What underlying cause contributes to the improved firm performance observed in companies that adopt the lean startup methodology?

The main underlying cause is the rapid, data‑driven learning cycle that lean startup forces teams to follow, which quickly identifies whether a product idea will actually satisfy customers. By building a minimal version of the product, testing it with real users, and measuring outcomes, companies cut out unneeded features and wasted spending. This focused experimentation lets firms reallocate resources to ideas that work and abandon those that do not, so they spend less on failures and more on successes. For example, a new food‑delivery app might launch a simple ordering page, gather usage data, and discover that users prefer a subscription model, then pivot before investing in full‑scale development. The result is a leaner, more efficient operation that delivers higher performance.