After reading Reid Hoffman and Jeff Gothelf I was expecting a lot more from this one. The concepts lack detail and it's pretty dry at times. It still contains some useful ideas though.
Lean startup builds on lean manufacturing, design thinking, customer development, and agile development.
Instead of making complex plans that are based on a lot of assumptions, 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.
Products change constantly through the process of optimisation, what I call tuning the engine. Less frequently, the strategy may have to change (called a pivot).
Startup — a human institution designed to create a new product or service under conditions of extreme uncertainty.
A company’s only sustainable path to long-term economic growth is to build an “innovation factory” that uses Lean Startup techniques to create disruptive innovations on a continuous basis.
Leadership requires creating conditions that enable employees to do the kinds of experimentation that entrepreneurship requires.
Validated learning is not after-the-fact rationalisation or a good story designed to hide failure. It is a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty in which startups grow.
Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.
The effort that is not absolutely necessary for learning what customers want can be eliminated. I call this validated learning because it is always demonstrated by positive improvements in the startup’s core metrics.
True startup productivity: systematically figuring out the right things to build.
One of the most important lessons of the scientific method: if you cannot fail, you cannot learn.
A true experiment follows the scientific method. It begins with a clear hypothesis that makes predictions about what is supposed to happen. It then tests those predictions empirically.
The first step: to break down the grand vision into its component parts (two most important assumptions entrepreneurs make).
Key questions to answer pre product development (tendency is to jump to 4, this is bad):
None of these activities by itself is of paramount importance. Instead, we need to focus our energies on minimising the total time through this feedback loop.
When we enter the Measure phase, the biggest challenge will be determining whether the product development efforts are leading to real progress.
Innovation accounting — a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruit.
Facebook example (early on):
Genchi Gembutsu — You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand (Toyota lean concept).
Steve Blank — the facts we need to gather about customers, markets, suppliers, and channels exist only “outside the building.”
A minimal viable product (MVP) helps entrepreneurs start the process of learning as quickly as possible. The fastest way through the build-measure-learn feedback loop.
Concierge MVP — e.g. a face-to-face personalised service as an initial MVP for a piece of software. It's not the product but a learning activity designed to test the leap-of-faith assumptions in the company’s growth model.
Quality and Design in an MVP
MVP rule: remove any feature, process, or effort that does not contribute directly to the learning you seek.
A startup’s job:
Innovation accounting works in three steps:
Cohort analysis — looks at the performance of each group of customers that comes into contact with the product independently. Each group is called a cohort.
The traditional numbers used to judge startups are “vanity metrics,” and innovation accounting requires us to avoid the temptation to use them.
Hypothesis Testing at Grockit
Everything that has been discussed so far is a prelude to a seemingly simple question: are we making sufficient progress to believe that our original strategic hypothesis is correct, or do we need to make a major change?
A pivot is a special kind of change designed to test a new fundamental hypothesis about the product, business model, and engine of growth.
Failure is a prerequisite to learning.
A pivot requires that we keep one foot rooted in what we’ve learned so far, while making a fundamental change in strategy in order to seek even greater validated learning.
A startups runway is the number of pivots it can still make
Each pivot or persevere meeting requires the participation of both the product development and business leadership teams.
Waiting too long to release can lead to the ultimate waste: making something that nobody wants.
The critical first question for any lean transformation is: which activities create value and which are a form of waste?
Lean Startups practice just-in-time scalability, conducting product experiments without making massive up-front investments in planning and design.
Toyota discovered that small batches made their factories more efficient. In contrast, in the Lean Startup the goal is not to produce more stuff efficiently. It is to—as quickly as possible—learn how to build a sustainable business.
Continuous Deployment — a process by which software is released several times throughout the day – in minutes versus days, weeks, or months.
The essential lesson is not that everyone should be shipping fifty times per day but that by reducing batch size, we can get through the Build-Measure-Learn feedback loop more quickly than our competitors can. The ability to learn faster from customers is the essential competitive advantage that startups must possess.
Although we write the feedback loop as Build-Measure-Learn because the activities happen in that order, our planning really works in the reverse order: we figure out what we need to learn and then work backwards to see what product will work as an experiment to get that learning.
Sustainable growth is characterised by one simple rule: New customers come from the actions of past customers.
Three engines of growth (sustainable growth power feedback loops):
Technically, more than one engine of growth can operate in a business at a time. This is not recommended due to the level of complexity and operational expertise required to pull it off effectively.
Focusing on speed alone would be destructive. To work, startups require built-in speed regulators that help teams find their optimal pace of work.
Andon cord — allows any employee along the production line to call a halt to the system if a defect was discovered (Toyota lean concept).
This is one of the most important discoveries of the lean manufacturing movement: you cannot trade quality for time.
At the root of every seemingly technical problem is a human problem. The Five Whys exercise provides an opportunity to discover what that human problem might be (see The Design of Everyday Things, 5 Whys).
One of the primary benefits of using techniques that are derived from lean manufacturing is that Lean Startups, when they grow up, are well positioned to develop operational excellence based on lean principles.
Internal or external, in my experience startup teams require three structural attributes: scarce but secure resources, independent authority to develop their business, and a personal stake in the outcome.
My suggested solution for allowing internal innovation to flourish is to create a sandbox for innovation that will contain the impact of the new innovation but not constrain the methods of the startup team.
To combat the inevitable commoditisation of the product in its market, line extensions, incremental upgrades, and new forms of marketing are essential.
Those who look to adopt the Lean Startup as a defined set of steps or tactics will not succeed.
In a startup situation, things constantly go wrong. When that happens, we face the age-old dilemma summarised by Deming: How do we know that the problem is due to a special cause versus a systemic cause?
If we’re in the middle of adopting a new way of working, the temptation will always be to blame the new system for the problems that arise. Sometimes that tendency is correct, sometimes not. Learning to tell the difference requires theory. You have to be able to predict the outcome of the changes you make to tell if the problems that result are really problems.
Image credits: The Lean Startup by Eric Ries