Lead on Purpose

Promoting Leadership Principles in Product Management

Lean startup, lean company

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“I explained the theory of the Lean Startup, repeating my definition: an organization designed to create new products and services under conditions of extreme uncertainty.” This definition comes from Eric Ries, author of The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.

As the title indicates, the book’s content is geared towards people starting new businesses. While that is the primary focus, what I found extremely interesting about The Lean Startup was the number of action items that work equally well for established companies as they do for startups. Innovation is innovation, no matter where it’s applied and regardless of its source.

The Lean Startup delivers a lot of great insight for leadership and product management. Here are some of the things that struck a chord with me:

  • Success can be learned: Successful startups and great new products aren’t just luck. You can put processes in place that will greatly increase the chances for success. “Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.”
  • Five key principles: The book focuses on five key principles:
  1. Entrepreneurs are everywhere: “The concept of entrepreneurship includes anyone who works within my definition of a startup” (see above).
  2. Entrepreneurship is management: “A startup is an institution, not just a product, and so it requires a new kind of management specifically geared to its context of extreme uncertainty.”
  3. Validated learning: “Startups exist to learn how to build a sustainable business.”
  4. Build-Measure-Learn: “The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.”
  5. Innovation accounting: “This requires a new kind of accounting designed for startups—and the people who hold them accountable.
  • Pivot or persevere: The Lean Startup method helps you decide when you need to keep going with an idea or make a change (‘pivot’). “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.”
  • Build an “innovation factory:” I cannot over emphasize this point: the Lean Startup method works for all companies. “Established companies need to figure out how to accomplish what Scot Cook [founder of Intuit] did in 1983 [he found out people wanted to use their computers to keep track of their check books], but on an industrial scale and with an established cohort of managers steeped in traditional management culture.”
  • Continual learning: A key to success is the ability to learn as you go and make adjustments along the way. “Validated learning is the process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.” Ries gives a detailed personal example of this concept from his work at IMVU.
  • Don’t capitulate: Don’t just give in to what customers think they want. “We adopted the view that our job was to find a synthesis between our 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.”
  • Ask hard questions: In every venture you need to ask ‘why am I doing this?’ “The question is not ‘Can this product be built?’ The more pertinent questions are ‘Should this product be built?’ and ‘Can we build a sustainable business around this set of products and services?’” Push your team to answer four questions:
  1. Do consumers recognize that they have the problem you are trying to solve?
  2. If there was a solution, would they buy it?
  3. Would they buy it from us?
  4. Can we build a solution for that problem?
  • Solve problems: In every effort, make sure you’re solving problems. “Success is not delivering a feature; success is learning how to solve the customer’s problem.”
  • Create, then test: Create a ‘minimum viable product’ (MVP) then test to make sure you’re on the right track. “The MVP is that version of the product that enables a full turn of the Build-Measure-Learn look with a minimum amount of effort and the least amount of development time.”
  • Fail quickly: The most successful companies recognized what worked and more importantly, what didn’t work. “What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.”
  • Genchi Gembutsu: This is a Japanese phrase usually translated as a directive to “go and see for yourself.” You need to get out of the office. “You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand.” You need extensive contact with potential customers to understand them sufficiently.

The Lean Startup is replete with stories and real-world examples to help you grasp the concepts. Eric Ries does a great job of bringing out important theories and models that will help you succeed whether you’re starting a new company or creating new products at an established corporation.


The Product Management Perspective: Every product manager in the world should study The Lean Startup and apply its teachings in day-to-day work and strategic planning. Unfortunately product managers get so embroiled in plans and stories and PRDs that we don’t stop and evaluate what’s really going on with the products.

A Good share of development is now done using some form of Agile. Make the effort to be agile in product definition and customer input. Don’t be too prideful to throw away your great idea that customers don’t latch onto. Put your focus and efforts into growing your products’ market share and revenue. Ultimately, nothing else really matters.

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3 thoughts on “Lean startup, lean company

  1. Pingback: Software Marketing Tweetables - 19 December 2011 | Smart Software Marketing

  2. Pingback: Lean startup, lean company « The Best of Product Management

  3. Pingback: Inhouse vs Outsourcing | The Answer Can Be Simple

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