Necessity is the mother of invention,” is an English proverb which means necessity or difficult situations encourage inventive solutions.

How is it possible for entrepreneurs with little in the way of resources, a small management team, very little capital for R & D, and no customers, to take on existing companies and introduce products or services that succeed in grabbing market share from those established companies?

The answer lies in the methodology followed by entrepreneurs to launch successful companies. It’s called the “lean startup.”

Every business on the planet has to continually introduce new products or services if it’s to survive and remain competitive.

If you are an Apple Computer or Google you have the financial wherewithalto do significant customer research and market testing before launching.

But what if you don’t have a great R&D budget or are not knee-deep in market research or even cash?

Then you could try to apply the lessons that apply to startup companies who are strapped for cash and introduce new products or services in the marketplace.

This methodology was captured by Eric Ries, a successful entrepreneur, investor, entrepreneur in residence at the Harvard Business School and author of the book, “Lean Startup.” This is a process employed by BizStarts in assisting earlystage entrepreneurs. The core to this approach is to reduce the upfront cost of product development in favor of immediate tests on targeted customers. In a world with 3-D printing, rapid prototyping centers such as the one at the Milwaukee School of Engineering (MSOE) and Internet tools, this becomes highly doable.

Facebook was able to validate its model by registering 150,000 users on very little cash investment. Mark Zuckerberg was able to test his social network on the students at his dorm at Harvard without a dollar of marketing or advertising having been spent.

This approach requires you to “think small.” It requires you to test your product innovation or service offering on a small group of consumers. You listen to what they say. You try to determine if they will actually pay for the new product or service. You do not want suspects. You want real customers. Talk is cheap so you want to find out if you identified a real need that they would pay for.

The process starts:

  1. Take the time to listen to customers to ascertain the market need your product or service will address. Listen carefully. What is the problem you will be solving?
  2. Then build or create a minimum viable product (MVP) whether it’s a crude prototype or even a video to demonstrate what it is you will do.
  3. Test it on a select number of customers to determine if you identified a real need to address.
  4.  Listen and learn and then be willing to pivot, which means change what you offer based on what you’ve learned.
  5. Continue small experiments to evolve your product or service to something that has market acceptance.
  6. Track the metrics of each iteration. Do not just study gross sales but look at other metrics that are very critical such as renewal rates, referral rates, etc.

The underlying thinking on this is attributable to the great Dr. Edwards Deming. He lectured business leaders in Japan in the 1950s that the most important part of the production process has to be a focus on the customer.

He flipped on its head the prevailing notion that a great business idea should be launched and customers would flock to buy.

Remember how American car companies rolled out new cars every year? Their theory was: build it and they will come.

Remember the Edsel?

In the meantime, the Japanese were pursuing a different approach to the marketplace because they did not have the resources of the great American companies.

Using Dr. Deming’s advice they applied a process known as genchi gembutsu, which literally means “go see for yourself.”

The approach of using the MVP helps you understand what the customer wants and needs with the lowest cost investment on your company’s part.

Even Mark Zukerberg made a major mistake in allowing the Beacon program to share personal information about users with marketing firms. At the same time he was not all that interested in photo sharing for Facebook. But when his staff was able to show success on a target audience, he signed on and it proved a major hit when it was finally rolled out.

You can compete head-on with entrepreneurs if you act like an entrepreneur and use the tools we teach at BizStarts.