The Lean Startup by Eric Ries

The Lean Startup CoverThe Lean Startup by Eric Ries is a terrific piece of business literature. It took me awhile to finish, but I have to say it was just terrific! I have no background in lean methods and no background in entrepreneurship (I work in a bank). I still learned so much from it.

When I picked up The Lean Startup I thought the word “lean” in the title was referring to light or slim and would be talking about how to run a startup with as little as possible. But really it refers to lean production, which is a discipline introduced by Toyota. I’m not going to get into it in details, but the basic gist of it is to perfect the flow of a production, eliminating waste and minimize stoppage. By doing this you keep improving your workflow.

Now you may think that a book about the lean manufacturing system wouldn’t be interesting. But it’s really about how the author draws upon the lessons learned in the Toyota assembly plants and incorporates them into his philosophy on how you always improve your work, your product and run a business.

Eric_Ries profileA little bit about the author

Eric Ries is a Silicon Valley entrepreneur. He’s born in 1979 and is a graduate from Yale. He’s been involved with a number of startups, most notably IMVU  which is an online community where people use 3D avatars to meet people, chat and play games and is the basis of many of the examples in the book.

The Lean Startup was released in 2011 and has sparked a movement around the globe making Ries a sort of a celebrity within the entrepreneurial world. He is now a sought after speaker and advisor to many companies.

The key points

Minimum viable product – MVP

According to the lessons in the book you’re supposed to create a “minimum viable product” and release it to the market. That’s how you can start testing its effect on your prospective clients. When we’re working on a new product we can be so tight up about finishing every single detail before we release it. Well if you don’t release anything to the market you can’t get any feedback to use to improve the product. So instead of focusing on producing a fully fledged product loaded with features, start small and create an MVP. As customers start signing up, you get valuable feedback on how to improve.

Build, measure, learn

This is one of those things which should be common sense. After you build something you have to measure it’s impact. Somehow we tend to forget the measurements and move on to the next project.

According to this principle, you’re supposed to release product updates (build) as soon as they are ready so you can get feedback (measure. Then you use the feedback to draw conclusions and improve the product (learn).

Vanity metrics vs Actionable metrics

There is so much data for you to use if you’re measuring. Just be sure you’re drawing conclusions according to the right metrics.

Lets take marketing campaigns for example. Getting a ton of views, likes, visits to a homepage etc. is great, but what did it bring to your bottom line? Can you draw any conclusions on likes and views? I know they are important indicators but they’re still only that, you cannot be basing decisions on vanity metrics like that. What you should be looking at in this example is things like sales, measurable effects on your image, sign ups – some action that your prospects took and you can use. It’s the build, measure, learn loop again and trust me, it keeps popping up around the book.

Pivot or persevere

You may start working on a specific idea for a specific target group. Things may start off great and you will get tons of early adopters to try your product. But what if you don’t go anywhere from there? What if your product never takes off? One possibility is to pivot into a different target group or even a different product category. Take text messaging for example. First off it was developed with business people in mind, so they could communicate while in and between meetings, but it never took off in that target group. As it turned out, the product was perfect for teenagers who took it and carried it off. Same product, different target group – text messaging pivoted.

The Lean Startup – Verdict

This book is awesome! I learned so much from reading (or rather listening to) it. Some of the lessons are pretty common sense, but still we never seem to follow our common sense.

The most valuable lesson I learned from the book is that entrepreneurs are found everywhere. In government, Fortune 500 companies and Silicon Valley. It’s all about challenging a status quo and striving for innovation. This happens in every organization. The only thing managers need to do is open their eyes to it and encourage.

In this short blog post I highlighted some of my favorite lessons from the book. However you can check out more principles on www.theleanstartup.com. Or you could just go ahead and:

I highly recommend it!

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