The Lean Entrepreneur E-Book

Brant Cooper

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 427

Veröffentlichungsjahr: 2016

Beschreibung

Leverage the framework of visionaries to innovate, disrupt, and ultimately succeed as an entrepreneur The Lean Entrepreneur, Second Edition banishes the "Myth of the Visionary" and shows you how you can implement proven, actionable techniques to create products and disrupt existing markets on your way to entrepreneurial success. The follow-up to the New York Times bestseller, this great guide combines the concepts of customer insight, rapid experimentation, and actionable data from the Lean Startup methodology to allow individuals, teams, or even entire companies to solve problems, create value, and ramp up their vision quickly and efficiently. The belief that innovative outliers like Steve Jobs and Bill Gates have some super-human ability to envision the future and build innovative products to meet needs that have yet to arise is a fallacy that too many fall prey to. This 'Myth of the Visionary' does nothing but get in the way of talented managers, investors, innovators, and entrepreneurs. Taking a proven, measured approach, The Lean Entrepreneur will have you engaging customers, reducing time to market and budgets, and stressing your organization's focus on the power of loyal customers to build powerhouse new products and companies. This guide will show you how to: * Apply actionable tips and tricks from successful lean entrepreneurs with proven track records * Leverage the Innovation Spectrum to disrupt markets and create altogether new markets * Use minimum viable products to drive strategy and conduct efficient market testing * Quickly develop cross-functional innovation teams to overcome typical startup roadblocks The Lean Entrepreneur is your complete guide to getting your startup moving in the right direction quickly and hyper-efficiently.

Leseprobe

The Lean Entrepreneur

HOW VISIONARIES CREATE PRODUCTS, INNOVATE WITH NEW VENTURES, AND DISRUPT MARKETS

Second Edition

BRANT COOPER PATRICK VLASKOVITS

Cover image: @FAKEGRIMLOCK

Copyright © 2016 by Brant Cooper and Patrick Vlaskovits. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

The first edition was published by Wiley in 2013.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

ISBN 978-1-119-09503-3 (Paperback) ISBN 978-1-119-09507-1 (ePDF) ISBN 978-1-119-09499-9 (ePub)

For Riva and Eliza

—BC

For Kati, Shane, Milla, and Viola

—PV

Contents

SPECIAL THANKS

FOREWORD

INTRODUCTION

WHAT IS

THE LEAN ENTREPRENEUR?

WHY READ (BE)

THE LEAN ENTREPRENEUR?

WHO IS THE LEAN ENTREPRENEUR?

HOW TO USE THE LEAN ENTREPRENEUR

NOTE

1 STARTUP REVOLUTION

BYTES EATING THE WORLD

CONNECTIVITY

THE VALUE-CREATION ECONOMY

CUE THE LEAN STARTUP

MEET THE LEAN ENTREPRENEUR

LEAN STARTUP AND DISRUPTION

NOTES

2 LEAN INTO CHANGE

VISION

ENTERPRISE NOTE

VALUES

CULTURE

DATA

EXPERIMENTATION

CUSTOMER FOCUS

ORGANIZATIONAL STRUCTURES

THE TEAM

BIG, OLD, AND . . . LEAN?

OVER THE HORIZON: A FRAMEWORK

WORK TO DO

NOTES

3 ALL THE FISH IN THE SEA

BUSINESS MODELS

KNOW YOUR AUDIENCE: WHY SEGMENTATION MATTERS

MARKET SEGMENT

PERSONAS: CREATE A REAL CUSTOMER

CHOOSING A MARKET SEGMENT

WORK TO DO

NOTES

4 WADING IN THE VALUE STREAM

ARTICULATING THE VALUE STREAM

ABOUT VALUE STREAMS

VALUE STREAM DISCOVERY

WORK TO DO

NOTES

5 CORE LEAN ENTREPRENEUR

THE 3 ES: EMPATHY, EXPERIMENTS, EVIDENCE

EMPATHY

EXPERIMENTS

EVIDENCE

WORK TO DO

NOTES

6 THE LEAN JOURNEY

FROM HERE TO ETERNITY: GROWTH PHASES

PHASE 1: IDEA PHASE: THIS IS GONNA BE BIG!

PHASE 2: MVP FOR A FEW: I’VE PROVEN THAT A FEW PEOPLE CARE!

PHASE 3: A FUNNEL OF MANY: I’VE PROVEN THAT A LOT OF SIMILAR PEOPLE CARE, AND SOME ARE GAGA!

PHASE 4: MULTIPLE FUNNELS: HOLY WOW, WE’RE GROWING LIKE CRAZY WITH A BUNCH OF DIFFERENT GROUPS OF PEOPLE!

PHASE 5: SCALING A PROFITABLE BUSINESS MODEL: SHAMPOO, RINSE, REPEAT

FINALLY, ENTERPRISE: LARGE AND SUCCESSFUL; SLOW AND BUREAUCRATIC

NOTES

7 THE FINAL WORD

WORK TO DO

APPENDIX: CASE STUDIES

ACKNOWLEDGMENTS

ACKNOWLEDGMENTS (1ST EDITION)

ABOUT THE AUTHORS

INDEX

EULA

Guide

Cover

Table of Contents

Chapter

Pages

ix

x

xi

xii

xiii

xiv

xv

xvi

xvii

xviii

xix

xx

xxi

1

2

3

4

5

6

7

8

9

10

11

13

14

17

18

19

20

21

22

23

24

25

26

27

28

29

31

32

33

35

36

37

38

39

40

41

42

43

44

45

47

48

49

50

51

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

83

84

86

87

88

89

90

91

92

93

94

95

96

97

98

99

101

102

103

104

105

106

107

110

111

112

113

114

115

117

118

119

120

121

122

123

124

125

127

128

129

130

132

134

135

136

138

140

141

142

143

145

146

147

148

149

150

151

152

153

155

156

157

158

159

160

161

162

163

164

165

166

167

168

169

170

171

172

173

174

175

176

177

178

179

180

181

183

185

186

187

188

190

193

194

195

196

197

198

199

Special Thanks

Without our early adopters, who believed enough in The Lean Entrepreneur to pre-order a book when it was merely a landing page with a silly video, we might not have survived the process of writing this book and seeing it published.

