Book Summary: The Lean Startup

 Ries, Eric (2011). The Lean Startup. New York: Crown Business. ISBN-13: 978-0307887894

The entrepreneurs had given up the traditional management practices due to the lack of positive result that created a vacuum of any defined process to make a Startup: a human initiative designed to create a product under extreme uncertainty, less susceptible to failure. To fill that gap, the Lean Startup utilizes the Build-Measure-Learn feedback loop to create the optimal product through a constant tune up of the strategy while keeping the overarching vision unchanged. Validated learning, the practice of identifying the desires of consumers and adjusting the product and strategy, helps to resolve the great riddle of any startup whether it should build the product in a sustainable business model. Experimenting the hypothesis, both value and growth, with a minimum viable product and doing it early is the key to a successful startup, be it small or large scale. Alternate to that is to plan in isolation that can only happen in a stable operating environment, which is becoming a rare state of affairs.

Successful entrepreneurs are beyond just being at the right place at the right time, but they have the ability to validate the “leap of faith” assumptions using the value and growth hypothesis. Entrepreneurs should go and see for themselves, “Genchi Gembutsu” in Japanese, to design the right customer archetype instead of circling in analysis paralysis and use the Minimum Viable Product (MVP), designed to be imperfect, without the fear of being copied over by competitors. Entrepreneurs should use Innovation Accounting to effectively assess the progress of an entrepreneurship using the three learning milestones: Establish the baseline to get real baseline data in its growth model; Tuning the engine by improving its drivers of growth model; Pivot or persevere using “actionable metrics” instead of a “vanity metrics”. Every Startup needs a periodic assessment of whether to Pivot or Persevere i.e. validating the “Strategic hypothesis” and then Pivot, when needed, by using some of the common Pivot strategies: Zoom-in, Zoom-out, Customer Segment, Customer Need, Platform, Business Architecture, Value capture, Engine of growth, Channel, and Technology Pivots.

The Lean startup model encourages using smaller Batch Size (e.g. single-flow process), Continuous Deployment regardless of whether it is a software or hardware product. The sticky engine, viral engine, and the paid engine are the engines of growth of a startup with four sustainable growth drivers, such as, new customers that come from the actions of past customers, words of mouth, a side effect of product usage, and through paid advertising and repeat purchase. To make the organization adapt to the changing environment, the “Five Why” tool is useful to identify areas to make a proportional investment. Startup style initiative in a large organization should create a sandbox of innovation and be independent enough to take disruptive innovation decisions and execute them with the right resources and budget. Finally, managing startups contradict with Frederick Taylor’s scientific management theory where people are put first, not the system to avoid the danger of turning the business systems too rigid to exploit the opportunities in the market.