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Notes from ‘The Lean Startup’.

Notes from ‘The Lean Startup’.

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Published by Scott Colfer
Key sections and page references from 'The Lean Startup'.

Notes by Scott Colfer, 5th June 2012.
Key sections and page references from 'The Lean Startup'.

Notes by Scott Colfer, 5th June 2012.

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Categories:Business/Law
Published by: Scott Colfer on Jun 04, 2013
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05/14/2014

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Notes from ‘The Lean Startup’.
 
Key sections and page references by Scott Colfer, 5
th
June 2012.
[Lean Startup comes from] lean manufacturing, design thinking, customer development, and agiledevelopment. (p4)[Lean Startup is] characterised by an extremely fast cycle time, a focus on what customers want(without asking them), and a scientific approach to making decisions. (p8)The Lean Startup Method (p8-10, paraphrasing):1.
 
Working in areas of extreme uncertainty
(entrepreneurship is everywhere)
 2.
 
Bring management to extreme uncertainty
(entrepreneurship is management)
 3.
 
Validated learning
(learn about your products
and 
your business)
 4.
 
Build-Measure-Learn
(accelerated feedback loop)
 
5.
 
Accountability
(Innovation accounting: measure, manage, prioritise)
The concept of entrepreneurship includes anyone who works within my definition of a startup: ahuman institution designed to
create new products and services under conditions of extremeuncertainty
. (p8
 –
my
bold
)Entrepreneurship is a kind of management. (p3)Entrepreneurship is management. (p8)Entrepreneurship requires a managerial discipline. (p17)Lean Startup takes its name from the lean manufacturing revolution. (p18)Too many [. . .] business plans look more like they are planning to launch a rocket ship than drive acar. They prescribe the steps to take and the results to expect in excruciating detail, and as inplanning to launch a rocket, they are set up in such a way that even tiny errors in assumptions canlead to catastrophic outcomes. (p21)Instead of making complex plans that are based on a lot of assumptions, you can make constantadjustments with [. . .] the Build-Measure-Learn feedback loop. (p22)
We can learn when and if it’s time to make a sharp turn called a pivot or
whether we shouldpersevere along our current path. (p22)Entrepreneurs who operate inside an established organisation sometimes are called
“intrapreneurs”. (p26)
 A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. (p27)Lean Startup can help:To create breakthrough new products
 –
disruptive innovation
 –
that can create new sustainablesources of growth. (p31)
Validated Learning.
(paraphrasing, p49) always demonstrated by positive improv
ements in the startup’s core metrics,
backed up by empirical data collected from real customers.
 
 
It’s easy to kid yourself about what you think customers want. It’s also easy to learn things that are
completely irrelevant. (p49)Value VS. waste:Which of our efforts are value creating and which are wasteful? (p47
 –
 
in relation to the excuse that a failure was worthwhile because it enabled learning
– 
was it the best way to learn that, or would talking to users have been better? 
)Learning is the essential unit of progress for startups. The effort that is not absolutely necessary forlearning what customers want can be eliminated. (p49)Vanity metrics. (p54
– 
 
don’t focus on vanity metrics that give the illusion of success, focus on real 
 progress
)Observe real customer behaviour. (p58
 –
 
this is called an experiment 
)Break it down:The
value hypothesis
tests whether a product or service really delivers value to customers once theyare using it. (p61)The
growth hypothesis
tests how new customers will discover a product or service. (p61)An experiment is more than just a theoretical inquiry; it is also a first product. (p63)
Build-Measure-Learn feedback loop.
We need to focus our energies on minimising the
total 
time through this feedback loop. (p76)
 
The two most important assumptions are the value hypothesis and the growth hypothesis [. . .] onceclear of these
leap-of-faith
assumptions, the first step is to enter the Build phase as quickly aspossible with a minimum viable product (MVP). (p76)The MVP is that version of the product that enables a full turn of the Build-Measure-Learn loop witha minimum amount of effort and the least amount of development time. (p77)Strategy is based on assumptions [. . .] be
cause the assumptions haven’t been proved to be true *. . .+the goal of a startup’s early efforts should be to test them as quickly as possible.
(p81)There are many value-destroying kinds of growth that should be avoided. An example would be abusiness that grows through continuous fund-raising from investors and lots of paid advertising butdoes not develop a value-creating product. (p85)
Paraphrasing: get out of the building and speak to real people
– 
behind all metrics lie real, breathing people. You should never base you assumptions on reports or research.
 The goal of such early contact with customers is not to gain definitive answers. Instead, it is to clarifyat a basic, coarse level that we understand our potential customer and what problems they have.With that understanding we can craft a
customer archetype
, a brief document that seeks tohumanise the proposed target customer. (p89)A new breed of designers is developing brand-new techniques under the banner of Lean UserExperience (Lean UX). They recognise that the customer archetype is a hypothesis, not a fact. Thecustomer profile should be considered provisional until the strategy has shown via validated learningthat we can serve this type of customer in a sustainable way. (p90)Down the road
 –
after many iterations
 –
you may learn that some element of your product orstrategy is flawed and decide it is time to make a change, which I call a pivot, to a different methodfor achieving your vision. (p113)Innovation accounting (p117-118 + some from p120, paraphrasing)
 –
how it works (threemilestones):1.
 
Use an MVP (baseline) to establish real data on where your company is at (value hypothesisand growth hypothesis)2.
 
Use iterative development to progress from this baseline to a more ideal state: have ahypothesis about what will improve metrics and a set of experiments designed to test thathypothesis3.
 
Pivot or persevere?When a company pivots, it starts the process all over again, re-establishing a new baseline and thentuning the engine from there. The sign of a successful pivot is that these engine-tuning activities aremore productive after the pivot than before. (p118)When one is choosing among the many assumptions in a business plan, it makes sense to test theriskiest assumptions first. (p119)Metrics should be (paraphrasing p142-146):Actionable (clear relationship between cause and effect)Accessible (plain English, easily understood, reflecting that metrics are people, e.g. what is a website
‘hit’?)
 Auditable (data must be credible).

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