How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

By Eric Ries

Introduction

• Lean Startup: the application of lean thinking to the process of innovation
• Startup: a human institution designed to create new products and services under conditions of extreme uncertainty
• Five Principles:
  1. Entrepreneurs are everywhere
  2. Entrepreneurship is management
  3. Validated learning
     • startups exist to learn how to build a sustainable business
  4. Build-Measure-Learn
  5. Innovation accounting
• Why startups fail
  • the allure of a good plan, solid strategy, and thorough market research
  • the “just do it” school of startups - chaos is the answer

Part One: Vision

• Entrepreneurship requires a managerial discipline to harness the entrepreneurial opportunity we have been given
• 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
• New product development happens in fits and starts. Much of the time a startup’s life is spent tuning the engine by making improvements in product, marketing, or operations
• Too many startup business plans look more like a rocket ship than a car - set up in a way that even tiny errors in assumptions can lead to catastrophic outcomes.
• Intuit, SnapTax - cultivating entrepreneurship is the responsibility of senior management
• Validated learning - a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty in which startups grow. The process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.
• IMVU - could have conducted an experiment, offering customers the chance to try something and then measuring their behavior...It’s easy to kid yourself about what you think customers want.
  • Adopted the view that their job was to find a synthesis between their 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.
• True startup productivity: systematically figuring out the right things to build
• The Lean Startup is a principled approach to new product development
• Not a question of can this product be built, rather - should this product be built and can we build a sustainable business around this set of products and services.
• Zappos began with a tiny, simple product. Is there already sufficient demand for a superior online shopping experience for shoes?
  • To test, founder began by asking local shoe stores if he could take pictures of their inventory. In exchange for permission to take the pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online.