Lean Analytics is a must-read for entrepreneurs who acknowledge how important is data in the process of building a startup. The book guides you into the lean startup movement. Lean Startup refers to a method for developing businesses and products based on short development cycles with cheap experimentation and focus on customers.
Entrepreneurs Should Use Data Wisely
Data links your product/service to your market. Lean Analytics helps entrepreneurs implement a monitoring system in their startup.
Using data aim at validating defined assumptions. Choose a metric to assess your assumptions, set a target, and focus your attention on reaching this goal. If something is going wrong, adapt your experiment until you’re getting it right.
The core idea behind the book is that at each stage of your business, your company should focus on the ‘One Metric That Matters‘ to your startup.
At each stage, you should change your focus. That’s what the stages of the startup lifecycle illustrates. If you want to make good business decisions, you need to know where you are in this lifecycle.
“A good metric changes the way you behave. This is by far the most important criterion for a metric: what will you do differently based on changes in the metric?”
Each stage should have its own strategy. A startup that is looking for a viable business model does not have the same focus that a startup that is seeking fast growth. And you cannot do both at the same time. Growing startups know who are their customers and what they want. They are just looking to reach as many as possible.
There is a huge gap in term of what you should between the discovery phase and the scaling phase.
“Know your customer. There’s no substitute for engaging with customers and users directly.”
Using analytics aims at reducing the risks inherent in early-stage startups. It helps you to understand at which stage you are and avoid premature focus on growth, when you should focus on validating a solid foundation—your business model.
A Complement to Lean Startup and Customer Development
The Lean Startup develops the idea of the build-measure-learn cycle. Lean Analytics gives you a way to optimize the ‘measure-learn’ part of the method. For each assumption you should conduct a cheap experiment.
Like scientists, entrepreneurs need to monitor how customers react to a marketing/product experiment. Does the new feature increase the conversion rate? Is LinkedIn the right channel to focus on to acquire new customers? All of these questions should be answered using metrics that are adapted to your startup lifecycle stage.
“In a startup, the purpose of analytics is to find your way to the right product and market before the money runs out.”
Check some of the other resources I recommend to young entrepreneur.
- Using ‘One Metrics That Matters’ to monitor each stage of your startup is essential.
- At each stage, you should focus on a specific strategy (find your business model, scale your business…).
- Avoid vanity metrics (number of hits,
- Use ‘One Metrics That Matters’. Focus on one or two ratios.
- Speak to your customers. They are human beings not robots.