The world of entrepreneurship can be characterized as dynamic, encompassing and lacking boundaries. Eric Ries, the author of The Lean Startup, transposes these features to its terminology to more accurately capture the diversity of the field. Ries’ book makes a case for a continuous innovation approach to startups called “The Lean Startup Method.” His method approaches startups by drawing connections between startups and established business frameworks such as production, management, and accounting. The overarching idea is to take the ‘lessons learned’ from traditional business operations and fine-tune them to function in the uncertain world of startups. However, he also cautions about inaccurately assuming these frameworks are perfect lenses to assess and analyze startups. These initial ideas serve as the starting point to discussions about mutual applications; including startup innovation techniques applied to established businesses and basic business frameworks applied to boost startups’ success.
Eric Ries acknowledges that there is a method to the madness of startups, and their success is a function of the method as much as the madness itself. The idea is to bend and expand traditional norms and ways of thinking ranging from terminology all the way to production processes. After all, startups come to life out of necessity and/or the desire to bring new and different solutions to address a demand or problem. With regards to terminology, Eric Ries notes the following definitions:
Entrepreneurship– Entrepreneurship is management. Building a startup is an exercise in institution building; thus, it necessarily involves management.
Entrepreneur– Entrepreneurs are visionaries ranging from those working in a garage startup to those operating inside an established organization. Thus, entrepreneur refers to the whole startup ecosystem regardless of company size, sector, or stage of development.
Startup- A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. (Ries, 2011).
Some people approach definitions and labels with a degree of skepticism, afraid of limitations imposed by strict definitions. However, Ries’ interpretation of these terms pushes back on this notion. In reference to defining a startup, Eric Ries writes “I’ve come to realize that the most important part of this definition is what it omits. It says nothing about the size of the company, the industry, or the sector of the economy” (Ries, 2011, p. 27). This same open approach is employed towards the other two definitions. In essence, it leaves the door wide open to other agents interested in taking advantage of the entrepreneurship process. This new approach enables opportunities for traditional startups, intrapreneurs working within larger companies, government agencies, and even the military.
Eric Ries’ book, The Lean Startup, will continue on to examine the methodology startups should undertake to increase their likelihood of success. However, the implications of these expanded definitions deserve further analysis. Many large organizations involved in technology and innovation, such as Apple or Microsoft, have developed and strengthened systems in place to foster their entrepreneurial spirit. However, organizations should not view this approach as limited to large companies or certain industries. Every organization, public and private, has room to improve the services or products they offer. Furthermore, organizations can venture into new markets or even build them; consider Apple’s numerous iPhone versions or Microsoft’s operating system series. The key is for an organization to be forethinking of potential opportunities and deliberately facilitate environments for innovation. For an organization to be a leader in their field, senior management needs to create a culture and develop systems that march such desires.
For established companies and organizations, it might seem strange to think of themselves in terms of entrepreneurs and startups. However, it is important to highlight that those organizations that fail to adapt to changing environments are likely to become obsolete. Competitors or other parties will be able to provide better products or services when industry leadership is abdicated. Thus, every leader should ask themselves: Is my organization striving for leadership? And if so, do we have the necessary systems in place?
Reference
Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses. New York, NY: Currency.
Links to Other Resources
Hi Jose,
I really enjoyed reading you blog post about the book your are reading. It sounds like the author likes to encourage the reader to change their thinking on how they perceive entrepreneurs and start-ups. I love his definition of an entrepreneur. I do not think my father ever thought of himself as an entrepreneur until I said something to him recently. He always pictured a man in a business suit talking to the banks and lawyers to get his business started.
I look forward to reading more of your posts.
Thanks,
Dani
Jose,
Your book selection choice sounds like it is good one! The concepts you have highlighted from Eric Ries’ reading have provided a great insight to what I believe is a developing field within industry and of course entrepreneurship. Within your closing statement you bring up a good point of how industries and companies should not excluded themselves from an entrepreneurial mindset and to treat their operations as a “startup.” Currently, I have been seeing a rise in what companies are calling “intrapreneurs” in which these team members are hired to perform entrepreneurial business practices within large organizations. I feel like after taking some courses I can see why. I believe having a team member with these traits can perform and innovate better than your typical M.B.A. student who is more concerned with risk avoidance rather than rise tolerance which is essential to new developments. M.B.A. programs are good for a more logical standpoint in business but companies looking for a push in new ideas may want to turn to their newly hired “intrapreneur” who might have some more creative ways to solve problems other than black and white statistical numbers.
By the way, your updated site is coming along great! I will talk to you soon.
– Paul
Jose,
Great perspective on the book. First I want to say that I originally wanted this book, however you beat me to it so congratulations. I think that book I am reading is the one I really needed to read anyways.
Back to the post.
The role of entrepreneurship is huge in our world today and your writing show it. Not just in small startups but in big businesses and already established businesses. You made a lot of good points, but the one at the very end stuck with me and I feel like goes over looked. The idea that current businesses need to think of themselves as startups, I feel, goes right over a lot of companies heads. They get so caught up in their way that they are not willing to evolve with the market. Companies like Apple, Google, and Microsoft are ahead of the curve in pushing their employees to innovate, as you mentioned. I do not understand why companies are always looking to Apple to be more like them, yet they are unwilling to do the innovative thinking like they do. Companies need to think like startups more often.
Exciting material and I plan on reading this book one day! Keep up the good work!
Hi Jose
First off, I love the idea of being able to create without boundaries. The concept of a building without the limits of boundaries certainly does take off the chains of the thought process.
In the first paragraph, you wrote of how to use any known concepts to your advantage. It will be interesting to see how Eric Ries applies conceptual ideas where there are not many preconceived notions on how to build something out of the box. I am glad that this author is validating some of the concepts taught in the last two classes.
In the last paragraph, you touched on the concept of established business looking into seeing themselves as entrepreneurs and startups. I think this is a great concept that pushes business to reassess, reassess, reassess.
Great feedback from your book, I might buy this one for my insight. Thanks for your post.
Eric
Hi Jose,
Having an entrepreneurial environment is so important in not just startups but established companies as well. In order to stand out and stay ahead of the curve it’s critical to the growth of any company. For me, I can see challenges in implementation in both but especially in an already established company. Change is hard, and especially in older companies that have been around for quite some time and have a large number of employees. How can you “move the ship” with so many obstacles and hurdles such as differing views in management?
I too believe that newness is absolutely needed in any company otherwise running the risk for competitors to swoop in and grab your market share. But how does a company foster newness in a large corporate setting? I hope to discuss this further in future posts.
I can’t wait to read your next posts. I too have read this book and it does offer some interesting methods and I look forward to a new perspective.
Best,
Carter Jones
Jose,
I think the author is right on when he discusses the necessary differences between existing business models and start up models. My experience has been that a start up business is a different animal that needs more leeway when it comes to process, especially in a lean start up status.
I also really like his definitions for Entrepreneurship, Entrepreneur, and A startup. He keeps it simple and to the point.
Devon