The Startup Way - Eric Ries

The Startup Way - Eric Ries

Understand how startups emerge from garages and dominate the market, while large and traditional companies are disappearing. Build your own successful startup by applying innovative concepts!

Would you like to know the good practices of startups and how you can apply them in any company to be able to survive in the time of innovation? If so, then the book "The Startup Way", written by the author Eric Ries, was made for you!

He brings principles of entrepreneurship for your startup to have sustainable growth and dominate markets, and explains the importance of the innovative mindset in all types of business.

Do you want to know more? Then, keep reading this summary and get to know entrepreneurial management!

About the book "The Startup Way"

"The Startup Way" was written by Eric Ries, the same author of the bestseller "The Lean Startup", and published in 2017 by Currency.

For a better understanding of "The Startup Way", we recommend reading the first book "The Lean Startup", because it demonstrates what are the main concepts of a startup that develops in the ideas of Lean Manufacturing.

In the book in question, it shows the application of these ideas not only in a new company of technology and software, as it happens in the first one, but also in centenary companies that develop products.

About the author Eric Ries

Eric Ries is a Silicon Valley entrepreneur, creator of the Lean Startup movement, and author of the bestseller "The Lean Startup", which has been translated into more than thirty languages and has sold over a million copies.

He seeks to direct startups by developing a business model structured, based on the Lean Manufacturing methodology.

Eric has founded a number of startups, including IMVU, where he worked as chief technology officer.

He is also a business and product strategy consultant for startups of large companies, such as GE. Due to the experience at this institution, this book appeared and it brings, as a central theme, the development of innovative practices in consolidated companies.

The author Eric Ries has also worked as a resident entrepreneur at Harvard Business School, IDEO, and Pivotal, and he is also the founder and executive director of the Long-Term Stock Exchange.

To whom is this book indicated?

The book "The Startup Way" brings content intended for people who want to understand how the methodology of the lean startup can be applied in all types of companies.

Thus, if you are or want to be a founder, or even, if you are or want to be a company employee, reading this book will enable you to make your workplace always innovate through the practices of startups.

The author Eric Ries warns that, although startups don't like bureaucracy, they tend to become more bureaucratic with the much-desired exponential growth. So, he shows you the tools needed to prevent it from occurring.

Main ideas of the book "The Startup Way"

The author Eric Ries aims to demonstrate how the practices of startups can be applied in all types of companies. Therefore, in this summary, we will address the following aspects:

  • A brief explanation of what is covered in the book "Lean Startup";
  • The different practices of traditional and modern companies;
  • The application of these practices in traditional companies;
  • Innovation;
  • The Startup Way.

So, let's see what is this startup way?

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[Book Summary] The Startup Way - Eric Ries

Overview: We need to talk about the previous book

First of all, we need to return to the concepts of Startup and Lean Startup. The author Eric Ries defines a startup as a group formed of people with a vision to change the world while they are inserted in an environment of extreme uncertainty.

Lean Manufacturing, applied at Toyota, with the innovation and creativity process of a Startup is, in Eric's view, the union of Lean Startup practices. This is done to optimize the innovation process and reduce risks if the wrong strategy is adopted.

In his revolutionary concept of Lean Startup to develop an innovative and more dynamic process, Eric Ries cites good practices, such as:

  • Choosing to make a "leap of faith", that is, to define some basic and essential requirements to start validating an idea. This is because, without this validation, there is no way to develop the product/service;
  • Build from a Minimum Viable Product (MVP) after the "leap of faith":
  • What is it? It is a product or service with the minimum required characteristics of the final product;
  • Why do that? The author chooses to develop an MVP, among other things, due to the reduced cost of development and the reduction in the time of elaboration of a project;
  • Why is this paramount? One of the concepts of Lean Startup is constant validation with the customer. That way, if you are looking to develop something very elaborate, your schedule will be long. Therefore, it is better to develop something more basic and build new features according to your customer's feedback.
  • After building the MVP, it is necessary to measure your results, both the initial adopters, feedbacks, and the efficiency of your product or service;
  • After the measurement, you must choose to stay on the idea and optimize it or develop a new product or service. If you choose the second option, you are pivoting. ,

This methodology described in the topics above forms the "Build-Measure-Learn" cycle and exists to facilitate and optimize the innovation process, as well as reduce the impact if you have to pivot.

