The Startup Way

The Startup Way combines the rigor of general management with the highly iterative nature of startups. It is a system that can be used in any organization that seeks to practice continuous innovation, regardless of size, age, or mission. (Location 242)

The five key principles behind the Startup Way philosophy are: 1. CONTINUOUS INNOVATION: Too many leaders are searching for that one key innovation. But long-term growth requires something different: a method for finding new breakthroughs repeatedly, drawing on the creativity and talent of every level of the organization. 2. STARTUP AS ATOMIC UNIT OF WORK: In order to create cycles of continuous innovation and unlock new sources of growth, companies need to have teams that can experiment to find them. These teams are internal startups, and they require a distinct organizational structure to support them. 3. THE MISSING FUNCTION: If you add startups to an organization’s ecosystem, they must be managed in ways that confound traditional techniques. Most organizations are missing a core discipline—entrepreneurship—that is just as vital to their future success as marketing or finance. 4. THE SECOND FOUNDING: Making this kind of profound change to an organization’s structure is like founding the company all over again, whether it’s five or a hundred years old. 5. CONTINUOUS TRANSFORMATION: All of this requires the development of a new organizational capability: the ability to rewrite the organization’s DNA in response to new and diverse challenges. It would be a shame to transform only once. When a company has figured out how to transform, it can—and should—be prepared to do it many more times in the future. (Location 249)

“Nobody wants to work at an old-fashioned company. Nobody wants to buy products from an old-fashioned company. And nobody wants to invest in an old-fashioned company.” (Location 364)

Over and over again, I see their incredible anxiety about the unpredictability of the world they live in. The most common concerns I hear: 1. Globalization and the rise of new global competitors. 2. “Software eating the world”1 and the way automation and IT seem to destroy the competitive “moats”2 companies have been able to set up around their products and services in the past. 3. The increasing speed of technological change and consumer preference. 4. The ridiculous number of new potential high-growth startups that are entering every industry—even if most of them eventually flame out.3 (Location 376)

I’ve made billions of dollars of failures at Amazon.com. Literally. None of these things are fun, but they also don’t matter. What matters is that companies that don’t continue to experiment or embrace failure eventually get in the position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence. I don’t believe in bet-the-company bets. (Location 521)

“This is the missing half of the Toyota Production System. We have a system that is outstanding at producing what we specify, with high quality, but we don’t have a corresponding system for discovering what to produce in the first place.” (Location 580)

A modern company is one that has both halves, both systems. It has a capacity to produce products with great reliability and quality, but also to discover what new products to produce. (Location 585)

A modern company is one in which every employee has the opportunity to be an entrepreneur. It 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. (Location 588)

AN OLD-FASHIONED COMPANY is full of multitasking: meetings and deliberations where participants are only partly focused on the task at hand. There are lots of middle managers and experts in the room to give their input, even if they don’t have direct responsibility for implementation. And most employees are dividing their creativity and focus across many different kinds of projects at the same time. A MODERN COMPANY has a new tool in its arsenal: the internal startup, filled with a small number of passionate believers dedicated to one project at a time. Like Amazon’s famous “two-pizza team”—no larger than you can feed with two pizzas—these small teams are able to experiment rapidly and scale their impact. Their ethos: “Think big. Start small. Scale fast.” (Location 611)

Overseeing high-potential growth initiatives that could one day become new divisions of the company. 2. Infusing everyday work across the organization with an entrepreneurial, experimental, iterative mindset. (Location 658)

The most commonly held belief in Silicon Valley is that “it’s all about the team.” (Location 918)

Amazon uses a method called “working backward” to make (Location 988)

The key word in this process is better. It’s not enough just to solve the customer’s problem. Silicon Valley–style companies aspire to delight customers by providing a solution that is dramatically better than anything they’ve seen before. (Location 994)

Without a vision you cannot pivot. The accuracy of that statement is baked into the very definition of pivot: A pivot is a change in strategy without a change in vision. (Location 1171)

HOW THE LEAN STARTUP WORKS Here is an overview of the basics of the Lean Startup method. We’ll get into each one, and each specialized term, in greater detail. 1. Identify the beliefs about what must be true in order for the startup to succeed. We call these leap-of-faith assumptions. 2. Create an experiment to test those assumptions as quickly and inexpensively as possible. We call this initial effort a minimum viable product. 3. 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. 4. Take the learning from each experiment and start the loop over again. This cycle of iteration is called the build-measure-learn feedback loop. 5. On a regular schedule (cadence), make a decision about whether to make a change in strategy (pivot) or stay the course (persevere). (Location 1217)