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Many organizations approach product development backwards. As a result, they waste a great deal of time, effort, money, and creative potential on products that customers do not actually want. Eric Ries explains how to minimize this waste in clear, easy-to-understand steps as well as how to harness scientific reasoning and real customer behavior to snatch success from the jaws of defeat. Using tools like a minimum viable product and effective metrics, harnessing the lean startup methodology will unleash your organization’s full potential.
The Lean Startup opens by defining a startup as any organization creating goods or services in unpredictable conditions. Then, Ries launches into an enthralling anecdote regarding the importance of working effectively. It is important to create a product that real customers need instead of working efficiently to create a product that customers do not need and will not buy.That does not mean hiding behind the whiteboard in perfection analysis or releasing a product without research to see what happens.
While market research is valuable, it is important to remember that customers often do not know exactly what they want until they are using it. Instead of falling into an endless cycle of market research or releasing a product with no market research, startups should launch a minimum viable product. The minimum viable product is a pared-down product that offers the bare minimum to the customer. Often, the first customers who are willing to use and offer feedback on the minimum viable product are known as early adopters. Then, customers’ behavior can be observed and your organization can unlock what customers want (and will pay for). Another great book on this topic is Ready, Fire, Aim.
Which features are most important for your minimum viable product? Ries explains in a clear, easy-to-understand way that this cycle starts with quantifying your hypotheses. Then, beginning with the riskiest, empirically test them via your minimum viable product. This way, real customer behavior drives which features receive precious resources and can help you figure out which problems your customers really have.
Of course, this will also include some negative feedback. However, responding to and resolving the issues will help your organization create a product that best meets your customers’ needs. As your organization releases a minimum viable product and performs experiments, you can tune the engine and observe how customer behavior changes. Developing the right product is a challenge, but very important and we recommend Loonshots or Innovator's Dilemma to help choose the kind of innovation you pursue.
Right Place Right Time means nothing. Henry Ford had 500 competitors. Same for Facebook & other college networks who's head start proved irrelevant.
If there is no difference in customer behavior, it might be time to consider a pivot. In addition to learning more about your customers and their needs, this approach can help give your organization the tools to determine whether to pivot or to persevere. Although Ries does not tell you which decision to make, he does explain that using scientifically tested data gives you the most possible information to make that decision. If you are considering a pivot we recommend the book Good To Great so you can learn what a successful pivot does and does not looks like.
Another big step to operating a lean startup is to make sure your organization is using the right metrics. Instead of relying on ambiguous vanity metrics, it is important to define success on clear metrics that everyone understands. Ries explains how applying actionable, accessible, and auditable metrics can help achieve success. If the right metrics are readily available then you can use what is describer in The Messy Middle as "Stand-In Metrics".
Determining which engine of growth your organization should focus on can change which growth metrics you should be using. For example, sticky growth, which is reliant on repeat customers, should focus on repeat business over new customer growth. Other engines of growth are defined and explained in an easy-to-follow way.
Similar to lean manufacturing, operating a lean startup means working in smaller batches. Using clear examples from industry leaders like Toyota, Ries shows how operating in smaller batches, while seemingly inefficient for an individual contributor, are actually more efficient for the organization as a whole. Because this allows for agile problem solving, your organization will be able to react quickly and effectively in an uncertain environment. Another great book about what to focus on in order to succeed is Why Startups Fail.
Quality assurance is another key to a successful lean startup. Using Toyota as a guide, Ries outlines a modified version of the quality assurance five questions system that you can use to determine the root cause of problems. Although this system is designed only to identify new problems, this quality-assurance tool is an excellent way to start building a sustainably lean company.
Because not all startups are the stereotypical inventors in a garage, Ries includes a section on how to implement lean startup strategies in a variety of setups. From governmental agencies to small startups, the scientifically based theories outlined in “The Lean Startup” can be applied to nearly any type of organization. However, this requires cooperation and mutual trust. Because Ries understands this is not always the case, he includes some strategies to help build those muscles.
Lean Startup talks about "leaps of faith" when founders and leaders must move confidently in one direction believing that necessary happening will come to fruition. The book Fooled By Randomness calls this "Cascading Miracles.
Throughout “the Lean Startup,” Ries illustrates concepts with real-life examples. Drawing on experiences both from his own startup IMVU and those he has consulted on, the wealth of actionable knowledge makes it possible to easily visualize the concepts.