Their early feedback on content and exercises forced us to simplify, focus, and home in on how to move the needle for them.

            Thank you.

Brant and Patrick

The Lean Entrepreneur Early Adopters*:

@$H0K

Alberto Jr.

Amiel Zwier

@WojKwasi

Alex Wolfe

Andersen Andre

Aalap Parikh

Alexander Bastien

Andrea Amedeo

Abraham Williams

Alexander Ginsberg

Andreas Cem Vogt

Adalsteinn Ottarsson

Alexander Konowka

Andreas Klinger

Adam Gibson

Alexander Osterwalder

Andres Arias

Adam Jong

Alexandre Marcondes

Andres Buritica

Advanced VA

Alexandre Zamarion Cepeda

Andres Riggioni

Akili King

Alfred Lo

Andrew Hemsley

Al Bsharah

Alfredo Osorio

Andrew Korf

Al Shaw

Alison Anthoine

Andrew Mohebbi

Alan David Rojas Yacolca

Alison Gibbins

Andrew Payne

Alan Lattimore

Alline Watkins

Andrew White

Alan Turner

Alon Goren

Andrey Gridnev

Anita Leffel

Chantal Botana

Dave Blackman

Antonio Lucena de Faria

Chin Eugene

David Andujo

Arden Grady

Chonchayong Trairatkeyoon

David Drake

Armando Maldonado

Chris Elam

David Fishman

Arthur Dodge

Chris Gallo

David Hooton

Arturo Garrido

Chris Healy

David Stevens

Basil Elway

Christian Fahlke

Davorin Gabrovec

Beat Goetschi

Christian Kramer

Daylin Breen

Becky Smith

Christopher Conrey

Deane Sloan

Beihua Yu

Claudio Perrone

Dennis Cabarroguis

Benjamin Biddel

Clayton Levering

Desiderio Gutierrez

Benjamin Patock

Colin Tuggle

Dmitri Leonov

Bergson Fogaca de Oliveira

Craig Aron

Donna Klym

Bernard Lebelle

Cristian Valbuena

Dr. Ernie

Bernardo Mazzini

Cv Harquail

Drew Sanocki

Bill Carver

D. Elley

Eduardo Burgel

Bill Kenney

Dale Larson

Elio Maggini

Brendan Baker

Damien Saunders

Emily Cotter

Brenton O’Brien

Damon D’Amore

Emmanuel Devries

Brittany Lynch

Dan Kaplan

Eneko Bilbao

Brunno Cruz

Dan Mattrazzo

Eric Fader

Bryan Hall

Daniel Donado

Eric Galen

C. Crouch

Daniel Fulep

Eric Pantera

Camilo Zamora

Daniel Haran

Erich Buri

Carol Gunby

Daniel Horowitz

Erick Herring

Casey Armstrong

Daniel James Scott

Erik Saltwell

Cassiano Porreca

Daniel Politzer

Erika Callahan

Catherine Colgan

Danny Beckett Jr.

Erin Mcclarty

Chan Keung

Danny Currie

Esteban Quijano

Chandan Kanodia

Darren Fehrmann

Farez Rahman

Ferenc Fekete

Hao Chen

Jeff Chen

Fernando Labastida

Helge Hannisdal

Jeffrey Howell

Fernando Saenz-Marrero

Hendrik Bohn

Jeffrey Mohr

Ferran Giones

Hiroshi Menjo

Jeffrey Poole

Francesc Mutge

Howard Iii

Jeffrey Tingle

Francesco Fullone

Ira Herman

Jennie Enholm

Frank Dale

Iren Elisabeth Ovstebo

Jeremy George

Fuat Koro

Ivan Rapin-Smith

Jesse Nowlin

Gabriele Lana

Iyas Alqasem

Jim Chesebro

Garth Humbert

Jacob Taylor

JM Bonthous

Gary Chiu

Jake Waxenberg

Joanna Piotrowska

Gary Hellen

Jakub Musialek

Joe Bailey

Gary Marcos

James Gagel

Joe Gerber

Gary Percy

James Katzenberger

Joe Waltman

Gavin Heer

James Levine

Joel Abraham

Geert Bollen

James Manias

Joel Gascoigne

George Komoto

James McGilvray

Joel Jenkins

Gerard Charlot

James Sutherland

John Asalone

Gibran Abarca

Jan Belke

John Beadle

Gideon Walker

Jane Garrity

John Carter

Gijsbert Koren

Jared Hardy

John Halpern

Gil Doukhan

Jason Bowser

John Holcroft

Gilbert Bagaoisan

Jason Fitts

John Hornbaker

Giles Farrow

Jason Fraser

John Morrow

Giorgio Casoni

Jason HJH

John T. Chapman

Glenn Marcus

Jason Yip

John Wark

Gonzalo Santos

Jay Beecham

John Wolpert

Graham Kehily

Jay Cranman

Jon Gold

Guilhem Bertholet

Jay Grieves

Jon Lawrence

Hampus Jakobsson

Jeanne Pi

Jonatan Alava

Jonathan Buccella

Kutlu Kazanci

Matthew A.

