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The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth Hardcover – October 17, 2017
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-Robert I. Sutton, Professor of Management Science and Engineering and Professor of Organizational Behavior at Stanford, co-author of Scaling Up Excellence, author of The Asshole Survival Guide.
"Startups are experiments -- some are successful, some aren't, but they're the best way to bring new ideas to market. So how can a big company become more startup-like... or revive the focus and spirit that birthed it in the first place? Building on his revolutionary lean startup work, but applied to big companies, Ries' book shows you how."
-Marc Andreessen, co-founder and partner at Andreessen Horowitz
“I have witnessed firsthand how Eric Ries weaves the impact of lean start up methods with speed and scale into a big company. The Startup Way is an indispensable resource for companies, big and small, looking for faster, more sustainable ways to grow.”
-Beth Comstock, vice chair of GE
“Any leader looking to be on the cutting edge needs to ponder the lessons in this important book. Eric Ries demonstrates once again that the best ideas are both fresh and common sense once presented. An essential blueprint for modern companies—from large corporations to family businesses or nonprofits—for decades to come.”
-Lawrence Summers, University Charles W. Eliot professor and former U.S. Treasury Secretary
“Continuous innovation is the key to long-term impact and success. Eric shows how organizations of all kinds—not just startups—can be built to learn and adapt. In the pivot-or-perish networked world of twenty-first-century business, this is mission critical reading.”
-Reid Hoffman, co-founder of LinkedIn and co-author of the #1 New York Times bestsellers The Alliance and The Startup of You
“Organizations are normally where entrepreneurship goes to die, but Eric Ries has the master plan for breathing new life into them. This is a remarkably useful playbook that every business, government, and nonprofit needs to ignite the spark of innovation and fuel the fire of change.”
-Adam Grant, New York Times bestselling author of Originals, Give and Take, and OPTION B with Sheryl Sandberg
"My research has focused on what causes established companies to maintain success, and The Startup Way provides practical guidance on how to do just that."
--Clay Christensen, Kim B. Clark Professor of Business Administration at Harvard Business School
"The Startup Way creates a vision and blueprint for a new form of management which combines entrepreneurial and general management skills and practices. The inspirational examples across multiple, diverse organizations show that integrating the highly iterative, experimental mindset and skills of start-ups into established organizations is key to unlocking continuous innovation and sustainable growth… Provides clear and useful guidance for tackling the toughest challenges.”
--Kathy Fish, CTO, Procter & Gamble
“To succeed in the Third Wave, an era where technology will disrupt everything from education to healthcare, companies will need new tools and approaches. Eric Ries provides a road map for companies on how to use entrepreneurial principles to achieve transformational growth.”
-- Steve Case, former Chairman of AOL Time Warner and author of the New York Times bestseller The Third Wave
“The Startup Way is a wonderful decoder ring for those seeking to create, nurture, and sustain entrepreneurial thinking in companies at any size and scale. Rich with case studies showcasing real world applications and lessons learned, The Startup Way builds on the proven techniques from The Lean Startup with the next generation of best practices for companies of all sizes and industries.”
-Brad D. Smith, chairman and CEO of Intuit
“A fascinating, supremely useful read. On the foundation of his transformational The Lean Startup, Eric Ries has built a compelling case for organizational entrepreneurship to enable continuous transformation at scale. As he convincingly argues, it is not for every organization – only those that hope to survive and succeed in today’s environment.”
-General Stanley McChrystal
“The Startup Way teaches companies of all sizes how to effectively incubate and maintain an entrepreneurial culture through growth by allowing employees to find their inner entrepreneur. A must read, especially, by all leaders burdened by legacy organizational baggage and processes.”
--Aaron Levie, co-founder and CEO, Box
"If The Startup Way can transform the federal government -- and it has -- it can transform your company. For everyone who's thought 'there has to be a better way,' here's your proof and a playbook to make it happen."
