If you continue browsing the site, you agree to the use of cookies on this website. Decreasing the headstart to the competition and allowing them to steal the idea earlier —  One of the biggest fears of people releasing a MVP is the fear that their idea is stolen by a bigger company that will then outperform them. Design and the customer archetype — We need to contact early with the customers in order to know them. An MPV is the bare minimum you can ship so that the first users -usually the innovators– can give you that early, precious feedback that will help you steer your development. Back to the methods of growing. This is a must-read for anyone interested in entrepreneurship, startups or launching a product. So, in a startup, productivity is better thought of as the amount of learning per amount of effort. Start testing the assumptions soon, with a minimum viable product/service (MVP/MVS), basically an alpha version. The concierge MVP is basically a temporary solution for a product, that is used for example: To show how the concierge MVP works the author gave an example of an online service that shows people a shopping list and its total price for some suggested recipes using available ingredients in nearby stores based on the subscriber’s tastes and location. Eric Ries says that determination leading startups to success is a myth. Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. According to the author that root cause is generally human-related. Keeping your product under wrap, away from the feedback it desperately needs, will only make your failure more likely. Less interesting Lean Methodology I found the part of the book discussing lean methodologies a bit less interesting. He then gives the example of a company that specializes in rapid manufacturing of everything, SGW Designworks, who work by doing 3D modeling and talking with the customer very early, then quickly proceeding to a prototype. Sometimes putting out an unfinished product calls the attention of early adopters that even prefer it that way, as they can feel as they can be part of the development. You might feel like success is just around the corner. He also mentions the importance of split tests (also called A/B tests) , where 2 different versions of the same product are launched, and then data is analysed. ‘Steer' dives into the methodology of the build-measu… Startups often build products that nobody wants. In a nutshell, The Lean Startup is about taking the scientific process to this question: Since our productive capacity exceeds our ability to know what to build, the question to ask is never “can it be built?,” but instead, “should it be built?” This is because Eric’s stated goal of innovation is to learn that which is currently unknown. AGENDA What is Lean Startup? Again this is a good analogy for the cycle that we talked about earlier. What you might discover is that suddenly your return on investment skyrocketed. This is a great way of knowing which variables are responsible for what. Of all the entrepreneurship and wealth creation books that I have read, I consider “The Lean Startup” to be the most useful. For example, after a year of a perfect loop of ideas >> testing >>learning >>… That is A/B testing, validated learning, and continuous implementations of those learnings with little improvements it might be time to ask ourselves the question if a major change in the product is needed. The same with a startup that is creating a product. Also it often uncovers surprising results, namely that many features or things that engineers or those that are developing the product think is an improvement have no impact in customer behavior. Your email address will not be published. Make it highly targeted to the customers your aiming (early adopters specially). The quickest, simplest product you can assemble to start testing your assumptions right away. The goal of a startup is to figure out the right thing to build as quickly as possible. 1) do customers have that problem? Learn how your comment data is processed. You finished the final chapter of the Lean Startup! The Lean Startup (2011) helps start-ups and tech companies develop sustainable business models.It advocates continuous rapid prototyping and focusing on customer-feedback data. It must show which variable was responsible for which effect; Easily understandable (in simple language) so that people from different backgrounds can give their inputs. He studied at Yale and in 2010, he became an Entrepreneur-in-Residence at Harvard Business School. Lean Startup Summary About The Author : Eric Ries is an American entrepreneur, blogger, and creator of the Lean Startup Methodology, which he explains in “The Lean Startup”. To which, he replied: Sebastian: hey, did you read the Lean Startup already? How to be Charming: The Art of Social Seduction, Straight Line Persuasion: Review & Summary, How to Learn: The Three Pillars of Mastery, Protected: Berlusconi Power Moves: Stealing The Show (Case Study), Dating Power Dynamics: Resources & Change Log, Protected: Trump VS Merkel Picture: Body Language Analysis, 12 Types of Toxic People You Need to Avoid. Or that a pivot is needed. There is a term that is used to mean how much time a startup has, it’s runaway (like the path of the airplane before it lifts), so in the end it either lifts or crashes. These 5 Lean Startup principles can be incorporated into 3 phases of a Lean Startup growth or development – Vision, Steer, and Accelerate. used to refresh your memory after you´ve read the