Acclaim for THE LEAN STARTUP

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prototypes. Handos and approvals slow down the Build-Measure- Learn feedback loop and inhibit both learning and accountability. Startups require that they be kept to an absolute minimum. Of course, this level of development autonomy is liable to raise fears in a parent organization. Alleviating those fears is a major goal of the method recommended below. A Personal Stake in the Outcome Third, entrepreneurs need a personal stake in the outcome of their creations. In stand-alone new ventures, this usually is achieved through stock options or other forms of equity ownership. Where a bonus system must be used instead, the best incentives are tied to the long-term performance of the new innovation. However, I do not believe that a personal stake has to be nancial. This is especially important in organizations, such as nonprots and government, in which the innovation is not tied to nancial objectives. In these cases, it is still possible for teams to have a personal stake. The parent organization has to make it clear who the innovator is and make sure the innovator receives credit for having brought the new product to life—if it is successful. As one entrepreneur who ran her own division at a major media company told me, “Financial incentives aside, I always felt that because my name was on the door, I had more to lose and more to prove than someone else. That sense of ownership is not insignificant.” This formula is eective in for-prot companies as well. At Toyota, the manager in charge of developing a new vehicle from start to finish is called the shusa, or chief engineer: Shusa are often called heavy-weight project managers in the U.S. literature, but this name understates their real roles as design leaders. Toyota employees translate the term as chief engineer, and they refer to the vehicle under development as the shusa’s car. They assured us that the shusa has nal, absolute authority over every aspect of vehicle
development.1 On the ip side, I know an extremely high-prole technology company that has a reputation for having an innovative culture, yet its track record of producing new products is disappointing. The company boasts an internal reward system that is based on large nancial and status awards to teams that do something extraordinary, but those awards are handed out by senior management on the basis of—no one knows what. There are no objective criteria by which a team can gauge whether it will win this coveted lottery. Teams have little condence that they will receive any long-term ownership of their innovations. Thus, teams rarely are motivated to take real risks, instead focusing their energies on projects that are expected to win the approval of senior management. Protecting the Parent Organization Conventionally, advice about internal innovators focuses on protecting the startup from the parent organization. I believe it is necessary to turn this model on its head. Let me begin by describing a fairly typical meeting from one of my consulting clients, a large company. Senior management had gathered to make decisions about what to include in the next CREATING A PLATFORM FOR EXPERIMENTATION Next, it is important to focus on establishing the ground rules under which autonomous startup teams operate: how to protect the parent organization, how to hold entrepreneurial managers accountable, and how to reintegrate an innovation back into the parent organization if it is successful. Recall the “island of freedom” that enabled the SnapTax team—in Chapter 2—to successfully create a startup within Intuit. That’s what a platform for experimentation can do.
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Acclaim for THE LEAN STARTUP
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—Geoffrey Moore, author, Crossing
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Copyright © 2011 by Eric Ries All
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Contents Cover Title Page Copyright
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Introduction S top me if you’ve h
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can be engineered by following the
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product vision. These supposed xes
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entrepreneurship, the movement has
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have neither. The second problem is
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shooting in the dark. We are relyin
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Part One VISION
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previous time in history. This has
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manufacturing is measured by the pr
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Every new version of a product, eve
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Products change constantly through
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2 DEFINE WHO, EXACTLY, IS AN ENTREP
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ecosystem regardless of company siz
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In 2009, a startup decided to try s
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accountable. In other words, cultiv
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signicant number of existing custom
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3 LEARN A s an entrepreneur, nothin
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ventures that had failed, and we we
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moving parts that we had to cut a l
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Out of desperation, we decided to t
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eight.” We had no idea how many i
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eliminate it has allowed lean compa
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trying to convince investors, emplo
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gathered suggested new experiments
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entrepreneur in residence. I’ve a
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FROM ALCHEMY TO SCIENCE The Lean St
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1. It had more accurate data about
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nicely. Yet despite all that work,
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second time? How many are willing t
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finding justified the significant e
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them to dry, which takes two to sev
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and innovation to make the agency m
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have the opportunity to closely mon
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Part Two STEER
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This Build-Measure-Learn feedback l
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objectively; they are also invaluab
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spent. In other words, Facebook als
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The problem with analogies like thi
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the biggest market opportunities in
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To demonstrate, take a look at the
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conversations were designed to answ
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6 TEST G roupon is one of the faste
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At IMVU, when we were raising money
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Most entrepreneurs approach a quest
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made a video. The video is banal, a
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sign up for a new service sight uns
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city?” and the technology flails.