--Jennifer Pahlka, Founder and Executive Director, Code for America
"Big companies are struggling as never before. They need a brand new stem-to-stern game plan, and they get exactly that in Eric Ries' new book The Startup Way. It keys off The Lean Startup and makes a great leap forward. The game plan Eric suggests is 'not optional' for our bumbling big outfits. Well done!"
“As someone who is deeply committed to the public sector, I was heartened to see that the entrepreneurial principles and practices that Eric Ries describes in his new book, The Startup Way, apply equally effectively to governments and nonprofits, as well as for established for-profit businesses. If you want to visit the future of the modern organization, read this compelling book.”
--Gavin Newsom, Lieutenant Governor of California
"In The Startup Way, Eric Ries uses his years of work with companies like GE and Toyota to show us what the company of the future will look like. If you want to know how companies can become more agile, more innovative, and more resilient in the face of today’s relentless pace of change, this is the book for you."
-Arianna Huffington, founder of The Huffington Post and founder and CEO of Thrive Global
“The American economy relies on a startup culture to create new goods and services, provide job opportunities, and raise living standards. Eric Ries’s The Startup Way provides a compelling roadmap to guide all organizations – old and new, big and small, high-tech and low-tech – to build a startup culture to experiment, iterate and innovate.”
-Alan Krueger, Chairman of the President’s Economic Advisers under President Obama and Bendheim Professor of Economics and Public Affairs at Princeton
“A twenty-first century toolkit that will allow any company to flourish.”
–Ron Conway, founder and co-managing partner of SV Angel
“People tend to associate the term ‘startup’ with a uniqueness that assumes a culture of creativity, innovation, and continuous learning. But as Eric Ries’ shows, you don’t have to fit the mold of a typical Silicon Valley start-up to prioritize learning over perfection, and create a culture where making mistakes is not just accepted, but encouraged. The Startup Way presents a new vision for what a modern company can, and should, look like.”
--Reshma Saujani, founder of Girls Who Code
“In The Startup Way, Eric Ries offers leaders across the public, private and non-profit sectors a road map for managing continuous innovation, regardless of organizational size or complexity. As someone who helped introduce some of these practices to the U.S. government, I’ve seen firsthand the improvement in people's lives.”
--Aneesh Chopra, former U.S. CTO
“Eric Ries does it again -- brilliantly. In his new book, The Startup Way, Ries argues that established businesses need to build a new entrepreneurial capability in order to innovate continuously. Most large companies are missing this fundamental piece of the corporate innovation puzzle. Neglect his advice at your peril.”
-Thales Teixeira, Associate Professor of Business Administration at Harvard Business School
"A future classic, a book that will inspire thousands of companies to leap into a much needed re-invention."
-Seth Godin, author of Linchpin
“In The Startup Way, Eric Ries applies the secrets of Silicon Valley to established companies in every industry. The fact is, today, every one of us is in Startup mode. Every leader and aspiring leader should read this eye-opening book.”
-Marshall Goldsmith, author of the #1 bestselling Triggers, and What Got You Here Won’t Get You There
"Eric brilliantly describes the limitations of old management thinking in a time where competitors bring out new products an order of magnitude faster than legacy companies. The Startup Way describes how to foster entrepreneurial leadership essential to corporate survival in the 21st century."
-Jeff Sutherland, co-creator of Scrum Inc. and author of SCRUM: The Art of Doing Twice the Work in Half the Time
“Eric Ries shows that entrepreneurial management is a key to success in this fast-changing world. At ING we’ve embedded lean startup principles into the way we innovate, The Startup Way brings new and valuable insights"
-Ralph Hamers, CEO of ING Group
"Eric has done it again! Every company can benefit from these startup principles -- and should -- because if they don't, a startup is probably going to drink up all their milkshake. This is the internet revolution and if your company isn't adapting to The Startup Way, it's failing."