Jonathan Drillings

Lars Kristian Aasbrenn

Matthew Bellows

Jonathan Gray

Lars Teigen

Matthew Dally

Jonathan Tarud

Lawrence Schoonover, DDS

Matthew Ownby

Jonathan York

Lee Heathfield

Mauricio Montilla

Jonathon Schuster

Lee Munroe

Melissa Foster

Jonny Lennon

Leslie Hunter

Melissa Navarro

Jordana Adler

Lindsey Nagy

Meng Wong

Joseph Draschil

Lord Fernandez

Michael Grassotti

Joseph Morgan

Louis Galipeau

Michael Hawkins

Joseph Vandervest

Lowell Lindstrom

Michael Lira

Joshua Kerievsky

Lowell Winer

Michael Maretzke

Joshua Lewis

Luigi Matrone

Michael Petronaci

Joshua Steimle

Luigi Montanez

Michael Porcelli

jozi9

Luis Luengo

Michael Thompson

Juergen Anke

Lukas Fittl

Michael Yevdokimov

Justin Coetsee

Luke Scoates

Michel Gelobter

Justin Homkow

Lynn Pearce

Michele Battelli

Justine Lam

Lynn Rasmussen

Michelle Hoang

Kahlil Corazo

M. Keeffe

Mikhail Nikolaev

Kangtao Chuang

Maciej Czarnik

Mila Vukojevic

Karin Lehner

Makoto Miyagawa

Mitchell Villani

Karl Shaikh

Marc Havener

Morgan Linton

Kathleen Meairs

Marcelo Pimenta

Mr. O’Flynn

Keenahn Jung

Mark Horoszowski

Mrs. Oliver

Keiron Mccammon

Mark Morris

Nadav Wilf

Kelvin Th am

Marko Vasiljevic

Nicholas Wichert

Ken Hejmanowski

Martin Alcala Rubi

Nick Tippmann

Kent Mcdonald

Martin Giorgetti

Nicolas Tognoni

Kim Silva

Martin Hrdlicka

Nikhil Thomas

Kirk Lashley

Matias Waes

Nikolaos Souris

Nina Alter

Rahul Gupta

Samuel Goldberg

Nir Eyal

Rak Dheva-Aksorn

Samuel Parker

Norbert Schwagmann

Rammohan Reddy

Sash Catanzarite

Oana Calugar

Randall Minchew

Scott Austin

Olaf Lewitz

Ray Hallare

Scott Gillespie

Olaf Myklebust

Reginald Niles

Scott Kurland

Oleg Mysyk

Regis Rehel

Scott Roehrick

Olga Pavlovsky

Reid Mcgregor

Scott Steele

Olin Hyde

Rene-Martin Tudyka

Sean Ammirati

Olivier Verbeke

Ricardo Dorado

Sean Crafts

Oriol Pascual

Richard Ackermann

Sean Taylor

Oskari Kettunen

Richard Kroon

Sean Tierney

Paolo Lorenzoni

Richard Prest

Sebastien Arbogast

Parul Singh

Rick Perreault

Sergio Marrero

Patrick Buechner

Ricky Juarez

Shawn Arnwine

Patrick Smith

Rindranirina Ramamonjison

Shawn Purcell

Paul Connaghan

Rob Linton

Simone Brunozzi

Paul Gomez

Robert Bowman

Son Thanh Le

Paul Merino

Robert Fan

Stephen Rhyne

Paul Reichman

Robert Fenton

Stephen Wood

Pedro Carmo Oliveira

Roberto Magnifico

Steven Craig

Pedro Rocha

Rodney Rumford

Steven Mcilvenna

Per Sahlin

Rodolfo Angel Lomascolo Szittyay

Sunshine Makarow

Peter Cooper

Rodrigo Ludwig

Sylvain Montreuil

Peter Hargittay

Roger Weber

Takashi Tsutsumi

Peter Hong

Ross O’Lochlainn

Tal Rachleff

Peter Troast

Royce Hamano

Tanya Ross-Lane

Piotr Durlej

Rukesh Patel

Theodore Barnett

Prudencio Herrero

Ryan Fujiu

Theodore Shivdasani

R. Bowater

Ryan Poissant

Thomas Lin

Rachel Willmer

Salim Virani

Thomas Neiger

Thomas Pridham

Travis Mccutcheon

William Loeber

Tim Kastelle

Trevor Owens

William Mcbride

Timothy Lombardo

Veeral Shah

Wiro Kuipers

Todd Werelius

Venkatesh Rao

Young Lee

Tom Philip

Vidar Brekke

Yuki Sekiguchi

Tom Yandell

Vik Chadha

Yves Hanoulle

Tomasz Rudolf

Vishal Bagga

Zoiner Tejada

Tomer Sharon

Vivek Raman

*To view this list of names online, please visit http://leanentrepreneur.co/earlyadopters.

Foreword

When I first started blogging in August 2008, I had no idea what to expect. Startup blogging was hardly cool back then. Plenty of venture capitalists advised me against it.

My personal background was as an engineer, and my companies had been web-based startups, so that is what I wrote about. Struggling to explain the successes and failures of those companies, I discussed principles like continuous deployment, customer development, and a hyper-accelerated form of agile. When I delved into lean manufacturing, I discovered that the concepts and terminology dovetailed. The result: a new idea I called the Lean Startup.

I started with some basic theory: that a startup is an institution designed to thrive in the soil of extreme uncertainty, and that traditional management techniques rooted in forecasting and planning would not work well in the face of that uncertainty. Therefore, we needed a new management tool kit designed explicitly for iteration, scientific learning, and rapid experimentation.

At the time, I viewed it as incidental that the theory might be tied to a particular industry, such as high-tech startups or web-based environments. Lean, after all, emerged from Toyota, a huge automobile manufacturing company. I simply stated my belief that Lean Startup principles would work in other types of startups and in other areas of business where uncertainty reigned.

Boy, was I unprepared for what happened next. I was hopeful that we would change the way startups are built—but I didn’t know.

