Watch Eric Ries on “The Lean Startup”
Rypple brought thought leader Eric Ries to Toronto’s Rotman School of Management to discuss his new management paradigm for startups.
The author of the acclaimed new book The Lean Startup, Eric shared his provocative, controversial view that when it comes to startups, most of the widely accepted management techniques are doomed to fail. In Eric’s view, new businesses lack the long operating history necessary to make traditional management work.
You can watch Eric’s talk, and the introduction by Rypple co-CEO Daniel Debow, below.
Eric’s book has already been placed in exalted company by reviewers, including Philip Delves Broughton of the Financial Times:
Every so often a business book comes along that changes how we think about innovation and entrepreneurship. Clay Christensen’s theories on disruptive innovation and Geoffrey Moore’s potent metaphors of “crossing the chasm” from small to mass markets, and going “inside the tornado” of starting a business, have loomed large over entrepreneurial theory for years. Eric Ries’s The Lean Startup has the chops to join this exalted company.
What You Should Know About Building Lean Startups
They require a lot of boring, tedious and difficult work. While entrepreneurship has become “cool” thanks to films like The Social Network, it is largely about answering pain-staking development questions that would never make it into a Hollywood movie plot.
Entrepreneurship requires a new style of management. It’s not just about building a product efficiently, but about learning if your product is valuable and whether you are on the path to a sustainable business. This is done through early customer testing, to find the Holy Grail of “product-market fit.”
A new management style needs a new form of a accounting. Eric coined the phrase “innovation accounting” for a financial system that can figure out whether a team is making progress in a situation of high uncertainty. Predicting and forecasting what the outcome will be is only viable when you’re operating in a stable system, which is not the case for most startups.
Be prepared to experiment and experiment some more. Startups don’t necessarily fail because their strategy is bad. They fail because their strategy is based on incorrect facts and assumptions. The goal is not just to get answers to the questions you need to ask, but to find out what customers want. You don’t accomplish this by asking them, but by running experiments that reveal their true desires.
Agility is what sets you apart. While the lean principles work for organizations of all sizes, it really comes down to whether a company can reach product-market fit ahead of its competition.
Come together with local entrepreneurs in your community on a regular basis and hold each other accountable. Sharing can be painful but you need someone who can call you out on whether you’re meeting your goals. Creating a safe space for discussion like this will benefit the startup community.
During his talk, Eric debunked the common misconception that lean means cheap. How much capital you need to raise depends on your product. A lean startup is about using capital more efficiently by not wasting it building the wrong thing.
Watch the video here.
About Eric Ries
Eric Ries is the creator of the Lean Startup methodology and the author of the popular entrepreneurship blog Startup Lessons Learned. He co-founded and served as the CTO of IMVU, his third startup. He is a frequent consultant to a number of businesses and venture capital firms on business and product strategy, including Fortune 100 companies.
In 2007, BusinessWeek named Ries one of the Best Young Entrepreneurs of Tech and in 2009 he was honored with a TechFellow award in the category of Engineering Leadership. Most recently in 2010 he became the entrepreneur-in-residence at Harvard Business School
