
Most importantly though, startups should discover, learn and build as they go. Interim product prototypes are a good mechanism for this, as well as offering something tangible for people to ‘connect’ with, and provide feedback on, throughout the journey.
By the time the key decision maker in an organisation is reached, many of the background assumptions will have already been tested.
The Lean Startup approach is in many ways merely a framework to help startups strategically manage the activities, resources and people involved.
While the nature of this framework is particularly well suited to B2C environments, there is no reason why the fundamental principles cannot also be equally applied to a B2B environment.
Entrepreneurs behind B2B startups will however, need to use sound judgment to adjust how and, when to apply it.
Christopher Tia is Principal of Lean Market Research, a boutique advisory service focused on market research for startups, investors and new product development initiatives.