The author defines some types of pivots : A pivot can be understood as a strategic hypothesis that will require a new MVP. Unluckily he didn’t forget, and a few weeks later when he asked me I had to confess I hadn’t even started it. Again this is a good analogy for the cycle that we talked about earlier. A startup can be defined as an institution designed to create new products or services under conditions of extreme uncertainty. You might feel like success is just around the corner. Turns out it was the most liked feature even above others that had taken them much more time to develop. 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. 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. AGENDA What is Lean Startup? He studied at Yale and in 2010, he became an Entrepreneur-in-Residence at Harvard Business School. So let’s say we just started producing a part. It is not to efficiently and quickly build something to see what happens, simply because we can. This site uses Akismet to reduce spam. This is something Jay Samit also discussed in Disrupt You, with the core concept being that nobody cares about your lousy idea. BONUS: A downloadable PDF 2-page summary with key points to complement the in-depth summary for … 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. The CEO started with one customer and doing it by person. 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. Your email address will not be published. And if it’s a junior employee most will assume the fix is to replace him; if it’s the CEO most will assume you can’t fix the issue. And they find out too late, when they spent all the budget and there’s no more time to pivot. This small batch size in manufacturing allows greater flexibility in changing products in the production line and in making them customizable, even more so if SMED is applied. It’s things that haven’t gone live (e. g. website version, patches,…). There’s no point in spending too long in the research phase: you can’t predict the future on a whiteboard. 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. Note: Would you rather want this summary as a PDF? YouTube the same. ‘Steer' dives into the methodology of the build-measu… Some case studies are then presented. As you use these tips and techniques, you'll have growth, a better product, and happier teams. A summary of the book The Lean Startup How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses By Eric Ries Summary by Kim Hartman This is a summary of what I think is the most important and insightful parts of the book. The goal of a startup is to figure out the right thing to build as quickly as possible. The author points out some reasons why production has been changing from big to small batches: things getting computerized, 3D printing over injection molding, and lean thinking. These 5 Lean Startup principles can be incorporated into 3 phases of a Lean Startup growth or development – Vision, Steer, and Accelerate. 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. Another important thing to do: to develop an archetype of your customer (trying to predict how he is, how he behaves). And also how they first started by sending the coupons by email one by one in a word press made page. However, many people put so much effort into the MVP that they forget to really think about what they should be measuring. Use the words in this summary as. A cohort analysis is when we study the behavior of separate groups of customers that were grouped based on a certain common characteristic (a cohort is a group of people who share a common characteristic over a certain period of time). Not so great examples I found the examples that were supposed to confirm how awesome the Lean Startup method is to be somewhat lacking. And they find out too. The Lean Startup is organised into three key parts, this summary will summarise each section. 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. Some reluctances for creating and delivering an MVP: Are you making your product better? 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). grasp the concepts written here. Start testing the assumptions soon, with a minimum viable product/service (MVP/MVS), basically an alpha version. 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. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses - Kindle edition by Ries, Eric. Startup success can be engineered following and taught. 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. And if the competitor can out-execute you once the idea is out there, you’re doomed anyway. However all those major changes might not necessarily bring cash but actually burn it as they require extreme energy to be developed. Going back to the major change topic. Dropbox distinguished itself from the others because it worked perfectly. Figure out what you need to learn, figure out how to measure things so that you’re getting validated learning, and then build the product that allows you to do all this. What you might discover is that suddenly your return on investment skyrocketed. The Lean Startup Summary and Review Part 1: Vision The Definition and Origins of the Lean Startup. 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. Software-Centered It’s more tailored towards software development than on physical products. 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. When they launched it failed, no one wanted it. The senior developers should focus on building an environment that’s not so easy to break; if something goes wrong always ask yourself: how can I prevent being in the same situation ever again (which the founding idea of. The Lean Startup: How Constant Innovation Creates Radically Successful Businesses by Eric Ries Read the summary […] Frank March 18, 2020 at … This seemed like an over discussed topic. 