Eric Ries – the MBA for Startups?

I have been reading Eric Ries’ excellent book called “The Lean Startup,” highly recommended for anyone in the entrepreneurial business, whether it is a fast-growth tech-startup or just a local laundromat. For that matter, I also recommend it for managers at larger firms, both in terms of managing their own internal innovation and in terms of understanding where their own metrics may fall short.

One of the interesting factoids about the MBA degree (of which the author is the proud holder of one from Duke University, an innovative and collaborative environment) is that business schools were originally founded for engineers. Around the turn of the 20th century, and especially later in the century as larger companies began to grow with Sloan’s management practices, many engineers who were excellent designers and builders of innovative products, were promoted into general management roles. However, these engineers had little to no real business experience, and the ins and outs of accounting, sales, marketing, etc. were completely foreign to them. To resolve these mismatches, schools for business (literally “business schools”) were set up.

Ries’ primary thesis in his book is that entrepreneurs often confuse “vanity metrics”, numbers that look good but do not actually give insight into how the startup’s engine of growth is working and being tuned,¬†with “value metrics”, those that give critical insight into the engine, its functioning, and whether it is time to persevere or pivot.

Ries says, rightly IMO (and yours truly has definitely been guilty of this), that product people have a tendency to believe that building better quality, better features, leads to better business results. Yes, it does, but only once you have properly identified what features and quality in which market segments actually make the engine run. Of course, everyone is guilty of this: engineers who build better quality, product managers who insist on more features, marketers who are convinced that one more campaign is what it takes, etc. But at heart, it is about knowing which of these will make growth really matter.

In that respect, Ries’ “Lean Startup” is almost like the “Fast-Forward MBA for Entrepreneurs with a More Traditional Background,” the way that business school was “school for business for engineers.”

 

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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