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The Lean Startup Summary
About The Lean Startup Book
Most startups fail. But many of those failures are preventable. The Lean Startup is a new approach being adopted across the globe, changing the way companies are built and new products are launched.
Eric Ries defines a startup as an organization dedicated to creating something new under conditions of extreme uncertainty. This is just as true for one person in a garage or a group of seasoned professionals in a Fortune 500 boardroom. What they have in common is a mission to penetrate that fog of uncertainty to discover a successful path to a sustainable business.
The Lean Startup approach fosters companies that are both more capital efficient and that leverage human creativity more effectively. Inspired by lessons from lean manufacturing, it relies on “validated learning,” rapid scientific experimentation, as well as a number of counter-intuitive practices that shorten product development cycles, measure actual progress without resorting to vanity metrics, and learn what customers really want. It enables a company to shift directions with agility, altering plans inch by inch, minute by minute.
Rather than wasting time creating elaborate business plans, The Lean Startup offers entrepreneurs—in companies of all sizes—a way to test their vision continuously, to adapt and adjust before it’s too late. Ries provides a scientific approach to creating and managing successful startups in a age when companies need to innovate more than ever.
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“Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.”
ERIC RIES
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Why Do startups fail ??
According to Eric Ries, there are two main reasons for startup failures:
- Traditional management methods do not work for a highly uncertain startup
- The second reason may seem completely opposite to the first one
- seeing that traditional management approaches do not work, entrepreneurs let things go by themselves and are guided by the "just do it" principle.
Even such a chaotic and unpredictable phenomenon as a startup (can) should be managed. And this is what we document in this stash
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What is a Lean Startup?
- Many people share the opinion that entrepreneurial success is a combination of perseverance, intelligence, a good product, and the luck of being in the right place at the right time.
- Routine, small things, and boring details do not matter.
- it is nothing more than just a myth, partly imposed by pop culture.
It's exactly the boring little things that are critical to a startup's success.
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This book is a good business bible for new approach to manage a new company known as startups in the post - modern 21st century as the world economy is becoming a knowledge economy where human is at the centre of producing goods and services.
Why Do startups fail ??
According to Eric Ries, there are two main reasons for startup failures:
- Traditional management methods do not work for a highly uncertain startup
- The second reason may seem completely opposite to the first one
- seeing that traditional management approaches do not work, entrepreneurs let things go by themselves and are guided by the "just do it" principle.
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What is a Lean Startup?
- Many people share the opinion that entrepreneurial success is a combination of perseverance, intelligence, a good product, and the luck of being in the right place at the right time.
- Routine, small things, and boring details do not matter.
- it is nothing more than just a myth, partly imposed by pop culture.
It's exactly the boring little things that are critical to a startup's success.
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Five Principles of the Lean Startup:
- Entrepreneurs are everywhere.
- Irrespective of the size of the venture if you guys are working on a product that solves a problem in a new and better way then you are entrepreneurs
- Entrepreneurship is management. Startups need a new type of management that will handle the conditions of extreme uncertainty.
- Confirmation by facts. A startup needs continuous learning through a scientific approach and empirical hypothesis testing.
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The central idea of the book is that startups should adopt a scientific approach to creating and managing products. Instead of developing elaborate business plans and launching products based on assumptions, Ries advocates for a process of iterative learning and experimentation.
Innovation Accounting.
Innovation accounting is a methodology used by organizations, especially in the context of startups and product development, to measure and track the progress of innovation initiatives. It helps teams assess the value of their ideas, products, or projects and make informed decisions about resource allocation.
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Hold On
We're getting lost a bit here when we are bombarded with new info, i mean, what does methodology even mean?? Don't worry, let's simplify all of it.
*Imagine you have a big puzzle to solve, but you're not sure which pieces fit together. Innovation accounting is like a special way of keeping track of how well you're doing in solving that puzzle.
You just have to measure data after collecting it, and then learn from that measurement, change your strategies and plans if they are not giving you so great results after measurement, and most importantly, you keep trying
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What You Need To Measure?
Well it's called the Key Metrics, Identifying and tracking specific key performance indicators (KPIs) that are relevant to the innovation project.
These metrics often go beyond traditional financial measures and may include user engagement, customer feedback, or product usage data.
For those whoe worked in customer service before, your KPI's are you average monthly performance indicators, how many calls did you get for how many minutes, how satisfied were the customers after every call, did you get enough surveys? What needs to be improved about your communication style? And so on and so forth.
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Revolutionizing the way startups are built and businesses are launched. 🌟📚
The lean Startup
Revolutionizing the way startups are built and businesses are launched.
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1. Start with a Problem
Identify a pressing problem or pain point that your product or service aims to solve. Focus on delivering value and addressing real customer needs.
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2. Minimum Viable Product (MVP)
Build a basic version of your product with core features to gather feedback and validate assumptions. Iterate based on user insights to refine and improve your offering.
