The Lean Startup Method - Eric Ries

Discover how today’s entrepreneurs use continuous innovation to create

highly successful companies.

The Lean Startup Method - Eric Ries

We are living in a time of many changes and opportunities to apply different

business models.

Currently, a major challenge for any startup is to find a market for its
product. The traditional way of creating business plans, developing a product, launching it to
the market and only then sell it has been the main reason for the failure of companies in
everyone.

Unlike the already known way of creating companies, Lean Startup proposes new
ways to create products and services that lead to a sustainable and thriving business
against the waste of time and resources.

About the book

The book 'The Lean Startup' (2011) by Eric Ries, originally titled 'The Lean Startup'
English) describes a path for all innovators, managers, and business leaders
they seek to launch successful products without wasting time, talent, and resources.

The core of the book is the concept of Lean Startup, which is developed through various ideas, such as
such as Lean Manufacturing, design thinking, customer development, and agile development.

About the author

Eric Ries is an entrepreneur from Silicon Valley and an author known for being the creator of
Lean Startup movement, a new business model strategy that guides startups to
assign their resources more efficiently. He is also a well-known blogger among the
community of tech entrepreneurs.

Ries has founded a series of startups, including IMVU, where he worked as chief director of
technology. Offered consulting in business and product strategies for startups to
venture capital companies and large corporations, including GE, with which it created the
Fast-Works program.

He also worked as a resident entrepreneur at Harvard Business School, at IDEO and at

the Pivotal, and is the founder and CEO of the Long-Term Stock Exchange.

Who is this book intended for?

The content of the book is relevant for anyone interested in entrepreneurship.
or with the desire to start their own business.

It is applicable for individuals interested in rapid product development and testing.

Especially important for founders, executives, and employees of companies

technology.

Main ideas

The highlights of the book are:

How to start, learn, define, and experiment with ideas for a Startup;
How to use constant innovation to validate ideas;
The importance of validated learning as a way to understand the needs of the
clients
The need to create prototypes and develop the MVP before promoting a final product;
The right time to pivot a project or continue its execution;
The need to maintain real indicators to sustain a growth engine in the
company.

These concepts represent a new approach to creating continuous innovation. You are not going to
losing the opportunity to learn more about this book, right? Keep reading this article!

In it, we are going to explain all the main points of the work.

Principle 1 - Continuous Innovation

Innovation is not a concern only for startups. There are managers in large companies.
who have the mission of leading an initiative for a new product or service - are called
internal entrepreneurs.

In addition, the author defines a startup as a human institution for creating new products and
services under conditions of extreme uncertainty.

It is important to highlight that "institution" can refer to different types of organizations:

government agencies, companies supported by venture capital, non-profit NGOs
or profit-oriented companies.

The fact is that the product or service of the startup is also an essential part of the definition.
The organization is dedicated to revealing a new source of value for customers and is concerned
due to the impact of their product on those customers.
It is also important that the word 'innovation' is understood broadly. It can be
original scientific discoveries, a new use for existing technology, creation of a
new business model, among others.

Principle 2 - Learning

Validated learning

Validated learning is a rigorous method to demonstrate progress within this.

context of uncertainty in which startups grow.

The process consists of empirically representing that the team has discovered information.
valuable about the current and potential consumers of the company. It is faster, more accurate and
concrete market forecasts or classic business planning.

Learning is the core for the progress of these institutions. The effort that is not
Necessary to learn what clients want must be eliminated.

The path to progress is to see the startup as a great experiment. The question should not be
to be "Did we manage to build that product?" But yes "Did we manage to build a business
sustainable involving that product?

Your job is to find the common points between your vision and what consumers
they would accept.

Productivity

The true productivity of a startup is measured by the systematic pursuit of certain

things to do. In the lean startup, every product, every feature, and every campaign of
Advertising is understood as an experiment to achieve validated learning.

Principle 3 - Experimentation

The experimentation phase begins with a clear hypothesis of predictions about what
It must happen. It must be guided by the company's vision.

The goal of each experiment is to discover how to build a sustainable business around
from that vision. Even when they produce negative results, these failures can help and
influence the strategy.

In the lean startup model, an experiment is more than theoretical research. It is already a
first product.

The two most important assumptions among entrepreneurs are:

Value hypothesis: formulated to test whether the product or service truly provides value
to customers at the moment they are using it.

Growth hypothesis: made to test how new customers find a product

or service. The most important aspect to be evaluated is behavior.

And the four questions that must be raised are:

Do consumers acknowledge that they have the problem we are trying to solve?
If there were a solution, would they buy?
Would you buy from us?
Did we manage to develop a solution to this problem?

Principle 4 - Minimum Viable Product

If you want to create a sustainable business, you need to first know if there is demand for your
product. The best way to achieve this is the concept of MVP (Minimum Viable Product).

From this method, you get feedback from real customers about your product idea.
MVP must be as simple as possible and must contain only what is necessary to deliver a
realistic experience of how your idea works.

A good example of such use was made by the founders of Dropbox, software for
cloud storage. They knew that developing their idea into a complete product
it would take a lot of time, so they thought of an easy way: they made a video.