Fast-forward more than seven years, and I’m astounded by what has emerged. A nascent community has blossomed into a full-fledged movement. Entrepreneurs, both new and experienced, proudly share their Lean Startup learning in case studies, conferences, and many, many blogs. Books, workshops, and courses written and led by passionate practitioners relate experiences, share insights, and create tools to teach students ways to make Lean Startup principles their own. Many investors, advisors, mentors, and even celebrity entrepreneur icons speak the Lean Startup language.

It’s a big tent. We stand on the shoulders of giants: customer development, the theory of disruptive innovation, the technology life-cycle adoption theory, and agile development. Complementary lines of thinking, such as that of user experience professionals, design thinking practitioners, and the functional disciplines of sales, marketing, operations, and even accounting, come together to share practices that lift us all.

Lean Startup has gone mainstream. I wish I could say that this was all part of some master plan, that I knew all along that companies of all sizes—even those far outside the high-technology world—would embrace Lean Startup. I wish I had foreseen that within a year of publishing The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, many large organizations, including such monsters as the U.S. federal government (!), would have recognized that to cope with today’s world—faster, more competitive, and inundated with data—new methods are needed to keep up. The truth is that all of this change has happened faster and more thoroughly than any of us imagined. And—as you’re about to see—we’re just getting started.

That’s why I am so excited by this book you hold in your hands. The Lean Entrepreneur is about these new methods. Brant Cooper and Patrick Vlaskovits are among the earliest adopters of new ideas such as Lean Startup and customer development. Their new work turns their lens on three primary focal points: how to interact with customers, run experiments, and use actionable data to move the needle of any uncertain business endeavor.

As with all of their work, theirs is not just a book of theory. Brant and Patrick provide great tactical depth in each of these areas.

They endeavor to answer the question: No matter where you are as an organization, how do you know where to focus your Lean Startup activities? The Lean Entrepreneur offers new thinking, tools, and activities that help organizations identify and act upon business model challenges in a waste-eliminating manner. Following the precepts of traditional lean thinking, Brant and Patrick introduce the Value Stream Discovery process, which helps organizations hypothesize what they must do, including product development, marketing, and sales, in order to create value. These business model assumptions are then ripe for testing, measuring, and iterating upon.

Further, the value you create is meaningless without a customer who needs, wants, desires, and, ultimately, determines the final value of your creation. Brant and Patrick spend considerable time helping you think through your customer segments. Cleverly, and in the spirit of the scientific method, they even help you discover where your customer theory is wrong.

Everyone likes a good story; Brant and Patrick interviewed dozens of entrepreneurs and documented numerous case studies both inside and outside of high technology, in both startups and large enterprises. There’s even a classic Wizard of Oz minimum viable product that dates back to 1998!

Make no mistake: Brant and Patrick have been here since the beginning. They self-published The Entrepreneur’s Guide to Customer Development in April 2010.

From the outset, they were both practitioners and mentors, urging entrepreneurs not to follow a paint-by-numbers approach, but rather to think lean: fast, agile, and continuously learning. Over the past two years they’ve traveled around the world speaking, advising, and teaching Lean Startup.

The Lean Entrepreneur is an important addition to the growing library of principles and practices designed to improve how we tackle innovation and uncertainty, be it in high-tech startups, Fortune 100 companies, nonprofits, or government offices.

I consider myself lucky to count Brant and Patrick as friends and colleagues. It is my hope that from this book you will gain valuable insights, that you make Lean Startup your own, and—much more important—that you are successful in changing the world for the better.

Eric Ries San Francisco January 2013

Introduction

WHAT IS THE LEAN ENTREPRENEUR?

It’s hard to know where you live on the curve. As far as we can tell, the arrow of time moves in one direction. You can never step in the same river twice (Heraclitus), and all that.

Change isn’t constant. We change constantly, but at different rates, depending on where we are on the curve. Fast change comes in times of cheap experimentation. Massive new life emerged on Earth during time periods in which a convergence of foundational platforms, like the different aspects of Earth’s biosphere, favored the emergence of diverse species, most of which failed. Massive new technologies emerge when the discovery and extraction of massive amounts of resources (water, minerals, fuel) provide low-cost industrial experiments, most of which fail.

Although our narratives of the past reveal eras of big change, those who lived during those times likely didn’t see it that way:

“Hey bro, pretty cool, we’re living in the Age of Renaissance, yeah?”

“Beats the Middle Ages, dude.”

“Word.”

The life you live defines normalcy.

Is change big or little? Dramatic or incremental? Permanent or cyclical? Disruptive or sustaining?

No one can pinpoint where we exist on the curve. Is change over or just beginning? Are we at an inflection point? Up or down? Is the end nigh, or is the Age of Aquarius approaching?

A broken clock is right twice a day.

How can we know when we are amid big change? Listen to experts and incumbents. If you hear a lot of this, then be forewarned—“The times, they are a-changin’ ”:

“Don’t worry, it’s just the business cycle; or, in other words, the next bus to pick us up will be by in five minutes.”

“Will

x

be ubiquitous? Oh that’s ridiculous;

x

is exactly what is already consuming your market. ‘It’s just a normal cycle, we’ll be back.’ ”

“Piracy is killing us!”

The Lean Entrepreneur is about navigating change.

Whether what’s emerging is considered the postindustrial age, an information society, or an experience economy, The Lean Entrepreneur aims to help you create products people want, innovate with new ventures, and disrupt markets. With big change comes big opportunity. We’ll provide you with grounded ways to market-test your ideas with the right market segment; we’ll give you real, tangible examples of how successful entrepreneurs are applying lean innovation principles; and we’ll get you started right now and get you up to speed quickly.

We think of The Lean Entrepreneur as a field guide because it is designed to be brought into the field, whether that is your office, the local co-working space, your client’s place of business, or the local coffee shop as you surf cyberspace, planning your conquest. Whereas a traditional naturalist field guide helps outdoorsmen identify the plants and animals of a certain geography, our field guide will help you identify concepts and ideas in the geography of innovation. At first blush, some of these ideas may not appear to be applicable to your business, but with an open mind and a spirit of creativity, we will demonstrate how these concepts can and will radically reshape how you bring products to market and, ultimately, success to your business.

