The diary of a product owner #3: How can I use the lean startup approach as a product owner?

What is a lean startup approach? A refresher

A lean startup was first introduced in 2011 in Eric Ries’s book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. It is a business approach to minimizing the risk associated with product development, rapidly discovering product’s viability, and shortening time-to-market. The idea is to build products in three quick cycles called: build, measure, and learn.

How does lean startup benefit digital businesses?

If you are a product owner, your main goal is clear: develop digital products that resolve users’ actual problems and bring value into their lives. Lean startup emphasizes customer feedback over intuition, and flexibility over planning. It’s a combination of business-hypothesis-driven experimentation, iterative product releases and validated learning (source). This methodology - in comparison to the traditional approach - enables more effective recovery from possible failures.

Despite its name, lean startup is not just for startups. It can be effective for scaling up existing products that aspire to grow and expand to new markets.

Can lean startup change your reality as a product owner?

Product owners who decide to apply a lean approach need to leave the idea of waterfall development behind. And that’s only part of what needs to be done. In order to validate the product with the market, implementing Scrum won’t be enough. In other words, the product built in this most popular Agile framework, won’t necessarily be lean. For this to happen, small hypotheses need to be validated at each stage of product development (not just during the product discovery phase).

Example - Netflix

Let’s take Netflix as an example. This video streaming magnate has more than 200 million users expecting new content on a regular basis (source). If Netflix decides that it’s time to introduce a new set of content, they would first show it to a minor audience to find out if the idea meets Netflix viewers’ expectations and interests.

In this scenario, Netflix’s hypothesis is: will our users watch the new content? If the small sample of users enjoys the new content - the hypothesis is recognized as validated. Only then can new content get published for all two hundred million users.

Common mistake that product owners make

What product owners are often missing is an Agile business approach, such as build quickly fail quickly. After all, lean startup should be about minimizing risk with the lowest cost.

To establish a strong Agile approach within product teams, product owners need to become more Agile in how they think about the product. For example, they could adopt this attitude: let’s set and validate a hypothesis every time we can. This leads to the essence of lean startup: validated learning (which is the unit of progress for lean startups).

How can validated learning influence businesses - an example from medical industry

Validated learning is what helped Owlet, a medical startup, grow into a successful business despite going through two substantial pivots. Their product was built to help nurses monitor the breathing of premature babies. Owlet’s hypothesis was that such devices would make nurses’ work easier.

To test that hypothesis, Owlet developed blankets that would notify hospital staff as soon as there was a change in babies’ breathing patterns. There was one problem: the device would need to get a legal approval as specific restrictions apply for products used in hospitals. As a response Owlet came up with their second hypothesis: If hospitals won’t use it, maybe parents will? As it turns out, they would.

Unfortunately, there was another problem: babies wouldn’t keep their blankets on. To tackle this issue, Owlet replaced blankets with baby socks, which worked brilliantly. Owlet is now a successful startup scaling up its operations. It is also an example of how a startup can test its product idea despite not having substantial capital at the prototyping phase of product development.

How can product owners make better use of the validated learning?

If you want to benefit from validated learning, start with conducting a riskiest assumptions test (RAT). It’s an approach where you try to determine if the core assumptions about your business are valid. RAT helps you avoid wrong investments and saves your valuable resources.

Being a product owner is both challenging and satisfying, but with the right mindset, it can also be profitable. That is why it’s good to invest some time and try out validated learning, and let’s make a hypothesis out of this attitude. While it might feel unnatural at first, it’s a sure way to boost the effectiveness as a product owner. You’re invited to discover other articles from the Diary of a product owner series.