The Build-Measure-Learn cycle is a repeatable learning process derived from the Lean Startup methodology. Start-ups develop a simple solution, test it with real users and use the results to inform their next decisions.
The aim is to test key assumptions as early as possible. This enables founders to identify any misguided approaches, allocate resources more effectively and tailor products more closely to actual customer needs.
How does the ‘Build-Measure-Learn’ cycle work?
The process consists of three consecutive steps:
- Build: The team develops a simple solution to test a specific hypothesis. To do this, it often uses a Minimum Viable Product (MVP), i.e. an initial version of the product with the necessary features.
- Measure: The start-up then examines how the target audience responds to the solution. To do this, it collects usage data, conducts interviews or analyses initial purchasing decisions, for example.
- Learn: The team analyses the results and checks whether they confirm its original assumption. It then uses this to inform specific decisions regarding further development.
After the third step, the cycle begins again. This enables the start-up to improve its product step by step and gain new insights.
Example: Product development at a B2B start-up
A start-up is developing software that enables industrial companies to digitise their maintenance processes.
The team of founders suspects that production managers spend a particularly large amount of time manually documenting maintenance work.
Build: To begin with, the team is developing a simple prototype that automatically generates maintenance reports.
Measure: Five companies will then test the solution. The start-up will measure how often they use the feature and how much time they actually save.
Learn: The results show that automatic documentation is helpful. However, the test customers would also like to see integration with existing systems.
That is why the team is adjusting its priorities and will be testing a simple interface in the next development cycle.
This is how new features are developed on the basis of specific customer feedback rather than solely on internal assumptions.
Which key figures are important when taking measurements?
Meaningful metrics depend on which hypothesis a start-up wishes to test.
Possible key figures include:
- Utilisation rate: How many test customers are actually using the new feature?
- Conversion rate: How many people who show an interest go on to become paying customers?
- Time saved: To what extent does the solution improve an existing work process?
- Customer loyalty: How many users use the product regularly?
- Willingness to pay: Are companies prepared to pay for the solution?
It is important to define appropriate success criteria before the test. Otherwise, there is a risk that the team will interpret the results too positively in hindsight.
What happens after the evaluation?
After each test, the start-up decides how it wishes to proceed.
There are two basic options:
- Persevere (Keep going): The results confirm that the team is on the right track. The team is therefore continuing to develop its solution.
- Pivot (change of direction): Key assumptions turn out to be incorrect. The team then makes targeted changes to its product or business model strategy.
A change of direction does not necessarily mean abandoning the entire business concept. Often, it only affects the target audience, the value proposition or a specific approach.
What are the advantages of this method?
Through short testing and learning phases, start-ups can align their product development more closely with actual market demand.
This approach is particularly helpful in:
- Incorporating customer feedback at an early stage
- Identifying unsuitable product ideas more quickly
- To limit development costs in a targeted manner
- Basing decisions on verifiable results
- To develop products and business models step by step
However, this method does not guarantee a successful market entry. Individual test cycles may take longer, particularly in the case of complex industrial products or hardware.
What matters, therefore, is not carrying out as many experiments as possible, but gaining concrete insights from each test.
You can find out more about how this works in practice in the innoWerft article What is an MVP? Definition, examples and common mistakes for start-ups.
How can innoWerft help with this?
innoWerft helps founders to critically assess their business models and product ideas and to develop appropriate steps for market validation. Through coaching and dialogue with experienced mentors, start-ups can make targeted use of customer feedback and further develop their solutions.
Frequently asked questions about the Build-Measure-Learn cycle
What does ‘Build-Measure-Learn’ mean in German?
The three terms mean „build, measure, learn“. They describe a recurring process in which start-ups gain insights for their product development from practical tests.
Who developed the ‘Build-Measure-Learn’ cycle?
The approach was popularised in particular by Eric Ries and his book The Lean Startup well known. It is one of the core principles of the Lean Startup methodology.
Do you need an MVP for every cycle?
It does not necessarily have to be a fully functional product. Depending on the problem at hand, prototypes, simple demonstrations or other experiments may be sufficient to test a hypothesis.
What is the main aim of the method?
The aim is verifiable learning. Start-ups should identify as early as possible whether their product ideas and business model assumptions align with the needs of their target audience.
innoWerft is an early-stage investor and accelerator based in Walldorf, supporting start-ups before or shortly after they are founded by providing capital, coaching and access to a network of investors and businesses to foster sustainable growth.
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