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with humans replicating pieces of t
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we are not even sure who the custom
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quality products, but only in servi
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of these cases, there is an easy so
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7 MEASURE A t the beginning, a star
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changes we’ve made are related to
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For example, a startup might create
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INNOVATION ACCOUNTING AT IMVU Here
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This graph represents approximately
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might, we were getting straight C
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When I meet with those teams, there
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much more exciting. That’s why I
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important connection: “I have thi
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equirements of the product owner (t
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was judged by its ability to improv
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The questioning inspired the team t
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I have implemented this system with
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Even more important than reducing w
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from their actions. Human beings ar
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metrics, “auditable,” is so ess
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8 PIVOT (OR PERSEVERE) E very entre
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1. Customers would be interested en
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easy; it is to make sure that there
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@2gov had a slightly dierent set of
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leap-of-faith questions, David conc
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the U.S. population and has deliver
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pivot or persevere, whether to chan
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THE PIVOT OR PERSEVERE MEETING The
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2. The game would grow using the vi
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not launched its current product, t
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A customer segment pivot is an espe
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incorrectly as a synonym for change
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Value Capture Pivot There are many
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similar to that of a successful com
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Part Three
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Start Your Engines Most of the deci
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accounting method described in Part
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is so named because it has a batch
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producers. Over time, that capabili
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they immediately would release a ne
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in consumer electronics. The latest
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Small Batches in Education Not ever
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change, you could roll it out immed
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The original version had been years
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Page 197 and 198: This has enabled Alphabet Energy to
Page 199 and 200: THE STARTUP WAY
Page 201 and 202: companies had used their early succ
Page 203 and 204: We saw in Part Two how important it
Page 205 and 206: suited to testing the value hypothe
Page 207 and 208: and its speed is determined by a si
Page 209 and 210: Imagine that the rst company uses G
Page 211 and 212: those were all services the company
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Page 215 and 216: Chapter 6 emphasized the importance
Page 217 and 218: 11 ADAPT W hen I was the CTO of IMV
Page 219 and 220: eward extreme polarization, that’
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Page 223 and 224: 3. Why was it not lubricated sucien
Page 225 and 226: I used the example of engineering t
Page 227 and 228: When blame inevitably arises, the m
Page 229 and 230: sometimes will devolve into the Fiv
Page 231 and 232: game players in the world. More tha
Page 233 and 234: Tony relates, “As the new master
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Page 237 and 238: planning. In other words, it is com
Page 239 and 240: problems that aict large-batch deve
Page 241 and 242: Historically, QuickBooks had been b
Page 243 and 244: successful startup expect to have y
Page 245: Scarce but Secure Resources Divisio
Page 249 and 250: spent debating the data because, in
Page 251 and 252: can we protect the internal startup
Page 253 and 254: are considered real and the innovat
Page 255 and 256: Once the market for the new product
Page 257 and 258: to train new team members in the ne
Page 259 and 260: It took a constant eort to consider
Page 261 and 262: online, and suggestions for how you
Page 263 and 264: extremely harmful and required the
Page 265 and 266: century, too, before people knew ab
Page 267 and 268: good system must be that of develop
Page 269 and 270: spawned to correct those deficienci
Page 271 and 272: test the impact of those factors on
Page 273 and 274: vision but not to abandon it. We wo
Page 275 and 276: yourself. The Lean Startup Wiki Not
Page 277 and 278: • Ash Maurya has emerged as a lea
Page 279 and 280: The idea of the Build-Measure-Learn
Page 281 and 282: 350000-downloads-for-snapt
Page 283 and 284: 93% log in at least once a month.
Page 285 and 286: more on Dropbox’s success, see
Page 287 and 288: you move the pile around between st
Page 289 and 290: article2/0,2817,35549,0
Page 291 and 292: Acknowledgments I owe a tremendous
Page 293 and 294: Telepathy, designed and built the w
Page 295: About the Author ERIC RIES is an en
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Acclaim for THE LEAN STARTUP

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