Book Report: The Lean Startup

lean-startup-and-process“All these activities in a well-run traditional organization offer incremental benefit for incremental effort. As long as we are executing the plan well, hard work yields results. However, these tools for product improvement do not work the same way for startups. If you are building the wrong thing, optimizing the product or its marketing will not yield significant results. A startup has to measure progress against a high bar: evidence that a sustainable business can be built around its products or services. That’s a standard that can be assessed only if a startup has made clear, tangible predictions ahead of time.” (The Lean Startup)

Title: The Lean Startup – How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Authors: Eric Ries

Publisher: Crown

Publication Date: 2011

Origin: As someone who’s considering starting a tech company, or perhaps joining a very early stage tech company, I wanted to learn lean strategies and tactics so that I can directly apply them.

Summary: The Lean Startup is, essentially, a how-to guide for “the application of lean thinking to the process of innovation.” (p6)

Drawing upon his own experiences, and those of other people and companies, Ries shows how innovation can be achieved and optimized by following lean methodologies and processes.

Page 8 introduces the Lean Startup Method, which, at the highest level, has five components:

  1. Entrepreneurs are everywhere: “The Lean Startup approach can work in any size company, even a very large enterprise, in any sector or industry.”
  2. Entrepreneurship is management: “A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty.”
  3. Validated learning: “Startups exist not just to make stuff, make money, or even serve customers. They exist to learn how to build a sustainable business.”
  4. Build-Measure-Learn: “The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.”
  5. Innovation accounting: “To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, and how to prioritize work.”

The rest of the book walks us through this method, via three parts:

  • Part One: Vision explains how to StartDefineLearn, and Experiment, so our startup actively tests hypotheses as part of a Build-Measure-Learn cycle
  • Part Two: Steer, which subdivides into LeapTestMeasure, and Pivot (or Persevere), moves from this early vision phase to one of active measurement, so that we can determine if we’re on the right track or if we need to make some fundamental change
  • Part Three: Accelerate addresses how to increase our velocity through small batches (Batch), engines of growth (Grow), adaptation (Adapt), and continuous innovation (Innovate)

An Epilogue closes things off with some final words of wisdom.

My Take: It’s taken me a long time to get to The Lean Startup – it’s been on my shelf for years – but I ripped through it in two days. In some ways, perhaps the wait was beneficial, as I have much more developed insights and experience now than I did five or so years ago when I purchased the book.

Admittedly, I was a bit concerned that I’d find The Lean Startup to be a bit ambiguous, faddish, cheesy, or superficial, but I’m happy to report that, instead, I found it to be clear, straightforward, fairly concise (points are made and supported, but not dragged out), very practical, and quite inspiring. It confirmed some of my own observations, while providing enough new ideas and concepts that I’ve definitely learned a considerable amount.

I’m kind’ve eager to apply those lessons, and hope to make or find the opportunity to do so in the near future.

Read This Book If: …You’re in a position where innovation is a key objective.

Notes and Quotes

Introduction

“Entrepreneurship is a kind of management.

  • p2, preaching to the choir: “In magazines and newspapers, in blockbuster movies, and on countless blogs, we hear the mantra of the successful entrepreneurs: through determination, brilliance, great timing, and – above all – a great product, you too can achieve fame and fortune. There is a mythmaking industry hard at work to sell us that story, but I have come to believe that the story is false, the product of selection bias and after-the-fact rationalization… Yet the story of perseverance, creative genius, and hard work persists. Why is it so popular? I think there is something deeply appealing about this modern-day rags-to-riches story. It makes success seem inevitable if you just have the right stuff. It means that the mundane details, the boring stuff, the small individual choices don’t matter.”
  • Discipline will be a recurring theme in this book; p3: “Entrepreneurship is a kind of management. No, you didn’t read that wrong. We have wildly divergent associations with these two words, entrepreneurship and management. Lately, it seems that one is cool, innovative, and exciting and the other is dull, serious, and bland. It’s time to look past these preconceptions.”
  • p4 alludes to the fact that steering vision is a critical guiding light: “We really did have customers in those early days – true visionary early adopters – and we often talked to them and asked for their feedback. But we emphatically did not do what they said. We viewed their input as only one source of information about our product and overall vision.”
  • p5, how outlandish! I’m happy to see that the attitude is changing, and moving more towards this balanced view: “Back in 2004, Steve [Blank] had just begun preaching a new idea: the business and marketing functions of a startup should be considered as important as engineering and product development and therefore deserve an equally rigorous methodology to guide them.”