- Alexis Ohanian, cofounder of Reddit & Initialized Capital, bestselling author of Without Their Permission
“The most important companies in the world were not built in a day. Companies like Facebook, SpaceX, and AirBnB did not stop after their first successful product. They continued to innovate, even in the face of extreme competition from startups. As a long term investor, I look for companies that can maintain that innovative edge over the course of decades. This book gives the blueprint essential to creating and sustaining that innovative culture regardless of the size of the company.”
-- Brian Singerman, Partner, Founders Fund
“There's a lot of talk about the need for more entrepreneurship in today's changing economy. But there isn't a lot of real insight about just what that means. The Startup Way is the toolkit every business needs to make itself both more entrepreneurial and more effective.”
-- Tim O’Reilly, CEO O’Reilly Media
"The problem with many 'how-to' books is that they don't really answer on the promise of teaching us how to. Not so with Ries' new book: this book is born out of the real world of application. It teaches line by line the path to put lean thinking to work in order to produce breakthrough results in culture and growth."
-- Greg McKeown, the author of the New York Times Bestseller, Essentialism: The Disciplined Pursuit of Less
About the Author
He has founded a number of startups including IMVU, where he served as CTO, and he has advised on business and product strategy for startups, venture capital firms, and large companies, including GE, where he partnered to create the FastWorks program. Ries has served as an Entrepreneur-in-Residence at Harvard Business School, IDEO, and Pivotal, and he is the founder and CEO of the Long-Term Stock Exchange.
- Publisher : Currency; Illustrated edition (October 17, 2017)
- Language : English
- Hardcover : 400 pages
- ISBN-10 : 1101903201
- ISBN-13 : 978-1101903209
- Item Weight : 1.15 pounds
- Dimensions : 5.7 x 1.4 x 8.5 inches
- Best Sellers Rank: #53,181 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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Eric’s 4 step recipe for transforming a company is EXACTLY what a conventional change management program is all about since time immemorial. Get Management Buy-in, teach and motivate people, lead by example, devote time and attention, train-the-trainers, etc. This is business as usual in modern companies. It is just another top-down driven Change Program. There is nothing to assume that this program will be more efficient than any other change program is.
Oh, wait! Maybe there is: Entrepreneurship is an institution now. We are adding a new department to the company. Surely this will help! It will help exactly like installing a “Chief Digital” or a “Chief Innovation Officer” helps to promote those themes on the board. The name is different, but there is nothing that indicates why a “Chief Entrepreneur” should be more effective. Those Organisations will always be the “weak line”: Organizations are dominated by those “strong lines” of the departments doing the real work, closer to the business. Hell, they ARE the business. Entrepreneurship is just another matrix function.
But wait again! The strong lines, the realm of General Management, will be all aligned with experimental management now, as they all share a vision and embrace truth and discipline now – as in the neat graphic above.
This degree of naivete leaves me speechless. There is nothing in this book and in the world that will indicate any more success with this as with all other Change management initiatives before.
Some critical words on Amazon:
All these five start ratings leave me speechless. You need to know that there have been already 34 five Star Ratings on the day the book was released. After 3 days, there were just two 1 star ratings. Both disappeared. One of those was my review, which at about 42 likes, more than any other review. Now it is gone. The second negative review is gone as well. What the hell, Amazon! That's evil.
The mistake in this book is the disservice Ries' does to his populist readers by not even glancingly touching on any of the innovation thought paradigms that are sweeping through the Fortune 1000. Ries chooses to overlook this and present The Startup Way as his own unified enterprise management methodology that incorporates Lean Startup with the intention of expanding his thought footprint into organizational change management.
Yet, if you do even the slightest bit of research on Google around "Design Thinking and Lean Start-up," "Design Thinking, Lean and Agile" or "Innovation and Design Thinking" you'll see that hundreds if not thousands of people have wrestled with trying to knit these concepts together in a way that works for large organizations.
Ries ignores all of this in his service to his own ideas. I hope he enjoyed the consulting fees from GE because they corrupted the otherwise egalitarian approach he should have taken for this book -- then he would have become the father of a movement, not just a character in an ensemble cast of thought.