It was a simple video, just a presentation of the technology and a demonstration of how
it would work. The video worked: in one night, 75,000 people signed up for the list.
waiting for Dropbox.

From that, they started developing the final product. Nowadays, the company is valued at
over 1 billion dollars.

Principle 5 - Build-measure-learn

The priority of a startup should be learning: it is necessary to know which products to build.
and how to make money with them. And that doesn't come without contact with the real world.

To make this easier, you can use the build-measure-learn loop.

First, a trial version of your product is created, like a prototype, an MVP.

After that, it is necessary to place that product in your market and gather feedback. To
collect quantitative data from this experiment, you can measure people's interest in
your product.

When analyzing, it is important not to focus only on the numbers. You must talk with the
people. In this way, it is easier to understand the collected data, once you have
learned about their individual impressions.

What you learn in one cycle must be used in the conception of others. This process
then it repeats until you find a sustainable model.

Principle 6 - Pivots

Many startups believe in the popular myth that the secret to success is perseverance and
a lot of willpower: a hero founder has a brilliant idea and goes through
various obstacles until reaching the successful product in one go.

But that way of thinking leads companies to a territory that the author calls 'land of the
"living dead". Like zombies, they have no awareness of what is happening around them and
they continue to strive to sell a product that the market simply does not want.

To avoid this, you should ask yourself how you can change your product to improve it and
help him find his market. In addition, one must be open to what the author calls
pivot - a fundamental change of direction.

A pivot can take many forms, the way to reset the innate value of the product.
pursue a different market segment or change its main sales channel.

One characteristic of the pivot is the conducting of new hypothesis tests, as the
Initial assumptions of the startup have changed.

Deciding on that can be difficult, and many startups end up avoiding or postponing it.
election. Therefore, it is valid to hold monthly meetings to analyze the situation and address the
subject.

Many startups had to pivot several times before achieving success. Take Groupon for example.
as an example: it started as a platform for activism and fundraising, and
Nowadays it is an e-commerce market.

Principle 7 - Growth Engine

A key part of any business is the growth engine, which ensures that the
the company does not stagnate. There are three types:
The engine of recurrent growth

It works by retaining existing customers who already generate a steady flow of income. The
the focus is not on acquiring new clients, therefore, as a result, no actions are taken.
large investments in marketing.

Instead, new functionalities or services are offered for current consumers

use their product more frequently.

The viral growth engine

The purpose of this type is to make your own customers do the marketing work of the
company. The awareness of its product extends among its target audience through
word of mouth recommendation.

This enables the startup to save on advertising campaigns, which is important.

facilitate clients to engage with this type of viral marketing.

A good example was when Hotmail's email service added a signature.

automatic at the end of each email with the words: "PS: Get your free email"
in Hotmail.

In six months, the service had more than one million new registered customers.

The paid growth engine

The last method depends on marketing investment, for example, online advertising.
paid.

This mode is only sustainable if customers bring in enough income to ensure that
the customer acquisition costs are lower than the lifetime value of the
client.

In general, one can tackle these three growth fronts at the same time, but it is smart
focus only on one, so that he can generate results more quickly.

Furthermore, having just one method helps evaluate the success of new functionalities: if they
they help the growth engine to gain speed, they are valuable; if not, they are waste and should
to be deleted.

Principle 8 - Adaptation
One of the most important discoveries of Lean philosophy was that you cannot change
Quality over time. If you have quality issues now, the resulting defects will delay you.
in the future.

To accelerate, lean startups need processes that provide a natural cycle of

feedbacks. Adaptive processes require investing in solving problems that are
wasting time. As these preventive efforts yield results, you
you can naturally grow and develop again. One of the recommended methods
by the author to identify the root cause of the problems are the 5 whys.

In summary, the work of startups never ends. Even established companies must
learning to drive different ways of working at the same time, seeking operational excellence
and innovate constantly.

What do other authors say about this?

In their research, the authors of the book "Built to Last," Jim Collins and Jerry I. Porras,
they found that most visionary companies did not start with an idea
a revolutionary movement that succeeded from the beginning. In reality, they had a slow start and, with
over time, they managed to dominate their markets.

Regarding the foundation of the startup, Pier Thiel, in his work 'From Zero to One', said: 'A startup
with problems in its foundation cannot be repaired. One of the biggest difficulties is
choose your partner. This decision is so important that the author compares it to a marriage.

You must have already heard that market research is the most important part of the
preparation before opening a business. From it, you can identify your audience.
consumer and build your product according to your market niche. However, Simon
Sinek in his book "Why?" does not agree with that. He believes, of course, that the part
more important is to discover and understand your 'why'. This is a process of discovery, not
of invention that happens overnight.

True, but how can I apply this in my life?

Unlike traditional companies, startups need to be managed differently.

a different approach than those already established. The objective is to find a business model
sustainable.

With the analysis of 'The Lean Startup', the reader is able to understand and apply an approach to
test its main assumptions and then build a business model
sustainable.
After reading, you will be able to quickly develop product prototypes, and in the
sequence, based on customer experience and learning cycles, improve
continuously.