Start

“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.

  • p20: “Because startups 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.”
  • I thought this was a useful concept, from p22: “Powered by a splashy launch, the company successfully executed its plan. Unfortunately, customers did not flock to the product in great numbers. Even worse, the company had invested in massive infrastructure, hiring, and support to handle the influx of customers it expected. When the customers failed to materialize, the company had committed itself so completely that they could not adapt in time. They had ‘achieved failure’ – successfully, faithfully, and rigorously executing a plan that turned out to have been utterly flawed.”
  • p23: “Products change constantly through the process of optimization, what I call tuning the engine. Less frequently, the strategy may have to change (called a pivot). However, the overarching vision rarely changes. Entrepreneurs are committed to seeing the startup through to that destination. Every setback is an opportunity for learning how to get where they want to go.”

Define

“Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean it cannot be managed.

  • p26 reminded me of Where Good Ideas Come From: “The theories of management that Mark had studied treat innovation like a ‘black box’ by focusing on the structures companies need to put in place to form internal startup teams. But Mark found himself working inside the black box – and in need of guidance. What Mark was missing was a process for converting the raw materials of innovation into real-world breakthrough successes.”
  • p29, stop me if you’ve heard this before: “The future is unpredictable, customers face a growing array of alternatives, and the pace of change is ever increasing. Yet most startups – in garages and enterprises alike – still are managed by using standard forecasts, product milestones, and detailed business plans.”
  • p31 tries to dispel some commonly held beliefs: “Innovation is a bottoms-up, decentralized, and unpredictable thing, but that doesn’t mean it cannot be managed. It can, but to do so requires a new management discipline, one that needs to be mastered not just by practicing entrepreneurs seeking to build the next big thing but also by the people who support them, nurture them, and hold them accountable.”
  • p35 talks gives an example of innovation from Intuit, and makes the point that a platform must be in place to enable the deployment, testing, and analysis that is key to the build-measure-learn process.

Learn

“I’ve come to believe that learning is the essential unit of progress for startups. The effort that is not absolutely necessary for learning what customers want can be eliminated.

  • p48: “In a startup, who the customer is and what the customer might find valuable are unknown, part of the very uncertainty that is an essential part of the definition of a startup.”
  • p49: “I’ve come to believe that learning is the essential unit of progress for startups. The effort that is not absolutely necessary for learning what customers want can be eliminated. I call this validated learning because it is always demonstrated by positive improvements in the startup’s core metrics.”
  • p50 has an anecdote that reminds me of a local tech company. I’ve seen their still-young-but-less-young-than-before CEO speak on several occasions, and he keeps talking about the mistakes they’re making, and learning from them, and how their investors have encouraged them to hire people who’ve made those mistakes already.
  • p50, recalling the quote from p4: “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.”

Experiment

“Planning is a tool that only works in the presence of a long and stable operating history.

  • p56, in another recurring theme of this blog (e.g., scientific method): “Unfortunately, if the plan is to see what happens, a team is guaranteed to succeed – at seeing what happens – but won’t necessarily gain validated learning. This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn.”
  • p62, about early stage experimentation: “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.”
  • This part from p64 reminds me of an article I saw in HBR in 2007 (Is It Real? Can We Win? Is It Worth Doing?: Managing Risk and Reward in an Innovation Portfolio): “I try to push my team to answer four questions: 1. Do customers recognize that they have the problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution for that problem?”
  • p72: “Planning is a tool that only works in the presence of a long and stable operating history. And yet, do any of us feel that the world around us is getting more and more stable every day? Changing such a mind-set is hard but critical to startup success.”

Part 2: Steer

“The MVP [minimum viable product] is that version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time.

