'The Lean Startup' Rewrites the Entrepreneur Playbook

by QuickBooks

2 min read

When one of Facebook’s founders endorses a new how-to book on entrepreneurial methodology — because it helps “answer the tough questions about business” — entrepreneurs listen. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, by Eric Ries, currently ranks fourth on The New York Times Best Sellers list. His insightful exploration of why startups fail will likely rewrite the playbook for entrepreneurial ventures for years to come.

In the book, Ries observes that current management strategies are “not designed to flourish in the harsh soil of extreme uncertainty in which startups thrive … yet most startups … are managed using traditional business plans with forecasts and product milestones.” The author then outlines a compelling new vision for how to successfully steer startups, based on “applying ideas from lean manufacturing to [his] own entrepreneurial challenges — with a few tweaks and changes,” he says.

“Managers inside big companies are full of plenty of good ideas. The reason they lose out to startups is they can’t execute, they can’t test,” Ries explains to Canadian news anchor Steve Paikin. “[The question is] not can it be built, but really should it be built?”

In The Lean Startup, Ries recounts his own experience as chief technology officer for IMVU, a social-networking platform that offers participants the ability to create unique 3-D avatars. His managerial approach strikingly differs from traditional methods. “We build a minimum viable product, an early product that is terrible, full of bugs and [has] crash-your-computer-yes-really stability problems,” Ries writes. “Then we ship it to customers way before it’s ready. And we charge money for it. After securing initial customers, we change the product constantly — much too fast by traditional standards — shipping new versions of our product dozens of times every single day.”

Ries, who is also an entrepreneur-in-residence at Harvard Business School, asserts that early adopters, driven by the thrill of using new technology, are suspicious of new products that are too polished. Instead of striving for a “high-quality mainstream product that will change the world,” Ries says a startup’s vision should focus on one product “used by a small niche of people who are willing to give it a shot before it’s ready.”

For example, Ries cites Groupon, the origins of which were crudely “cobbled together,” according to founder Andrew Mason. The fledgling company began when it “skinned a simple WordPress blog” with “Groupon” and started selling T-shirts — a “minimum viable product” — online, Ries notes. Groupon then used “handmade PDFs, a pizza coupon, and a simple blog” to launch the company that has since achieved record-breaking success in hundreds of cities worldwide.

Ries discusses entrepreneurship and offers more examples on his blog, Startup Lessons Learned.

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