My friend Alan just published an excellent blog on “Lean start up”. http://www.smallbusinesscan.com/the-lean-startup/
That got me thinking.
Isn’t “lean start up” another term for “bootstrapping” or “market research”?
I agree with a lot Eric Ries says (how can you not), but I just find it difficult to see what is really new?
I am just jealous
I have to declare an interest. I am the co-author (with Brian O’Kane) of a number of publications on start-ups, with much more original titles than “Lean start up”, such as “TENBizplan”, “Start your own business, a workbook” and “Steps to enterprise”. And yes, I am insanely jealous (can’t speak for Brian) and I want to be Eric Ries. Let me rephrase that; I want to sell as many copies of my books as Eric Ries.
I still wonder what the fuss is about and I am probably best described as a jealous sceptic.
Credit where credit is due. Eric took a leaf out of “What would Google do” and has given market research much more rigour. I like his focus on metrics. And love the focus on the metrics that really mean something. Which why in the olden days, we used to focus on forward orders, sales, turn over, cash flow and profits.
In fairness, he invented a few new terms, such as MVP, pivoting, LTV and is an indication on how this resonates.
MVP (minimal viable product) is new. I am not quite sure what that really means. I am unconvinced that a sign up web page as an “MVP” is proper market research (we used to call that forward orders), but I agree it gives an indication.
And yes, the web allows for easier access to the market place and it beats handing out handing out paper questionnaires in the local shopping mall (or does it?).
But sales, and sales only remains the only metric. Eric calls it conversion and particularly online conversion is a hard, hard nut to crack. I am not sure MVP is the right indication for future success.
Only for internet companies?
Maybe lean only applies to internet companies? But soon every company is an internet company?
Pivoting for example (and do it hate that word). Change what you are doing or stop. We used to call it “change what you are doing” and GO/NO GO. Can we ban that word from being used, particularly when you use it to show off that you read the book (you know who you are).
LTV (lifetime value of customer) has been around for a lifetime, but near rhymes with MVP.
I like his approach to innovative accounting and how traditional accounting needs a hard look at what they measure. With this method he suggests that progress is best tracked by observing things like user activity, engagement, retention and virality.
The new balance sheet
Which brings me to a side step about traditional accounting and how particularly a balance sheet just does not help to predict the future (and therefore useless?). The future balance sheet will contain items such as talent, brand, community, environment, culture, LTV, channel, engagement, idea pipeline, IP, investment in training and development, etc..
The soft balance sheet
Maybe that is what my next book should be about. Only need to find a catchy alternative title to “The soft balance sheet”. Preferably something that rhymes with “lean”. All suggestions welcome.
Back to Alan
Just to get back to the lean start up. Alan’s summary I have to agree is spot on.
If you are an Internet or technology based startup the lessons will be ones that are likely to resonate. The Lean Startup approach is certainly one which will help you instill early on the need for decisions to be based on scientific facts (as much as possible) and that given the extremely difficult conditions start-ups operate in, that an ability to learn quickly and change tack are lessons you would do well to bear in mind.
Only for internet companies?
Which brings me to my earlier point; Maybe lean only applies to internet companies? But soon every company is an internet company?
Will stick with being jealous.