That’s a 360-degree turn from traditional ways of doing business, according to panelists at the roundtable hosted by the Institute of Entrepreneurship and Innovation at CEU Business School April 19. The roundtable, “Lean Startup Methodology: Is Experimentation an Alternative to Planning?” was led by CEU Business School Professor Gyorgy Bogel.

“Twenty years ago, you figured out something, formed a company, put some capital in it, formed a team that could build a product, built it, and went to sell it,” said Peter Kadas, a medical doctor turned serial entrepreneur. “Now, you have one or two founders, who ask the customer, go back, make adjustments, and when the product is good, they raise money, raise a team, and go to market. “

The concept comes from Eric Ries’ bestselling book, “The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses,” published in 2011. Companies like Dropbox and Grockit were early adopters of the methodology, which has spread to multinationals and U.S. government agencies.

Panelist Imre Hild, CEO of iCatapult, a tech accelerator and business development company, says the idea dates back from innovations at Toyota back in the 1960s and has morphed and taken off in today’s environment of low startup costs and fast technology development.

“Toyota said, “do away with the waste. Only add features that can be attached to satisfaction of the customer,”” Hild said. “Talk to the customer. As simple and trivial as it sounds, that is the key.”

Talking to the customer may be quite scary, Hild said. Or entrepreneurs may be “in love” with their product, convinced that it is just what the customer needs, said Bogel. Entrepreneurs must be able to overcome these obstacles to be successful, panelists said.

“One reason why I like to work with young entrepreneurs is that they don’t have these assumptions,” said Hild. “Assumptions have to be replaced with facts. Young people are open to that.”

Entrepreneurs must also be committed to working quickly, changing course when needed, and focusing on validation by customers, Hild said. While these principles can be implemented in larger companies, startups can take advantage of their greater agility, panelists said.

“People are building companies at a fraction of the cost 10 years ago,” said entrepreneur Tamas Locher. “It’s a very small investment. It means you can put the effort on what matters to your customers. We will see a tremendous amount of innovation in the next 10 years as a result.”

The panelists also offered CEU Business School students advice on how and when to approach venture capital investors for funding, and reminded them that they still need a business plan to get started as an entrepreneur. The event concluded with some unequivocal encouragement.

“Entrepreneurship is the only way forward,” Locher said.

Source: CEU Business School Budapest