  • p76: “I call the riskiest elements of a startup’s plan, the parts on which everything depends, leap-of-faith assumptions. The two most important assumptions are the value hypothesis and the growth hypothesis. These give rise to tuning variables that control a startup’s engine of growth.”
  • p77: “The MVP [minimum viable product] is that version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time.”
  • p77, a crucial point about some other stuff that needs to be built into the MVP: “In some ways, creating a MVP requires extra work: we must be able to measure its impact.”
  • p78: “The Lean Startup method builds capital-efficient companies because it allows startups to recognize that it’s time to pivot sooner, creating less waste of time and money. Although we write the feedback loop as Build-Measure-Learn because the activities happen in that order, our planning really works in the reverse order: we figure out what we need to learn, use innovation accounting to figure out what we need to measure to know if we are gaining validated learning, and then figure out what product we need to build to run that experiment and get that measurement.” So the learning mechanism must be incorporated into the plan and delivered. I expect that many companies would quickly put them below the ‘cut line’ once time or resource pressure is applied, with the result being that they’d miss out on the vital insights of the Build-Measure-Learn loop.

Leap

“The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have.

  • I found it refreshing to read this statement, from p80: “Is the lesson of Facebook that startups should not charge customers money in the early days? Or is it that startups should never spend money on marketing? These questions cannot be answered in the abstract; there are an almost infinite number of counterexamples for any technique.”
  • p89, from a section called Design and the Customer Archetype: “The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarify at a basic, coarse level that we understand our potential customer and what problems they have. With that understanding, we can craft a customer archetype, a brief document that seeks to humanize the proposed target customer.”
  • p91: “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. Unfortunately, most of these errors cannot be detected at the whiteboard because they depend on the subtle interactions between products and customers.”

Test

“Unlike a prototype or concept test, an MVP is designed not just to answer product design or technical questions. Its goal is to test fundamental business hypotheses.”

  • p93 pointed to an endnote that pointed to this article: Minimum Viable Product: a guide
  • p93 makes a crucial distinction: “Unlike a prototype or concept test, an MVP is designed not just to answer product design or technical questions. Its goal is to test fundamental business hypotheses.”
  • p95: “Early adopters are suspicious of something that is too polished: if it’s ready for everyone to adopt, how much advantage can one get by being early? As a result, additional features or polish beyond what early adopters demand is a form of wasted resources and time. This is a hard truth for many entrepreneurs to accept.”
  • p96: “The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.”

“The lesson of the MVP is that any additional work beyond what was required to start learning is waste, no matter how important it might have seemed at the time.”

  • p98-99 talk about the Dropbox demo video. You can read about it and watch the video in this article that Ries wrote on TechCrunch: How DropBox Started As A Minimal Viable Product
  • p102, with an important lesson about scaling something that’s working, rather than emphasizing perfection: “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.”
  • p109: “We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible. But once again, this does not mean operating in a sloppy or undisciplined way.”
  • p110: “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.”
  • p111 suggests we shouldn’t fear idea theft, which keeps many startups in a stealth mode or very quiet for too long, creating a latency between launch and acquiring enough customers to test their hypotheses: “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.”
  • p112: “Startups have the advantage of being obscure, having a pathetically small number of customers, and not having much exposure. Rather than lamenting them, use these advantages to experiment under the radar and then do a public marketing launch once the product has proved itself with real customers.” There’s an associated endnote which points to this article, worth reading: Don’t launch

Measure

“Innovation accounting enables startups to prove objectively that they are learning how to grow a sustainable business.

  • p114, on a selection bias in the stories told about entrepreneurship: “One of the most dangerous outcomes for a startup is to bumble along in the land of the living dead. Employees and entrepreneurs tend to be optimistic by nature. We want to keep believing in our ideas even when the writing is on the wall. This is why the myth of perseverance is so dangerous. We all know stories of epic entrepreneurs who managed to pull out a victory when things seemed incredibly bleak. Unfortunately, we don’t hear stories about the countless nameless others who persevered too long, leading their companies to failure.”
  • p116: “Innovation accounting enables startups to prove objectively that they are learning how to grow a sustainable business.”
  • p126: “All these activities in a well-run traditional organization offer incremental benefit for incremental effort. As long as we are executing the plan well, hard work yields results. However, these tools for product improvement do not work the same way for startups. If you are building the wrong thing, optimizing the product or its marketing will not yield significant results. A startup has to measure progress against a high bar: evidence that a sustainable business can be built around its products or services. That’s a standard that can be assessed only if a startup has made clear, tangible predictions ahead of time.”
  • p128 includes a good discussion of vanity metrics. Man, I despise vanity metrics and the people who create or are fooled by them.
  • p135 has a section on the pitfalls of chasing efficiency and optimizing utilization…reminded me very much of the management classic, The Goal. A few lines later, there’s a cautionary tale about superficially following lean methods and relying on vanity metrics, an approach that doesn’t result in improvement.
  • p136 talks about cohort analysis and split tests, which I think is/are great; however, I expect there’s a certain minimum number of customers that must be reached before valid insights can be found
  • p137: “Although working with split tests seems to be more difficult because it requires extra accounting and metrics to keep track of each variation, it almost always saves tremendous amounts of time in the long run by eliminating work that doesn’t matter to customers.”
  • p138, in a section on kanban: “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. Validated was defined as ‘knowing whether the story was a good idea to have been done in the first place.’ This validation usually would come in the form of a split test showing a change in customer behavior but also might include customer interviews or surveys.”
  • p140, to all those who hate process, here’s another benefit! “A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.”

