57 pages • 1 hour read
Eric RiesThe Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
Eric RiesNonfiction | Book | Adult | Published in 2011A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Summary
Background
Chapter Summaries & Analyses
Key Figures
Themes
Index of Terms
Important Quotes
Essay Topics
Tools
BetaThemes
Lean Manufacturing, Thinking, and User Experience
Ries positions the tenets of The Lean Startup on the ideas of lean manufacturing, lean thinking, and lean user experience (UX). These concepts pervade the text as unifying principles to justify the efficacy of validated learning, small batch production, and engines of growth. Thus, the concept of lean, as an adjective applied to diverse business philosophies, acts as a unifying theme throughout the text to communicate Ries’s recommendations for startup success. All these lean concepts come from other authors and business minds: lean manufacturing was developed by Taiichi Ohno and Shigeo Shingo, lean thinking by James P. Womack and Daniel Jones, and lean UX by Jeff Gothelf and Josh Seiden. Ries synthesizes these authors’ theories and applies it specifically to the systems and operations of a startup. Ries expands upon the concept of lean in the Lean Startup method by developing new business principles: Build-Measure-Learn feedback loops, MVPs, validated learning, innovative accounting, pivot (or persevere), and portfolio thinking. Although these principles may occur at separate stages in the startup’s operations, all of them embody lean in their essential functions and outcomes. Speed and agility in development characterize the central functions of lean in startup organizations, while growth and sustainability exemplify the outcomes. Lean methods allow startups to develop products efficiently that create growth and value, while reducing overall waste of time and resources.
As unifying theme, lean allows Ries to connect seemingly disparate ideas and examples into coherent arguments for the lean startup method. For instance, in the “Introduction” Ries discusses how he searched out of desperation for ideas external to orthodox entrepreneurial practice. Eventually, this led him to study the lean manufacturing principles developed by Toyota Production System to expedite the production of physical goods. Lean manufacturing provided Ries with a framework from which he could center and develop his entrepreneurial ideas. This “line of thought” matured into the Lean Startup method, i.e., “the application of lean thinking to the process of innovation” (6). According to Ries, “lean thinking defines value as providing benefit to the customer; anything else is waste” (48). A primary component of lean in a startup is the reduction of waste, whether that is building products customers don’t want or need, or removing new products from the shelves because of inaccurate market forecasts. Waste is the antithesis of lean, and the primary driver of startup failure. To combat the buildup of waste in a startup’s resources, energy, and or time, lean promotes testing all assumptions, experimenting with products, learning from failures, and innovating constantly.
Lean also affects the experimentation and research process in a product’s development. For instance, innovative accounting distinguishes between actionable and vanity metrics. Vanity metrics rely on inaccurate cause and effect relationships typically devised to satisfy partners, investors, or parent organizations. A simple example of vanity metrics is when a subscription-based service believes that an increase in customer acquisition determines success, even though customer retention decreases at a faster rate. The company then wastes time and resources on a projected model of false success. Alternatively, a value metric accounts for the drop in retention and implements the Build-Measure-Learn procedure to determine why the decrease is occurring. Lean manufacturing and lean thinking recommend building an MVP based on an assumption of customer behavior and then collecting data for subsequent analysis of the problem. Validated learning provides the team with constant feedback about the MVPs viability in the experiment. After enough data is collected, the team determines how to pivot. Lean permeates this entire process of product/service development by eliminating waste from the experiment.
The Author as Entrepreneurial Manager
To Ries, entrepreneurship and management must coexist and operate in harmony for a startup to succeed in uncertain conditions. Throughout the book, Ries weaves the innovative tenor of entrepreneurial language with the rigid, scientific discipline of management. As he observes, the construction of “a startup is an exercise in institution building; thus, it necessarily involves management” (16). Ries argues that entrepreneurship cannot succeed with management, and vice versa. Ries claims that the reluctance to associate entrepreneurship with management emerges from the belief that “a failure to deliver results” is due to failed planning or failed execution (24). Conversely, Ries believes that failure can be harnessed for greatness.