book. Actionable: Your metri… An example is given of a company that did yearly release cycles of their product. He studied at Yale and in 2010, he became an Entrepreneur-in-Residence at Harvard Business School. This can be done, e.g., by showing by means of real unambiguous data that the team has found important truths. It is not to efficiently and quickly build something to see what happens, simply because we can. And remember that better, is subjective, better for the customers not for you. After a small introduction now we’re talking about lean manufacturing and how many lessons from it can be applied to startups, with the author focusing on the power of small batches. There’s technique called the 5 why’s, where when you encounter a problem you ask why 5 times in order to know the root cause. To solve this we can incentive customers to come back, e.g. I had no intention of reading it though because back then I was fully focused on people and social skills and had no time for entrepreneurship. To save time on knowledge absorption check my metasummaries. And he aims to fix the issue with The Lean Startup. And they find out too. In ‘Vision' Ries defines what an entrepreneur and startup actually are and articulates a new way for startups to measure their progress called ‘validated learning'. What they did was very smart and allowed them to be purchased for $50 million by Google: they launched several products each that solved that a problem or variations of it in different ways, in order to know which one people liked the most. THE LEAN STARTUP (Eric Ries) SUMMARY PREETI BHALLA 2. A startup can be defined as an institution designed to create new products or services under conditions of extreme uncertainty. This seemed like an over discussed topic. And if the competitor can out-execute you once the idea is out there, you’re doomed anyway. It was buggy, ugly, etc. How have they worked for you? The author also defends that the traditional ways of analysis such as doing a business plan and doing forecasts don’t work in a startup environment because the uncertainty is so high. Eric Ries' book The Lean Startup has been out since 2011, but I've disregarded reading it because I assumed by 'lean startup' he meant: being cheap and building small minimal viable products. One should keep focused on the big experiments that lead to validated learning. Small batches allow problems to be corrected earlier and more cheaply. So we only really know we learned something when we apply it, and we see the customers talk with their wallets positively. So, consider this simple rule: remove any feature, process or effort that does not contribute directly to the learning you seek. What larger companies can do to avoid shaming their brand is launching their product under a different brand. Facebook, blogs. We should learn from what is working today in real life conditions than from trying to guess what might work tomorrow based on assumptions and surveys. A human institution to create a new products and services under conditions of extreme uncertainty. 28 pages.This is a summary of what I think is the most important and insightful parts of the book. if a new employee breaks the product environment, it’s no shame on the newbie. They made predictions. In this case a number of new users that is increasing can mean a bad thing if they don’t come back or buy stuff. (This way of incremental development was heavily criticized by Theil) The author also mentions the problem of people having muscle memory. A concise summary of Eric Ries' The lean startup-- in 30 minutes. An example is given that it is faster to seal and attach stamps to envelopes one by one (batch size of 1) than doing each operation for all the envelops (batch size = all the envelopes). Note that it is not the fastest product possible, but the one that allows the planned learning to occur the quickest. If 10 customers bring a new one, then v=0.1. In the very beginning of a startup we should focus on early adopters, those that need the product the most and that more easily forgive problems. The goal of a startup is to figure out the right thing to build as quickly as possible. This is why it’s important to do cohort analysis and not just look at certain statistics and say “we’re growing!”. The products a startup builds are, in essence, tests, whose point is to learn about the customer and learn how to build a sustainable business in that field. Here are a few techniques Eric Ries discusses: Get everyone in the room when brainstorming issues If you don’t get everyone involved in the room, says Ries, the one not present is usually the one everyone will blame. The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. Startup success can be engineered following and taught. And this learning need to be validated, that is, we need to verify what we think we learned is really true. The last part of the book was mostly focused on the lean methodology, a product development system born in Japan with Toyota. But it’s main functionality worked the best. But too much is also dangerous — example 1) people do extensive market research but then later could reach the conclusion that it was based on wrong facts; example 2) it can lead to paralysis by analysis (which is the state of over-thinking a situation so that a decision or action is never taken. So they did a video showing how it would be (a 3 minute video demonstration) catering to the early adopters (tech people) and overnight the sign ups on the website grew by 1500%. If we don’t know