There are so many takeaways from this book for an entrepreneur at any stage of their career. Most business books I’ve read emphasize strategic planning. Eric Ries emphasizes that a startup is operating on a set of assumptions. Nothing is for certain. The goal is to build a sustainable business around the vision of the entrepreneur. All the assumptions, such as the assumption that the market has a need for the product, must be tested. Do customers realize they have the problem you’re trying to solve? If there was a solution, would they buy it? Would they buy it from us? Can we build a solution for that problem?
What I learned
Ries explains the difference between actionable metrics and vanity metrics. Vanity metrics make a company look good, but can’t be scientifically explained. Whereas actionable metrics are based on cause and effect data.
-Short cycle times- It is important that value and growth hypotheses are tested in real life with real customers as quickly as possible to avoid costly drawn out production cycles.
-Small batch sizes- It is counterintuitive to think of small production batch sizes as being more efficient, but in a startup a smaller batch size results in less waste when a mistake occurs or a remodel is needed. Problems are easier to solve more quickly and it is easier to implement modifications, or pivot if necessary.
-Clear growth hypothesis- The engine of growth will determine the product/market fit. What really matters is the direction and the degree of progress. By using the Build-Measure-Learn feedback loop and innovation accounting, a startup can determine if it is using the right engine.
-Strong experimental design- To add value and avoid making modifications or adding features that don’t matter, a startup must have an excellent protocol for testing it’s hypotheses. Using a minimum viable product establishes a baseline. From that baseline, testing tunes the engine to the ideal. Split tests, or A/B testing offers different versions of a product to customers at the same time to see how they interact. Actionable, Accessible, and Auditable metrics will determine whether a startup needs to pivot or persevere.
-Strong team ownership- It is extremely important to nurture disruptive innovation within the business. Teams should have secure, if limited resources, the independent authority to develop, and a personal stake in the outcome of the project, such as stock option or other forms of equity ownership. Innovation teams should be small at first and act as startups within the startup.
I’ve learned that the Lean Startup Method is not a blueprint for how a startup should function. It is more of a framework to guide the innovation process in the most efficient way possible and determine if a product or idea has a place in the market. I really enjoyed this book and will read it again in the future.
