The Startup Way

The Startup Way by Eric Ries is currently weighted 6th on The List. It’s a relatively new book, released just last month (October, 2017).

It is the second book from author Eric Ries on the subject, the first, The Lean Startup, which I’ve recently re-read.

Interestingly, when reading Tools of Titans (you can catch the reading here and the review here), I noticed an interesting contrast in opinions:

Ries and the “lean” proponents (like Steve Blank/Ash Maurya) are often associated with the phrase “fail fast.”

After all, rapid iteration and pivoting are both key concepts in “lean,” and why would you iterate or pivot if a hypothesis isn’t failing?

And yet, a few of the “titans” in Tim’s book said that “fail fast” is the worst advice they hear most often.

Ries and Blank have both noted that people seem to have mistakenly conflated the probability of failure in a startup with the goal of a startup.

I think it would be an interesting topic to address/nuance to be teased out, so I asked Tim to invite Steve Blank on his show – we’ll see…

Now to the book in question.

The Startup Way – Raw Notes

Began Reading: 11/17/2017
Finished Reading: 11/20/2017 (Parts One and Two, which are relevant here. Part Three was not.)

The Startup Way – Three Things

  • 12/20/2017 – Update One
  • 1/20/2018 – Update Two
  • 2/20/2018 – Update Three

The Startup Way – Part 1 | The Modern Company

First Thing First

The first thing you should know about either of Eric’s books is that they’re both heavily centered on bringing the startup into the existing corporation, and NOT starting a standalone startup.

If you are picking up the book as an aspiring startup founder and you’re new to this material, you’d be better off with Steve Blank’s free Udacity course, or Ash Maurya’s book Running Lean.

Both of those are much better primers to the world of startups.

Are You Evolved?

“So…how would you know a modern company if you saw it?”

This question reminded me that Carl Hodges once asked if I knew any evolved persons; the point being that it’s almost impossible to know evolved from deformed or crazy at the point of evolution.

But back to the book…

Ries actually goes into a fair bit of detail teasing out a modern versus an old-fashioned company starting on page 37.

Question for the Author

How does a company go about developing a startup dashboard made up of non-vanity metrics? (Perhaps answered in the second part of the book.)

I remember this topic being address in The Lean Startup, but I don’t remember specific guidelines on how to approach defining non-vanity metrics.

Helpful to You

I think a comparison of The Lean Startup (Ries’s first book on the subject) to The Startup Way might be helpful.

The Lean Startup:

  • Any time there is a fair amount of uncertainty in the outcome of a project (innovation) it should be treated as an entrepreneurial venture (a startup),
  • And it should be managed as such, guided by these five principles:
  1. Entrepreneurs are everywhere.
  2. Entrepreneurship is management.
  3. Validated learning.
  4. Build-Measure-Learn
  5. Innovation accounting.

The Startup Way:

  • Companies should engage in uncertain projects (innovation) on the regular to sustain themselves in the long-term,
  • And should manage such uncertain projects as an entrepreneurial venture (a startup), guided by these five principles:
  1. Continuous Innovation
  2. Startup As Atomic Unit Of Work
  3. The Missing Function (is Entrepreneurship/Startup in the org chart)
  4. The Second Founding
  5. Continuous Transformation

I’ll give Eric the benefit of the doubt going into the second section of The Startup Way, but thus far I don’t think the theses of these two books are different enough to warrant two treatments. I wonder why these thoughts weren’t included in an updated version of the first book.

The Startup Way – Part 2 | A Road Map for Transformation

Phase One | Chapter 6

tl;dr

Start Small
Build Dedicated, Cross-Functional Teams
Wield the Golden Sword (Use senior management to cut through red tape.)
Design a Good Experiment
Create New Ways to Measure Success
Work by Exception

Connections

Ries recounts the importance of leadership buy-in, similar to Jocko’s concept of “leading up the chain of command.” (p. 163)

Also related to Extreme Ownership, when asked what they need, teams typically don’t ask for more money, they ask for cover and help through corporate bureaucracy. This reminds me of two things:

  • The story of never asking for something you can work around so that when you ask for something actually needed the response will be more positive and faster.
  • And the concept of “cover and move.” (p. 178)

Every Experiment Should Have

(p. 169)

  • A clear, falsifiable hypothesis.
  • An obvious next action.
  • Strict risk containment.
  • A tie between what is measured and at least one Leap of Faith Assumption.

Handy List of Questions

I’m a fan of good questions, and there’s a list of them on pages 172 and 173 that are worth getting to know…

Phase Two | Chapter 7

tl;dr

Identify the Challenges Faced by Pilot Teams
Implement a Widespread Rollout
Identify and Make Proper Use of Executive-Level Champions
Train Representatives of All Internal Functions
Establish an In-House Coaching Program
Set Up the Mechanisms of Metered Funding and Growth Boards

Phase Three | Chapter 8

tl;dr

Oh dear. The list of all the places to apply these things is exhaustive.

HR
Accounting
Legal

And the list goes on and on and on.

Innovative Accounting | Chapter 9

The Startup Way Innovation AccountingI’m not sure why Ries was so apologetic about this chapter.

It is alone worth the price of the book (which is saying something, because I wasn’t sure we were going to get to this point).

In fact, if he’d written a whole book on innovation accounting, I’d be a much happier reader.

But instead he seems to shy away from writing about the math behind it all.

Probably because math doesn’t sell books.

But only if it did…

Essentially, this chapter begins to answer my question above for the author: Which metrics are not vanity metrics?

And what he describes seems to be a lot like what I did for my startup when I was trying to get a handle on all the moving pieces.

Someone told me to call what I’d made a sensitivity analysis.

But the intention is to gather real data to replace hypothetical data (projections)… I like Ries’s term better.

I’ll have to write more about this soon. I guess that’ll be my first thing for this book…

The Startup Way – Part 3 | The Big Picture

Turns out, this part of the book falls outside of the business nature of Entreprising commentary… So, no comment.

Which leads me to considering the Three Things…

Last Updated 11/21/2017