While reading The Lean Startup by Eric Ries, I found I underlined many sentences and wrote many notes in the margins. Before I tell you the most valuable nuggets I learned, first let me give my review: it is an outstanding book! If you want to or already have started a business, you need to read it. If you agree that the definition of business model is the most scale-able and repeatable way to get customers to pay you for your product or service, then you'll want to read this book more than once.
Now, on to some of my key take-aways.
Entrepreneurship is a form of management, one that focuses on doing the boring stuff over and over again, following a system, or process, that follows the steps of building, measuring, learning, tweaking, and then repeating this process as quickly and diligently as possible.
The traditional balance sheet and profit and loss is almost useless in the startup phase. The balance sheet and its various ratios are meaningless, and the profit and loss (or really the loss statement since most startups lose money at first) reveals no new, timely information to the entrepreneur. Lean startups call for more frequent and timely numbers that measure progress in the context of experimentation, learning, and key drivers of success.
Evaluating what we learn from our experiments leads us to one of two conclusions: pivot or preserve. Either it didn't work and needs to be changed or it did work and we need to keep doing more of the same.
Running one test, or experiment, at a time is no longer acceptable. It breeds a culture of politicians and salespeople lobbying for the success or failure of the experiment. Running hundreds of tests at a time (how Ries describes Intuit) allows for everything to move at the speed of the experimentation system with "shift-on-the-fly" results.
The goal of every startup should be to test every one of the assumptions they have made as quickly possible.
The "go and see for yourself" principle challenges all entrepreneurs to get to know their customers intimately and understand the core reasons they want to buy.
A Minimum Viable Product (MVP) does not have to be a working prototype. It can be something as simple as a basic survey or landing page with basic information and calls to action. It might even be a video of the concept. The key is to experiment on and test your assumptions as quickly and inexpensively as possible.
I love the concept Ries calls "Wizard of Oz testing". Rather than build out a product that is perfectly automated at the beginning, you can make it appear that your website is automated but actually is being run by humans. This allows for quick and inexpensive experimentation to take place long before investing in something that you'll likely need to scrap later.
"New customers come from the actions of past customers."
Those are some of the more important points I learned or re-learned from Eric's book and perspective. The book is well worth the read, and every business that has any desire to innovate can add value to their innovation process by implementing The Lean Startup principles.