How small businesses can capitalize on the Lean Startup

In the last post I discussed what The Lean Startup did for startup development, and how key elements such as hypotheses and prototype development translate into immediate market feedback. Most of the book is written for nimble, hardworking, fast-changing tech startups. That doesn’t mean the principles don’t apply. Small businesses may not have highly innovative software that is sold to customers, but they can still be ‘demand led’ in identifying new ways to service and sell to customers.

Few companies instill continuous customer feedback into their processes. For example, understanding who the ‘super customers are’ that could give a critical understanding of what is missing from the products/service and how it could improve is a great way to be customer-first in development.

But for feedback to be truly insightful, customers need to see something as close to the real thing so that they can react. Paper drawings and verbal descriptions can only go so far. Having something to hold and to use/touch makes it real-world enough for customers to give meaningful feedback that reflects how they actually feel. For service businesses, this can be as simple as a brochure or website outlining the service. In more advanced cases, it can be a one-day workshop that addresses the issue and simultaneously tests the desire to get a more in-depth service.

But how much feedback is enough? That’s a question that’s best answered by setting clear targets before the feedback sessions begin. In many cases, 30 interviews is enough to confirm a customer viewpoint, provided that the questions are clear and consistent. Understanding what the ‘hurdle rate’ is to make go or no-go decisions will depend on the cost and risk of full launch, as well as how much effort and time it takes to launch. A bakery that is considering a new pastry may only have a morning’s worth of baking at risk if the new menu item fails. But a consultancy that offers specialized packages may need greater confirmation before designing and advertising the new service offering.

Once the target performance is decided, it’s time to start polling customers and potential customers on the market potential. This includes surveys, phone calls, face-to-face interviews, and observational research. Ensuring that questions are actionable keeps the feedback valuable. Blue or green? Online-only or retail? Questions that narrow the focus and create specific guidance allows you to make decisions.

Once your feedback is in, you can then do a deep, objective review to understand what you customers are telling you. Taking the emotion out of it will keep you from making decisions based on what you think your customers should want-but don’t. And ultimately, this helps you make sure that your business decisions create powerful value.