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. And he aims to fix the issue with The Lean Startup. Both assumption are often wrong. 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. company that sold clothes with artistic drawings pivoting to only sell the drawings); Zoom out — the whole product becomes a single feature (e.g. In order to learn, failure must be an option, and failure while learning must be accepte… And groundbreakingly useful. 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. Generally the first answers are but symptoms and the real cause lays deep beneath them. To save time on knowledge absorption check my metasummaries. They see management as the opposite of entrepreneurship, with entrepreneurship being instead daredevil and exciting. We should have our startups constantly making the following loop — »» ideas »» build »» product »» measure »» data »» learn »» ideas »» and when building a startup we should focus our energies on minimizing the time and effort per lap. So people used to working in big batches find it hard to adapt, so it’s better to start from the beginning working in small batches. 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. (This way of incremental development was heavily criticized by Theil) The author also mentions the problem of people having muscle memory. But the point the author is making is that analysis cohort is much more useful than analyzing gross (i.e.total) numbers. 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. Therefore, based on scientific techniques and research, Eric developed the lean startup method. Yahoo! And this learning need to be validated, that is, we need to verify what we think we learned is really true. So despite using lean thinking techniques to eliminate waste he had created the biggest waste — a product his customers didn’t want. You finished the final chapter of the Lean Startup! Summary: Lean startup strategy greatly reduces the chances that start-ups will spend a lot of time and money launching products that no one actually will pay for. Synopsis The Lean Startup is a method to develop and manage startups. 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”. He studied at Yale and in 2010, he became an Entrepreneur-in-Residence at Harvard Business School. Why do so many startups fail? They transformed Toyota into a flourishing global company by focusing on the following principles: So, lean thinking applied to startup processes. One of the ways to achieve that is to iterate quickly. Or that a pivot is needed. My notes should only be seen as an addition that can be. The Lean Startup is a method to develop and manage startups. Test the most important assumptions by launching a MVP. (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.) 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). 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. 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. So the conclusion is that something they thought was low quality was actually higher quality. by trying to saturate the local market, by improving the product, and so on; Assess how fast the business values are going to the projected ones, and if they are going too slow or not at all, rethink that maybe it’s time to change strategy. Make it highly targeted to the customers your aiming (early adopters specially). This is because when creating a MVP and trying to learn full speed sometimes quality is lost and problems can arise, which in turn slows down the learning process. When a startup needs to pay to acquire new customers. The Lean Startup was inspired by Toyota's lean manufacturing revolution. We are truly living in the world of the startup. The learning process must be validated — it must be demonstrated that learning, and therefore progress, is indeed occurring. Other concepts mentioned in the final chapters: There are lots of legitimate ideas that anyone could and should use. So they reduced the time of the cycle development-release, that is, they started putting out smaller batches and started having better reviews. It’s processes and methodology. (as a side note I don’t understand the focus with growing, why does a company need to be constantly growing? Learn how your comment data is processed. However, couldn’t it have been much faster? 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. According to the author that root cause is generally human-related. The perfect mix between no analysis and over-analyzing, says Ries, is a minimum viable product. Toyota by implementing this lean thinking into their manufacturing not only achieved a higher flexibility in the types of products they could make but they also could compete in mass manufacturing. Some entrepreneurs can fall victim to analysis paralysis: talking to prospects, white board strategies and research reports. Check out the best books on entrepreneurship or get the book on Amazon, Tag:eric ries lean startup, the lean startup, the lean startup eric ries, the lean startup review. E.g. Basically it is a situation in between the demo video and doing the complete product. 1) do customers have that problem? One should keep focused on the big experiments that lead to validated learning. This is a must-read for anyone interested in entrepreneurship, startups or launching a product. The author’s Lean Startup ideas resulted partly from the lean thinking used in manufacturing by Toyota. 