The Lean Entrepreneur is a book of synthesis, of recombination, and, we hope, of inspiration. It is a synthesis in that we will show where several preexisting ideas about how to innovate, which initially appear to be virtual islands strewn across a sea, actually share connections and complement each other. And if we have done this well, a larger, more complete, and more comprehensive map of the changes coming and how to innovate now will have emerged for you.

As Henry Ford recombined existing technologies from different domains (interchangeable parts, the assembly line, the electric motor) into a wholly novel and disruptive set of innovations resulting in the manufacture and distribution of the first durable, mass-market automobile, we hope to inspire vis-à-vis our interpretations of several big ideas, which will result in a new approach that scales well for disruptive innovators and entrepreneurs—from small, value-producing businesses to the Fortune 500.

The product development methodologies and innovation frameworks espoused by The Lean Entrepreneur are heavily influenced by truly big thinkers, such as Steve Blank and Eric Ries, creators of Customer Development and The Lean Startup, respectively. However, other, rather similar, innovation methodologies such as design thinking and discovery-driven planning also exist.

All the aforementioned frameworks tend to be driven by principle rather than by a set of cut-and-dried tactics, and are typified by iterative, customer-centric, data-informed approaches resembling the scientific method; and we, as natural-born bricoleurs, happily borrow from ideas that we deem appropriate as well as discard or ignore what we deem unhelpful.

We urge you, the reader, to do the same with ideas and approaches presented in this book.

WHY READ (BE) THE LEAN ENTREPRENEUR?

Our mission in writing The Lean Entrepreneur is threefold:

To describe why our economy is primed for a new wave of entrepreneurship using new methods of disruptive innovation.

To provide real-world examples of how entrepreneurs are creating new markets and disrupting others.

To show you how you can get started

creating value

.

The context of The Lean Entrepreneur is an iterative, customer-centric, data-informed business development approach in the face of market uncertainty. Although, to some degree, all businesses operate in conditions of market uncertainty, all such conditions are not created equal. Market uncertainty can be described by an innovation spectrum stretching from lesser market uncertainty when undertaking sustaining innovation to greater market uncertainty when pursuing truly disruptive innovation.

Uncertainty and innovation are a duality. Without the former, there is no opportunity for the latter. True disruptive innovation can only happen in environments in which the final product, and its value proposition, price, marketing, sales channels, and, most importantly, its customer are, at best, educated guesses but, more than likely, almost completely unknown.

The inverse is also true: If one is developing products for which the value proposition, price, marketing, sales channels, and market segments are known or very likely to be known, then iterative, customer-centric, data-driven approaches as espoused by The Lean Entrepreneur may be suboptimal.

Suffice it to say that when the value proposition is known and successfully delivered by a business to a known customer, the methods of execution used by its owners and employees are good enough, at least for now. Perhaps they could become more efficient or less wasteful, but to instruct successful businesses on how to be more efficient is not our ambition.

As you read The Lean Entrepreneur, we’ll make the case that innovating in uncertainty requires a highly iterative approach. We’ll also make the case that a disproportionate part of your business model is ultimately determined not by command-and-control diktats from the executive offices of your company or even your own personal desires but implicitly by the market segment you hope to provide value for. The sooner you grok that your customers have significant de facto control over the destiny of your business, the better it is for you, your customers, your employees, your colleagues, your shareholders, and other stakeholders in your business.

To belabor the point, it is your market segment, not you, that determines how you distribute your product, how much customers are willing to pay, what sort of messaging they respond to, and for what job they are in need of hiring a product. In other words, other than the fact that you can choose whether to serve a particular segment, it is up to the segment to decide whether you should be given a shot.

Since iterative, customer-centric, data-informed product development approaches to creating value predate this book, is this simply a gussied-up rehash of previous thinking?

Short answer: No.

We hear time and time again that the greatest contribution made by Eric Ries and the Lean Startup is the lexicon. It provides a language for anyone practicing entrepreneurship to talk about how to do meaningful innovation. The point has never been about who came up with what, but, rather, how we can learn from past successes to make future endeavors more predictable.

We feel that we are now witnessing a phase marked by radical disequilibrium and fundamental changes in innovation and entrepreneurship enabled by a juggernaut of technological and cultural trends.

The best way to navigate the near future is to hyperfocus on creating value for customers and moving at the speed of the Internet. We’ll show you how.

WHO IS THE LEAN ENTREPRENEUR?

We’d like to answer that question like most entrepreneurs who are asked to define their market: Everyone! However, in order to demonstrate that we drink our own Kool-Aid, we have spoken to and worked with many different individuals as we wrote this book. Here are our market segments:

Scalable startup founders—If you are hoping to build “the next big thing.”

Lifestyle business founders—We don’t think the term is derogatory in the least. If you’re trying to build a

real

business that provides value to customers, we’re talking to you.

Intrapreneurs—If you are trying to change your business, whatever size, to move at the

speed of the Internet

, read on.

Educators—You recognize that entrepreneurship needs to be taught differently.

Government change agents—If, like entrepreneurs trying to drive change inside big businesses, you are trying to drive change in how governments operate, we’re here to help.

Investors—You could use help finding and providing assistance to the right startups.

Although we’d like to think this book will benefit everyone to some degree, this book is likely less than optimal for these market segments:

Small-business founders who are starting companies for which there is already a known model—Typically these are the types of businesses found in malls: dry cleaners, retailers, franchises, and so forth.

Lifestyle business owners—If you’ve already built your business and are generally satisfied with what you’ve achieved, congratulations! You probably don’t need us.

Solo practitioners—If you’re trying to generate a personal or family income stream via “projects” or small-scale products or services, we think that’s great! There are probably better books for that.

