The Lean Startup by Eric Ries
A few years ago I read “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses” by Eric Ries. It is a book that is heavily based on the Technology Startup industry, however the concepts are widely applicable on any kind of startup, small or medium sized enterprise.
The core idea of the book states that the classic business plans are redundant. For decades the Business Plan has been the starting point of new enterprises. It forecasts and projects ideas that could create income.
Business plans rarely survive first contact with customers.
“Everybody has a plan until they get punched in the mouth.” As the boxer Mike Tyson once said about his opponents’ prefight strategies.
What Eric Ries found was that in the startup phase, a company would spend a lot of time creating the products and features that the market did not want at launch. Time, money and other resources are wasted building products that people don’t need. The business plan forced these companies to stick to it.
75% of startups fail. Often the reason for this is cash runs out before the product has reached an adoption volume that goes beyond critical mass. Eric Ries proposes that startups should build Minimum Viable Products. These are products with 20% of the features 80% of your target market wants. Once you get into the market, you test these products by using a feedback loop he calls: “Build, Measure, Learn”.
The quicker you learn from your customers how your product needs to change and implement those leanings in your product, the faster you will reach critical mass.
According to Steve Blank from the Harvard business Review, we have yet to see the full impact Ries’ theories on the market.
At New Normal we have successfully applied this methodology on many startups and SME’s and consider it part of our core practices when supporting businesses.
Do yourself a favour and read the book. We give it 2 thumbs ups.
For a short and helpful introduction watch this video:
You can also buy the book on Amazon.