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Preview — The Lean Startup by Eric Ries
The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
by Eric Ries
Read between August 21 - September 14, 2017
The tremendous success of general management over the last century has provided unprecedented material abundance, but those management principles are ill suited to handle the chaos and uncertainty that startups must face.
Lean thinking is radically altering the way supply chains and production systems are run. Among its tenets are drawing on the knowledge and creativity of individual workers, the shrinking of batch sizes, just-in-time production and inventory control, and an acceleration of cycle times. It taught the world the difference between value-creating activities and waste and showed how to build quality into products from the inside out.
It has to provide a method for measuring progress in the context of extreme uncertainty.
Learning, by contrast, is frustratingly intangible.
Every setback is an opportunity for learning how to get where they want to go
and can shield controversial teams from corporate meddling.
The biggest surprise is that they are visionaries.
which of our efforts are value-creating and which are wasteful?
Positive changes in metrics became the quantitative validation that our learning was real.
the right way to think about productivity in a startup: not in terms of how much stuff we are building but in terms of how much validated learning we’re getting for our efforts.
The more pertinent questions are “Should this product be built?” and “Can we build a sustainable business around this set of products and services?”
A true experiment follows the scientific method. It begins with a clear hypothesis that makes predictions about what is supposed to happen. It then tests those predictions empirically.
The point is not to find the average customer but to find early adopters: the customers who feel the need for the product most acutely. Those customers tend to be more forgiving of mistakes and are especially eager to give feedback.
In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.
1. Do consumers recognize that they have the problem you are trying to solve? 2. If there was a solution, would they buy it?
I call the riskiest elements of a startup’s plan, the parts on which everything depends, leap-of-faith assumptions.
The first challenge for an entrepreneur is to build an organization that can test these assumptions systematically.
GET OUT OF THE BUILDING Numbers tell a compelling story, but I always remind entrepreneurs that metrics are people, too.
The problem with most entrepreneurs’ plans is generally not that they don’t follow sound strategic principles but that the facts upon which they are based are wrong.
they have to be sold to early adopters. These people are a special breed of customer. They accept—in fact prefer—an 80 percent solution;
you don’t need a perfect solution to capture their interest.
Every extra feature is a form of waste, and if we delay the test for these extra features, it comes with a tremendous potential cost in terms of learning and cycle time.
In this case, the video was the minimum viable product.
But along the way, their product development team was always focused on scaling something that was working rather than trying to invent something that might work in the future.
the software craftsmanship movement.
Customers don’t care how much time something takes to build. They care only if it serves their needs.
Finally, it helps to prepare for the fact that MVPs often result in bad news.
Unfortunately, standard accounting is not helpful in evaluating entrepreneurs. Startups are too unpredictable for forecasts and milestones to be accurate.
Every product development, marketing, or other initiative that a startup undertakes should be targeted at improving one of the drivers of its growth model.
If you are building the wrong thing, optimizing the product or its marketing will not yield significant results.
But like many entrepreneurs with ambition, Farb didn’t build his MVP just to make a living.
Compared to a lot of startups, the Grockit team had a huge advantage: they were tremendously disciplined.
Most important, a disciplined team can experiment with its own working style and draw meaningful conclusions.
many features that make the product better in the eyes of engineers and designers have no impact on customer behavior.
stories could be cataloged as being in one of four states of development: in the product backlog, actively being built, done (feature complete from a technical point of view), or in the process of being validated.
without a clear hypothesis, how can a story ever be validated?
A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.
our reporting data and its infrastructure were considered part of the product itself and were owned by the product development team.
The true measure of runway is how many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy.
We had been so successful with our early efforts that we were ignoring the principles behind them.
Remember that the rationale for building low-quality MVPs is that developing any features beyond what early adopters require is a form of waste. However, the logic of this takes you only so far. Once you have found success with early adopters, you want to sell to mainstream customers. Mainstream customers have different requirements and are much more demanding.
A pivot is a special kind of change designed to test a new fundamental hypothesis about the product, business model, and engine of growth.
Geoffrey Moore, who observed that companies generally follow one of two major business architectures: high margin, low volume (complex systems model) or low margin, high volume (volume operations model).
The critical first question for any lean transformation is: which activities create value and which are a form of waste?
The essential lesson is not that everyone should be shipping fifty times per day but that by reducing batch size, we can get through the Build-Measure-Learn feedback loop more quickly than our competitors can.