The Lean Startup
ERIC RIES
Reviewed by Todd
Eric Ries begins The Lean Startup with a provocative statement: “Entrepreneurship is a kind of management.”
That is not what comes to mind when I think of entrepreneurship. I envision a single founder risk taker taking on the world in brash Richard Branson–esque fashion. Now, I grew up in the 1980s when starting a business changed from being a fool’s errand to a front cover feature in the newly formed Inc. magazine. Entrepreneurs became the new rock stars of the business world. Closer to home, my image of entrepreneurship will forever be cast by my father’s decision to start a sheet metal fabrication company during the terrible recession in 1982, a business he ran for the next twenty-five years until his retirement.
Ries tells us to throw out all that hero worship. Stop betting the company on big gambles; it’s reckless. Don’t measure things to support your ego; measure only what helps you learn.
The magic is the use of the Toyota Production System as methodology for exploring and improving entrepreneurship. TPS has a lot to say about how to effectively get work done. Limit your work in process (kanban). When there is a quality issue, stop work immediately and swarm the problem until resolved (andon cord). Go and see for yourself (genchi genbutsu). The end goal of TPS is minimizing errors and creating efficiencies.
Startups, though, operate with extremely high levels of uncertainty compared with the manufacturing floor. In both environments, the goal is to eliminate waste, but rather than scrapped parts or large queues, the startup and its founders labor around two questions:
• Does this work create value for the customer?
• Does this work grow the business?
Ries argues that each new action should be seen as a hypothesis to be tested and an experiment to be learned from, because by eliminating waste from the startup process, founders are given the most valuable resource they could ask for—more time.
Business movements like The Lean Startup develop their own vocabulary. The “pivot” is probably Ries’s most mentioned concept. A pivot is when a startup makes a “special kind of change designed to test a fundamental hypothesis about the product, business model, and engine for growth.” This is one of the places where the book particularly shines, providing a layer of context for those company-defining moments when an entrepreneur is faced with a failing, anemic business and needs to make a significant strategic change to survive. If they have been using hypothesis-driven learning to measure themselves, founders benefit from a strong case to test against rather than just “trying something else.”
“A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty.”
We were rightly cautious when choosing newer books to replace any on our original 100 Best list, but this book has earned its place due to the growing ecosystem of learning that is continuing to happen around these ideas. Growth hacking is a studied activity. People like Ash Maurya and Alexander Osterwalder have added to and expanded upon the frameworks Ries proposes. The support infrastructure of incubators and accelerators like Y Combinator, TechStars, and 500Startups are acting as field laboratories for the fast-moving evolution of these ideas, and, as Ries says, we will look at entrepreneurship very differently a hundred years from now, just as Lean Startup has changed the conversation in a mere five years. TS
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, Crown Business, Hardcover 2011, ISBN 9780307887894
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