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"The Lean Startup" by Eric Ries is not just a book; it's a blueprint for a new era of business. It encourages entrepreneurs to embrace uncertainty, learn from real-world experiences, and adapt quickly. Ries' insights on the importance of validated learning, the power of the MVP, and the necessity of pivoting provide invaluable lessons for anyone looking to thrive in today's dynamic economic environment. This book is a must-read for aspiring entrepreneurs and business leaders alike.
Introduction – Embracing Agile Methodologies
In "The Lean Startup," Eric Ries revolutionizes our understanding of entrepreneurship, advocating for a lean, agile approach in business. This influential book guides readers through the process of building a startup in an uncertain economic landscape, emphasizing the importance of adaptability, customer feedback, and iterative development.
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The Build-Measure-Learn Feedback Loop
Ries introduces the concept of the Build-Measure-Learn loop, a core principle of the Lean Startup methodology. He emphasizes the importance of creating a minimal viable product (MVP), measuring its impact through customer feedback, and learning from the results to make rapid adjustments.
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The only way to win is to learn faster than anyone else.
ERIC RIES
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Runway = Pivots left
Runway is usually defined as the cash left in the bank divided by the monthly burn rate. Runway can be extended by cutting costs or raising more money.
However, the true measure of runway is the number of pivots a startup has left. From this point of view, runway can be extended by getting to each pivot faster. This means the stratup has to find ways to achieve the same amount of validated learning at lower cost or in a shorter time.
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Line Summary
The lean startup offers both entrepreneurs and wantreprenuere a semi scientific, real-world approach to building a business by using validation, finding a profitable business model and creating a growth engine.
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Key highlights
• Find a business model that works through validation.
• Use split testing to tell value from waste.
• Never ever indulge in vanity metrics.
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Summary
Despite serious business plans, well thought-out business models, detailed go-to-market strategies, and large investments, most startups fail.
why is this so? Eric Ries, the author of the Lean Startup Methodology, is sure that the traditional approach to business development does not apply to startups.
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A startup's success path is full of uncertainty and their is no defined pipeline to make a startup successful. But there are some strategies used by many companies to help them grow their company. This book brings those strategies to you.
Startups VS traditional businesses
In today's world, everyone knows what a startup is, but what they don't know is that a startup is different from a traditional business. Unlike established businesses, startups have many uncertainties in their path to success.
Many people think that startup is all about developing a bridge between the problems faced by the consumers and the solution to them, but this is not true. A successful startup should have a solution to a problem statement as well as a system in their company.
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The build-measure-learn loop
Build- You build a product
Measure- You test the product in the market
Learn- You gain validated learning from your target audience regarding your product fit in the market.
And after gaining insight through your validated learning, one has to work on the downsides of the product and then measure the product again on the respective market and learn. The cycle continues until the company has shaped the product as good as perfect.
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Build an MVP for testing the market
MVP stands for minimum viable product. To test your product in the market for the very first time you need to build a basic prototype of your product incorporated with needful and USP features.
One has to make an MVP first and continuously innovate through early feedback to make a final product that can be released into the market as a flagship product.
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Zvažte například doporučení vytvořit multifunkční týmy a dát jim zodpovědnost za to, co nazýváme milníky ve vzdělání, namísto organizace své společnosti do striktně funkčních oddělení (marketing, obchodní oddělení, IT, lidské zdroje atd.), která činí lidi odpovědnými za výkon ve vymezených specializovaných oblastech (viz kapitolu 7).
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Mají-li lidé vyhodnotit svoji produktivitu lokálně, pokládají za dobrý den ten, v němž jim šla po celý den práce dobře od ruky. Když jsem ještě pracoval jako programátor, znamenalo to osm hodin programování bez přerušení. To byl pro mě dobrý den. Jakmile mé vyrušovaly otázky, procesy nebo (nedej bože, abych na ně zapomněl) schůzky, cítil jsem se špatné. Co jsem vlastně v takový den doopravdy dokázal? Kód a produktové funkce pro mě byly měřítkem, mohl jsem je vidět, pochopit a demonstrovat. Získávání védomostí je neuchopitelné, a proto frustrující.
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Cílem startupu je správné určit, jakou věc vytvořit - věc, kterou zákazníci chtějí a zaplatí –, a to co nejrychleji. Jinými slovy: Lean Startup je novým způsobem nahlížení na vývoj nových inovativních produktů, který zahrnuje rychlou iteraci a postřehy zákazníků, notnou dávku vize a velké ambice, a to všechno najednou.
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Customer Development Methodology
The business and marketing functions of a startup should be considered as important as engineering and product development
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Lean Startup
The application of lean thinking to the process of innovation. It is a new way of looking at development of innovative new products that emphasizes fast iteration and customer insight, huge vision, and great ambition.
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Validated learning
Use scientific experimentation to discover how to build a sustainable business
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