With the recent worsening employment rate, many young people have begun to start their own businesses, increasing the number of start-ups that emphasize innovation. However, the economy is still in a bad shape, so they launch their own businesses without much preparation, and then, after failing in their own business, they are ready to get a job. There is new management methodology that solves the difficulties of these startups which is 'Lean Startup.' Now let's find out about this 'Lean Startup'.

What Is Lean Startup?

The Definition of Lean Startup

           "Lean" means "get rid of extra flab, no fat" and "startup" is an organization that creates new products or services amid extreme uncertainty. Literally, lean startup means an early-stage organization or company that moves quickly by losing weight to create new products or services amid extreme uncertainty. In other words, a lean startup is a newly launched company that releases early-stage products first and then analyzes and responds quickly to the feedback it receives from markets. By following this approach, a lean start-up can continue to improve its products and services in response to market changes.

Why Do Existing Startups Failure?

           Existing startups wanted to establish and manage business models based on thorough market research and elaborate strategies and plans. However, such existing market research or strategies for it have become meaningless because the current market is rapidly changing thereby increasing uncertainty. And many startups and investors saw that traditional management techniques fail in the current market. So, they become accustomed to doing things once without preparation, resulting in an increase in startups that do not start after-sales management.

Think Big, Start Small, Grow Big Quickly!

           This is the spirit of the lean startup. According to Eric Ries, CTO(Chief Technical Officer) of IMVU and founder of lean startup, continued learning about customers and markets is important throughout the lean start-up process. This process requires a combination of focus, speed and learning for each product the company launches. As a result, companies should be encouraged to continue to innovate. Eric Ries especially emphasizes five principles of lean startup. First, any early-stage company is applicable. Second, success in uncertainty requires new management. Third, a startup exists not just to make money, but to learn how to create a sustainable business. Fourth, you should quickly rotate the feedback loop that you create, measure, and learn. Fifth, a new measurement approach for startups—innovation accounting, in other words—is needed for financial success.

Examples of Lean Startups

Zappos, Delivering happiness

           Zappos is a shoe-specialized company whose founder Tony Hsieh has not conducted any market research or even made a business plan to start a shoe-selling business. Therefore, they could not spend time attracting investment or building production or distribution lines. He just took a picture of the shoes at a small shoe store in the village and posted the pictures on the Internet, promising to buy the shoes if they were sold. Tony Hsieh started his business like this and continued to innovate both inside and outside the company in the spirit of lean startup. The company changed its culture, emphasizing maximum service for its customers, and it implemented a Holacracy in order to eliminates the level of position within the company and thereby reduce the inefficiency it caused. Tony Hsieh thought meetings held in traditional companies had time to waste, so he adopted a way of setting agendas ahead of time, discussing agendas quickly and ending the meetings.

Dropbox, Storage Revolution

           One system that enabled lean startup is 'Crowdfunding'. Even though products have not yet been produced, it is possible to attract investors and predict demands through concept images and lack of prototypes. Dropbox was also able to provide services through these crowdfunding strategies. Drew Houston, co-founder of Dropbox, has attracted around 75,000 investors with just a four-minute video explaining how Dropbox works. Now Dropbox has become a very large platform for more than 500 million people in 180 countries. Drew Houston says, "The biggest risk for a startup is making products that customers don't need. It is more important to learn than to release a product. It's important to get feedback from customers as soon as possible, no matter what type of feedback they have." That is, he emphasizes that the spirit of lean startup is essential to success in the end.

Cardoc, Car Repair O2O

           In Korea, some companies have succeeded through the management methodology of lean startup. One example is ‘Cardoc’, which provides estimates for repair of cars through app. Lee Joon-noh, founder of Cardoc, found the problem of spending too much time and effort to find affordable auto repair services. Afterwards, he experienced the entire process of car repair and released the app officially. The early stage of the app was simply the form of the car accident, and the repair industry quoting the car accident and choosing it from the consumers. With consumer feedback, Cardoc has strengthened its role as a more reliable car repair broker by adding location-based services to the app and allowing customers who actually repaired their car through Cardoc to write comments. Cardoc also gave continuous feedback by measuring the number of requests for estimates, call progress, and number of actual repairs, instead of meaningless indicators such as app downloads and ranking. As a result, Cardoc has climbed onto the auto repair platform used by many car owners and has even been acquired by ‘Kakao’.