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From the point of view of many entrepreneurs, launching something new is all about punching the universe in the face till it does what you want. It involves machismo and making things happen through sheer determination. To those people, talking about management seems really boring. But in a traditional organizational context, to some I sound crazy.

Lean Software Startup – An Experience Report from an Entrepreneurial Software Business Course

Of course, large companies are full of entrepreneurs and always have been. Where did all those different business divisions come from?

Were they handed down from God on tablets? No, they were created. They were once startups. RIES: Most of these companies have some version of a stage-gate development process for new products. All these companies have introduced successful new products. Their win rate may not be very high, but the law of large numbers says every company has at least some new product successes.

But we actually set up a parallel process to bring out the product, working off the books, and then we retroactively applied the stage-gate process to describe what happened. You should be fired. Nobody in this company believes these reports.

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Nobody thinks the official process works. We try to fit the circle into the square box. In traditional companies, people carve out this beautiful little bubble of orderliness and calm and low variation—or they think they do. The cost of starting a new company is going down. So, in previously safe industries, where there were very few competitors and an oligopoly once controlled everything, you can now wake up one day to find that startups have entered your market, and then things suddenly go to hell.

Part of the challenge is just to acknowledge that the reality of competition has changed, rather than trying to fit the signals from an increasingly uncertain world into forecasting-based spreadsheets that demand predictability. RIES: It starts with a few principles.

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First, entrepreneurs are everywhere; not just two guys in the garage but anyplace uncertainty is being managed. Second, entrepreneurship is a system of management. They try to use the same measurement tools from elsewhere in the organization and we end up with those shadow startups in large companies.

Compare that to your typical Silicon Valley startup. The hockey stick shows a few months passing after the product launch, with the curve nice and flat—and then boom, up into the black.

Stealth Mode’s Declining Popularity

People forget that the defining characteristic of the hockey-stick shape is the long, flat blade, not the vertical shaft. There was no meteoric rise up the handle. What happened? We were on time. We were on budget, on schedule. We did everything that we said we were going to do. It took me a long time to understand the real fundamental issue: It is impossible in a startup situation to make an accurate forecast.

Then how do you measure your progress? How do you hold yourself and your colleagues accountable during the early stages of building a new business? This ties to my greatest fear as an entrepreneur: going to sleep at night unsure of what I accomplished. I know I spent some money. I kept a lot of people busy.

We built some new features and hit some development milestones. The antidote is validated learning. You prove one step at a time that you are figuring out how to build a sustainable business. Instead of building the whole product over many years and shipping it all at once, you try to find the smallest experimental version of the product you can launch, to begin the process of getting feedback.

RIES: Learning is the unit of progress in entrepreneurship.

Of course, those things are important, but only insofar as they contribute to learning what creates value and what creates waste. We have nothing but a hypothesis.

RIES: Our first goal is to build a minimum viable product: a working prototype we can get into the hands of prospective customers. We do this by constraining the production run—say, to or even just Then we move right past traditional market research; we just go ahead and sell them.

We skip traditional distribution channels, which would obviously be wasteful for such a small number.

We go to one store, or maybe one customer, and try to get them to use the product. We sell it ourselves. We are personally in the store persuading customers.

The goal, remember, is to start the learning process. All sorts of questions come up with a truly new product.

But guess what? That would be true if you launched on a larger scale anyway. Success is predicated on too many factors for one methodology to guarantee that any single start-up will be a winner. A lower start-up failure rate could have profound economic consequences.

Today the forces of disruption, globalization, and regulation are buffeting the economies of every country. Established industries are rapidly shedding jobs, many of which will never return. Employment growth in the 21st century will have to come from new ventures, so we all have a vested interest in fostering an environment that helps them succeed, grow, and hire more workers.

Only after quick rounds of experimentation and feedback reveal a model that works do lean founders focus on execution. The high cost of getting the first customer and the even higher cost of getting the product wrong.

Long technology development cycles. The limited number of people with an appetite for the risks inherent in founding or working at a start-up. The structure of the venture capital industry, in which a small number of firms each needed to invest big sums in a handful of start-ups to have a chance at significant returns.

The concentration of real expertise in how to build start-ups, which in the United States was mostly found in pockets on the East and West coasts. This is less an issue in Europe and other parts of the world, but even overseas there are geographic entrepreneurial hot spots.

The lean approach reduces the first two constraints by helping new ventures launch products that customers actually want, far more quickly and cheaply than traditional methods, and the third by making start-ups less risky.

Why Eric Ries Likes Management

And it has emerged at a time when other business and technology trends are likewise breaking down the barriers to start-up formation. The combination of all these forces is altering the entrepreneurial landscape.

Today open source software, like GitHub, and cloud services, such as site Web Services, have slashed the cost of software development from millions of dollars to thousands. Hardware start-ups no longer have to build their own factories, since offshore manufacturers are so easily accessible. Once its founders had finished testing and iterating on the design of their wired dollhouse kit, they sent the specs off to a contract manufacturer in China.

Three weeks later the first products arrived. Large companies, such as GE and Intuit, have begun to implement them. Another important trend is the decentralization of access to financing. Venture capital used to be a tight club of formal firms clustered near Silicon Valley, Boston, and New York. Worldwide, hundreds of accelerators, like Y Combinator and TechStars, have begun to formalize seed investments.

And crowdsourcing sites like Kickstarter provide another, more democratic method of financing start-ups. Before the internet, new company founders got advice only as often as they could have coffee with experienced investors or entrepreneurs. Dym, C.

Wesner, J. Atman, C. Eisenhardt, K. Taajamaa, V. Callele, D. Bosch, J. In: Fitzgerald, B.

LESS LNBIP, vol. In: International Conference on Engineering Education.

Research reports Turku University of Applied Science, pp.Burns, M. Power, Religion and Rhetoric by Colin P. The Finest Hour by Carlo Zen. The Price of Glory by William H. But guess what? The lean start-up method is now being taught at more than 25 universities and through a popular online course at Udacity. Essentially, this is a diagram of how a company creates value for itself and its customers.

Volume 1 by J. Your high-risk, high-reward entrepreneurs need to be managed differently, to a different set of metrics and a different system than the conservative operational people who are running your existing products.