who the customer is and what he wants we don’t know what quality is. In 2008 they became the biggest automaker. The only way to win is to learn faster than anyone else. He says something that I liked — “Startups don’t starve, they drown.” — meaning that in startups there are always too many ideas going around on how to improve a product, but most only help marginally, they are but optimizations. Software-Centered It’s more tailored towards software development than on physical products. Even though it takes a bit more effort two launch 2 versions (or simply keep the old one and test it against a new one) it saves a long time in the long run by preventing you from working on things that don’t affect customers, that is, with split testing you learn better what customers really value. In startups it may be a bit hard to identify what is the WIP because it deals with intangibles. The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer, The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. The author now tells the story of one of his startups: He says how they had this idea. Sometimes the same startup has to go through many major changes (what the author calls pivot). The author holds a master's degree from La Sapienza, department of communication and sociological research, and is a member of the American Psychology Association (APA). Long gone are the times when they could milk some innovation for many years and rest. If the values with which we measure the performance of our business don’t improve towards what is ideal, then we’re not making progress. It is the only way to avoid being out-executed by someone else; Ruining brand reputation because of releasing an initial low quality product  — Startups are really obscure when they start, so it’s OK. You can use the low number of costumers to experiment and then when the product has proved itself with real customers you launch a bigger marketing campaign. Flows are sequences of customer behaviors that are needed in order for the product or service to be sold (for example in an online store one needs to go the website, maybe login, they add a product to the cart, then check out, input data, etc. That is, he would go personally give the customer the list, and did it with just one store. This chapter [which i found to be one of the most important] defines the view that learning is the most important measure of progress of a startup. Turns out it was the most liked feature even above others that had taken them much more time to develop. The Lean Startup Summary Chapter 12: Startups in Big Organizations . Eric Ries says that success doesn’t happen because you’re in the right place at the right time. If CLV > CPA then we’re growing baby! The CEO started with one customer and doing it by person. But I played along pretending I was going to read it just because he was my boss. The Lean Startup was inspired by Toyota's lean manufacturing revolution. It’s been just about three years since I first wrote the phrase “lean startup” in a blog post that a few dozen people read. Test the most important assumptions by launching a MVP. My notes should only be seen as an addition that can be. Entrepreneurship needs management. I can’t speak for anyone else and I strongly recommend you to read the book in order to fully grasp the concepts written here. All very basic but enough to see if the new idea had feet to walk. And also how they first started by sending the coupons by email one by one in a word press made page. Fun fact: many of these lean thinking concepts were developed at Toyota which at the time couldn’t compete with American car companies that produced very large quantities for a big market. Iterations are obtained until the client is satisfied and voilá, they soon arrive at the final product that the clien wants. Some guys had a vision: that there should be a way to ask an engine a very specific question and it would answer (not like Google where it just shows links and not actual answers). We should prefer to getting real customer data by launching an early unfinished version of the business and doing real time tests to asking questions by surveys and building one big launch. Required fields are marked *. Both assumption are often wrong. The lowdown: The Lean Startup is the most important book ever written for people starting businesses. The Lean Startup is a method to develop and manage startups. Reading is good, action is better I totally agree with this one. It’s things that haven’t gone live (e. g. website version, patches,…). If more people stay than leave (for a given period of time) then it had growth. Running Lean’s simple, action-oriented templates provide tools that startups in all stages of development can use to help build breakthrough, disruptive new products and organizations. Basically it is a situation in between the demo video and doing the complete product. And they find out too late, when they spent all the budget and there’s no more time to pivot. Some believe that a company’s only long term path to success is to be constantly innovating. 