According to the book "The Startup Way", innovation occurs more effectively and naturally with the faster development of this cycle.

Overview: Traditional and modern companies

In this part of the book "The Startup Way", it is presented the main differences in the form of management, types of projects, and characteristics aimed at innovation of the two different types of companies.

Very traditional companies

The author Eric Ries shows that these companies have some characteristic practices:

  • They seek to work in isolated areas and with almost no interaction;
  • They tend to execute large, expensive, and slow projects;
  • There is a lot of presence of "middle managers", who have no decision-making power, which blocks the process;
  • Employees are often engaged in various activities, processes, and deliveries;
  • It is a place where most employees share their attention in several simultaneous projects;
  • Failure is not an option.

Modern companies

On the other hand, modern companies have more dynamic and innovative practices:

  • They seek to develop in their employees a mindset of constant innovation;
  • They allow their employees to be entrepreneurs and choose to develop an internal startup, in which the employees carry out one project at a time;
  • The teams are multidisciplinary, that is, people from various areas with the goal of developing a project that seeks to deliver the best experience for consumers;
  • They have an idea of dreaming big, start small, and scale rapidly and exponentially through the execution of dynamic projects;
  • They allow and reward errors that bring some positive change.

For the author Eric Ries, the practices of modern companies are responsible for the number of innovations they promote. Therefore, through the analysis of these good practices, the author developed "The Startup Way".

The principles of the Startup Way

  • Continuous innovation: aims for long-term growth. It seeks to develop creativity, talent, and through dynamic and recurring advances;
  • Startup as an atomic unit of work: to develop continuous cycles of knowledge and innovation, companies must create internal startups so that they can experiment and develop new experiences;
  • Absent functional area: from the moment that startups are added to the organization, it is important to note that they require a different organizational structure and a form of management that confuses traditional techniques;
  • The second foundation: keep in mind that this type of change so profound in the organization is similar to the feeling of founding the company again;
  • Continuous transformation: this principle requires the development of a new organizational capacity that seeks to constantly transform some of the company's practices to achieve innovation.

Attention Points

The author Eric Ries draws, in the book "The Startup Way", attention to the fact that, when making changes like these, it is important to be aware that:

  • It is not necessary to reorganize all teams around the principle of startups;
  • Employees don't change their behaviors suddenly;
  • The goal is to make teams of startups work peacefully and safely to innovate. This favors employees to act in an entrepreneurial way, which allows the emergence of a new culture;
  • It is extremely important that all company managers master the entrepreneurial management tools and know the real reason why some people are working differently;
  • People dedicated to internal startups should be charged according to the new standards.

Overview: Application in a century-old company

In the book "The Startup Way", the author Eric Ries presents how he applied his startup principles in a centenary American company, GE, which has a history of being innovative.

For the CEO there, the organization should start applying more modern processes, as well as developing a culture of continuous innovation, as the startups did.

For Eric Ries, the innovative principles of startups can be applied in any company and help modernize the most traditional ones.

Thus, the author participated in the application of these innovative principles in a project to build a diesel and natural gas engine within GE. Such a project, following normal practices, would take 5 years to get ready and at a high cost.

But, with the application of the fundamentals of startups, the engine, developed in a single mold and with smaller dimensions, was done in 6 months, with a lower cost and a better validation of the idea and the user experience.

The success of this project meant that good practices were extended to all GE and led to the creation of an internal project, Fast Works.

So, did you understand how the practice of startups works? See that there is no need to create something very elaborate with an extensive schedule and high costs.

You can create something simpler, at a lower cost, in less time and rely on the opinion of who matters most, the customer, and only then invest in creating the final product or service. This is the practice of MVP.

Challenges

During the implementation of this project, the author Eric Ries realized some challenges that can be faced:

  • The culture that mistakes are not common in traditional companies. Thus, accepting the question of pivoting is a very big paradigm break, as it forces the conception that error is part of the process;
  • Traditional companies have aversion to risk projects, which limits innovation.

Benefits

According to the book "The Startup Way", with the ability of every employee to be an entrepreneur, it is easier to retain good people within your company, and these people are responsible for developing a mindset of innovation.

Overview: Innovation

The author Eric Ries, due to his frequent contact with both startups and traditional companies, realized that the questions of the CEO's of the two niches are usually the same:

  • "How can I encourage employees to think more like entrepreneurs?";
  • "How to develop innovation in new products without losing current customers?";
  • "How can I ask for results from the entrepreneurs who work for me without putting my business at risk?".

