The First Mistake

Learn about the first mistake called Putting the Cart Before the Horse.

We'll cover the following

Putting the cart before the horse

Lean startup is about doing the right thing, doing it to the right extent, and doing it at the right time. Another way to look at it is always to ask yourself one question: What is the minimum experiment I can do to learn the most? Well, asking this question is the opposite of what most established companies do.

One reason for making these mistakes is the large amount of money that big companies have, which prevents them from optimizing for outcomes.

The most common mistake that most companies make is scaling before having objective evidence that the product is something people want and there is a reasonable market for it.

In this context, new products or functionalities generally start from a business objective. They start with an idea or a need. Then, a business plan is created. The process is completely budgeted based on estimates and conjectures about the future. The infrastructure, resources, and people are hired in advance, and then construction begins.

But this is a sure recipe for failure. Instead, approach product development like approaching innovation or startups. Management must act as venture capitalists or investors by using innovation accountingA way of evaluating progress when all the metrics typically used in an established company (revenue, customers, ROI, market share) are effectively zero. [Ries, In Conversation: Eric Ries on the Value of Learning, 2014] to measure progress until the product-market fit is reached. And then boost growth. For example:

  • You do not need to allocate the budget for the year to projects and products from day one.

  • You do not need a scalable architecture from day one. Your infrastructure must grow along with your customer base.

  • You do not need 15 developers if you have not yet validated the product-market fit.