The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
Crown Business (2011)
“There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” Peter Drucker
I selected this observation by Drucker (1963) because it continues to suggest caution when deciding what to do, how and when to do it, etc. Michael Porter also offers a helpful reminder: “The essence of strategy is choosing what not to do.” This is especially true of those who are either planning to launch a start-up or have only recently done so. Given the number of Four and Five Star reviews of this book featured by Amazon as of this moment (136 of a total of 153), Eric Ries has clearly attracted and rewarded the attention of those who share his determination to “improve the success rate of new innovative products worldwide.” He offers a method by which to achieve that objective, based on five separate but interdependent principles best revealed within the book’s narrative, in context.
Ries suggests two primary reasons for the failure of most startups. One is trusting indicators of likely success that are either inappropriate or unreliable such as a good business plan, a solid strategy, and thorough market research. A startup is by nature and unknown quantity, Ries points out, as are its prospects. Also, many entrepreneurs and their investors become impatient, then frustrated, and abandon traditional management practices. I agree with him that all startups must be managed and only those that are managed well have a chance to survive. It is also important to keep in mind that, at one time, each of the “Fortune 500” was a startup, launched by one or more entrepreneurs who would not be denied.
Credit Ries with pursuing what Jim Collins and Jerry Porras characterize in Built to Last as a Big Hairy Audacious Goal or BHAG: To provide “a new discipline for entrepreneurial management” that takes into full account “the chaos and uncertainty that startups must face…I believe that entrepreneurship requires a managerial discipline to harness the entrepreneurial opportunity we have been given.” Here’s the BHAG: “change the entire ecosystem of entrepreneurship.”
The Lean Startup movement’s size and impact seem to be rapidly increasing as entrepreneurs worldwide embrace the tenets of a manufacturing revolution that Taiichi Ohno and Shigeo Shingo are credited with developing at Toyota. These tenets by no means preclude traditional functions such as vision and concept, product development, marketing and sales, etc. Rather, what Ries advocates (if I understand him correctly) is a new way of looking at the development of innovative new products by accepting a new way of looking at the management process by which that will be accomplished.
As I re-read this book, I realized that despite all the attention that Ries devotes to startups, much (if not most) of the material in his book is directly relevant to almost all organizations, whatever their size, nature, and birth date may be. This is what Jack Welch had in mind when explaining his reasons for admiring small companies. Here is a brief excerpt from his remarks at a GE annual meeting about 20 years ago:
“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”
As Eric Ries concludes his book, he wonders what an organization would look like “if all of its employees were armed with Lean Startup superpowers.” What indeed.
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