In this way, innovation becomes essential for both companies. To this end, it is suggested in the book "The Startup Way" that companies develop an innovation department.

The suggestion is that there is a person responsible for the innovation area. This way, it will be possible to be promoted, in addition to providing a principle environment for risk and the development of new ideas.

Do you want to know if your company is on the right track? Answer 2 questions:

  1. "Who, within your company, is responsible for developing internal startups?";
  2. "Who, within your company, is responsible for stimulating an innovative and entrepreneurial mindset in all departments?".

Know that if the answer to both questions is "everyone", no one does and your company is further from innovation.

Implementing internal startups

As has been said, the implementation of these institutions within a company is important. But what should you do?

  • Create spaces for experiments;
  • Create goals for them to operate autonomously;
  • Develop the entrepreneurial qualities of your employees;
  • Put the right person on the right team;
  • Create new incentive models and career plans.

How to make big companies innovate?

In the book "The Startup Way", the author Eric Ries advises that this can be done as follows:

  • It is necessary for the company to develop administrative and entrepreneurial practices aimed at spreading the innovative mindset in the organization;
  • Implement the proposed changes in a practical and dynamic way. Also, it is necessary to measure the result to see what has been beneficial and disclose it to the entire company;
  • Continue measuring what is working;
  • Pay attention to the small nuclei of resistance that may try to sabotage the new culture;
  • The desire for change must come from the top leadership, as the transformation process is so traumatic that it seems as if the company is being founded again.

Overview: The Startup Way

For the author Eric Ries, the base of the Startup Way pyramid consists of Accountability, followed by Process, then Culture, and People on top.

Accountability

In this niche are the systems, bonuses, and incentives that motivate employees' behavior in the tasks that must be performed. These accountability systems should be aligned with the company's goals.

For the implementation of a new culture, this is where the transformation begins.

Process

In the lower-end niche of the pyramid are the tools and tactics that employees use daily to get the job done.

The process flows due to accountability because it limits choices, as it is explained in the book "The Startup Way".

Know that if a system of accountability punishes any failure, it will be impossible to implement rapid and iterative experimentation processes (which involve many failures and lead to innovation).

Examples: project planning and management, team coordination and collaboration.

Here is the second step of transformation!

Culture

The union of habits, forms of work, shared and implicit beliefs, condense into a culture. Culture is the picture of how the organization acted in the past, not how it wants to act.

Changing culture is not so easy and does not happen suddenly, because it is formed over time and is the residue of the entire process and the company's responsibilities.

People

Know that every culture attracts certain types of people. A toxic culture, for example, repels innovative talent.

The author Eric Ries points out that it is possible to determine the success of the organization by the capacity of the people it manages to attract and retain.

Know that:

For you to be able to transform your company, the order of transformation must start with accountability, so that you can optimize your processes to implant a new culture and attract good people.

It is possible to "incubate" a new culture within a traditional organization. To do this, simply organize internal startups with people with an innovative spirit and encourage them to grow and spread the idea in the company.

What do other authors say about it?

The author Frederic Laloux brings in his book "Reinventing Organizations" scores on the emergence of a new organizational model that tends to be adopted in corporations. He also examines the reason why organizations have changed their habits, through the search for more engaged employees who care for continuous improvement.

In the book "The Innovator's Dilemma", the author Clayton M. Christensen brings concepts to help readers tailor their company to innovations to create a competitive advantage, overcome competitors, and dominate the market. This book has already been considered as one of the 6 most important business books in the last 50 years.

Jim Collins in the book "How the Mighty Fall" lists the five steps for the decline of large companies. In this way, the author explores how even the largest companies can suddenly collapse.

Okay, but how can I apply this to my life?

The practices applied in startups can also be applied to traditional companies.

That way, you should understand the practical concepts of a Lean Startup, such as the development cycle.

Also, it is important to develop an area of innovation in the company, which will have a multidisciplinary internal startup for the development of a specific project and will aim to "incubate" a new culture in the company, which focuses on innovation.

Did you like this summary of the book "The Startup Way"?

Are you ready to turn your startup project into reality? Tell us in the comments, your feedback is very important!

If you want to know all the details of Eric Ries's lessons, click on the image below to purchase the book:

Book “The Startup Way”

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