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The Startup Way

December 1, 2017

Video Length 5:44

Who Should Read It

People who are eager to drive innovation in large organizations

 

Why Should We Read It

Large organizations can be innovative and no, they are not allergic to the Lean Startup. The Startup Way will tell us how they adopt and transform.

 

What Will We Learn

We will learn how large organizations adopt the Lean Startup method and transform the product management, organizations, and culture!

 

Book Summary

 

"Every entrepreneur aspires to be the Next Big Thing."

 

Every entrepreneur aspires to be the Next Big Thing. None of them can realize that dream without reading Eric Ries's The Lean Startup, the seminal how-to manual that helps scrappy startup companies to scientifically test business assumptions, validate learning, and develop a winning culture of build-measure-learn feedback loops. But how can "Lean Startup" concepts like Leap-of-Faith-Assumption (LOFA) and Minimum Viable Product (MVP) be successfully applied to large organizations who already have their own ingrained culture? Mr. Ries answers this question with his latest book The Startup Way.

 

"Implementing the "Lean Startup" method to large organizations is surprisingly similar to concepts discussed in The Lean Startup itself."

 

Implementing the "Lean Startup" method to large organizations is surprisingly similar to concepts discussed in The Lean Startup itself. Building and sustaining innovation still requires a methodical approach to testing and verifying business assumptions. The trick with large organizations, according to Mr. Ries, is to know where to innovate, and when to scale. He offers distinct three phases for those in large organizations:

  • Start with a few teams and projects

  • Expand to leaders

  • Involve back-end divisions, including finance, HR, and IT

It is The Startup Way in a nutshell - start small, experiment, learn, and scale.

 

"With the right metrics in place, executives will see the progress and feel more comfortable offering support."

 

The real challenge is phase two: gaining executive support. Enterprise executives like seeing big numbers on balance sheets; new ideas, however, need to go through experiments before scaling. Mr. Ries introduces innovation accounting to address these challenges. In Step 1, the executives should focus on per-customer-metrics: What is the usage per customer? What is the behavior pattern? What function is helpful and what is not for a customer? In Step 2, the metrics move toward growth: Are the customers willing to pay more? Are the existing customers using more? Are we getting more customers? Then in Step 3, we talk about Net Present Value (NPV): Is this project making profits? When will it make profits? With the right metrics in place, executives will see the progress and feel more comfortable offering support.

 

"We only need to look at the success of GE and the Federal Government in implementing the "Lean Startup", both which cannot be further away from any software business, to affirm that the core spirit of any company should be experimenting and learning."

 

Mr. Ries highlights the importance of executive support, without which the "Lean Startup" initiative would die before it can take off. Most importantly, we see again and again that Mr. Ries focuses on running and learning from experiments.  Within large organizations, these experiments need to be conducted with a little more strategy.  If the "Lean Startup" is implemented correctly, large companies can foster a new culture in which employees are more transparent about what they don't know and design experiments to address those knowledge gaps.  Does it work?  We only need to look at the success of GE and the Federal Government in implementing the "Lean Startup", both which cannot be further away from any software business, to affirm that the core spirit of any company should be experimenting and learning.

 

 

 

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