Great read. It builds on Eric's prior work, providing context and methods of applying startup culture within any organization. There are some very simple concepts here, but most organizations do not follow them - and yet wonder why they cannot innovate, and more importantly why getting anything out of the door becomes a challenge.
From the ways to measure success of an intended entrepreneurial project to the way bean counters usually kill anything which might innovate in a large corporation, the book covers challenges which most people will recognize if they have spent any time outside of startups - and especially if they've lived through a maturing success.
Actionable ideas, simple concepts and engaging writing - it's great to see the developing influence Eric is having on all kinds of businesses.
Of course you have to be open minded - if you believe that nothing can be achieved without a detailed business plan, which is expected to actually represent the future - you're going to find this one a tough read.
Top reviews from other countries
Innovation equals entrepreneurship
Finally, CEOs start to realise that entrepreneurship and innovation are two sides of the same coin. It is called intrapreneurship. It is a hot topic. Peter Hinssen writes about in “The day after tomorrow”. Freek Vermeulen writes about it in “Breaking bad habits”. Geoffrey Moore writes about in “Zone to win”. It is “Antifragile”. It is “Brilliant mistakes” or “Blackbox thinking”.
The principles of entrepreneurial management could be applied in any industry, any type of company, or sector of the economy. Intrapreneurship as the antidote to creative destruction. Creating internal engines for innovation, experimentation and growth. Ongoing change management and transformation. Units that can unleash the talent, the sense of purpose, achievement and ownership.
Entrepreneurship as a core organisational capability
Entrepreneurship as a core discipline and core capability within large organisations. Based on the assumption that for a modern company, the payoffs of continuous innovation are not only the breakthrough new products, services, internal systems, and commercial wins that it produces. Innovation also provides the opportunity to incubate a new culture, one that unleashes entrepreneurial creativity at every level of the organisation.
You are being disrupted
Based on the assumption that global communications mean that new products can be conceived and built anywhere, and customers can discover them at an unprecedented pace. What’s more, individuals and small companies have unprecedented access to these new global systems, compared to a small number of owners of capital in the past. If you won’t. They will.
The question to ask
If you selected an employee of the company at random, from any level or function or region, and that employee had an absolutely brilliant idea that would unlock a dramatic new source of growth for the company, how would he or she get it implemented?
Does the company have an automatic process for testing a new idea, to see if it is actually any good?
Does the company have the management tools necessary to scale this idea up to maximum impact, even if it doesn’t align with any of the company’s current lines of business?
Does the company harness the creativity and talent of every single one of its employees?
Not a hope. You are still working with business plans. They don’t work anymore. Because the “fantasy plan” of the original pitch is often far too optimistic to be used as a real forecast. But managers, lacking any other system to use, need something to hold on to. Without an alternative, they cling to the forecast—even if it’s just made up one. Your system of accountability was designed in a very different time and for a very different context.
The metrics to use
Business plans tend to be made up of forecasts and predictions, always denominated in gross metrics (vanity metrics). What Silicon Valley has learned the hard way over the past few decades is that “no business plan survives first contact with customers”.What you need a clear understanding of the difference between trailing indicators (such as gross revenue, profit, ROI, and market share) and leading indicators that might predict future success (such as customer engagement, satisfaction, unit economics, repeat usage, and conversion rates).
Failure as an option
Unlike in a corporate setting, where everything has to be right in order to proceed, a startup doesn’t have to have everything figured out. Because in this era failure is not only an option, it is pre-requisite. You need to start eating failure for breakfast. Because no amount of forecasting, diligent preparation, planning or execution is going to prevent that. There is too much uncertainty. Which means you can’t afford to bet on one horse. You need to let a 1000 flowers bloom. And find a mechanism to kill off the initiatives that don’t work. Creating fast failure through experimentation.
A modern company…….
A modern company has to have a capacity to produce products with great reliability and quality, but also to discover what new products to produce.
A company in which every employee has the opportunity to be an entrepreneur.
A company that respects its employees and their ideas at a fundamental level.
