Startup general interest

Eirc Ries – The Lean Startup

By November 17, 2011 5 Comments

The Lean Startup: How Constant Innovation Creates Radically Successful BusinessesI started reading Eric Ries‘s new book The Lean Startup last night and so far it is very, very good. Almost ‘can’t put it down’ good, or at least as close to that as you could expect from a business book.

Most of you will be familiar with the lean startup methodology by now. Testing your assumptions in the market and pivoting if they are wrong and keeping costs low until you have found product-market fit. Some of you will be tempted to think that because you understand the basics you don’t need to read this book.

That would be a mistake.

There is a lot of important detail which sits underneath the main ideas that Eric proposes, and probably more importantly Eric’s main point is subtly different from the lean startup summary I gave above. The real essence of the lean startup methodology is to make learning how to build a sustainable business the central objective of management. The learning should derive from a continuous process of hypothesis generation, hypothesis testing and iteration. This goes much further than iterating the product to achieve market fit (important though that is). It also requires much more discipline to execute and I would say is more difficult for most teams to adopt. Those that do, however, will have a better chance of success.

I’m going to finish with a passage from the book which shows one of the management challenges that arises if you follow the disciplines of the lean startup methodology.

The context for this passage is that rapid experimentation requires small targets so success or failure can be assessed quickly.

Despite IMVU’s [Eric’s second startup] early success our gross numbers were still pretty small. Unfortunately, because of the traditional way businesses are evaluated, this is a dangerous situation … Zero invites imagination, but small numbers invite questions about whether large numbers will ever materialise. Everyonr knows (or thinks he or she knows) stories of products that achieved breakthrough sucess overnight. As long as nothing has been released and no data collected, it is still possible to imagine overnight success in the future. Small number pour cold water on that hope.

This phenomenon creates a brutal incentive: postpone getting any data until you are certain of success.

The emphasis is mine.

Having the strength to set small targets and be prepared to reject hypotheses if they are not met is an example of a discipline that many managers find tough to stick with. Remember that our natural tendency is to do the opposite, and seek out only the data that confirms our beliefs.

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