Generally speaking, if you’ve read Eric Ries’s The Lean Startup and are looking for more tactical application of the principles espoused there, this is the right book for you. If you haven’t read it and need convincing that a lean startup is the right thing for you and your organization, we will make the case—but you really should read Eric’s book.

If you’ve read The Four Steps to the Epiphany, our Entrepreneur’s Guide to Customer Development, or Blank’s The Startup Owner’s Manual, you will find new tools and methodologies for applying the principles you already believe in. There is not a lot of duplication here.

If you are well into the lean startup movement, a heavy reader of Ash Maurya, Cindy Alvarez, Sean Murphy, and others, we firmly believe we have exciting new material you can use to grow your business.

HOW TO USE THE LEAN ENTREPRENEUR

With this book, we hope to not only teach you and inspire you, but also to show you some fun along the way.

To that end, we’ve engaged a talented entrepreneur and artist who goes by the name of Fake Grimlock. Fake Grimlock has created an expressive set of illustrations just for The Lean Entrepreneur. The illustrations tell a story and serve to amplify concepts from the book.

You’ll find them a bit whimsical at times, but be prepared to think deep thoughts as you take them in.

We’ve made them available for you for reuse and remix, subject to the Creative Commons license.

If you want to download the illustrations to use them in your presentations or blog posts or in other interesting ways, please do.1 You can access them at http://LeanEntrepreneur.co/illustrations or e-mail us at [email protected].

Our writing style aims to get to the heart of the matter quickly. Experts in specific domains will notice, probably much to their irritation, that we intentionally gloss over some of the finer points we discuss. This is not because we don’t think the details matter; they do, but they don’t matter for the context of this book.

The “New and Improved” Lean Entrepreneur is divided into seven chapters:

Startup Revolution—A brief redux on what’s going on now that makes lean innovation the right methodology to apply to your business, regardless of size or sector.

Lean into Change—We describe what vision, values, and culture have to do with innovation.

All the Fish in the Sea—We help you figure out what customers fish for.

Wading in the Value Stream—We bring you a framework to establish new value to be created for customers.

Core Lean Entrepreneur—We introduce the 3Es of lean innovation—empathy, experiments, and evidence.

The Lean Journey—We describe how you apply the 3Es over the innovation lifecycle.

The Final Word—We end with a call to action.

Throughout, we include examples of real companies applying lean startup principles and succeeding. We hope you gain learning and inspiration from these companies, many of whom don’t use the term lean to describe themselves.

Each chapter also includes exercises and templates you can use to help you think through your business model. Although we don’t believe a step-by-step approach to success exists, we think many will find our exercises beneficial.

Learn the craft, then make it your own.

True visionaries relentlessly pursue the change they want to see.

NOTE

1

We’ve licensed the illustrations with

http://creativecommons.org/licenses/by-sa/3.0/

. We’d love for you to use and share them, just remember to attribute “

The Lean Entrepreneur

by Brant Cooper and Patrick Vlaskovits with illustrations by Fake Grimlock” with a link to

http://LeanEntrepreneur.co

. Thanks!

1STARTUP REVOLUTION

Welcome to the Age of Value Creation. If your organization is not creating value for customers, you are done. If you are focused on wealth creation, if your objective is to profit off fomenting fear or instilling insecurities, or if your business model depends on spoon-feeding solutions, you are done.

In the value creation economy, the customer has the power. The technological transformation we are witnessing provides both consumers and business buyers with vast amounts of knowledge about markets, products, features, capabilities, and reputation; myriad products and companies to choose from; and the power to more easily switch from one company to another. Knowledge at our fingertips comes from the Internet and computers in our pockets; it is easier than ever for customers to curate, analyze, and share opinions and information. Product and company choice comes from globalization, the rise of entrepreneurs and freelancers, and market-expanding enterprises.

All this change has created new rules in the economy: The customer has the power, so you must be focused on creating value for and maximizing the experience of the customer.

Further, we are arguably at the beginning of these trends. The breakthrough technologies of artificial intelligence, robotics, digital fabrication, and open-source hardware will continue to push power to the customer. Customers will increasingly be able to design custom-fit solutions for their individual pains and passions.

These changes don’t come without costs. These changes disrupt the existing economy, collapsing relatively young enterprises like Blockbuster and Borders, decades-old household names like Kodak, and even century-old stalwarts like Nokia, putting tens of thousands of people out of work.

Disruption hurts.

Even in the best of times it’s the worst of times: The very structure of the global economy is changing, forever. Millions are unemployed and suffering worldwide. Manufacturing is not merely being sent offshore; it’s being permanently displaced, even in China. Service jobs are the capitalists’ new “unit of labor.” White-collar jobs are being sent offshore. Online marketplaces are turning college-education skills into commodities. At the online workplace Upwork, customers can get competing bids from onshore and offshore contract freelancers or businesses: engineering, accounting, marketing, sales, website development, design, customer service, technical support, administrative assistance, writing, editing, translating, human resources (HR), legal, recruiting, statistical analysis, and information technology (IT).

One of Henry Ford’s great insights was that if he could produce a car at a price his workers could afford, he’d have a huge market.

As entrepreneur and author Seth Godin writes, “The factory—that system where organized labor meets patient capital, productivity-improving devices, and leverage—has fallen apart. Ohio and Michigan have lost their ‘real’ factories, just as the factories of the service industries have crumbled as well. Worse still, the types of low-risk, high-stability jobs that three-quarters of us crave have turned into dead-end traps of dissatisfaction and unfair risk.”1

What will people do for a living?

What’s going on? It’s pretty hard to wrap your head around. Economic growth indicators that describe the past to help us plan for the future will be revised backward soon. (Don’t worry; experts will be on hand to explain.)