2) if they do, and if there was a solution, would they buy it? They see management as the opposite of entrepreneurship, with entrepreneurship being instead daredevil and exciting. Another important thing to do: to develop an archetype of your customer (trying to predict how he is, how he behaves). For example to study those that access our website we can see how many people came back, how many of those registered, of those how many logged in, of those how many bought the product, etc. 4) can you build that solution? The 1st is is about whether the business gives value to the customer and can be tested by e.g. Startups often build products that nobody wants. BONUS: A downloadable PDF 2-page summary with key points to complement the in-depth summary for … This growth depends on word of mouth to spread itself. E.g. Customers don’t care about how much time something takes to develop, in the end they only care about their needs being met. Unluckily he didn’t forget, and a few weeks later when he asked me I had to confess I hadn’t even started it. Based on the feedback you get, keep testing and refining your product and marketing as quickly as possible. This is even more visible when the brand is well known and the people behind it have very public exposure (thus they feel shamed). If we do X and only X, and suddenly the number of buying customers increases, then our hypothesis about X is indeed true. The interviews ended up showing them a new direction that clients actually wanted. One of the ways to achieve that is to iterate quickly. It starts with a clear hypothesis based on your visions and makes predictions on what’s supposed to happen. One of the greatest concerns of entrepreneurs that wonder if they should do a major change is that the startup hasn’t yet had time to prove itself. Have you built any startup using these principles? retention rate (how many people come back for more). So if on average a new customer brings another, then v=1. This is something Jay Samit also discussed in Disrupt You, with the core concept being that nobody cares about your lousy idea. The push behind a successful start up is to accelerate that build-measure-development feedback loops faster than anyone else. Then we need to test that. If growth is your goal and you achieve it, you’ll keep growing your startup to 10, 100, 1,000 people. a shop that only sold shoes pivoting to sell all kinds of footwear); Customer segment — the product is solving a problem but for another customer segment than originally predicted so the company pivots it’s main customer segment; Customer need — the company might see that the problem they’re trying to solve is not really a problem but they may discover a completely new need to solve; Business architecture — businesses can be high margin low volume, low margin high volume and somewhere in between. The general premises from the previous startup up had shown how far they could go and it wasn’t that much. And groundbreakingly useful. It’s the boring stuff that leads to success. The only way to win is to learn, that is, go through the the learn loop, faster than anyone else. Standard business practices are not always applicable to startups. When a startup needs to pay to acquire new customers. grasp the concepts written here. It is unacceptable to take anything for granted or rely on the reports of others. This chapter [which i found to be one of the most important] defines the view that learning is the most important measure of progress of a startup. A specific kind of management geared towards uncertainty. For example if your business was about selling lamps, now it could be about selling parts of lamps, or designing lamps. The Lean Startup: how today’s entrepreneurs use continuous innovation to create radically successful businesses… by Eric Ries, a serial entrepreneur who created the lean startup movement to help startups allocate their resources more effectively.Startups are NOT about coming up with a brilliant idea and becoming an overnight success as many articles might have you believe. Other concepts mentioned in the final chapters: There are lots of legitimate ideas that anyone could and should use. These organizations necessitate special policies and procedures for managing innovative enterprises. This major change might mean you create a similar startup where you still apply things you learned but where you’re going to test other assumptions that you couldn’t on your previous startup because it wasn’t how it worked. with random sales and price fluctuations, so that they must come often to find the best bargain. The final substantive chapter of Lean Startup discusses innovation in a large company and internal startups. Then as he learned more and improved the service, more customers started appearing and he started automating certain aspects culminating in a fully automated service. The pivot is when it changes from one to the other. Some entrepreneurs can fall victim to analysis paralysis: talking to prospects, white board strategies and research reports. It’s processes and methodology. It is here where he reaches the conclusion that the best way to measure progress of a startup is by the amount of learning about what customers want. Yet he tried to console himself by saying that it was a valuable learning process. this is the flow of actions). However, many people put so much effort into the MVP that they forget to really think about what they should be measuring. An example of a company that despite having internal lean thinking still results in the old mass manufacturing ideas is apple. Another useful concept is customer lifetime value (CLV), basically how much customers are expected to pay in total from when they pay the first time to the last. A new way which emphasizes fast iterations, customers’ insights, huge vision and great ambitions all at the same time. They are a permanent fact of life for growing businesses. The author defines some types of pivots : A pivot can be