The topic of this master thesis is "Development of Innovative and Smart Products". This thesis describes the definition of a startup, stages of their development and the reasons for their inadequate performance on the market. According to the principles of the Lean method,entrepreneur Eric Ries has adapted the Lean method to startups and entrepreneurs, calling it the Lean startup method. It is based on the development of innovative products, focusing on quick iterations and insight into user thinking. Using the Build-Measure-Learn Feedback loop and the Minimum Viable Product (MVP), the hypotheses listed in the business model are being tested. Based on these data, startup will find out did he create a quality and desirable product or not. With further advancement in information and communication technologies, innovative and smart products are being developed and digitalization is being carried out on existing products by turning them into smart products. The implementation of the Lean startup method and the estimated achievements and progress are presented here by the Croatian startup Juvo-Home Friend which is an innovative system for increasing safety of children in the household. At the end of this thesis, the importance of the metrics will be explained and the support program will be provided to track the startups performance.