Lean Start Up Summary - 1 of 3

Book summary of The Lean Start Up by Eric Reis. This blog entry is mostly excerpts - with minor edits - that I highlighted in the kindle version.

Part One: Vision

The purpose of Part One is to explore the importance of learning as the measure of progress for a startup. By focusing our energies on validated learning, we can avoid much of the waste that plagues startups today. As in lean manufacturing, learning where and when to invest energy results in saving time and money.

Chapter 1 Start

The goal of a startup is to figure out the right thing to build— the thing customers want and will pay for— as quickly as possible.

Startups also have a true north, a destination in mind: creating a thriving and world-changing business. I call that a startup’s vision.

To achieve that vision, startups employ a strategy, which includes a business model, a product road map, a point of view about partners and competitors, and ideas about who the customer will be. Products change constantly through the process of optimization, what I call tuning the engine. Less frequently, the strategy may have to change (called a pivot). However, the overarching vision rarely changes.

You can make constant adjustments with a steering wheel called the Build-Measure-Learn feedback loop. Through this process of steering, we can learn when and if it’s time to make a sharp turn called a pivot or whether we should persevere along our current path.

Chapter 2 Define

A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.

Without validated learning experiments you don’t have entrepreneurs, you have politicians, because you have to sell. Out of a hundred good ideas, you’ve got to sell your idea. So you build up a society of politicians and salespeople. When you have five hundred tests of customer behavior that you’re running (an example of validated learning), then everybody’s ideas can run. And then you create entrepreneurs who run and learn and can retest and relearn as opposed to a society of politicians.

Developing these experimentation systems is the responsibility of senior management; they have to be put in by the leadership. It’s moving leaders from playing Caesar with their thumbs up and down on every idea to— instead— putting in the culture and the systems so that teams can move and innovate at the speed of the experimentation system.

Chapter 3 Learn

Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.

I call this validated learning because it is always demonstrated by positive improvements in the startup’s core metrics. As we’ve seen, it’s easy to kid yourself about what you think customers want. It’s also easy to learn things that are completely irrelevant. Thus, validated learning is backed up by empirical data collected from real customers.

We adopted the view that our job was to find a synthesis between our vision and what customers would accept; it wasn’t to capitulate to what customers thought they wanted or to tell customers what they ought to want. This is true startup productivity: systematically figuring out the right things to build.

Chapter 4 Experiment

The principle of this chapter: treat the proposed product as an experiment, identify the elements of the product and its plan that are assumptions rather than facts, and figure out ways to test them.

Two core assumptions you'll always need: The value hypothesis tests whether a product or service really delivers value to customers once they are using it. For the growth hypothesis, which tests how new customers will discover a product or service, we can do a similar analysis.

As you look for customers for your experiments the point is not to find the average customer but to find early adopters: the customers who feel the need for the product most acutely. Those customers tend to be more forgiving of mistakes and are especially eager to give feedback.

We are too used to jumping to a "solution" e.g. The Kodak manager relates “Traditionally, the product manager says, ‘I just want this.’ In response, the engineer says, ‘I’m going to build it.’ Instead, I try to push my team to first answer four questions:

1. Do consumers recognize that they have the problem you are trying to solve? 
2. If there was a solution, would they buy it? 
3. Would they buy it from us?
4. Can we build a solution for that problem?”

The challenge is to overcome the prevailing management thinking that puts its faith in well-researched plans. Remember, planning is a tool that only works in the presence of a long and stable operating history. The success of new products and significant product innovations are difficult to predict e.g. even if you ask customers they may not know if they would actually use it.

Next: Lean Start Up Summary - 2 of 3