It’s not just the economy, either; it’s how we talk about it. Political institutions have never seemed so clueless, having the same arguments they had in the 1950s. The media is equally flummoxed, having given up trying to separate political fact from fiction, science from opinion. Pundits are proven wrong on a daily basis, only to be trotted out before the masses for their opinions again. Economists run models based on assumptions that have no real-world bearing.

There’s a lot of doom-and-gloom prophecy reminiscent of the eighteenth-century cleric Thomas Malthus, who wrote that “the power of population is so superior to the power in the earth to produce subsistence for man, that premature death must in some shape or other visit the human race.”2

Yet, tech hubs of entrepreneurial activity are thriving not only in Silicon Valley, Manhattan, Santa Monica, and Boston, but in Boulder, Grand Rapids, and San Diego.

We find ourselves amid a tremendous storm of economic, technological, and cultural transformation. We are experiencing massive waves of change, high tides of anxiety, and a tumultuous backwash of resistance. This disruption has created an odd mixture of extraordinary market efficiency and entrepreneurial innovation, coupled with volatility and uncertainty at unprecedented levels.

How do you face uncertainty?

To survive and indeed to prosper through these changes, whether as an individual, a startup, or a large enterprise, you must be fast, efficient, and value-creating. You must be close to your customer, be optimized for learning, and use data to help inform decisions. You have to be lean.

BYTES EATING THE WORLD

In 2011, famed Internet-entrepreneur-turned-venture-capitalist Marc Andreessen described how technology companies are disrupting entire industries. He called this phenomenon “software eating the world.” He declared:

Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.3

Indeed, software is ubiquitous—it’s in your car, phone, stereo, camera, and TV. Software is critical to any modern business. Customer management, logistics, resource planning, inventory control, human resources, accounting, factory automation—all are made up of software, software, software. The same is true of the consumer experience: We buy books, watch movies, listen to music, and play games created or distributed by software companies: Amazon, Netflix, Pandora, Apple, Zynga.

The line between software companies and traditional-product companies is blurring to the point of making the distinction irrelevant.

Innovative software coupled with new electronics has resulted in new ways for computers and people to interact (human–computer interaction or HCI), resulting in what investor Brad Feld of the Foundry Group calls “instrumenting human beings.” We are at the very infancy of HCI and its natural progression toward a “symbiotic human–computer future.”4

The open-source software movement, which helped lower development costs and drove innovation in the personal computer world, is now emerging in the computer networking industry led largely by Google’s G-Scale Network and the use of the OpenFlow protocol.

Have we mentioned hardware? And materials science? Massively disruptive technologies, such as 3D printing, are enabling the first wave of mass customization that will threaten manufacturing-based economies. Movements are well underway to open-source hardware-development technologies and create hardware components that can be used across different companies, even in different industries.

“For the last hundred years and definitely for the last thirty years, manufacturing has ostensibly been treated as a solved problem,” says David ten Have, CEO and founder of Ponoko, a web-based platform for digital fabrication. “The reality is that it is just a plateau that we’ve been sitting on, and some technologies and some social forces have come into play that have caused us to push off the plateau.”5

DIGITAL FABRICATION:

Process that combines 3D modeling and additive manufacturing technology to produce models, prototypes, and, most significantly, functional products.

Digital fabrication is giving small businesses the ability to manage inventories like Fortune 100 companies. Suddenly, experimentation with new products and disruptive innovation is not so risky.

This also matches up with the trend toward people making products to solve problems in their own communities. Businesses are moving away from producing for the masses, and toward more local, niche markets.

The culture of open-source software—which permits users free use of code under specific conditions—is another death knell for the big-business-protecting patent system. (Not that this will be a quick death.)

Current digital-fabrication technologies are at the state of one of the first fully assembled personal computer circuit boards, the Apple I, developed in 1976, estimates David ten Have. If true, this means that 3D printing, open-source hardware, and other digital-fabrication technologies will have a massive impact on our economy.

CONNECTIVITY

Internet, mobile devices, laptops, tablets; PDAs, GPS, 3G, 4G, IM, SMS, GPS; LinkedIn, Facebook, Twitter—you get the picture. We’re plugged in and connected, and, as some like to say, hyper-ly so.

Venture capitalist Mike Maples Jr. says:

You’re going to have billions of nodes connected to millions of clouds and you’re not going to think of it as one Internet anymore, but you’re going to have all kinds of different clouds and data feeds and screens and interfaces that don’t even have screens talking to each other, sometimes overtly and sometimes behind the scenes.6

Today, technology innovation is finally about the individual product user. Disintermediation, or the removal of the middleman that sometimes lives between problem and solution, has disrupted multiple industries, putting creative people in direct contact with consumers. For instance, musicians can sell directly to their fans, authors to their readers, and filmmakers to their viewers. While large entertainment studios, for instance, once dominated their respective industries by curating content producers and owning distribution channels, the Internet has brought democracy to these endeavors, increasing competition, driving down prices, and increasing consumer choice. The days of cable companies forcing consumers to buy schlocky reality shows to get the content they truly want are coming to an end.

THE VALUE-CREATION ECONOMY

We are in a value-creation economy. The businesses that continuously create the most value within a market win. This is true for big, established businesses, as well as startups.

There are two sides to the coin when it comes to value-creation. On one side is customer empowerment, and on the other is employee empowerment.

The nature of being hyperconnected means businesses can have access to their customers 24/7, no matter where they live. This has an important implication, which is that it’s easier than ever to be attuned to your customers, and that means businesses are in an excellent position to truly understand their consumers.

In the value-creation economy, customers are empowered by:

Having a product experience that exceeds their needs.

Having a relationship with the company in which the company treats them respectfully.

Having a voice in the product.

With power in the hands of the consumer, the value-creation economy is defined by eliminating barriers between those who build a product and those who experience it. To accomplish this, employees must be empowered to:

Be close to the customer.