“A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.”

  • p143 refers to the “three A’s of metrics”: actionable, accessible, and auditable
  • p143: “For a report to be considered actionable, it must demonstrate clear cause and effect. Otherwise, it’s a vanity metric.”
  • p144, on accessible metrics: “Departments too often spend their energy learning how to use data to get what they want rather than as genuine feedback to guide their future actions. There is an antidote to this misuse of data. First, make the reports as simple as possible so that everyone understands them… This is why cohort-based reports are the gold standard of learning metrics: they turn complex actions into people-based reports.”
  • Nice, I’m all for transparency; p145: “Accessibility also refers to widespread access to the reports.”
  • p146, on auditable metrics: “That’s why the third A of good metrics, ‘auditable,’ is so essential. We must ensure that the data is credible to employees.”

Pivot (or Persevere)

“A startup’s runway is the number of pivots it can still make.

  • p149…PIVOT! Actually, I quite like this definition, and I suspect many uses of the term are not true to this meaning: “That change is called a pivot: a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.”
  • p149, echoing what was said on page 114: “There is no bigger destroyer of creative potential than the misguided decision to persevere.”
  • p153: “The goal of creating milestones is not to make the decision easy; it is to make sure that there is relevant data in the room when it comes time to decide.”

“The goal of creating milestones is not to make the decision easy; it is to make sure that there is relevant data in the room when it comes time to decide.”

  • p154 makes the distinction between a pivot and a complete change: “A pivot requires that we keep one foot rooted in what we’ve learned so far, while making a fundamental change in strategy in order to seek even greater validated learning.”
  • p154 defines a zoom-in pivot: “refocusing the product on what previously had been considered just one feature of a larger whole”
  • p156 defines a customer segment pivot: “keeping the functionality of the product the same but changing the audience focus”
  • p157 defines a platform pivot: basically changing from selling one application or product at a time, to selling a platform to support a wide array of applications
  • I love this statement, from p160: “A startup’s runway is the number of pivots it can still make”
  • p160 with some crucial points: “When startups start to run low on cash, they can extend the runway two ways: by cutting costs or by raising additional funds. But when entrepreneurs cut costs indiscriminately, they are as liable to cut the costs that are allowing the company to get through its Build-Measure-Learn feedback loop as they are to cut waste. If the cuts result in a slowdown to this feedback loop, all they have accomplished is to help the startup go out of business more slowly. 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. Measuring runway through the lens of pivots rather than that of time suggests another way to extend that runway: get to each pivot faster.”
  • p161, to file under the heading of “learning from the mistakes of others”: “Ask most entrepreneurs who have decided to pivot and they will tell you that they wish they had made the decision sooner.” Ries suggests that there are three reasons why entrepreneurs resist pivoting: being fooled by vanity metrics, having an unclear hypothesis that prevents complete failure, and fear.
  • p164, from a section called “The Pivot or Persevere Meeting” (I think these points are crucial!): “The decision to pivot requires a clear-eyed and objective mind-set. We’ve discussed the telltale signs of the need to pivot: the decreasing effectiveness of product experiments and the general feeling that product development should be more productive. Whenever you see those symptoms, consider a pivot.”
  • The section continues: “The decision to pivot is emotionally charged for any startup and has to be addressed in a structured way. One way to mitigate this challenge is to schedule the meeting in advance. I recommend that every startup have a ‘pivot or persevere’ meeting. In my experience, less than a few weeks between meetings is too often and more than a few months is too infrequent. However, each startup needs to find its own pace.”

“The decision to pivot is emotionally charged for any startup and has to be addressed in a structured way. One way to mitigate this challenge is to schedule the meeting in advance.”