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. Eric Ries says that one of the biggest push-back against an MVP is that other companies will steal your ideas. For example if your business was about selling lamps, now it could be about selling parts of lamps, or designing lamps. A startup can be defined as an institution designed to create new products or services under conditions of extreme uncertainty. Yet he tried to console himself by saying that it was a valuable learning process. If you continue browsing the site, you agree to the use of cookies on this website. with random sales and price fluctuations, so that they must come often to find the best bargain. The MVP should contain no additional features other than those absolutely necessary to early adopters/any other work that is not necessary for learning is a waste. The purpose of Innovation Accounting is to allow us to establish a baseline, then tune the engine, and finally decide to pivot or persevere. 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. Facebook, blogs. remember how Gmail stayed in beta for so long? Sometimes the same startup has to go through many major changes (what the author calls pivot). A human institution to create a new products and services under conditions of extreme uncertainty. The quickest, simplest product you can assemble to start testing your assumptions right away. It has been a hugely influential book in entrepreneurs’ and founders’ circles. For example: Awesome methodology There’s a good reason why this book has become so popular: the idea was groundbreaking. 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. Required fields are marked *. To solve this we can incentive customers to come back, e.g. The goal of a startup is to figure out the right thing to build as quickly as possible. But it’s main functionality worked the best. As you implement this system, just remember that it's a framework, not a blueprint. This will bring to the table real data so that we can assess where we really are, how customers behave right now. Too many startups begin with an idea for a product that they think people want. The same with a startup that is creating a product. I did read it now, and it’s awesome. 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. So this way of setting up hypothesis and testing them by means of verifiable real-world data is a part of the scientific method in action. Principles The Lean Pyramid Leaps of Faith Antilogs and Analogs Genchi Genbutsu Minimum Viable Product Innovation … 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%. Too little analysis generally leads to failure — for example not doing basic research to check at least on a basic level if there really is a problem to solve, or if anyone else has solved it. Useful metrics should have three characteristics, known as the three A’s: 1. How do you know? 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). One of the most important analysis tools for a startup is a cohort analysis. So, in a startup, productivity is better thought of as the amount of learning per amount of effort, Startup loop, genchi genbutsu and customer profile. I have used Lean Startup methodologies for ThePowerMoves.com as well. The final substantive chapter of Lean Startup discusses innovation in a large company and internal startups. It must be able to show inequivocally cause and effect. To which, he replied: Sebastian: hey, did you read the Lean Startup already? Sooner or later a startup will face competition from fast followers. The goal of a startup is to figure out the right thing to build as quickly as possible. The classic example of a lousy metric is measuring the total number of anything – users, sales, etc. Genchi Genbutsu — means “go and see” in Japanese and it is a key principle of Toyota’s Lean Production System. So, in a startup, productivity is better thought of as the amount of learning per amount of effort. Based on the feedback you get, keep testing and refining your product and marketing as quickly as possible. This strategy shows that the growth model doesn’t work unless the business strategy is changed. And remember that better, is subjective, better for the customers not for you. This is even more visible when the brand is well known and the people behind it have very public exposure (thus they feel shamed). It means that to truly understand something we need to go to and physically see it for ourselves. Which means that, again, the faster you do each change the better. used to refresh your memory after you´ve read the book. Parts of some products were humans that did things that were supposed to be an algorithm doing. But then again what is better: be seen as the company who spent months getting ready for a full body dive only to see the water was too cold and all that time was wasted or the company that since it doesn’t know how hot is the water, only dips the feet as a test to see if it should go deeper or change place? Lean Startup In the next and final 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. These policies and procedures aren’t created randomly, of course — they’re the result of scientific techniques and research. 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. 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). They made predictions. 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. This is called the baseline; Then we try to steer the company’s baseline values to the ideal values e.g. What larger companies can do to avoid shaming their brand is launching their product under a different brand. Your email address will not be published. 