Monday, March 05, 2012

The Lean Startup, by Eric Ries

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries

I found The Lean Startup to be an easy and fun read. Taking on many of the same topics as the Poppendieck’s Implementing Lean Software Development but from more of a corporate or management perspective, Ries does an excellent job of describing exactly how one would go about setting up a new company with the ability to quickly innovate and become successful. The key is the Build-Measure-Learn feedback loop and reducing the time it takes a group to completely cycle through this process. Ries believes that you shouldn’t build anything without the ability to measure its success; in the agile software world this is very similar to well-defined acceptance criteria. Measuring is not only the normal quality metrics such as test coverage, but (and probably more important) customer acceptance. Having feedback from actual customers that your company is actually building the right thing is invaluable, and if you discover you aren’t going in the right direction, learn from this knowledge and pivot your behaviors.

The sections on choosing the proper metrics and tests to measure a product were by far the best part of the book. Ries calls traditional numbers used to judge products “vanity metrics:” total customers, gross revenue, and the like. Instead, metrics should be “actionable, accessible, and auditable.” Actionable means there must be a clear cause and effect for the data; if the numbers don’t reach a desired threshold it must be obvious what the next steps are. If web site hits suddenly increase, is it because of a better product or a PR campaign? If you can’t answer the question, you have a vanity metric rather than an actionable metric. Accessible means the reports are easily understood and provide a common frame of reference for everyone involved. Is a web site hit a successful login from a unique IP within a 24-hour period, or simply any request to the server? Auditable means the metric data is both black-and-white testable and easily available. If a test shows that a project should be killed, you don’t want the losers to challenge the veracity of the metric.

As with most agile processes, the ability to change is key. “As a movement, the Lean Startup must avoid doctrines and rigid ideology.” Other than the Lean doctrine itself, of course! The discussions here are quite broad; this is a book of ideas much more than a simple template to follow for success. That isn’t meant as a knock on the book, but that The Lean Startup should be only the first of many places a budding entrepreneur should begin a quest for success.

First Sentence:
Building a startup is an exercise in institution building; thus, it necessarily involves management.

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