  • p169, with another important point about pivots: “It is not necessary to throw out everything that came before and start over. Instead, it’s about repurposing what has been built and what has been learned to find a more positive direction.”
  • p170, on a pivot that’s pretty much required to cross the chasm: “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 requirement and are much more demanding.” This reality calls for a customer segment pivot.
  • p170 continues: “A customer segment pivot is an especially tricky pivot to execute because…the very actions that made us successful with early adopters were diametrically opposed to the actions we’d have to master to be successful with mainstream customers.”
  • p171, it’s easy to lose your way, and you must be mindful of the real reasons why you’re doing things: “We had gotten really good at optimizing, tuning, and iterating, but in the process we had lost sight of the purpose of those activities: testing a clear hypothesis in the service of the company’s vision. Instead, we were chasing growth, revenue, and profits wherever we could find them.”
  • p172 begins a section that lists and defines different types of pivots (Zoom-in Pivot, Zoom-out Pivot, Customer Segment Pivot, Customer Need Pivot, Platform Pivot, Business Architecture Pivot, Value Capture Pivot, Engine of Growth Pivot, Channel Pivot, Technology Pivot): “The word pivot is sometimes used incorrectly as a synonym for change. A pivot is a special kind of change designed to test a new fundamental hypothesis about the product, business model, and engine of growth.”
  • p177: “A pivot is better understood as a new strategic hypothesis that will require a new minimum viable product to test.”

“A pivot is better understood as a new strategic hypothesis that will require a new minimum viable product to test.”

  • p178, on pivots: “A pivot is not just an exhortation to change. Remember, it is a special kind of structured change designed to test a new hypothesis about the product, business model, and engine of growth. It is the heart of the Lean Startup method. It is what makes companies that follow Lean Startup resilient in the face of mistakes: if we take a wrong turn, we have the tools we need to realize it and the agility to find another path.”

Part 3: Accelerate

“Value in a startup is not the creation of stuff, but rather validated learning about how to build a sustainable business.”

  • p182: “Value in a startup is not the creation of stuff, but rather validated learning about how to build a sustainable business. What products do customers really want? How will our business grow? Who is our customer? Which customers should we listen to and which should we ignore? These are the questions that need answering as quickly as possible to maximize a startup’s chances of success. That is what creates value for a startup.”
  • p183 talks about the need to build an adaptive organization by investing in the right amount of process to keep teams nimble as they grow; I’m a big fan of this line of thinking

Batch

“The biggest advantage of working in small batches is that quality problems can be identified much sooner.

  • p187: “The biggest advantage of working in small batches is that quality problems can be identified much sooner.”
  • p191 introduces continuous deployment
  • p196 begins a short section on the large-batch death spiral, which I’m sure many of us have experienced or observed in our professional lives
  • p198, does this description of the large-batch death spiral sound familiar to anyone? “Unlike in manufacturing, there are no physical limits on the maximum size of a batch. It is possible for batch size to keep growing and growing. Eventually, one batch will become the highest-priority project, a ‘bet the company’ new version of the product, because the company has taken such a long time since the last release. But now the managers are incentivized to increase batch size rather than ship the product. In light of how long the product has been in development, why not fix one more bug or add one more feature? Who really wants to be the manager who risked the success of this huge release by failing to address a potentially critical flaw?”
  • p201, in a section called Pull, Don’t Push: “Almost every Lean Startup technique we’ve discussed so far works its magic in two ways: by converting push methods to pull and reducing batch size. Both have the net effect of reducing WIP [work-in-progress].”

Grow

“Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers.

  • p207: “The engine of growth is the mechanism that startups use to achieve sustainable growth. I use the word sustainable to exclude all one-time activities that generate a surge of customers but have no long-term impact.”
  • p207 continues, “Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers”, and introduces the four primary ways past customers drive sustainable growth: word of mouth, as a side effect of product usage, through funded advertising, through repeat purchase or use
  • p209 introduces the three engines of growth: the Sticky Engine of Growth, the Viral Engine of Growth, and the Paid Engine of Growth
  • p213, in a section on the viral engine of growth, has an endnote that points to this slightly-dated-but-still-relevant article: Network Effects
  • p215, still on the viral engine of growth, has an endnote that points to: Business ecology and the four customer currencies (time, money, skill, and passion)
  • p219, with an important caveat: “Technically, more than one engine of growth can operate in a business at a time… However, in my experience, successful startups usually focus on just one engine of growth, specializing in everything required to make it work. Companies that attempt to build a dashboard that includes all three engines tend to cause a lot of confusion because the operations expertise required to model all these effects simultaneously is quite complicated.”