Discover new value.

Create value in the moment.

Rather than being sequestered inside office buildings and leaving customer interaction solely to salespeople and customer support, all employees should seek to deeply understand their customers. It should become standard practice for anyone engaging with a customer to be in a learning mode. Software engineers need to go to the source and understand the context of the problem for which they’re engineering a solution. Customer service should be empathetic. Salespeople should be consultative. Even personnel in back-office support functions like human resources, legal and compliance, and information technology should seek to deeply understand the needs of their customers, who happen to be colleagues at their place of work.

This is even true for doctors!

Good physicians know that understanding their patients deeply helps them diagnose illnesses. Family history, nutrition, exercise, stress, and other daily routines and quality-of-life conditions have an important impact on health. That being said, specialists can lose sight of the impact that medical procedures and pharmaceuticals might have on quality of life and other factors that impact long-term health. So relying solely on the science of disease, medicine, and cures, it’s possible to lose focus on the idea that analyzing the quality of life shouldn’t be separate from the discussion about life itself.

Dr. Stephanie Cooper,7 cardiologist and assistant professor at the University of Washington, says:

In the past, a doctor may begin interaction with a patient with an open-ended question, but research has shown that doctors often interrupt the response. The ensuing discussion is directed and manipulated by the physician, who often has preconceived notions about what the patient needs. Patients leave without having all of their questions answered, often feeling disrespected and not fully understanding the treatment plan. This leads to decreased compliance and, in the worse situations, to increased likelihood of litigation if things go wrong. It may also result in worse outcomes.

In recent years, there has been an increasing emphasis on patient involvement in medical decision making in which all the possible treatment options and outcomes are outlined and the patient and doctor together make a decision based on patient preferences. This is in direct contradistinction to physicians’ patriarchal, autonomous decision making (telling the patient what treatment comes next) but also is not an open-ended choice given to the patient, who cannot possibly understand all of the consequences of treatment options without guidance from their medical provider.

This is patient empowerment.

CASE STUDY: Customized Value Creation

Scott Summit, cofounder of Bespoke Innovations, revolutionized the world of prosthetic limbs by combining excellent design with digital fabrication techniques. Here’s his story.

I set out thinking, “Where can you create things that (1) are very complex and (2) will be meaningful in changing the quality of somebody’s life?”

As it happens, I was always interested in prosthetic limbs. I saw an opportunity waiting to happen or a solution that is waiting to happen because existing products represent an unsatisfied need. Regular prosthetics are an engineering solution to a problem and not a design solution.

I thought, “Okay, here is an opportunity to fix that. Maybe I can combine 3D printing, which is the ability to make a unique thing for a unique situation, and prosthetic limbs, which are not very well suited for mass production since that makes generic the complexity and nuance of human individuality.”

So that became the foundation for Bespoke. We started with prosthetic limbs and that’s still what we do as kind of the flagship, but now we have a number of other opportunities that follow a similar mentality.

Ultimately, we want to show as much respect for an individual as we possibly can. We use technology tools and the design tools as our vehicle. I think it shows people tremendous disrespect to lump them all into the same category and say, “Okay, you’re all amputees—you all get this part, this collection of titanium machined parts because you’re all that similar.”

So we rethink that and say, “How do we speak to a person’s individuality and their taste and their uniqueness?”

The process we take is multifaceted. There’s the “get to know us” process, where we explain to [clients] what we do. We attempt to elicit from them their tastes and preferences in design aesthetic, and that’s actually very difficult to do, harder than I had ever imagined.

Outside of people who are designers at heart, it’s very hard to thrust somebody into the role of designing something for themselves, something very personal like a prosthetic limb. It’s like the extreme version of telling somebody to design their own tattoo. We all generally don’t do that, because we’re not used to doing that in our daily lives.

So we typically show people the art we have, the patterns, the designs we’ve done in the past, and we use that as a kickoff point. We say, “By the way, we can change this material. We can add details if you like. If there are patterns that you like.  .  .  .” We try to tease that out of them because ultimately we don’t want them to simply select from our preexisting work. That doesn’t take what we offer to its fullest potential. So we encourage people to cut loose a bit and look inside themselves and see what would make it the most personal and give them the most connection to it.

Then there’s the technology part of the process. We do a 3D scan of their body and turn the images into usable data by running them through software that uses different cleaning algorithms and meshing algorithms. From that data, we actually mirror the person’s sound-side leg and superimpose it over their lost leg. We align it by eye; there is a lot of craft involved. We line it up until it looks like it is in a natural location on the body based on the scan. That will be the reference for the rest of the process because now the body will be symmetric no matter what we do and it will be unique no matter what we do. The process philosophically goes to the heart of what we do because it generates what we think are the most important elements we offer: symmetry and uniqueness.

We have a number of templates that we’ve developed, which are partially mechanical and allow us to attach elements to the substructure of the prosthesis. The templates might create the design pattern, for example, herringbone tweed or a lace or a lattice, and we start mixing these templates into the computer files, playing with them to create the aesthetic we’re striving for.

The final step is that once we have the data, we do a lot of communication with the client. We send them images of the prosthetic, which are photographically accurate even though they’re virtual. When they’re ready to pull the trigger, we send the files out to a third party who three-dimensionally prints the parts. We have a few post-processing steps we can apply depending on what the person is looking for, and then we’re ready to send them to the person.

How they use them and how their life changes is up to them. We encourage them to communicate back to us when they’re ready, because it’s exciting for us and rewarding. We hear of stories where women all of a sudden are buying clothes to match their fairing. We recently had a case where this woman wore a beautiful dress and shoes that really brought out the best in the fairing we had created for her.

The woman said she had been creatively hiding her prosthetic for eight years under stockings with foam pads and suddenly she’s wearing skirts that show it as it is and it just looks great and she doesn’t care about people seeing it and knowing that she’s an amputee.