Small businesses urged to cut waste and create value

Ries' book The Lean Startup has become a business publishing sensation since hitting the shops in September. This month he was in the UK to promote the international English edition and spoke to sold-out audiences, eager to learn about his approach.

So what is the lean start-up? "The idea is to evaluate what we do as entrepreneurs to figure out what parts of the work we do create value and what parts are wasteful," explains Ries. "We took the word lean from lean manufacturing where the breakthrough idea was that value is defined by what the customer cares about. Customers don't care about how much inventory you carry in the factory, they only care about the high quality product, but in a start-up we don't know who the customer is and we often wind up building a product there is no customer for and so how do we know how to define value in a start-up? Our belief is that you define it by learning how to build a sustainable business."

Ries has based the approach on his own experiences. "I started out programming computers; in my childhood it was my favourite thing to do in the whole world and I thought I'd keep doing it for the rest of my life. But I kept working at start-ups where we built amazing technology that even today nobody is using. It was completely wasted. That is how this got started, there was a lot of frustration working on products that don't matter - I wanted to find a solution to that problem," he explains. "I started blogging, writing, reading and developing the thinking. Once I put it together I called it the lean start-up."

He speaks of concepts like minimal viable product, or MVP, basically a way of working out the smallest product amount required in order to run an experiment to learn if it works. "If you want to start a new internet based service you'd normally spend a year or two developing the technology and doing a lot of preparation, but in the lean start-up it is completely opposite. We'd say there is no need to build any technology at all until we know that the customers actually want the product," he says.

One company he cites in the book, Food on the Table, creates bespoke menus to families, supplying them with meal plans based on what's available at their local supermarket. Starting out the founders spent a long time meeting with customers face-to-face in the supermarket car park, providing printed out menus and getting feedback. Only when they had so many customers they couldn't practically meet with them all, did they start work on the software. "It seems ridiculous, the CEO and CTO wasting their time meeting just one customer at a time, but it allowed them to start learning straight away and taught them what worked," explains Ries.

He believes entrepreneurs need to pay much more attention to what he calls "the boring stuff". "In the movies it is all about the idea, how you got it and what kind of person you are. But in real life lots of people have good ideas and they don't always become successful," he says. "Facebook was the third or fourth college social network. But if you look at all the other guys who had the right idea at the right time in the right place, they didn't make any money and Mark Zuckerberg is one of the richest men alive. It is because the boring stuff doesn't even make it into the movies - they skip over the dialogue - but that is where the decision was made that determines who is successful and who fails. So my thesis is that if we focus on that stuff even if it is too boring to make it into the movie we could help entrepreneurs be more likely to succeed."

But while he encourages a more scientific approach to business he says the more traditional entrepreneurial virtues are still vital. "They are all still important: the good idea, a good team, perseverance and creativity. But what we fundamentally believe is that those assets have to be channelled through a scientific process. In order to be maximally effective otherwise you're just hoping to get lucky so we teach people to be disciplined.  It doesn't mean being bureaucratic or slow, but it does mean not being sloppy," he explains.

A newcomer to the UK start-up arena, Ries notes there is still a stigma of failure among the Brits and this is where another of his concepts, a pivot, comes in. "It is simply a change in strategy without a change in vision. It's the recognition that what you are doing is not working, but it is not giving up; it is finding new paths. Every start-up that has been successful has pivoted. We have to get used to that - it is not a failure, it is learning," he says.

"We want to teach entrepreneurs that learning is value and getting big fast and showing off and getting the press writing about you is a waste of time. Instead of focusing on what we call success theatre, which is the work you do to make people think you are a big shot, take all your energy and re-invest it in customers and making a great product. If you can do that then our industry could do so much better."

Click here to buy The Lean Startup and read Eric Ries' blog, www.startuplessonslearned.com

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