Book Notes #03: The Lean Startup - Eric Ries

William Meller - The Lean Startup - Eric Ries
How today's entrepreneurs use continuous innovation, new methodology, and tools to create radically successful businesses and improve virtually everything we do.


Title: The Lean Startup
Author: Eric Ries
Themes: Business, Entrepreneurship, Innovation, Products
Year: 2011
Publisher: Crown Business
ISBN: 0307887898, 9780307887894
Pages: 320

The Lean Startup by Eric Ries offers an innovative approach to launching new products and businesses.

Eric Ries develops all the concepts of The Lean Startup methodology in order to radically increase the chances of success for all those who wish to start their own business or develop a new project through continuous innovation.

Inspired by lessons from lean manufacturing, it relies on “validated learning,” rapid scientific experimentation, as well as a number of counter-intuitive practices that shorten product development cycles, measure actual progress without resorting to vanity metrics, and learn what customers really want. 

It enables a company to shift directions with agility, altering plans inch by inch, minute by minute. 

The real secret would be creating things that people want to buy in the first place. Startups generally fail not because of missed deadlines, faulty products or blown budgets, but because entrepreneurs are too focused on their vision, on their great new idea, and don't know what it is that their customers really want. 

The solution, according to this book, is lean thinking and validated learning. 

Rather than designing an elaborate business plan and committing large amounts of financial and human resources from the start, first find out what you can about your potential customers. 

And rather than adopting a static, product-centric approach, test your idea on your customers: respond to their feedback, and constantly be prepared to adjust your product, as well as your business.

William Meller - The Lean Startup - Eric Ries

The point of a startup is to get through the Build-Measure-Learn cycle as quickly as possible to figure out what your customers will pay for. 

The Lean Startup also incorporates customer feedback into the productivity equation. 

After creating an initial product, further iterations must incorporate customer responses to the product.

My Book Highlights:

"... The big question of our time is not Can it be built? But Should it be built? This places us in an unusual historical moment: our future prosperity depends on the quality of our collective imaginations..."

"... Leadership requires creating conditions that enable employees to do the kinds of experimentation that entrepreneurship requires..."

"... If we do not know who the customer is, we do not know what quality is..."

"... The value hypothesis tests whether a product or service really delivers value to customers once they are using it..."

"... Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects..."

"... Lean thinking defines value as providing benefit to the customer; anything else is waste..."

"... The goal of a startup is to figure out the right thing to build—the thing customers want and will pay for—as quickly as possible. In other words, the Lean Startup is a new way of looking at the development of innovative new products that emphasizes fast iteration and customer insight, a huge vision, and great ambition, all at the same time..."

"... A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty..."

"... We adopted the view that our job was to find a synthesis between our vision and what customers would accept; it wasn’t to capitulate to what customers thought they wanted or to tell customers what they ought to want..."

"... As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek..."

"... What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly..."

"... The only way to win is to learn faster than anyone else..."

"... We must learn what customers really want, not what they say they want or what we think they should want..."

"... This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn..."

Strongly based on widespread practices such as Lean Thinking, Customer Development, Agile Methods, Business Model Generation, MVP, and many other concepts, Lean Startup refers to a group of scientific methods to reproduce the success of well-known startups instead of just developing a system and "seeing how it goes".

The Lean Startup Method:
 - Entrepreneurs are everywhere - Huge companies can (and should) have entrepreneurs
 - Entrepreneurship is management
 - Validated Learning - Startups exist to learn how to build a sustainable business
 - Build-Measure-Learn - Run through this loop as fast as possible
 - Innovation accounting - how to measure progress and prioritize work

Part One: Vision

The new technique allowing startups to evaluate their progress: is validated learning. Based on scientific experimentation, this technique helps startups discover how to start a sustainable business, whether they take their first steps in a garage or in an established company.

 - The Myth of the loss of manufacturing capabilities
 - Lean Thinking
 - Progress Measure
 - Productivity
 - Build-measure learn feedback loop

 - Innovation factory
 - Culture and systems

 - Validated Learning
 - True Startup productivity
 - Lean Thinking

 - The experiment phase
 - The value hypothesis
 - The growth hypothesis

Part Two: Steer

The Lean Startup method in detail, with the build-measure-learn feedback loop. This technique describes how to develop a minimum viable product (MVP) to test its fundamental assumptions, how to evaluate our progress with a new cost accounting system, and how to decide whether to pivot, that is to say, change course, or persist in the same way.

 - Startup strategy
 - Leap-of-faith assumptions
 - Example leap of faith
 - Genchi Gembutsu
 - External customer data
 - Customer archetype

 - MVP definition (Minimum Viable Product)
 - The concierge MVP
 - MVP Rule
 - Constant Feedback
 - Early adopters
 - Wizard of Oz testing
 - High-quality experiences

 - Innovation accounting
 - Learning milestone
 - Tuning the engine
 - Pivot or preserve
 - The sign of a successful pivot
 - Pattern for making a pivot or preserve
 - Cohort analysis
 - Metrics

Pivot (or Persevere)
 - Pivot definition
 - Pivot sooner than later
 - The land of the living dead
 - Learning milestone goal
 - The runaway
 - Vanity metrics prevent pivoting
 - Common with pivots
 - From early adopters to mainstream
 - The heart of lean startup

Part Three: Accelerate

Accelerate part shows several techniques to allow a startup to go through the build-measure-learn loop as quickly as possible. This part of the book organizes the concepts of lean manufacturing that apply to startups, such as small batch production, the organizational structure of the startup and its mode of growth, and The principles of Lean Startup to apply beyond the legendary garage, and even within the largest multinationals.

 - Small batches
 - Example small batches vs large batches
 - Toyota's small batches
 - Large batches
 - School of One
 - Large-batch death spiral
 - Experiment early
 - Build-measure really works in the reverse order

 - Engines of growth
 - The sticky engine of growth
 - The viral engine of growth
 - The viral loop
 - The paid engine of growth
 - Product/market fit

 - Adaptive organization
 - One of the most important discoveries of lean
 - Adaptive processes
 - The Why's
 - Blame
 - Waterfall Product Methodology
 - A startup work is never done 

 - Three structural attributes
 - Startup budgets
 - Experimenting with autonomy
 - Rapid iteration
 - Operational excellence
 - The innovation sandbox
 - Speed
 - The lean startup as framework

The book outlines key principles for successful startups, such as:

• Start with a clear vision and purpose.
• Test and validate ideas quickly.
• Use customer feedback to refine products and services.
• Focus on learning rather than achieving specific goals.
• Develop a culture of experimentation and continuous improvement.
• Measure progress and performance.

Chapters of the Book:

Part One: Vision
  1. Start
  2. Define
  3. Learn
  4. Experiment

Part Two: Steer
  5. Leap
  6. Test
  7. Measure
  8. Pivot (or Persevere)

Part Three: Accelerate
  9. Batch
  10. Grow
  11. Adapt
  12. Innovate
  13. Epilogue: Waste Not
  14. Join the Movement

In conclusion, The Lean Startup by Eric Ries provides an effective roadmap to launching successful startups. 

Not only does Ries provide insightful advice and strategies to help entrepreneurs succeed, but he also offers practical tips to help them stay agile and focused. 

With its actionable advice and case studies, the book will undoubtedly leave readers with the tools they need to make their startups successful.

Eric Ries is an entrepreneur and author of the New York Times bestseller The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Business, published by Crown Business.

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