A modern company is disciplined at the rigorous execution of its core business—without discipline, no innovation is possible—but it also employs a complementary set of entrepreneurial management tools for dealing with situations of extreme uncertainty.
Lean startup thinking
Lean startup thinking. Internal startups. Passionate. One idea. With cross-functional teams. Iterative. Metric driven. Customer facing. Productive failure. Learning. Executing (because ideas are worthless). Read “The myth of the idea“. Create entrepreneurship as the missing function within your organisation.
Some more questions:
Who in your organisation is in charge of grappling with uncertainty, unlocking unexpected and dramatic new forms of growth and impact, translating research insights into viable products, and harnessing the forces of disruption in the organisation?
Who is overseeing high-potential growth initiatives that could one day become new divisions of the company?
Who is infusing everyday work across the organisation with an entrepreneurial, experimental, iterative mindset?
Who is managing success (because that is when the real fun starts)?
Do you have a dedicated function with its own career-path of corporate entrepreneurs, and also as a source of widespread basic knowledge, responsible for spreading entrepreneurial methods throughout your organisation?
Are you creating “islands of freedom”?
Do you know where and who they are?
Paradoxically, at the very moment in history when organisations critically need entrepreneurial talent, they are deeply confused about where to find it. Most organisations are replete with entrepreneurs already, but not only are they unable to recognise them, they inadvertently force them into hiding. Most companies are more likely to fire those who show entrepreneurial initiative than to promote them.
But once you start looking, you will find that there are a surprising number of other hidden startups tucked away. The underground network. The employees that managers know to call when things look like they might go off the rails—or already have. The person who to call if they get saddled with a high-risk, high-reward project. The person who is willing to risk career suicide to give it a shot. That is your coalition of the willing. Waiting to be unleashed.
And so the question I ask them is: What if? What if we were to give these creative, energetic people a structure for working intelligently on the kinds of projects they want to work on, and then we reward them and recognize them for that skill?
Entrepreneurship as a function
The promise of adding entrepreneurship as a function is the chance to create an environment where experimentation is encouraged, where ideas can be tested and then assimilated into the culture, where the passion to pursue the unexpected is not marginalised but systematised, not stymied but supported.
You need a framework
To create space for experiments with appropriate liability constraints
To fund projects without knowing the return on investment (ROI) in advance
To create appropriate milestones for teams that are operating autonomously
To provide professional development and coaching to help people get better at entrepreneurship as a skill
To provide networking and matchmaking in and out of the company, so people understand their new identity: “I’m a corporate entrepreneur.”
To ensure to put the right person on the right team? “Nobody gets assigned to work at a startup,” one corporate entrepreneur
To create new incentive and advancement systems?
The old way
Most corporate managers are looking for good ideas, sound strategy, and a solid business plan. Once they determine what is to be done, they then try to find the right person or people within the organisation to get it done. Personnel is evaluated by traditional criteria: past performance, résumé, and pedigree. (And, if we’re honest, a fair bit of politics.)
The new way
Silicon Valley investors, in contrast, make their investment decisions primarily based on the quality of the team: They look at the team first, then the idea. Instead of pedigree, they infer the quality of founders from the results they can deliver with limited resources, gambling on the chance that early success will be the hallmark of future greatness. Many investors believe that how a team runs the fund-raising process predicts how they’ll run a company, and use it as a leading indicator. And once you raised the money is yours. With full autonomy. You can spend it on what you like with minimal oversight (especially in the early stages). But Lord help you if you try to raise more money and you haven’t made any progress.
Contrast this with the life of a typical corporate product manager. Most organisations subject their internal teams to an endless stream of meetings: formal reviews, budget updates, and a constant barrage of middle manager check-ins. In established companies, an incredible amount of talent and energy gets wasted because innovation is blocked by the archaic, inflexible structures and protocols in place.
