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Kindle Notes & Highlights
by
Eric Ries
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February 14 - November 3, 2018
Per-customer learning metrics include:
Need help coming up with initial metrics? At a minimum, every IA dashboard should attempt to answer the four “key questions” described in the “Innovation Accounting at Scale” section, which starts here.
This dashboard, while simple, is powerful. For one thing, it starts the process of seeing customers as a “flow” through the experiment factory.
Level 2: Business Case Level 1 is not meant to
The dashboard should include a complete set of the input metrics that make up the business plan.
ENGINES OF GROWTH
Level 3: Net Present Value
Most teams I work with—from Silicon Valley to the factory floor—are, most of the time, completely stuck in the mud. They are getting a lot of work done. They are shipping new products and new features. But if you look rigorously, they aren’t really moving the key metrics that matter for their business. This may sound depressing, but it’s actually wonderful news to find out, because teams that have this realization are able to pivot more easily than those that aren’t sure if their current strategy is working. In other words, finance has a constructive role to play here in helping teams be more
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nobody is using it, then anything we measure in the later stages—such as customer satisfaction or productivity improvement—is just measuring noise. I also see
Think of all the corporate training programs that are content to show vanity metrics of how many people have completed the training—never mind if those people have changed their behavior as a result.
The key to this is not to compare the interim progress (which will often be quite modest) to the fantasy plan in the business case, but rather to compare it to the previous milestone.
WHAT IS A GROWTH BOARD?
A growth board is simply the purely internal version of a startup board: a group of people who meet on a regular basis to hear from teams about their progress and to make funding decisions.
What matters is not the exact composition of the board but that its membership is consistent from meeting to meeting. It’s
Board members also have a clear opinion about what kinds of leading indicators are valuable and will drive much better returns
To be the single point of corporate
This is different from a stage-gate (“go/kill”) review and is not effective if adversarial or imperious.
metered funding is the ultimate tool to drive culture change in an organization.
The startup is allowed to spend its growth-board money on whatever it wants, without micromanagement. But it must bear the full costs of anything it uses: salaries, equipment, facilities.
However, the ironclad rule of the growth board has to be: The money is yours, but you cannot get a penny more if you do not show validated learning. That
We set assumptions around what a good growth board would look like, and we thought about how we could validate or invalidate these in each round and learn along the way.
By empowering the people at the next level, they placed their trust in them (while remaining on standby as coaches, of course). The results were immediate. “We moved it down the chain of command,” Gebhardt says, “and that really unlocked a lot of the innovation.”
Let’s look at two very simple metrics the Oil & Gas team used to measure their progress.
All of that took just nine months. Nine months from expensive, never-ending zombie projects to self-sufficient product teams making their own well-informed decisions about whether to proceed.
Citi’s Discover 10X program (D10X) seeks to identify solutions that are at least ten times better for its clients and customers.
“Because until you go to the later stages of building products and launching, it should be inexpensive to test. It’s a fairly rapid cycle of very small amounts of funding to move forward.
One of the things that we’ve been able to create by building D10X is a rigorous process that allows for experimentation with low risk.”
Colella says the biggest change in the growth boards since they began is seeing people at all levels being comfortable not knowing all the answers and being able to say they think they can probably go out and find them.
hope this book will leave you with a hunger not only for transformation but for continuous transformation
In fact, I think we are better served by seeing transformation as a fact of life for the foreseeable future.
predict that twenty-first-century managers will live through as many organizational transformations as new-product platforms and come to see organizational forms the same way we see our smartphones—as something disposable that’s top of the line for a few years, then rapidly surpassed.
They are better seen as a permanent organizational capability than as a one-time event.
And, in too many organizations, productivity improvement is a code word (or feared code word) for layoffs or workforce reductions, so it has the nice surprise of the extra uncertainty that reluctant employees bring to the table. Isn’t the IT manager in charge of such a project an entrepreneur
Continuous transformation—an organization’s capability to test and learn from experiments having to do with its own structure and processes, promoting the best-proven techniques company-wide while limiting or discarding the rest—is what will give that organization the ability to thrive in the modern era. It’s my last suggestion as an addition to the toolbox of the entrepreneurial management function.
genius is widely distributed. Opportunity is not.
Those are the levers we need to move to create not just innovative companies but an innovative culture.
A new generation of entrepreneurs is experimenting with new health care delivery systems that offer the promise of world-class treatment and prevention at a lower cost and a much higher level of delight to patients and doctors alike.
Even that idea can be radical in an environment in which test scores are the focus of the curriculum and excellence is tied to funding and enrollment. But
Oulu, Finland, is now running an experiment to see how UBI might encourage entrepreneurs.
Entrepreneurs can turn open data into awesomeness.”29
insurance company’s investment
portfolio. Because
in public securities. Instead, the company prefers hard assets
“Forestry, for example,”
literal forests
In a forest you can easily—at any time—maximize your quarterly returns. You simply cut down all the trees. Of course, this is the ultimate short-term solution since once you’ve done it, the forest will have almost no remaining value.
Yet this is what too many of our public companies are doing: cannibalizing their long-term value by destroying their own brand, squeezing vendors, shortchanging customers, failing to invest in employees, and using
to maximize shareholder value means maximizing quarterly returns.
As I discussed in The Lean Startup, these kinds of bad incentives trickle down from the public markets and infect everything that public companies touch, including the environment, politics, public safety, and, of particular concern to me, the whole entrepreneurial ecosystem.
