[notes] The Lean Startup

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (2011) by Eric Ries #

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These are my notes from reading The Lean Startup. I’ve re-arranged and summarized them where I thought doing so would aid clarity. In particular, I combined Ries’ introduction and epilogue into a single background section which I’ve placed first because I think it provides useful context for understanding the rest of the content. I’ve also included a commentary section at the end, which aggregates the questions and comments I had while reading. Quotes are taken directly from The Lean Startup unless otherwise attributed. Enjoy : )

Background #

Frederick Taylor’s The Principles of Scientific Management (1911) #

“In the past, the man has been first; in the future, the system must be first.” (Taylor)

“By putting the system first, man has been able to acquire massive material surplus.”

“To achieve this success, man relied on planning, prevention, and procedure, which enabled organizations to achieve consistent results in a mostly static world.”

For the last hundred years or so, however, the trend of the world has been towards not-static. Ries doesn’t go into detail on this point but I’ll elaborate briefly with some of my own thoughts.

The increased industrial capacity produced by management has created the space for consumers to demand more personalized products. Malcolm Gladwell has a great Ted Talk about this transition where he tells the story of the perfect spaghetti sauces. Spoilers alert, the final s is important. Basically the spaghetti sauce company discovered that not all customers liked the same type of spaghetti sauce, and so the company created multiple types of spaghetti to appeal to all the different customer types. This was the beginning of market segmentation, and ever since we’ve seen a trend towards more specialized products.

[!!! furthermore, marketing and advertising tactics that push consumer trends to change faster]

Taiichi Ohno and Shigeo Shingo’s Toyota Production System (1948-1975) #

Single piece flow #

Just-in-time production #

Andon cord #

Shusa #

Lean Manufacturing #

“The management style of the past century has created unprecedented material abundance but is ill suited to handle the chaos and uncertainty of a startup.”

“Our productive capacity greatly exceeds our ability to know what to build.”

“The big question of our time is not ‘Can it be built?’ but ‘Should it be built?’”

Eric Ries’ Lean Startup (2011) #

The five guiding principles of the Lean Startup:

  1. Startup => “a human institution designed to create new products and services under conditions of extreme uncertainty”
  2. Startups “require a new kind of management specifically geared to its context of extreme uncertainty”
  3. Validated learning
  4. Build-Measure-Learn - “startup processes should be geared to accelerate the Build-Measure-Learn feedback loop”
  5. Innovation accounting

Part 1: Vision #

“Much of the time in a startup’s life is spent tuning the engine by making improvements in product, marketing, or operations.”

“Thing big, start small. Be creative in the small-ness.”

Validated Learning #

Genchi Gembutsu #

Part 2: Steer #

“A startup is a catalyst that transforms ideas into products. As customers interact with those products, they generate feedback and data.”

Build-Measure-Learn Feedback Loop #

Kanban (from lean manufacturing) #

“To apply the scientific method to a startup, we need to identify which hypothesis to test. I call the riskiest elements of a startup’s plan, the parts on which everything depends, leap-of-faith assumptions.”

Build #

Analogs and Antilogs #

Types of MVPs: #

  1. video MVP => make a video
  2. concierge MVP => substitute complicated engineering infrastructure with humans (build infrastructure as necessitated by scale)

“If we do not know who the customer is, we do not know what quality is.”

Concerns: #

“If we’re building something that nobody wants, it doesn’t much matter if we’re doing it on time and on budget.”

“A new breed of designers is developing brand-new techniques under the banner of Lean User Experience.”

Measure #

Metrics should be… #

Innovation Accounting #

Split testing #

Learn #

“A startup’s runway is the number of pivots they have left.”

Pivoting requires courage #

Types of Pivots: #

  1. zoom-in pivot => new product becomes a single feature of the old product
  2. zoom-out pivot => new product incorporates previous product as a single feature
  3. customer segment pivot => solves the problem but for a different customer segment
  4. customer need pivot => discover a different problem to solve for the same customer segment
  5. platform pivot
  6. business architecture pivot
  7. value capture pivot
  8. engine of growth pivot (viral, sticky, paid growth)
  9. channel pivot
  10. technology pivot

Part 3: Accelerate #

“Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers.”

“Startups don’t starve; they drown.”

“There are always a zillion new ideas about how to make the product better floating around but the hard truth is that most of those ideas make a difference only at the margins. They are mere optimizations. Startups need to focus on the big experiments that lead to validated learning. The engines of growth framework helps them stay focused on the metrics that matter.”

Engines of Growth #

  1. Sticky
  2. Viral
  3. Paid

Sticky #

Viral #

Product/Market Fit #

Five Whys #

Structure of Startups #

Innovation Sandbox #

Commentary #




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