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!Summary
Eric Ries //The Lean Startup// is an interesting read to bridge the concepts introduced in Steve Blanks [[The Four Steps to the Epiphany]], Lean Manufacturing and Agile Development methods in software engineering. Some of the very good quotes:
* //"The biggest [[Waste]] any company can have is to build a product that no customers want"//.
* //"When i could'nt think of anything else to do, i was finally ready to turn to the last resort: talking to customers"//
* //"If you are building the wrong thing, optimizing the product or its marketing will not yield significant results"//

In [[this article|http://www.sparkplugdigital.com/blog/5-marketing-lessons-from-eric-ries-and-the-lean-startup/]] the most important lessons are framed quite nicely:
1. Never make assumptions
2. Get out and interact with customers
3. Avoid measuring with [[Vanity Metrics]]
4. Find a viral coefficient that leads to growth [[Growth Hypothesis]]
5. Welcome experimentation and innovation

<<image /static/files/MBI/Other/leanstartup.jpg width:500>>

!!Vision
The lean startup method is build upon the following five basic principles:
* Entrepreneurs are everywhere
** Which just denotes that the lean startup principles can be applied in other contexts than startups.
* Entrepreneurship is management
** Most specifically managers today need to become entrepreneurs as all companies will depend on innovation.
* [[Validated Learning]]
* [[Build-Measure-Learn]]
* [[Innovation accounting]]

The roots of the lean startup are from [[Lean Manufacturing]] that tought the world to discriminate between value creating activity and [[Waste]]. The goal of a startup is to figure out the right things to build, the things customers want to pay for, as quickly as possible. The lean startup works through the concept of [[Build-Measure-Learn]]. Progess is measured in [[Validated Learning]] through completion of learning milestones. The strategy is evaluated frequently to determine wether to persevere or to [[Pivot]] the strategy.

A [[Lean Startup]] in the definition of Eric Ries is //an organisation designed to create new products and services under conditions of extreme uncertainty//. Point of this definition is that innovations are diverse and that the lean startup method can also be used outside a true startup context.

//[[Validated Learning]]// is the process of determining emperically that a team has discovered valuable truths of the startups present or future business prospects. It aims to be more concrete, more accurate and faster than marketing research. The described validated learning use ''//automated collected metrics//'' a lot. The example of IMVU that Eric Ries described was quite fun to read. His original strategy for positioning the 3D chat service was as an 'add-on' feature for instant messing. All of his testing with his 'young' target group revealed that they did not bought into using a new product with their friends. They merely were interested in the product to discover //new// friends. He describes how hard it was to depart from his original strategy as he felt "betrayed" as he recognized all his work and energy basically were deamed 'obsolete' by his customers. But this lead him towards one of the more interesting quotes in the book, after doing all the 'right' things in product development (Agile,Lean), their customers didn't want to use it: //"I had committed the biggest waste of all: building a product our customers refused to use"//. This started him down the path of trying to reduce waste as early as possible: "The most important question of any startup product development is not //can this product be build?// but //should this product be build?//".

The lean startup method is all about designing //experiments// to maximize learning:
# Define a hypothesis
## Define a [[Value Hypothesis]]
## Define a [[Growth Hypothesis]]
# Design the //cheapest// experiment that can falsify your hypothesis
The example in the book is how [[Zappos|http://zappos.com]] started their online shoe sales by taking pictures of shoes in local stores and selling these through a website to validate if enough customers would buy shoes online. A lean startup experiment is also a //first product//. If this experiment is succesful, it also a product managers to continue. Product managers should ask themselves the following questions:
# Do customers recognize they have a problem you are trying to solve?  (see also [[The Problem Awareness Grid]]@howtomakethesale found in [[How you make the sale]])
# If there was a solution, would they buy it?
# Would they buy it from us?
# Can we build a solution for that problem?
!!Steer
<<tiddler [[Build-Measure-Learn]]>>
<<tiddler [[Pivot]]>>

!Accelerate
Customers do not really know what they want in product development, as a result the concept of 'pull' as it is known in [[Lean]] does not work the same. The way to think about //pull// in a lean startup product development concept is to run an [[Experiment]] to test the hypothesis underlying the pull request.

If you are familiar with [[Lean Manufacturing]] you will know that small batches are superior. This is well catched by limiting work in progress on a kanban board. For more info on kanban in development read [[this minibook|/static/files/SoftwareEngineering/KanbanAndScrumInfoQVersionFINAL.pdf]]. Futhermore the concept of continuous deployment is powerfull.  IMVU was an early adopters and best in class companies for [[Continuous Deployment]]@software

Sustainable growth can be summarized as follows: //''new customers are a result from the actions of (learn from) past customers''//. Eric Ries describes four possible ways past customers drive growth:
* ''Word of mouth''
** Customers telling other people what they like about your product
* ''As a side effect of product usage''
** Fashion or status, seeing it being used by role models
* ''Through funded advertising''
** Your existing customers are the prime source to be able to pay for advertizing.
* ''Through repeat purchase or use''
** Some products are designed for repeat usage or subscription

There are three [[Engines of Growth]]
<<tiddler [[Engines of Growth]]>>

To create an adaptive organisation and deploy [[Build-Measure-Learn]] continously the [[Five Whys]] technique is very useful.
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Fri, 18 Nov 2011 22:03:38 GMT
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dirkjan