Here is a transcript of LeanBlog Podcast #115 with Eric Ries, author of the book The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. We recorded this in March 2011 before the book was out. Auditory learners can listen to audio at www.LeanBlog.org/115 or you can download the audio and subscribe to my series via Apple iTunes.
Mark Graban: Hi, this is Mark Graban. This is episode 115 of my podcast for March 10th, 2011. My guest today is Eric Ries, entrepreneur and author of the upcoming book, “The Lean Startup.” Now, today we'll talk about how Eric got introduced to Lean, to core materials such as books by Womack and Jones and Jeff Liker. And how he has put a lot of thought into how to take proven Lean principles, such as reduced batch sizes, five whys analysis, faster time to market and customer focus, and applied them to startups.
And we both agree that there are a lot of applications of these Lean startup principles, even if you the listener are working on new products and larger, older manufacturing settings. So, I hope you'll take 20 minutes to listen regardless of your background, as Eric's work has certainly stretched my attempts at Lean thinking in new and better directions.
Mark: I'd like you to define Lean startup methodology. But, maybe one other point I'd like you to make, because I think we have a lot of listeners who maybe, who don't work at startups. And I hope they continue listening anyway, because your definition of an entrepreneur, I think, is applicable, as well, to people who may be working in big large companies. Would you agree?
Eric: Oh, sure. Yes, absolutely. In fact, one of the biggest surprises, once I started being asked to speak in public about Lean startup is, I used to, part of my work was to try to bring the practice of entrepreneurship onto a more rigorous footing. I'm a very logical deductive style thinker, so it was important to me to have good definitions, returns, and really understand what is entrepreneurship, who is an entrepreneur, so that I'm not just basing my life's work on what I saw in the movies, which I just thought was not a very effective model. And so, I had this definition of a startup is a human institution designed to create something new under conditions of extreme uncertainty. And it was from that basic definition that I had proceeded to define a Lean theory of entrepreneurship. And one of the funny things about that definition is it doesn't say anything about industry, sector of the economy, or company size. It just says you're trying to create something new, build an organization to create something new under conditions of extreme uncertainty.
And so, for at my very first talks, I would say, and by the way, this is completely applicable to entrepreneurs inside big companies. And at that time, I was just speculating. I felt a little bit like a scientific theorist, making a prediction about the physical world without knowing whether it was going to be true or not. It just said, the theory predicts that these people should exist. So, if any one of you are in the audience, please come talk to me.
And from that very first talk, I remember it really clearly, there were people like that in the audience and they came up to me afterward. And they were actually the most vehement of the people who wanted to really ask me, well, how specifically do I do this. How can we convince people in my organization to adopt it?
Because most of the, kind of, theories of disruptive innovation, most of the frameworks that they were using to create new products inside their own companies, treated the innovation like a black box. And just said, you get the right kind of people, and you give them the right budget, and you kind of do the organizational structure around them properly, and then magic happens.
And that's basically what we used to believe about entrepreneurship, too, incidentally. And what these guys would say is, they're like, “Listen, I'm the manager of this team, we're in the black box.” And they said it to me like, I've got the firewood, and the kindling and my matches and the paper and all the ingredients right here. Where's my fire? And when the fire doesn't appear, they're like, what specifically, am I supposed to tell my people to do?
And I felt like, well, OK. That's actually the exact same problem we see with venture-backed entrepreneurs, who get, you know, managed to raise a check for $5 million. And they're like, now what? What specifically am I supposed to do every day? How can I tell if I'm making progress? And so, what has happened is this thing has grown into a movement as we have pulled in entrepreneurs from all kinds of different industries and sizes of company, and I think that's one of the most exciting things about it.