September 2015 – The Lean Start Up by Eric Ries
Posted: 1 September 2015Book reviews
Learn how constant innovation creates radically successful business
To celebrate Exeter library’s new found status as a Business and Intellectual Property Centre we’ve hand picked a selection of stimulating business reads for review, this month we are highlighting a title from 2011 that seems to have started something.
In 2011, Silicon Valley tech entrepreneur Eric Ries published a book called The Lean Start-Up. Not everybody noticed, but a growing band of enthusiasts did and the lean start-up movement was born.
Don’t be fooled by the title, this book is important for all organisations, not just start-ups and those looking to implement the principles of lean management. From a business perspective it’s a seminal book that seeks to move management thinking out of its old school ‘last century’ habits. For those who have previously suffered at the hands of lengthy, overly detailed pre-launch planning (all in stealth mode), this book should be a welcome revelation.
It tackles head-on the long running issue that start-ups have been facing, that is, why do so many of them fail?
Adopting an easy read, case study rich style (it works well in audiobook form) it introduces key concepts and principles that entrepreneurs and intra-preneurs can adopt:
Minimum Viable Product: aka MVP, is an early version of your product or service. Described as deliberately feature poor and often with little regard to appearance, the aim is to capture and test the key value proposition with potential clients and stakeholders. The inspiring story of how online shoe retailer Zappos built their first MPV is ‘not to be missed’;
Build-Measure-Learn loop: this is at the heart of lean start-up thinking, the idea is to keep iterating versions of your product or service and then try them out on customers so you can measure and learn from the results. Whether customers will buy, including their objections, requests and feedback will often be invaluable data for developing a business’s value proposition;
Validated Learning: this is proposed as the new currency for start-ups (as new ventures can be stifled by an over emphasis on revenue and profits). Eric explains that new ventures need to be occupied with learning how to build a sustainable business by running experiments to test their vision and underlying assumptions. Failures are identified as a high value activity for the business to move forward from;
Innovation Accounting: new metrics need a new type of accounting to facilitate this learning so Eric cites the need for a new system of accounting. Tech business case studies abound, demonstrating the utility in detailed monitoring of metrics such as sign-ups, time on site, social media ‘noise’ and conversion rates;
Pivot or Persevere: whether to continue with the original direction or whether to try setting a new direction is another key takeout. With all this learning, measurement and momentum you might assume that deciding whether to change or alter course becomes a simple decision. However, Eric is clear that this is not the case ‘There is no way to remove the human element – vision, intuition, judgment – from the practice of entrepreneurship, nor that would that be desirable’.
In putting this book together Eric gathered much inspiration from his time at IMVU (think virtual worlds meets instant messaging). Readers are treated to a fascinating exposé of how he and his team had to ditch six months of expensive software development following customer reactions to their incorrect assumptions about customer needs and motivations. Whilst advocating testing value propositions in scientific detail he simultaneously spurns both the ‘just do it’ and the old school ‘make super detailed plans’ approaches to business management.
By the end of this book you may well find yourself motivated to try these techniques for moving new ventures forward.
Next month we’ll be looking at a newer book with a similarly big potential impact – watch this space, and twitter, for details. In the meantime if you’ve read The Lean Start Up (or any of last month’s business beach reads) and have any comments or connected stories to tell then please do so via social media using #businessbookreviews (@ExeterLibrary on Twitter).