understood as a strategic hypothesis that will require a new MVP. The author mentions how in the product they were developing they avoided creating 3D characters and used a teleportation without sound or visual effects to solve the problem of the characters moving around. This strategy shows that the growth model doesn’t work unless the business strategy is changed. (how to know whether our company will grow viraly?). Sexual Market Value: A Practical Analysis... Change and iterate as quickly as possible, Use lean methodology to move quickly and efficiently, Small batch sizes: the idea of repeating sequentially the same tasks over and over instead of assembling the final product one by one won’t allow you to spot the mistakes early. The extreme of small batches is continuous development, for example, in development where the changes that are made are continuously updated online. How much of the effort and time really contributed to learning? Another one is cost per acquisition (CPA), that is, how much does it cost us to acquire a new customer. The author gives the example of Groupon and how it started by being a company with a totally different objective but by seeing what customers wanted changed to dealing with coupons entirely. It emphasizes a startup as one giant experiment. If that shop were to open somewhere else to sell other tourist attractions then it’s value proposition would have to change from specific to the original tourist attraction to a more general statement about tourist attractions). Try to learn the most but while doing the least. Which means that, again, the faster you do each change the better. The #1 best-selling summary of The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, Eric Ries' must-read book for entrepreneurs. It’s an appealing one, because it gives us the false belief that perseverance is the key and we can all be perseverant (I’m looking at you, Gary Vaynerchuck and Angela Duckworth!). Whatever effort is not spent on learning what clients want is a waste of time and energy. Genchi Genbutsu — means “go and see” in Japanese and it is a key principle of Toyota’s Lean Production System. As you use these tips and techniques, you'll have growth, a better product, and happier teams. If you don’t see results or if the feedback leads you somewhere else, consider pivoting. (by planned learning I mean that we build the easiest MVP we can build that allows us to test the idea or learn about something we want to learn.) For example a single shop might result in profit, but opening more shops would mean that the uniqueness and value proposition of that shop changes (imagine a shop that specializes in something that is catered to a specific tourist attraction in that place and only that place. Find out which solution customers prefer without investing too many resources developing all the alternative solutions; As a transition solution that works when the customer numbers are lower, that is simpler and less expensive; To work as crutches until the company has reached maturity. The method is based on the concepts of lean manufacturing and agile development, and its efficacy is backed up by case studies from the last few decades. We heard a few stories of people who won without ever giving up, but we don’t hear about the many more who kept wasting time beating a dead horse. The Lean Startup: 3 Phases In the early phases of your startup or innovation, you’ll need to clarify your assumptions (Vision) and test your hypotheses to figure out what really works (Steer), before you attempt to accelerate your growth (Accelerate). For example if a company sees that what they originally had created to sell to other companies might be much more interesting to sell to the mass market; Value capture — changes in the revenue model. Yet, the customer profile is only an hypothesis until we validate it through real life data and see that we can serve this customer in a sustainable way. This is called the baseline; Then we try to steer the company’s baseline values to the ideal values e.g. So the best way to go about launching a product is the MVP. Now now that a company can have many new customers, but if they don’t come back to buy stuff more times it’s going to have a problem. This method of development may clash with hypotesis testing because if too many new variables are introduced simultaneously then we may not be able which are responsible for a certain effect. (as a side note I don’t understand the focus with growing, why does a company need to be constantly growing? To know in broad strokes who they are and what their problems are — their profile. So for example if there are 4 developed products but that aren’t being validated, no more can developed (otherwise when the development ended they could end up passing the limit of 4 developed products). In-depth, comprehensive, chapter-by-chapter summary 2. When your startup doesn’t grow exponentially or even just to close to the ideal values you’re stuck in what they in Silicon Valley call the land of the living dead: your startup makes just enough to stay alive but not much else. remember how Gmail stayed in beta for so long? when they spent all the budget and there’s no more time to pivot. It must be able to show inequivocally cause and effect. Eric Ries says that one of the biggest push-back against an MVP is that other companies will steal your ideas. company that sold clothes with artistic drawings pivoting to only sell the drawings); Zoom out — the whole product becomes a single feature (e.g.