Save time for management
But what about urgent problems that, for whatever reason (real or political), don’t rise to the CEO’s attention? What about the problems that require collaboration between one function or division that feels the acute pain and another that does not? And what about the frustrating, everyday problems that afflict “only” ordinary workers? Today’s management system struggles to bring attention and resources to bear in these situations.
A more entrepreneurial approach offers a better answer: Put a startup on it. Run an experiment. Measure the results. Scale it up—maybe even bring it to the attention of senior leadership—if and when the results merit this treatment. Take advantage of the fact that the vast majority of experiments fail, and so they don’t need to take up senior management bandwidth (nor do they necessarily benefit from senior management meddling). By the time the organisation needs to have a strategy conversation about whether to double down on the new idea, it can have a rational discussion—complete with actual customer data.
The Lean Startup basics
Identify the beliefs about what must be true for the startup to succeed. We call these leap-of-faith assumptions.
Create an experiment to test those assumptions as quickly and inexpensively as possible. We call this initial effort a minimum viable product.
Think like a scientist. Treat each experiment as an opportunity to learn what’s working and what’s not. We call this “unit of progress” for startups validated learning.
Take the learning from each experiment and start the loop over again. This cycle of iteration is called the build-measure-learn feedback loop.
On a regular schedule (cadence), decide whether to make a change in strategy (pivot) or stay the course (persevere
He gives a lot of tips on implementing Lean. I particularly like his thinking around metrics and the creation of a growth board. A way to operationalise venture capital funds way of thinking.
Set up a dashboard
Conversion rates (such as the percentage of customers who try a free trial of a product who subsequently become paying customers).
Revenue per customer (the amount of money customers pay for a product on average).
Lifetime value per customer (the amount of money the company accrues from an average customer over the entire “life” of his or her relationship with the company).
Retention rate (what percentage of customers are still using the product after a certain amount of time).
Cost per customer (how much it costs to serve a customer on average).
Referral rate (what percentage of existing customers refer new customers to the product, and on average how many referrals they make per unit of time).
Channel adoption (what percentage of the relevant distribution channels carry the product).
Create a growth board
To be a sounding board for the founders and executives, helping them plot strategy, and hosting the pivot-or-persevere meeting
To act as the central clearinghouse for information about the startup, taking on the burden of reporting on behalf of the founders to key financial stakeholders like general partners and limited partners of the investment firm
To be the gatekeepers of future funding, either by writing checks themselves or by encouraging (or vetoing) sources of outside funding
To be the single point of corporate accountability for an internal startup.
To act as the single clearinghouse for information about the startup for the rest of the corporation.
To provide metered funding to startup teams.
Start with a limited number
Build a network of leaders
Create the golden sword (an executive with power to cut through red tape)
Intrapreneurship and transformation
Eric Ries predicts that twenty-first-century managers will live through as many organisational transformations as new-product platforms and come to see organisational forms the same way we see our smartphones—as something disposable that’s top of the line for a few years, then rapidly surpassed. The very skills that are required to do the Startup Way transformation are deeply transferrable. They are better seen as a permanent organisational capability than as a one-time event.
Continuous transformation—an organisation’s capability to test and learn from experiments having to do with its own structure and processes, promoting the best-proven techniques company-wide while limiting or discarding the rest—is what will give that organisation the ability to thrive in the modern era.
Entrepreneurship as a seat at the executive table
Progressive companies should give entrepreneurship a seat at the table when the other functions—especially gatekeeper functions—are setting company policy. This is incredibly important for finance, legal, HR, and IT in particular. This is the true promise. A management system that contains within it the seeds of its own evolution by providing an opportunity for every employee to become an entrepreneur.
If you read this book combined with the books I mentioned before, you will have all the tools and thinking you need to implement a solid intrapreneurship and innovation programme. It is not rocket science.
“The day after tomorrow”.
“Breaking bad habits”.
And you will become truly “Antifragile”
Seeing that it was published in 2017, it makes me realise that it's going to take 5-10 years at least for the modern method of continuous innovation to become standard across organisations, but it feels exciting to be part of this era.
I'd recommend this book.