The primary citation Ries uses to make the claim that entrepreneurship and management must be practiced in unison is Frederick Winslow Taylor’s, The Principles of Scientific Management. Ries uses Taylor, as a pivotal figure in the discipline of management science, as an authority from which he launches his own ideas about entrepreneurial management. On the surface, Ries adopts Taylor’s theories of managerial science to support his own notion of lean. Yet, on a deeper level, Ries starts a conversation with Taylor, across time and text, to argue for his credibility as the modern era’s expert on entrepreneurship and management. Ries believes in his own erudition and prophetic capabilities concerning the future of entrepreneurship. In this way, Ries self-fashions himself as the inheritor of Taylor by integrating entrepreneurship and management as one discipline.
This self-fashioning through the synthesis of disciplines can be seen in the author’s stories about his time at IMVU. Ries embodies two roles: that of executive and of developer. He was forced to build an agile engineering organization while managing teams and departments of product developers. In a self-deprecatory tone, Ries sets up the conflict in this scenario by admitting to his own failures at IMVU. He conjures up an imaginary memo that would tell him one day, “Congratulations! The job you used to do at this company is no longer available” (224). Ries then describes how he had to adapt to the changing environment of his company that he himself initiated. In essence, he had to use both his entrepreneurial and managerial skills to develop a new role for himself as an innovator in the company. In this new role, Ries developed the “Five Whys” process of evaluating feedback loops. The “Five Whys” consists of asking five, why questions to discover the root of problems (229). Typically, these questions start with technical issues and end with human errors. Here, Ries displays his entrepreneurial expertise—by inventing a new process of analysis at a time of extreme uncertainty in the company—and his managerial skillset—by implementing this process at IMVU to astounding success.
The amalgamation of entrepreneurship and management establishing Ries’s credibility as the archetype of entrepreneurial management to help him appeal to both camps of potential readers: those in development and those in management. By blending these roles, Ries proves his expertise in both areas and shows how the Lean Startup method works from both points of view.
The Scientific Method
Ries frequently uses the language of the scientific method—qualitative data, empirical research, experimentation—in The Lean Startup. This rhetoric attempts to persuade the audience of the validity and credibility of the Lean Startup method. Ries writes that true experiments begin “with a clear hypothesis that makes predictions about what is supposed to happen. It then tests those predictions empirically” (57). To clarify, Ries’s method starts with a theoretical or logical assumption to then be verified by observation and experience. On a small scale, the leap-of-faith assumption about customer behavior or market viability determines the type of MVP built and experiment conducted. Using the Build-Measure Feedback loop, the empirical data from the MVP’s performance informs the next iteration of product development. If the product resonates and attracts customers, the company can persevere. If the product appeals to customers, but a certain feature fails to deliver the hypothetical outcome, the company begins tuning the engine in the process of product development. If the product fails to capture attention or sell, then the company must pivot. On a larger scale, the vision foregrounds the business strategy and the process of product development. This hierarchy of operations and decisions relies on the scientific method to warrant the efficacy of the lean startup philosophy.
Despite the rigorous testing and analysis of data that Ries espouses, the scientific method demands a human element, defined as “vision, intuition, and judgement,” to mobilize creativity towards productive and innovative ends (149). For instance, when an entrepreneur needs to decide whether to pivot or persevere, inventiveness and ingenuity supplement the decision-making grounded in scientific methodology. Still, Ries emphasizes that human folly can misguide the startup, especially when the company disregards or forgets the scientific principles practiced in their product development. Thus, Ries advocates for a balanced scientific method that empowers creativity under the guidance of empirical observation and experimentation. In other words, “[t]he heart of the scientific method is the realization that although human judgement may be faulty, we can improve our judgement by subjecting our theories to repeated testing” (150).
Some standard practices of the scientific method in the Lean Startup method include split-testing, continuous deployment, and customer testing. Despite the habitual application of these strategies, Ries recounts how he and his employees constantly needed to fight the status quo. In the throes of constant innovation, suggestions abound: “go back to waterfall development, use more quality assurance (QA), use less QA, have more or less customer involvement, use more vision and less data, or interpret data in a more statistically rigorous way” (269). Instead of becoming overwhelmed by incessant recommendations, Ries applied the scientific method to test the hypotheses of his teammates and collect real-world data on the outcomes. Therefore, the scientific method not only applies to material experimentation in product development, but also pertains to theoretical issues at higher levels of decision-making.
Unlock all 57 pages of this Study GuidePlus, gain access to 8,800+ more expert-written Study Guides.
Including features: