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a16z Podcast | Beyond Lean Startups
38 segments available
What began as a scientific approach to creating and managing startups has now become a worldwide movement for companies of all sizes -- and for creating (or rather rediscovering) entrepreneurs in all places. Not just inside startups, not just for software, and not just inside Silicon Valley. It's about unlocking human creativity everywhere. Perhaps even reinventing the firm. As utopian as that sounds, Eric Ries -- who pioneered the lean startup movement and wrote the definitive book on it -- argues the case in this episode of the a16z Podcast. But has it become too much of a religion? One where people apply the letter of, but not the spirit, behind lean startup principles? Ries, who recently crowdsourced a leader's guide for practitioners to test and evolve the very concepts he first published 5 years ago, shares lessons learned -- as well as the true meaning of overused terms like 'MVP' and 'pivot'. Ultimately, lean startups are about how to make decisions and build new products under conditions of high uncertainty. Without having to chisel the principles into stone tablets.
Segments Timeline
Introduction to Lean Startup
In this segment, the hosts introduce Eric Ries, the author of 'The Lean Startup,' and discuss the significance of the book's upcoming five-year anniversary. They highlight how the Lean Startup methodology has evolved and its impact on entrepreneurship beyond Silicon Valley.
"hi everyone welcome to the Asics & Z podcast I'm sonal and Michael and I are here together interviewing Eric Ries who wrote the book on the Lean Startup and it's been actually now over fight is that r..."
The Evolution of Lean Startup
Eric Ries reflects on how the Lean Startup principles have transcended their original context, moving beyond Silicon Valley and traditional startups. He emphasizes the importance of understanding what Lean Startup means for the future of businesses of all sizes.
"came out in 2011 so next fall will be the five year anniversary of his publication and of course the publication was like you know the end of a process of blogging and writing and kind of building tha..."
Scientific Approach to Innovation
Ries explains the core idea of Lean Startup: applying a scientific, iterative, and customer-centric approach to product development. He discusses how this methodology draws from lean manufacturing principles to innovate effectively under uncertainty.
"because one of the things that's happened is that Lean Startup is now outside of Silicon Valley and it's gone also outside of startups interestingly so we want to hear a little bit about your insights..."
Testing Assumptions in Startups
In this segment, Ries addresses the common criticism that Lean Startup focuses too much on customer feedback at the expense of true creativity. He argues that understanding customer needs through scientific testing is crucial for successful innovation.
"scientific more iterative and more customer centric approach to product development and customer building it's called Lean Startup because we take ideas from lean manufacturing around cycle time and b..."
The Democratization of Entrepreneurship
Ries discusses how entrepreneurship has become more accessible, breaking down barriers that previously limited who could start a business. He highlights the shift in the entrepreneurial landscape, where anyone can now test ideas and innovate, regardless of their background.
"you respond to critics who say look I would say actually thinking about it more at no graphically that you're essentially only then building for people who know what they like it's based on what the m..."
The Role of Technology in Entrepreneurship
In this segment, Ries elaborates on how technology has transformed the means of production, allowing aspiring entrepreneurs to start businesses with minimal resources. He connects this shift to the broader cultural changes in how entrepreneurship is perceived.
"which elements of the strategy make sense right do we have the right business model and the right target customer and the right you know approach the disruptive innovation are we on the right technolo..."
Lean Startup Beyond Silicon Valley
Ries expresses his surprise at the widespread adoption of Lean Startup principles beyond Silicon Valley. He reflects on the timing of the movement's rise during the financial crisis and how it resonated with a growing desire for new approaches to business.
"Valley startup world be you know what are ya what are the things that people are kind of grasping to it whether it's aspirational or or really like I can roll up my sleeves and do this yeah you know i..."
The Shift in Management Thinking
Ries discusses the changing landscape of management theories and how traditional approaches are being challenged. He emphasizes the need for companies to adapt to rapid changes and the importance of entrepreneurial thinking within larger organizations.
"think that as Daz entrepreneurship has become more democratized what do you mean by entrepreneurs have become democratized so you know I think there was a time when if you wanted to become an entrepre..."
Forecasting and Uncertainty in Business
In this segment, Ries shares insights from his research on management practices, particularly the historical context of forecasting in business. He highlights the challenges entrepreneurs face when operating under high uncertainty and the limitations of traditional forecasting methods.
"if you want to test an idea if you want to start something in your dorm room at Harvard you know just because you started small just initial I mean it can't scale to something we know massively large ..."
The Reality of Entrepreneurship
Ries reflects on the nature of entrepreneurship, emphasizing that it involves creating something new under conditions of uncertainty. He discusses how this definition applies to individuals in various roles, including those in large corporations.
"piece of a much larger pie so speaking of the shift in management thinking let's talk about the surprise that you have and that we're surprised by that big companies are trying to be lean startup like..."
The Challenge of Innovation in Large Companies
Ries addresses the difficulties large companies face in fostering innovation. He contrasts the entrepreneurial spirit found in startups with the challenges of implementing new ideas within established organizations.
"never thought about what going back to the 1920s and Alfred Sloan and that whole movement and I read realize at certain point that though we had develop this accounting system not to keep track of the..."
The Rise of Intrapreneurs
In this segment, Ries discusses the concept of intrapreneurs—employees within large companies who drive innovation. He argues that the entrepreneurial mindset is essential for success, regardless of the corporate environment.
"and take them seriously we just made those numbers up we had no idea but of course if you think about that like that is so specific to my experience as an entrepreneur and I was like okay well how is ..."
Navigating Disruption in Big Companies
Ries explores how large companies are responding to disruption and the need for entrepreneurial activity to survive. He highlights the urgency for established firms to adopt Lean Startup principles to remain competitive.
"already talked about you said because of the definition of it this can apply to companies of all sizes all sectors all industries I said yeah I just say that so they're like I would like to go you kno..."
Scientific Rigor in Business Innovation
Ries concludes by emphasizing the importance of applying scientific rigor to business innovation. He discusses the need for companies to maintain a focus on experimentation and learning to navigate the complexities of the modern business landscape.
"in because so many companies want to act more entrepreneurial you know the idea you're gonna act like a start-up or have internal startups just like almost almost to the point of cliche here and yet m..."
Bridging the Gap from Lab to Market
In this segment, Ries highlights the disconnect between scientific breakthroughs in corporate labs and their commercialization. He points out that despite significant investments in research, many innovations remain unutilized due to a lack of dedicated processes and accountability for bringing ideas to market, illustrating a critical barrier to innovation.
"like they take these hot world-class scientists and like forget everything you know about science now we're gonna build a business plan tell me what's gonna happen in the future and then make it happe..."
The Missing Function of Entrepreneurship
Ries identifies a crucial gap in large organizations: the absence of a dedicated function for entrepreneurship. He argues that without a systematic approach to testing and executing new ideas, companies fail to harness the potential of their internal talent, leading to missed opportunities for innovation and growth.
"figure out how to incorporate commercialize how do you mean that it's nobody's job to do that I mean two million dollars that should get done and then we're off and running it's like everybody's job y..."
The Reality of Corporate Innovation
Ries shares his experiences consulting for large companies, revealing that many executives are unaware of the true state of their innovation efforts. He emphasizes the need for organizations to confront the reality of their bureaucratic structures and to actively seek transformation to foster a culture of continuous innovation.
"and the talent is in there too if you want to shut them up real quick just say okay tell me the process to test out those ideas to see if they're any good and they're like I guess I got to ask my mana..."
Reinventing the Nature of the Firm
In this segment, Ries discusses the broader implications of applying lean startup principles to large organizations. He argues that the goal should not just be about adapting lean startup methods but about fundamentally reinventing how firms operate to foster innovation and adaptability in a rapidly changing market.
"die now as a consulting that's not generally considered a nice thing to say but it helps because people who don't want to hear that kick me out of their office and we save ourselves a lot of time and ..."
The Entrepreneurial Reality in Corporations
Ries explores the various roles within corporations that require an entrepreneurial mindset, emphasizing that innovation is not limited to startups. He discusses the challenges faced by employees in large organizations who are tasked with driving innovation but often lack the support and structure needed to succeed.
"like I don't blame me like paying lip-service innovation is easy doing it is really hard and the question I always have is like what I want to find an entrepreneur inside a large organization I can us..."
Managing Innovation Like Other Disciplines
Ries argues that entrepreneurship should be treated with the same rigor as other corporate functions. He advocates for the establishment of clear metrics and accountability for innovation efforts, challenging the notion that creativity cannot be managed effectively within large organizations.
"challenge too then you have somebody in the business development you know office who's supposed to be evaluating outside startups for purchase and they make these catastrophic errors you know they'll ..."
The Future of Organizational Structure
In this concluding segment, Ries envisions a future where organizations are structured to support continuous innovation. He critiques the traditional corporate hierarchy and suggests that companies must evolve to remain competitive, emphasizing the importance of fostering an entrepreneurial spirit at all levels.
"but I asked these CEOs that I move all the time who's in charge of making sure that that happens and they don't know there's not there's nobody in the organization they can point to for accountability..."
The Illusion of Product-Market Fit
In this segment, Ries addresses the misconception that achieving product-market fit solves all problems for startups. He shares insights from founders who, despite initial success, struggle with the complexities of scaling their organizations. Ries points out the frustration of founders who miss the entrepreneurial spirit they once had and the challenges of maintaining that culture as their companies grow.
"the time now who have a hundred five hundred thousand five thousand person organization and they're like you know we've gotta get them privately off the record they'll be like I'm not sure I would eve..."
The Accountability Shift for CEOs
Ries explains the shift in accountability that occurs as startups grow into larger organizations. He discusses how founders must adapt to their new roles, where they become the source of funding and political capital for their teams. This segment highlights the importance of fostering an entrepreneurial mindset within the company to maintain innovation and agility.
"talking to them is to be like look I hate to be the bearer of bad news but you need to look in the mirror and now you're looking at the problem because you have to make a fundamental choice as you kno..."
Scaling Innovation Through Experimentation
In this segment, Ries emphasizes the need for large organizations to conduct numerous experiments simultaneously to foster innovation. He discusses the importance of training and rewarding entrepreneurial behavior within teams, contrasting the challenges faced by legacy organizations with those of newer companies that have adopted Lean Startup methodologies.
"know a small number of extremely passionate customers is way better than a large number of people who kind of are indifferent about about your product but they don't understand why the people that wor..."
Lean Startup in Government
Ries shares a compelling example of how Lean Startup principles are being applied within government agencies. He recounts a story about the U.S. Immigration Service's struggles with outdated processes and how a Lean Startup team successfully implemented user-centered design and experimentation techniques to improve efficiency and service delivery.
"larger organizations which by the way is both legacy organizations that are like a hundred years old and are now adopting it recently as well as these companies that started as lean startups but then ..."
Lessons from Healthcare.gov
In this segment, Ries draws parallels between private sector initiatives and the challenges faced during the rollout of Healthcare.gov. He critiques traditional management systems and advocates for a more agile approach to project management, emphasizing the importance of customer interaction and iterative development.
"that's the best they could come up with they sent a Lean Startup team in I think from the United States digital service at the White House and you know they partnered it wasn't just IT people coming a..."
Mindset Over Tools in Lean Startup
Ries discusses how Lean Startup is more about mindset than specific tools or methodologies. He shares insights from a consumer electronics company that successfully adopted Lean Startup principles to innovate rapidly. This segment highlights the importance of fostering a culture that embraces experimentation and customer feedback.
"is that in a lot of ways Lean Startup is almost synonymous with the world being eaten by software because it's really about a mindset for how people move fast have a certain methodology ability to dem..."
The Power of Prototyping
In this segment, Ries illustrates the significance of prototyping in the product development process. He recounts a story about a consumer electronics company that leveraged their existing resources to create a minimum viable product quickly. This approach allowed them to test their ideas with customers and iterate rapidly, demonstrating the effectiveness of Lean Startup principles.
"methodology from someone else's function so like if you ever tried to get software engineers to do design thinking writing on supply non-manufacturing people to do lean manufacturing you know you try ..."
Iterative Development for Market Success
Ries concludes by emphasizing the importance of iterative development in achieving market success. He explains how companies can benefit from rapid prototyping and customer feedback to refine their products. This segment reinforces the idea that Lean Startup methodologies can lead to significant improvements in efficiency and innovation.
"computers I passed me so whenever I deal with Hardware things and I've worked with you know the GES of the world the Toyotas of the world on big physical that if it can explode I tend to be very humbl..."
Unlocking Innovation in Corporate Structures
Eric Ries shares a transformative story about a company that had the resources to innovate but was unaware of their potential. By encouraging a shift in mindset, they learned to iterate quickly and test their products with customers, revolutionizing their business model. This segment emphasizes the importance of management in fostering creativity and the need for companies to recognize their inherent capabilities.
"cut they're like well actually we we run a model store in our company you know where we can showcase new technologies for for customers so customers are in there 24/7 you know looking at new things I ..."
The Power of Small Teams
Ries discusses the effectiveness of small, cross-functional teams in corporate environments. He recounts an experience where a large committee transformed into a focused five-person team, leading to a more agile approach to product development. This segment highlights the importance of customer-centric thinking and the need to test ideas in real-world scenarios to drive innovation.
"what's a high level moral of that story so there's a couple things one is just people use it as an example I think to see how a Minimum Viable Product thinking can work right so reduce scope reduce th..."
Creativity vs. Automation in the Workplace
In this segment, Ries argues against the notion that work is inherently boring and should be automated. He emphasizes that every employee has the right to express their creativity in their roles, regardless of the task. By sharing insights from the Toyota Production System, he illustrates how creativity can enhance productivity even in routine jobs, advocating for a workplace that values human judgment and innovation.
"telling us what to do you know but we we did the work and we went through the method like I said I think being able to derive lean startup from first principles it's very helpful you know accepting pe..."
Transforming Corporate Mindsets
Ries reflects on the potential for companies to unlock human creativity and potential by adopting lean startup principles. He discusses the challenges of changing entrenched corporate cultures and the importance of fostering an entrepreneurial mindset among employees. This segment underscores the significance of empowering individuals to innovate and contribute meaningfully within their organizations.
"really that is right so like prove that it works at scale X then prove that it works at scale 2x and just repeat until you have the whole thing these guys transformed into honest-to-god entrepreneurs ..."
Navigating Lean Startup Terminology
In this concluding segment, Ries addresses the phenomenon of 'lean washing' in the startup community, where companies misuse lean terminology to dress up poor ideas. He stresses the importance of understanding the underlying principles of lean startup rather than merely adopting the jargon. This discussion highlights the need for authenticity in applying lean concepts to foster genuine innovation.
"profound impact I just want to ask the distinction though between does that mean everyone needs to be an entrepreneur or entrepreneurial yeah that's a great question it's a source of great confusion b..."
The Misunderstood MVP
In this segment, Ries clarifies the concept of the Minimum Viable Product (MVP), addressing common misconceptions. He explains that an MVP is not about minimizing resources but about testing significant ideas effectively. Ries emphasizes that visionary projects may require substantial investment, countering the notion that MVPs are only for small, easy-to-implement ideas.
"minimum viable product or pivots like inside the company it's just like at do not want to hear about it so what they have figured out is like they have to create a company specific vocabulary version ..."
The Essence of Lean Startup
Ries critiques the oversimplification of lean startup terminology, noting that the core of the methodology is about management systems and innovation accounting rather than buzzwords. He stresses the importance of understanding the underlying principles and math that drive successful innovation, urging listeners to look beyond catchy phrases to grasp the true essence of lean startup practices.
"always seem a little bit creaky or we're not learning to close it out then let's just take the two most popular terms which are also often specifically organized and I think therefore have a lot of mi..."
Vision vs. Strategy: The Pivot Concept
Ries delves into the concept of 'pivoting,' defining it as a strategic change without altering the overarching vision. He illustrates this with examples from successful companies, emphasizing that while strategies may shift, the vision should remain constant. This segment highlights the importance of flexibility in execution while staying true to the core mission of a startup.
"no viable product or MVP that is a pretty common problem the core mistake I think people make is they think that it's a minimum product right like if you're trying to do something small in this world ..."
The Lean Startup Movement
In the concluding segment, Ries reflects on the evolution of the lean startup movement, asserting its relevance beyond Silicon Valley. He discusses the significance of maintaining a clear vision while adapting strategies, and how the concept of pivoting can extend a startup's runway. This segment encapsulates the essence of lean startup as a dynamic movement rather than a rigid doctrine.
"over time some visionaries in this world are independently wealthy and can sustain investment in their project for as long as they want some have the knack for raising money just in the strength of th..."