How to Use Lean Practices to Validate your Business

August 13, 2015 Matt Davis

All great leaders know that starting a business is hard work. You need an incredible drive and unwavering dedication in order to succeed. Your original idea is what gets you started; however you must be willing to pivot and evolve in order to stand a chance.

As a person that has started three businesses, I have found this to be all too true. I have adapted to business challenges by incorporating lean practices in all aspects of my business. The results have been incredible.

Let us picture the “typical entrepreneur” scenario. Someone has an idea or a skill that they are passionate about. This area of interest has a perceived or existing value, and the skill-holder decides to transform their passion into a business.

Unfortunately, the odds of being successful in a new business are very low. In fact, Forbes states that 90% of new businesses are doomed to fail.

Enter: the lean startup practice.

For those of you not familiar with Lean Practices, you can check out the popular book by Eric Ries, “The Lean Startup”.

Essentially, the idea is to get started, test your idea, evaluate the results and tweak the output to reflect the findings. The official process is more complex, but all with this simple process in mind. The practice pushes for you to “Idea, Test, Account, Learn, Build and Repeat”. This ensures that you’re doing a range of things in a simple way, and then putting more effort and work into the few methods that actually drive results for your business.  

1. IDEA

In our latest venture at Uno.im, we found that businesses and real-world customers have vastly different ideas of what communication should look like. We wanted to rectify this to allow the two sides to communicate seamlessly or at least with less resistance than the current solutions offer.

In many companies’ business phone menus, the customer is asked for the same information repeatedly. This structure helps optimize the process on the business side, however it results in horrendous experiences for the customer.

Additionally, Customer Service agents are required to look up accounts via complicated CRM interfaces that don’t show the full communication history. If support and sales teams do not have a complete history of communication with the account holder they may be attempting to accomplish goals that are no longer in line with the customer’s.

This was the idea that sparked Uno.im.

2. BUILD

We initially started by making cold calls to companies as our Lean/Build Measure method. 

In order to build a product we wanted to position ourselves as the “Communication Consultants – Optimizing your communications to optimize your business”. As our focus is on people, cold calling was used as our testing bed instead of landing page a/b testing.

This not only gave us first hand knowledge, it also cut down on advertising costs. 

3. MEASURE

At this stage in any business, you are making sure the data is measured for the key points.  It is important to identify some of the KPIs (Key Performance Indicators) that will lead to the success of the organization.

After we measured our identified KPIs, we gathered the data leading up this. For Uno.im we used the feedback sheets from the cold calling efforts.

The next stage is to learn from the data collected.

4. LEARN

We made one thousand calls and then reviewed the feedback to determine where the opportunities might be. We tried out different phrases and pitches to identify the ones that yielded the highest conversion to demo as a first step. 

This process of idea validation needs to be consistent. Test one idea and set your metrics for success.

For Uno.im, the conversation rate to Demo was the KPI we initially started with.

5. REPEAT

You now have a complete cycle of seeing your KPIs or sales flow bottlenecks, and you can ensure that each stage in your business is growing your revenue.  Once this process is in place, you have completed a new baseline and can re-evaluate where the next focus should be. 

The idea of validation through this type of testing may seem tedious and less passionate because you are not chasing an idea, but you are actually pursuing what customers actually need.

The reality is that businesses are based on supply and demand, and this is the key fundamental in the Lean Principles. A hard focus on what the customer demands will help align the product and customer requirements to increase sales.

We have found that using the lean principles in most aspects of our business development cycle has helped us improve our conversion rates and has contributed to the success of our business. 

How have you used Lean Startup principles to grow your business? Share your comments below. 

This blog post is brought to you by Matt Davis, Founder & CEO of Uno.im, a cloud-based business phone system to optimize communication. 

About the Author

Matt Davis

Guided by the belief that happiness begins as an internal journey, Matt has made it his mission to help people move forward by using a positive approach to business. A serial entrepreneur, Matt's most recent venture is Uno.im, a cloud based business phone system to optimize communication.

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