The business book you should read this month: The Lean Startup
An "antithesis" to traditional business thinking, media entrepreneur Ben Potter believes every founder can benefit from reading Ries' international bestseller...
Name of business book: The Lean Startup: How Constant Innovation Creates Radically Successful Businesses by Eric Ries
Recommended by: Benjamin Potter, creative director and co-founder of CLICKON
What is The Lean Startup about?
The book explores why most start-ups fail, and how many of the failures are actually preventable.
Ries asks the question: ‘How can we build a sustainable organisation around a new set of products or services?' An organisation, according to Ries, is “one that is dedicated to creating something new under conditions of extreme uncertainty.” All start-ups have the common mission to achieve growth and create a sustainable business, yet the majority never get close to such a position.
The Lean Startup offers budding entrepreneurs an entirely new perspective, which is to put a stop to elaborate business plans and scientifically test their vision, constantly adapting and adjusting before time runs out.
It is the antithesis of the business school mindset which is rigid and largely un-creative. Instead, Ries proposes a theory of “validated learning” that speeds up product development cycles, and analyses progress without having to rely on traditional “vanity metrics.” At the end of the day, no business plan is relevant if the consumer isn’t purchasing your product.
The book is aimed at start-ups who live in an era where innovation is more necessary than ever before.
What’s the best bit of The Lean Startup?
It’s the sheer practicality of the book in an age where so many self-help guides provide idealistic teachings.
I love Ries’ philosophy that reports and metrics are not an accurate guide to selling a product or a service. It comes down to getting outside and in front of your potential customers to really understand them.
Most businesses fail because the founders are too preoccupied with analysing data and not innovating based on what real people, not the computer, are saying about you.
Why should business owners read The Lean Startup?
A lot of managers within a start-up company blame others for mistakes, when senior management must realise that “people don’t fail, processes and incentives fail.”
Ries points out that managers should feel ashamed when a preventable mistake occurs. He is a big believer in the ‘Five Whys' method of understanding root cause and creating solutions that fix these issues: “Be tolerant of all mistakes the first time. Never allow the same mistake to be made twice.”
This philosophy alone will help so many business owners accelerate their path to success.
3 top takeaway points for start-ups:
- Know your customer (but don't necessarily do what they say – see below)
- Eliminate waste
- Accelerate product cycle times
Excerpt business owners can learn from?
“We really did have customers in those early days – true visionary early adopters – and we often talked to them and asked for their feedback. But we emphatically did not do what they said.
“We viewed their input as only one source of information about our product and overall vision. In fact, we were much more likely to run experiments on our customers than we were to cater to their whims. Traditional business thinking says that this approach shouldn't work, but it does, and you don't have to take my word for it.
“The approach we pioneered at IMVU, has become the basis for a new movement of entrepreneurs around the world. […] It represents a new approach to creating continuous innovation. It's called the Lean Startup…” (P. 4)
|Book name: The Lean Startup: How Constant Innovation Creates Radically Successful Businesses
Author: Eric Ries
Date published: October 2011
RRP: £9.75 (paperback)
Synopsis: Reflecting on his experiences as a serial entrepreneur – having successfully scaled avatar community IMVU – and acted as a venture capital investor, Eric Ries recognised that there was a winning formula for start-up success. This formula was, contrary to traditional business methodology, focused on increasing value-creating practices and eliminating wasteful practices. He would illustrate this formula and the ‘lean startup movement' in this aptly-titled book on the subject, which has since become a seminal tome for new and established entrepreneurs.