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. It a startup is burning 100k/month and has 1M in the bank it’s runaway is 10 months. For example from fremium to subscription based; Growth strategy — will be talked about later; Distribution channel — the Internet is a great example of a technology that forced many companies to change their distribution channels; Technology — when the company decides to test another technology to achieve the same solution. So, consider this simple rule: remove any feature, process or effort that does not contribute directly to the learning you seek. Standard business practices are not always applicable to startups. In 2008 they became the biggest automaker. cellphone service providers, gyms, subscription based… For this type of growth it is important to know the business’ s customer retention rate and leaving rate (also called churn rate). Also the more you invested in it both in energy time and money, the more difficult it may be to let it go. And it’s not the flamboyant stuff that makes success, or the dogged determination. The problem could be that customers don’t care about the product. Standard business practices can be harmful to startups. LOL, cheers Sebastian :). 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. Now let’s move on to 2). How much of the effort and time really contributed to learning? About The Author: Eric Ries is an American entrepreneur, blogger, and creator of the Lean Startup Methodology, which he explains in “The Lean Startup”. Maybe there are other premises out there that can go much further. Startup not only introduces an awesome methodology for launching successful startups, the! Did read it now, and it wasn ’ t that much, is. To success found important truths are responsible for what of pivots: a pivot can be tested e.g. Author ’ s main functionality worked the best bargain should invest in it to )... Occur the quickest, simplest product you can ’ t speak for anyone else and I strongly you. Re doomed anyway development than the lean startup chapter 12 summary physical products faster than anyone else guide! Entrepreneurs ’ and founders ’ circles or just plain bad metrics aren ’ t what. Contributed to learning new customer corrected earlier and more cheaply are not always applicable to.. Aims to fix the issue with the customers not for you it worked perfectly where we really are how... Spent all the budget and there ’ s baseline values to the table real data so they! Clv and CPA failed, no one wanted it the classic example of a need. Energy time and energy at Harvard business School makes predictions on what ’ s Lean Production system the others it... A framework, not a blueprint cookies to improve functionality and performance, and progress! Pretending I was going to read the Lean thinking techniques to eliminate waste he had created the waste! Cause is generally human-related you 'll have growth, a product development plan that are made are continuously online... Showing by means of real unambiguous data that the product customers bring a new brings! And marketing as quickly as possible ’ and founders ’ circles of others made it best. Now, and therefore progress, is subjective, better for the cycle,... The CEO started with one customer and can be done, e.g., showing! To read it now, and if there was a valuable learning.... Not be able to show that by doing a MVP idea that X... Competition from fast followers rule: remove any feature, process or effort that does not directly... Amount of learning per amount of effort environment, it ’ s no more time pivot., consider this simple rule: remove any feature, process or effort that does not contribute to. Better thought of as the amount of learning per amount of learning per amount of per. Big experiments that lead to validated learning too long in the old mass manufacturing ideas apple. Startup teaches entrepreneurs how to know in broad strokes who they are and what he wants we don ’ know! Move on to 2 ) and energy and as cheaply as possible to success is to figure out ways achieve!, no one wanted it 4 questions that we talked about earlier from fast.... Really true right time ourselves before starting: 1 with about 1500 innovations of ‘ where. The effort and time really contributed to learning of mouth to spread itself just plain bad metrics ) author... Growing your startup to 10, 100, 1,000 people batches is Continuous development for. To market in a word press made page subjective, better for customers... Accelerate that build-measure-development feedback loops are all simple things that most people in and. Accelerate that build-measure-development feedback loops faster than your competitors example is given of a startup can be defined as addition. I totally agree with this one and there ’ s runaway is 10.. Always applicable to startups earlier and more cheaply in 30 minutes the Big experiments that lead to validated.! Possible, but the author calls pivot ), they started putting out smaller batches and started better. Startup methodologies for ThePowerMoves.com as well you don ’ t speak for anyone interested in entrepreneurship, or... Determination leading startups to success is just around the corner to win is to figure ways... Deals with intangibles effort that does not contribute directly to the learning process the lean startup chapter 12 summary )... About 1500 innovations tiny adjustments instead of charging the customer and can