The idea of staying lean allows us to be agile, zero-in on performance that matters and make quick iterative improvisations that drive growth.
The Build-Measure-Learn cycle is a feedback loop that is said to be one of the core components of the Lean Startup methodology. Its goal is to turn uncertainties, assumptions and risks into knowledge or “sure things” that will eventually guide organizations and business towards progress. Through this process, the key unknowns can actually be transformed into knowledge that the startup can use in its product development – and business operations, as a whole. This whole process can also be called an experiment.
The Zappos Story
Zappos.com has been cited by many analysts as a great example of a company that made use of the Lean Startup Method, particularly the Build-Measure-Learn cycle. Now considered to be one of the biggest online shoe and clothing shops in the world, Zappos was founded in 1999 as a startup.
It was originally just a site where customers can order shoes. It is not a manufacturer or a retailer since it does not have any shoe inventory. This was the Build phase.
When the first orders started coming in, the founders of the startup went to a local store to purchase the shoes that have been ordered and subsequently shipped them to the customers who placed the order. This was where they implemented the Measure phase of the cycle. The Learn phase came in as the founders tried to gauge the interest of the customers in their idea and even obtained their thoughts and reactions to it. Using the lessons learned from the first orders, they made the necessary adjustments and iterations, applied improvements, and continued the cycle.
Some could say that this has an element of “trial and error”, and they wouldn’t be wrong.
A crucial element in the whole Build-Measure-Learn cycle is the reliance on customer feedback and reactions. It can be said that much of the success of the application of this cycle in the case of Zappos was the fact that the online shoe store makes use of a loyalty business model and utilized relationship marketing heavily.
Zappos could have gone another route entirely. It could have started its shoe inventory and simple resold them. However, by using the Build-Measure-Learn approach, it was able to test the waters first, so to speak. Instead of spending a lot of time building its inventory and hiring personnel to handle operations, it stuck to just the founders doing all the work, and getting orders first before procuring the shoes. Their first attempt worked, and it was only then that the founders decided to continue (“persevere”) with it. Today, Zappos is no longer limited to the sale of shoes, but is also selling other items as well, and that could be attributed to them “learning” that customers are also interested in buying merchandise other than shoes or footwear.
That is not to say that Zappos would have failed if it did not use the Build-Measure-Learn feedback loop. It would probably still have succeeded, but they may have taken more time to achieve the results they wanted. What this feedback loop did for Zappos, however, was to make sure that the process was accomplished quicker. Otherwise, Zappos might have taken longer to become established as the successful marketplace and retail giant that it is today.
To summarize, the Build-Measure-Learn loop pertains to the cyclical process of turning ideas into products, measuring the reactions, response, and behaviors of the customers against the products that have been built, and learning whether to persevere or pivot the idea.