Adapt

“At the root of every seemingly technical problem is a human problem.

  • p227, from a subsection Can You Go Too Fast?: “If you are causing (or missing) quality problems now, the resulting defects will slow you down later. Defects cause a lot of rework, low morale, and customer complaints, all of which slow progress and eat away at valuable resources.”
  • p230: “At the root of every seemingly technical problem is a human problem. Five Whys provides an opportunity to discover what the human problem might be.”
  • p232 has a subsection (in the overall Five Whys section) called Make a Proportional Investment, which basically says that the response to a problem diagnosis should be proportional to the diagnosis. Minor problems get minor fixes, and so on.
  • p233, a good Five Whys process has two outputs, learning and doing: “The Five Whys ties the rate of progress to learning, not just execution. Startup teams should go through the Five Whys whenever they encounter any kind of failure, including technical faults, failures to achieve business results, or unexpected changes in customer behavior.”
  • p234, with an important point about directing ‘blame’: “Although it’s human nature to assume that when we see a mistake, it’s due to defects in someone else’s department, knowledge, or character, the goal of the Five Whys is to help us see the objective truth that chronic problems are caused by bad process, not bad people, and remedy them accordingly.”

Innovate

“The problem for startups and large companies alike is that employees often follow the products they develop as they move from phase to phase.

  • p253, with a note that relates to having a lean startup mentality or team within a larger organization: “Internal or external, in my experience startup teams require three structural attributes: scarce but secure resources, independent authority to develop their business, and a personal stake in the outcome. Each of these requirements is different from those of established company divisions.”
  • p257-258 has a neat anecdote that basically describes a meeting in which all sorts of unclear data was presented: “Listening in, I assumed this would be the end of the meeting. With no agreed-on facts to help make the decision, I thought nobody would have any basis for making the case for a particular action. I was wrong. Each department simply took whatever interpretation of the data supported its position best and started advocating on its own behalf. Other departments would chime in with alternative interpretations that supported their positions, and so on. In the end, decisions were not made based on data. Instead, the executive running the meeting was forced to base decisions on the most plausible-sounding arguments.”
  • p264 starts a section, Cultivating the Management Portfolio, that is very reminiscent of Escape Velocity
  • p266, a very short statement that I think touches on a major issue in established companies: “The problem for startups and large companies alike is that employees often follow the products they develop as they move from phase to phase.” Why is this approach problematic? Because people have different skillsets (e.g., innovation, commercialization, maintenance, etc.)…those skillsets should be the driver of their work assignments/roles, not the proprietary knowledge about a particular product.
  • p271: “Switching to validated learning feels worse before it feels better. That’s the case because problems caused by the old system tend to be intangible, whereas the problems of the new system are all too tangible. Having the benefit of theory is the antidote to these challenges.”

Epilogue: Waste Not

“There has been an overemphasis on planning, prevention, and procedure, which enable organizations to achieve consistent results in a mostly static world.

  • p277, in a sub-section called Putting the System First: Some Dangers: “The productivity gains to be had through the early scientific management tactics…were so significant that subsequent generations of managers lost sight of the importance of the people who were implementing them. This has led to two problems: (1) business systems became overly rigid and thereby failed to take advantage of the adaptability, creativity, and wisdom of individual workers, and (2) there has been an overemphasis on planning, prevention, and procedure, which enable organizations to achieve consistent results in a mostly static world.”

Lee Brooks is a technology marketer based in the high-tech hub of Waterloo, Ontario, Canada.

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6 comments on “Book Report: The Lean Startup
  1. tl;dr: learn often through small batch size

  2. […] where it is, in a certain sense, ‘safe’ to fail.” Perhaps worth adding that in Lean Startup methodology, hypotheses are consciously tested, and failure is seen as a tool to validate […]

  3. […] In The Lean Startup, Eric Ries champions a build-measure-learn approach to startups in which making and testing hypotheses are a cornerstone of successful innovation […]

  4. […] to anyone with control systems training, or who’s read things like Black Box Thinking and The Lean Startup: “In so many other high-stakes endeavors, forecasters are groping in the dark. They have no […]

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