by Eric Ries
The Lean Startup was published in 2011 by internet entrepreneur, Eric Ries. It applies techniques used in lean manufacturing and agile software development to the business environment, especially to startups. The book is divided into three parts: Vision; Steer and Accelerate. Within these parts lie five fundamental principles that lean startups should employ: Entrepreneurs are everywhere; Entrepreneurship is management; Validated Learning; Build – Measure – Learn; Innovation Accounting.
He starts by considering what a startup is and concludes that it is an ‘experiment’, a “human institution designed to create a new product or service under conditions of extreme uncertainty”. Given his experience (he is now starting his third startup business) this is a very fair assessment. Uncertainty is everywhere. How many customers will we get? Will they like our offering? Is the pricing correct? Is our distribution model right for the market? And so on…
Ries believes that managing a startup requires completely different skills to managing a large corporate business. And the skills learned in most MBAs are not relevant. As uncertainty is the name of the game, being able to spot where things are not going right and to change direction rapidly and with minimum impact on the rest of the business is crucial. This so-called “pivoting” is a key facet of lean startups. As the Alex Osterwalder and Steve Blank state in Creating Startup Success 101, “No business plan survives first customer contact”. So spotting where things are not right, and pivoting into a different direction is what startup management is all about. Many successful companies are no longer in the business they started in. And being quick to spot the need to change, before the money runs out, is where the lean startup will have an edge over its slower competitors.
In a recent presentation of The Lean Startup at LSE, Ries kept repeating “Stop Wasting People’s Time”. He was referring to the fact that so many businesses start on a belief that the market needs a particular product or service and invests huge amounts of resources in building it only to discover no one wants it. It’s not a new principle, but putting the customer at the heart of the production process will generally lead to a better solution.
The Build-Measure-Learn cycle is the way to ensure lean and agile techniques are applied constantly. Start by creating a ‘minimum viable product’ – the MVP. Measure customer reaction to this product. Learn from the feedback and then build a new, better version. By constantly iterating around this cycle, the product will continuously improve and customers will continue to be customers.
As with all good management books, The Lean Startup is peppered with examples and case studies that show how Ries developed and applied his theories. Most are US-centric but still applicable across the startup world.
This short review can only scratch the surface of the Lean Startup but it is thoroughly worth reading for anyone involved in the business of startups.
More information can be found at: http://theleanstartup.com/ and the book can be purchased via our Resources page.
Published on 27-05-2012 01:01 by David Tee. 1042 page views
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