|Book Review: The Lean Startup|
The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
Written by: Eric Ries. New York: Crown Business, 2011. 320 pages.
In late 2011, The Lean Startup by Eric Ries became one of the top-selling business books. A significant portion of the content is dedicated to the development of radically new products.
Ries asserts that “Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught” (p. 3). His stated mission is “to improve the success rate of new innovative products worldwide” (p. 8). The book is written for entrepreneurs around his definition of a startup which is “a human institution designed to create new products and services under conditions of extreme uncertainty” (p. 8).
In The Lean Startup, use of the term “lean” is consistent with the meaning in the phrase “lean manufacturing,” the management philosophy derived from the Toyota Production System (TPS). In this context, lean is an approach that strives to minimize the expenditure of resources for anything but the creation of value for the customer.
The Lean Startup is not difficult to read or to comprehend. It is also available in an audio version that is nine hours in duration. It is segmented into three parts. The first two, Vision and Steer, address fundamentals. The focus of the Vision part is to provide a paradigm for entrepreneurial management. The central tenet demands “validated learning” to determine if your assumptions are correct. It is a rigorous method for demonstrating progress that benefits customers. The Steer part provides technique to speed learning. The final part, Accelerate, presents techniques to allow “Lean Startups to grow without sacrificing the speed and agility that are the lifeblood of every startup” (p. 182).
Much of the book's content is derived from stories that describe the author's approach to dealing with the extreme uncertainty that is typical in startups. In Chapter 3, Ries relates the story of six months of his development efforts that produced a product that no one wanted. Ries realized that he could have learned this lesson earlier. Knowing this earlier would have reduced wasted efforts. This realization shaped the core recommendations described in The Lean Startup. The author's recommendations include:
Recognized lean principles, such as Kanban and the elimination of waste are included in the list of recommendations in The Lean Startup.
Chapter 10 provides descriptions of three engines of entrepreneurial growth: sticky, viral, and paid, and their relationship to product/market fit, a term coined by Marc Andreessen to “describe the moment when a startup finally finds a widespread set of customers that resonate with its product” (p. 219). Within a few pages, Ries ties these concepts to the previous list of six recommendations.
The Lean Startup includes anecdotes to support Ries's recommendations. Ries gleaned these stories directly from peers at companies including Intuit, Zappos, Dropbox, and Facebook. The Facebook story highlights their value creation hypothesis and their growth hypothesis and the empirical data that supported these assumptions.
The goal of The Lean Startup was to answer the question “How can we build a sustainable organization around a new set of products or services?” (p. 275). The core advice is to implement projects that are “based on fundamental hypotheses that are testable” (p. 276).