Friday, September 27, 2013

The Lean Startup Principles of Eric Ries

This short interview with Eric Ries - author of The Lean Startup - is chock full of ideas, views and advice. It's mainly for entrepreneurs, but listen actively to what Ries relates and you hear him speak to how leaders and staffers in companies can do their work better.

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The Lean Startup works off the premise that many entrepreneurs are not creating the right products. That is, they create products that customers aren't buying. Ries helps them get on track with their business.  He contrasts his efforts with those of lean manufacturing, which is to make products on time and on budget.  

It reminds me of a story that speaks to this point.  A fire station gets a call, and the chief has his crew on it immediately.  The crew is well-trained and well-prepared, and firefighters are on the truck rushing to the scene in no time.  The chief understands the flow of traffic in the city, and directs the crew onto the best possible, quickest route to the scene.  Once there, the crew sets up their equipment, locates the fire hydrant, and  up the ladder before anyone can blink.  

Except that the chief didn't bother to double-check the address.  He had mistakenly transposed two digits, so the crew followed procedures perfectly and arrived super time efficiently at the wrong scene.

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The more precisely the position [e.g., an electron] is determined, the less precisely the momentum is known in this instant, and vice versa.
Reference:  The Uncertainty Principle, or the principle of indeterminacy, by physicist Werner Heisenberg.    
Entrepreneurship is management is the first principle of The Lean Startup.  But it's not management in a stable context, rather amid uncertain conditions.  

In coaching and advising leaders, I could readily distinguish between those who possessed wisdom and calm when faced with uncertainty and those who were clearly out of sorts if directions or information was ambiguous.  With the first, we could move right away to sharpening their efforts to make decisions and craft solutions. With the second, we needed to begin with instilling calm first and appreciating the fact that many situations do not offer optimal clarity.  

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In The Lean Startup, what you learn is as much a unit of progress as what you create.  Ries emphasizes that in the midst of uncertainty, entrepreneurs must learn how to sustain a business effectively.  They may not know, at first, what customers want, where the market is, and what products to create.  But I think what Ries teaches them is how to find the information they need, amid foggy weather, and to conduct tests that help them determine whether they are on the right track or not.  

I'd draw on my concept of meta-skills.  Entrepreneurs need skills to determine what skills they need to deal with particular situations and to learn what they need to learn correctly and efficiently.  

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Last night I was walking my daughter through what I called the algorithm that makes a car run.  For decades, it's the same fundamental one:  Gasoline is fed into the engine, where combustion takes place.  Drawing from her chemistry lesson, I said that this process was an exothermic one, that is, it released energy.  The combustion was a controlled explosion under the hood of a car, and the resulting energy was fed into sophisticated mechanisms that powered the car movement.

Just as car makers must understand this algorithm, so must entrepreneurs grasp the engines of growth, as Ries prefers to call processes happening in the markeet:  viral (customers infecting others to buy), engaged (customers who keep buying), and paid (customers who generate profits that can be reinvested back into the business).

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At the end of the interview, Ries makes a very compelling argument about what will help the economy: We've become so good and efficient at manufacturing products and handling routine tasks, that we're not creating as many jobs as before. So he argues that we need teach more people to get into the "creativity business" (i.e., entrepreneurship). Entrepreneurs identify problems, find solutions, and carve a business around them. The businesses they create ... create jobs.

Eric Ries
Thank you for reading, and let me know what you think!

Ron Villejo, PhD

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