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Business Manual

Introduction

Entrepreneurship is a risky venture. Uncertainty about the future of ideas and projects prevent innovators from starting business activities. That is why many brainchildren die unborn. Eric Ries, the author of “The Lean Startup,” encourages people to start doing something in order to find out the viability of the innovation. And if it does not work, the book inspires to get to know what exactly does not function and why it does not operate, and make it work. In general, “The Lean Startup” is an experience-based manual for entrepreneurs who strive for business success.

The book is divided into three parts. Part One describes before-launch actions that reflect the vision and provision of the company concerning its product. Part Two stresses the need for a constant measuring of the extent of success or failure for the future change of product or strategy. Part Three explains the ways the company can run business to make it sustainable. Whole book is dedicated to the Lean Startup method whose principles have become a common thread running through all parts of it. A reader can omit none of the approaches.

As for me, I am a member of a startup business project. Having read this book, I have understood that every brainchild requires special care on every stage of its implementation, from idea to long-standing revenue. All elements of running business are like gears. If one is wrong, broken or missing, the whole mechanism will fail to work. In the work, these gears are such crucial concepts as vision, validated learning, Build-Measure-Learn feedback loop, minimum viable product, innovation accounting, pivot or preserve, different metrics, engine of growth, batch, product/market fit, Five Whys, etc. Taking into account these elements, I can make feasible assumptions about sustainability of the project I start. Moreover, I can work out what steps I need to make, what I should be aware of, what mistakes I can avoid, and how I can overcome pitfalls.

The Core Concepts

The core of the book is its practicability. Eric Ries describes Validated Learning as a “rigorous method for demonstrating progress” (46). It is the catalysis that differentiates what the customer wants from what you think he/she wants. However, without data, experience remains only experience while with the empirical measurement, it becomes validated learning for the future change vector. Google has recently launched the substitute of the former Android Market called Google Play. This platform echoes features of Apple App Store offering more for Android users and serving as all-in-one platform providing music, books, and movies. Validated learning in this case resulted in the necessity of a more sophisticated and unified system to make the use of such customers’ accounts as Google Books or

Google Music easier. This way Google has become more competitive in the fight for the clients (C. Forrest).
Build-Measure-Learn feedback loop combines three essential steps followed one by one to check if the product works. To find out if the idea can create a demand, the first sep is to turn it into reality, or “build”. “Measure” stage shows if the item arouses interest or not. After gathering the data, the final step is to “learn” what changes the article must undergo. As the author suggests, it takes the minimum feature version to see if the game is worth the candle. Minimum viable product (MVP) is the product that has only those features that help reach the goal, i.e. client’s interest. Moreover, additional overload with functions and features can distract the entrepreneur from making the right learning from the product viability. SnapTax is an example of a product and the loop Intuit used to develop, measure, and learn. Intuit’s first version of the program was quite limited by people who used it, by the state and a particular type of tax. By creating a simple version, a kind of a MVP, the developers could “build” the idea and then “measure” how it worked in restricted conditions. It was just the beginning of a big experiment that eventually worked. The data gathered enabled the company to “learn” the outcome of the first version in order to expand the limits and continue the trials. This way, another Build-Measure-Learn loop began (Ries 82).

On the contrary to validated learning before starting something, innovation accounting is the data needed to see if the company achieves validated learning. It assumes the further development of the product from being requested to being ideal by adding new features. This is the point where the developer must make a decision whether to pivot or preserve. Facebook has made a long journey on the market but still searches for new areas of growth to keep up with the rivals and creates hosts of new apps. The Facebook’s pivot was another instant messenger. To make it stand out, the company provides a list of special options ranging from useful ones like making video to funny ones like holding a like button to make this sign huge (Revenscraft).

Learning Milestones

The process of the product enhancement consists of three milestones. It starts with the MVP. This way the company challenges its product towards the customer’s need. If the item creates the demand, the following step is to polish it to its ideal state by making some changes. And finally, when the business reaches the goal, it is time to pivot or preserve. This means that the developers need to make a decision about the sustainability of the product. When the product fails to be good, the need of pivoting arises. McDonald’s has always been a head taller than its competitors due to endless process of innovation. Never-ending attempts to create new menu offers encourage embracement of new customer segment. Healthy lifestyle movement has brought about the creation of a new design, concept, and content of the restaurant. Some specialties have failed to sustain, others have come to stay in daily or seasonal menus.

The Company that Pivoted

Viber application is the story of a real pivoting innovation forged by competition with Skype. First, Viber was available only on iPhone. The MVP of this app for Android was limited by only 50,,000 users. The next step was BlackBerry and phones on Windows platform. Apart from other pivots that have made the company extend both platforms and the range of features, Viber resolves the problem that Eric Ries faced with IMVU – “to switch from one network to another” (47). The company launched Viber Out that enabled Viber users to communicate with non-Viber ones. This feature is the essential one for the product development since it meets the customer’s needs (B. Forrest).

The Application of the Ideas

The first question an entrepreneur must ask himself before offering the product is whether a client needs it or not, or as the author suggests, “Should this product be built?” (Ries 61). In my group project called Skyfall Helmets, the company product is a glowing helmet. Our leap-of-faith question is whether people can attribute their safety to such a helmet. Our assumption is that we will provide value for customers who would pay for Skyfall helmets and feel safe on the roads at night. Our priority on the first stage is to discard secondary features like the beauty of design, focus on the main functional characteristic, and create our first MVP.

A set of examples of pivots mentioned in the book provides several directions that we could choose from in order to broaden horizons. Our company may experience Technology Pivot, and the change for more low-cost technology used in the manufacture of Skyfall Helmets may bring additional income. We could steer with Value Capture Pivot by offering some paid features of the helmets. This could also be Customer Need Pivot. We would learn what is missing in our product, and what is wrong or unnecessary.

Last but not the least is the metric that our company can utilize for an engine of growth as well as innovation accounting model. If we choose the paid engine, our prior activities are marketing and sales. If our helmets become virally popular, we should focus on developing special features. Summarizing all “must-do” actions,
“A startup can evaluate whether it is getting closer to product/market fit as it tunes its engine by evaluating each trip through the Build-Measure-Learn feedback loop using innovation accounting” (Ries 213).

Hyundai Motor America faces difficulties with sales (Harmon). The production figures go up while sales fall. Despite this fact, they produce a wide range of vehicles hoping to meet targeted volume. The company could investigate the reasons behind the decrease in sales through the Build-Measure-Learn feedback loop. It may turn out that some car models do not match product/market fit. In addition, this situation echoes Business Architecture Pivot that describes two types of businesses (Ries 171). They either have high volume with low margin or low volume with high margin. Having high volume with lowered margin, Hyundai could consider the switch provided by this pivot in case of permanent situation the company faces.

Every part of the book illustrates a certain stage and state of a business. “The Lean Startup” gives detailed guidelines on how the company must work.

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