Market research statistics show that more than 300 million startups are founded worldwide every year. Of these, only about 10% manage to become a successful company.
Startups in the digital health technology industry are not spared from this reality. It’s even harder for healthcare startups to get off the ground, as developing healthcare products often requires in-depth research and testing. Up to 35% of startups fail because they do not properly understand the needs of the market. Therefore, the last thing a healthcare company wants is to spend countless hours building a platform that people have no interest in.
The Lean Startup methodology was designed to allay some of the fears of building a startup from the ground up. Useful for both small and large businesses, several well-known brands have adopted lean startup principles to create highly successful products. The list includes Qualcomm, Dropbox and Toyota.
Let’s take a look at this unique system and how health technology startups can successfully adapt the principles to their business ideas.
What is the Lean Startup Model?
The Lean Startup methodology is a set of principles used to launch and develop new ideas based on the researched desires of the target customer. It strategically enables startups to eliminate market uncertainty while paving the path to product development. The concept’s founding principles have been largely attributed to Steve Blank, a Silicon Valley entrepreneur whose work has led to groundbreaking articles on the topic, such as “Why the Lean Startup Changes Everything,” published by Harvard Business Review in 2013.
The difference between Lean Startup and the usual startup process
The lean startup method guides founders to use a scientific approach to turn ideas into companies. In the traditional method, would-be founders draft complex business plans to attract investors and hope that their idea resonates with target users when launched. This approach hides the product from customers for as long as possible, so there is no indication whether the product meets their needs.
In Lean Startup, the focus is on identifying customer pain points or unmet needs without introducing a product. Once the urgent need is identified, a value proposition is created that needs to be validated with potential customers. The response is measured and the results are used to determine what functions and features the product should have that will attract customers to use it.
Use the Lean Startup methodology to build your own startup
Transitioning from concept to a full-fledged startup can present many challenges, including finding resources, building a network, and acquiring the necessary skills to get ideas off the ground. Overcoming the hurdles requires careful consideration, and this is where I have found the benefit of applying the principles of Steve Blank’s Lean Startup Methodology.
Lean Startup Methodology Breakdown
Success or failure when starting a business usually depends on how well your product is received by the target group. It’s more than just having a great idea and coming up with an enticing business plan. Lean startups take this fact into account and begin with a continuous trial and error process, while constantly revising and discarding ideas as necessary.
Here is a breakdown of the steps:
- idea
- Hypothesis testing
- Building a Minimum Viable Product (MVP) to collect customer feedback
- Revise the hypothesis accordingly
- Build a product
- Continuous testing for product improvement or expansion
The first step in the process after understanding the pain points and unmet needs is to validate the value proposition. After a hypothesis is formed, the next step in the lean startup system is to create a product with minimum viability. The MVP is a basic version of the product you want to build.
This allows you to test the product’s main features on real customers in your target group, collect data and measure customer interest accordingly. If the feedback is positive, that is a signal to continue. If it turns out negative, the startup can scrap the idea or use the feedback to pivot accordingly.
I used Steve Blank’s Lean Startup principles to develop an MVP that was presented to hundreds of potential customers. The target group are pediatricians and child neurologists.
Additionally, we wanted to determine what type of product would be most convenient and comfortable for patients to use. The MVP we developed allowed doctors to figure out exactly what type of data they wanted from the product, exactly when that data needed to be collected, and how the product needed to work so that the entire doctor-patient interaction would be seamless.
After some back and forth, we were able to develop a product that met the pain points physicians identified. However, as the solution was rolled out, it became apparent that physicians did not need the level of detail or amount of data that the tool could provide. Fortunately, applying lean startup principles meant we could use physician feedback to further optimize the product. We then developed a smartphone app that allows patients to record selfie videos, allowing doctors to extract exactly the data they need.
Continuous development of lean startups
Overall, the lean startup methodology is more about conducting tests that lead to the realization of a broader vision, rather than pursuing step-by-step business plans. Lean startups continue to use the system to ask questions that can lead to perfecting the product, developing additional products, and making changes when necessary.
Photo credit: elenabs, Getty Images
Rachel Kuperman, MD, a 2022 CharmHealth Innovation Challenge participant, is a pediatric epileptologist who led the pediatric epilepsy program at UCSF Benioff Children’s Hospital in Oakland, California for 10 years. During her training in physics and neurophysiology, she became increasingly frustrated by the lack of data used to make important decisions about the diagnosis and treatment of epilepsy, resulting in results not improving significantly in 30 years. The cardiologists had Holter monitors and the endocrinologists had remote glucose monitoring, but the neurologist had, at best, a patient-generated seizure diary that was less than 50% accurate. While in the hospital she was able to use complex brain mapping operations to use meaningful data to understand where a child’s seizures were coming from, in everyday life in the clinic she became frustrated and disillusioned because her patients’ lives were a black box. She founded Eysz with the goal of using patient-generated data to transform outcomes for people with neurological diseases, starting with epilepsy.