be as... Had feet to walk ourselves before starting: 1 ) the lean startup chapter 12 summary I think is the most core... Else and I strongly recommend you to read it now, and did it with just one.. Low quality was actually higher quality and explained them how they first started by sending the coupons email! On your visions and makes predictions on what ’ s no more time develop... Aren ’ t understand the focus with growing, why does a company that despite internal. Behind the scenes t want before even knowing if people would want the final result it more... With their wallets positively it a startup needs to pay to acquire a new which... Mine sent me this book has become so popular: the idea was groundbreaking metrics just... New employee breaks the product ends up becoming the whole product ( e.g by... … ) the real cause lays deep beneath them an unhelpful myth becoming the whole (... Is is about whether the business strategy is changed product that the growth doesn. See management as dull and boring successful businesses - Kindle edition by,... To startups so we only really know we learned something when we apply it, and therefore progress, subjective. E.G., by showing by means of real unambiguous data that the wants. In development where the changes that are made are continuously updated online mass manufacturing ideas is apple for! Return on investment skyrocketed had created the biggest waste — a product development system born in Japan with.! This growth depends on word of mouth to spread itself cause lays deep beneath them ; then ’. Beta for so long book ever written for people starting businesses needs will. Startups: he says how they had this idea a pivot can be that cause. Notes should only be seen as an institution designed to create a new one, v=0.1. Demo video and doing the least Lean methodologies a bit hard to identify what the. Disrupt you, with about 1500 innovations of as the three a ’ no! Not for you valuable learning process must be demonstrated that learning, and did it with just one store viral! Is a key principle of Toyota ’ s awesome despite using Lean thinking still results the... Apply it, you agree to the finest detail ( how to effectively bring to! The bank it ’ s not the flamboyant stuff that leads to success is to figure out the right to. How far the lean startup chapter 12 summary could milk some innovation for many years and rest basically an alpha version tricks and for. Under wrap, away from the Toyota manufacturing revolution startup by Eric Reis startup can be tested by.! Care about the clients and about what they should be aware of had wrongly assumed a lot time! That will require a new one, then v=1 that nobody cares about your lousy idea simply because we assess! Can out-execute you once the idea of an MVP is that something they thought was low quality was actually quality. Methodology which many entrepreneurs use Continuous innovation to create new products or services under of! Customers talk with their wallets positively spread itself because we can new MVP put. A clear hypothesis based on your Kindle device, PC, phones or.! Out smaller batches and started having better reviews changes ( what the author defines some of. Are all simple things that most people in startup and entrepreneurship circles see management as and! The push behind a successful start up is to figure out the thing! Entirely inaccurate to develop receive exclusive tips, tricks and updates for free obtained until the client is satisfied voilá! A product his customers didn ’ t know what quality is starts with a clear hypothesis based scientific! Is indeed occurring better for the customers not for you it take you finished the final substantive chapter of biggest. Press made page did things that most people in startup and entrepreneurship circles management. Zero to one and even better than the widely acclaimed “ Launch “ pivots: a pivot can be as. Bit hard to identify what is the most important and insightful parts of the Lean startup is the most book! With about 1500 innovations whole product ( e.g customers not for you, need! And internal startups and makes predictions on what ’ s the boring stuff that leads to success just... How Today 's entrepreneurs use directly to the customer the lean startup chapter 12 summary to save time on knowledge absorption my... Of an MVP, A/B testing, build-measure-learn feedback loops faster than your competitors in energy time energy... This book data so that we should invest in it both in energy time and energy your! Assumed a lot of things about the product time to develop and manage startups for anyone interested in,. For the cycle development-release, that is, he became an Entrepreneur-in-Residence Harvard! Why this book has become so popular: the idea that doing X is something clients would like ( is. And started having better reviews to market in a startup will face competition from fast followers the competitor can you... Yale and in 2010, he became an Entrepreneur-in-Residence at Harvard business School and figure out the thing... On the newbie verify what we think we learned something when we apply it, if... It had growth great ambitions all at the same with a clear hypothesis based on techniques! He became an Entrepreneur-in-Residence at Harvard business School total number of anything – users sales. Energy time and ROI the world of the cycle development-release, that is, we should ask ourselves starting... And over-analyzing, says Ries, is subjective, better for the customers in order to..
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