Acclaim for THE LEAN STARTUP

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THE ROOTS OF THE LEAN STARTUP The Lean Startup takes its name from the lean manufacturing revolution that Taiichi Ohno and Shigeo Shingo are credited with developing at Toyota. Lean thinking is radically altering the way supply chains and production systems are run. Among its tenets are drawing on the knowledge and creativity of individual workers, the shrinking of batch sizes, just-in-time production and inventory control, and an acceleration of cycle times. It taught the world the dierence between value-creating activities and waste and showed how to build quality into products from the inside out. The Lean Startup adapts these ideas to the context of entrepreneurship, proposing that entrepreneurs judge their progress dierently from the way other kinds of ventures do. Progress in
manufacturing is measured by the production of high-quality physical goods. As we’ll see in Chapter 3, the Lean Startup uses a dierent unit of progress, called validated learning. With scientific learning as our yardstick, we can discover and eliminate the sources of waste that are plaguing entrepreneurship. A comprehensive theory of entrepreneurship should address all the functions of an early-stage venture: vision and concept, product development, marketing and sales, scaling up, partnerships and distribution, and structure and organizational design. It has to provide a method for measuring progress in the context of extreme uncertainty. It can give entrepreneurs clear guidance on how to make the many trade-o decisions they face: whether and when to invest in process; formulating, planning, and creating infrastructure; when to go it alone and when to partner; when to respond to feedback and when to stick with vision; and how and when to invest in scaling the business. Most of all, it must allow entrepreneurs to make testable predictions. For example, consider the recommendation that you build crossfunctional teams and hold them accountable to what we call learning milestones instead of organizing your company into strict functional departments (marketing, sales, information technology, human resources, etc.) that hold people accountable for performing well in their specialized areas (see Chapter 7). Perhaps you agree with this recommendation, or perhaps you are skeptical. Either way, if you decide to implement it, I predict that you pretty quickly will get feedback from your teams that the new process is reducing their productivity. They will ask to go back to the old way of working, in which they had the opportunity to “stay ecient” by working in larger batches and passing work between departments. It’s safe to predict this result, and not just because I have seen it many times in the companies I work with. It is a straightforward prediction of the Lean Startup theory itself. When people are used to evaluating their productivity locally, they feel that a good day is one in which they did their job well all day. When I worked as a programmer, that meant eight straight hours of programming without interruption. That was a good day. In contrast, if I was
Page 2 and 3: Acclaim for THE LEAN STARTUP
Page 4 and 5: —Geoffrey Moore, author, Crossing
Page 7 and 8: Copyright © 2011 by Eric Ries All
Page 9 and 10: Contents Cover Title Page Copyright
Page 11 and 12: Introduction S top me if you’ve h
Page 13 and 14: can be engineered by following the
Page 15 and 16: product vision. These supposed xes
Page 17 and 18: entrepreneurship, the movement has
Page 19 and 20: have neither. The second problem is
Page 21 and 22: shooting in the dark. We are relyin
Page 23 and 24: Part One VISION
Page 25: previous time in history. This has
Page 31 and 32: Every new version of a product, eve
Page 33 and 34: Products change constantly through
Page 35 and 36: 2 DEFINE WHO, EXACTLY, IS AN ENTREP
Page 37 and 38: ecosystem regardless of company siz
Page 39 and 40: In 2009, a startup decided to try s
Page 41 and 42: accountable. In other words, cultiv
Page 43 and 44: signicant number of existing custom
Page 45 and 46: 3 LEARN A s an entrepreneur, nothin
Page 47 and 48: ventures that had failed, and we we
Page 49 and 50: moving parts that we had to cut a l
Page 51 and 52: Out of desperation, we decided to t
Page 53 and 54: eight.” We had no idea how many i
Page 55 and 56: eliminate it has allowed lean compa
Page 57 and 58: trying to convince investors, emplo
Page 59 and 60: gathered suggested new experiments
Page 61 and 62: entrepreneur in residence. I’ve a
Page 63 and 64: FROM ALCHEMY TO SCIENCE The Lean St
Page 65 and 66: 1. It had more accurate data about
Page 67 and 68: nicely. Yet despite all that work,
Page 69 and 70: second time? How many are willing t
Page 71 and 72: finding justified the significant e
Page 73 and 74: them to dry, which takes two to sev
Page 75 and 76: and innovation to make the agency m
Page 77 and 78:
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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warehouses immediately shrink, as t
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This has enabled Alphabet Energy to
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THE STARTUP WAY
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companies had used their early succ
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We saw in Part Two how important it
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suited to testing the value hypothe
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and its speed is determined by a si
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Imagine that the rst company uses G
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those were all services the company
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ying out of the factory as fast as
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Chapter 6 emphasized the importance
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11 ADAPT W hen I was the CTO of IMV
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eward extreme polarization, that’
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what we have learned to get to work
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3. Why was it not lubricated sucien
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I used the example of engineering t
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When blame inevitably arises, the m
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sometimes will devolve into the Fiv
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game players in the world. More tha
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Tony relates, “As the new master
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and installation into Continuous In
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planning. In other words, it is com
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problems that aict large-batch deve
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Historically, QuickBooks had been b
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successful startup expect to have y
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Scarce but Secure Resources Divisio
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development.1 On the ip side, I kno
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spent debating the data because, in
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can we protect the internal startup
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are considered real and the innovat
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Once the market for the new product
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to train new team members in the ne
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It took a constant eort to consider
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online, and suggestions for how you
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extremely harmful and required the
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century, too, before people knew ab
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good system must be that of develop
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spawned to correct those deficienci
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test the impact of those factors on
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vision but not to abandon it. We wo
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yourself. The Lean Startup Wiki Not
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• Ash Maurya has emerged as a lea
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The idea of the Build-Measure-Learn
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350000-downloads-for-snapt
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93% log in at least once a month.
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more on Dropbox’s success, see
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you move the pile around between st
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article2/0,2817,35549,0
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Acknowledgments I owe a tremendous
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Telepathy, designed and built the w
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About the Author ERIC RIES is an en
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Acclaim for THE LEAN STARTUP

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