his journey to Lean, and its principles and practice in his 2011 book The Lean Startup. Steve Blank and Eric Dorf have written The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company, which guides you through the Lean Startup process. Ries wrote a later book, The Startup Way, which he says “owes its title to Jeffery Liker’s magisterial The Toyota Way”. This shows how the Lean Startup system can become a system of entrepreneurial management that can lead organizations of any size from any industry to growth and long-term impact.
Eric Ries had a number of successes and failures as an entrepreneur and came to realize that startup success can be engineered by following the right process, that entrepreneurship is a kind of management. He was successfully applying what are now recognized as many of the principles of lean innovation, which ran counter to the then perceived wisdom about entrepreneurship. He began to look outside entrepreneurship for ideas that would help him understand his experience. He found these ideas in Lean Manufacturing and applied them to create the framework that he would document in The Lean Startup.
The Lean definition of a startup is
- A temporary organization
- Designed to search for a repeatable and scalable business model
- Designed to fail fast and be continually learning. By failing fast, you know quickly if your idea is no good
Startups are not smaller versions of large companies. The ones that succeed go from failure to failure, all the while adapting, iterating on, and improving their initial ideas as they continually learn from customers. While existing companies execute a business model, start-ups look for one. However, you can have lean startup initiatives within large companies, and many large companies now have innovation incubators that follow the Lean Startup method. Indeed, many have incorporated the Startup Way into their management system.
The Four Pillars of Lean Startup
The Four Pillars of the Lean Startup method are:
Quickly build something that you can try out on potential customers; measure its acceptability and value to its intended audience and learn from what you’ve measured
Build a Minimum Viable Product
Build something that’s good enough to try on customers, no frills, probably not much error recovery. Build it quick and fast; get it out to early adopters; think big; start small
Conduct an Experiment and Collect Relevant Metrics
Create a hypothesis about the product or market; create experiment(s) to try out your hypothesis; measure the experiment’s outcome to validate or disprove hypothesis.
A key part of this measurement is what the method calls Innovation Accounting, which focuses on how entrepreneurs can maintain accountability and maximize outcomes by measuring progress, planning milestones, and prioritizing. This is different from traditional accounting.
Another key part is Validated Learning. This is defined as a process in which one learns by trying out an initial idea and then measuring it to validate its effect. Each test of an idea is a single iteration in a larger process of many iterations whereby something is learnt and then applied to succeeding tests.
Persevere or Pivot
Find the sweet spot of your product. Your metrics will tell you if you should keep going with your original idea or “pivot” and turn in a different direction.
Build – Measure – Learn
Below is an illustration of the Build-Measure-Learn iterative feedback loop
Build-Measure-Learn is the core part of the lean startup methodology that explains what we should do between the phases of Idea -> Build -> Code -> Measure -> Data -> Learn. In other words, it is a loop process of turning ideas into products, measuring customers’ reactions and behaviors against built products, and then learning whether to persevere with or pivot the idea; this process repeats over and over again. If you pivot to a new idea, you create a new baseline and start the iteration process from there.
It’s worth remembering, an MVP does not have to be a physical product or a software offering. Zappos is an