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 / Winter 2013 / Issue 73(originally published by Booz & Company)


Why Eric Ries Likes Management

Think about GE—such a strong culture of discipline, rigorous execution, and management training. As I’ve watched the company adopt lean startup ideas, the commonalities have been great with its existing culture because lean startup is itself a rigorous methodology. We don’t lose the rigor and accountability, but we put in place different metrics, milestones, and checklists.

We don’t need to reinvent corporate culture, but we need to recognize that the culture will manifest itself in different ways in different parts of the portfolio. That itself is a pretty big shift. 

The Five Principles of the Lean Startup

As the name implies, the lean startup is an efficiency-minded methodology for launching new businesses, whether they are stand-alone new ventures or ventures within existing enterprises. We are reprinting Ries’s own published primer on the five principles that characterize the lean startup.

Entrepreneurs are everywhere. You don’t have to work in a garage to be in a startup.

Entrepreneurship is management.  A startup is an institution, not just a product, so it requires management, a new kind of management specifically geared to its context.

Validated learning. Startups exist not to make stuff, make money, or serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically, by running experiments that allow us to test each element of our vision.

Innovation accounting.  To improve entrepreneurial outcomes, and to hold entrepreneurs accountable, we need to focus on the boring stuff: how to measure progress, how to set up milestones, how to prioritize work. This requires a new kind of accounting, specific to startups.

Build—measure—learn. The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop.

Reprint No. 00224

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