“The Lean Startup” by Eric Ries: Review and discussion of key points
Being involved as the founder of an IT start-up (Active Associate – a chat bot for law firms) this book was recommended to me as essential reading. The subtitle is: “How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses”.
It definitely provides a lot of good ideas as the main point is that you should constantly be evolving – don’t try and build the perfect product. Particularly with software that is important to remember because demands shift and change so quickly among consumers.
The author outlines more about that basic point as follows:
After more than ten years as an entrepreneur … I have learned from both my own successes and failures and those of many others that it’s the boring stuff that matters the most. Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.
He summarises the five key principles regarding the Lean Startup idea as follows:
- Entrepreneurs are everywhere. So the Lean Startup approach can work with any size of company or sector.
- Entrepreneurship is management. Startups require new types of management given their context of uncertainty.
- Validated learning. Startups exist to learn how to build a sustainable business. This learning can be tested and validated.
- Build-Measure-Learn. Startups turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.
- Innovation accounting. Need to measure progress, set up milestones, and how to prioritize work.
There is quite a lot on this also at the website The Lean Startup
The main takeaway from the book is the need to continually innovate and evolve and not settle or try to have a “perfect” solution before you actually start rolling it out to your customers. In order to give a taste of the concepts that the author then goes on to outline here are some key quotes that I found were the most interesting and potentially the most applicable to many others:
- The Lean Startup asks people to start measuring their productivity differently. Because startups often accidentally build something nobody wants, it doesn’t matter much if they do it on time and on budget. 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 the Lean Startup model, every product, every feature, every marketing campaign – everything a startup does – is understood to be an experiment designed to achieve validated learning.
- This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn.
- 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.
- A minimum viable product (MVP) helps entrepreneurs start the process of learning as quickly as possible. It is not necessarily the smallest product imaginable, though; it is simply the fastest ways to get through the Build-Measure-Learn feedback loop with the minimum amount of effort.
- Contrary to traditional product development, which usually involves a long, thorough incubation period and strives for product perfection, the goal of the MPV is to begin the process of learning, not end it.
- It’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet.
- Only 5 percent of entrepreneurship is the big idea, the business model, the whiteboard strategizing and the splitting up of the spoils. The other 95 percent is the gritty work that is measured by innovation accounting: product prioritisation decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback.
As a lawyer I found the following quote quite interesting because it is definitely something we see among our clients with early stage ideas. They often are worried about someone stealing the idea and so ask about patents, copyright, trademarks etc. But often it is the best advice just to start doing something and learn as you go and be the front runner in the industry rather than trying to have everything sorted and perfect in advance.
Legal risks may be daunting, but you may be surprised to learn that the most common objection I have heard over the years to building an MVP is fear of competitors – especially large established companies- stealing a startups ideas. If only it were so easy to have a good idea stolen! Part of the special challenge of being a startup is the near impossibility of having your idea, company, or product be noticed by anyone, let alone a competitor.
I found the sections where he described the businesses that he had been involved with were the best parts (rather than describing what other people had done). For example, these were the four questions that he asked his team:
- “Do consumers recognise that they have the problem you are trying to solve?
- If there was a solution, would they buy it?
- Would they buy it from us?
- Can we build a solution for that problem?
The common tendency of product development is to skip straight to the fourth question and build a solution before confirming that customers have the problem.”
Overall this book was helpful for me to read through although the key concepts are outlined above and so it felt like it was a longer book than it needed to be. But that is just my own impression and others might enjoy the variety of stories that are told. On other parts of this site we are putting up reviews of books which entrepreneurs will want to have to hand when they go through the journey of starting up something new.
If there is a book you think we should review, or you would like to do a guest review, then just let me know at stevenmoe@parryfield.com!
