on 4 April 2013
Lean Analytics is a practical guide and checklist for developing a high-growth start-up. The authors' main premise is that you should find a single meaningful metric, and then run experiments to improve it until this KPI is good enough to move to the next problem (of the next stage) of your business.
The book divides into two halves. The first section guides you in working out what you should be doing - there's even a useful chapter on deciding what to do with your life and whether you'll actually enjoy doing what you're proposing. It encourages you to have clear goals, experiment, and move through build->measure->learn cycle as quickly and frequently as possible
The Lean Analytics part is about picking a number, setting it as the target, and having enough confidence that if you hit it then you consider it a success.
The second half of the book maps things into six (mainly) Internet-based business models and five stages of maturity within those models. It argues that a combination of the model and the stage of maturity determines which metric you should be focused on. This section is less successful than the first because it offers a fleeting, high-level overview which means that you'll need to get detailed information from somewhere else (however, if it had gone into detail then we'd have a 1000+ page tome, with most sections irrelevant to the majority of readers).
Most of us are not going to build a high growth start-up, let alone an Internet start-up. Maybe you'll be building-up a small service business? There are enough good ideas, structure and discipline, and collective wisdom to make reading this book well worth your while.
on 13 December 2013
The Clash have a brilliant song called `Should I stay or should I go'. I don't know what the lyrics exactly refer to but it is a question most startup entrepreneurs probably ask themselves at some point. I regularly meet startups who are torn between `banging your head against a brick wall' and `doing everything you can to run through a brick wall' to use two popular analogies. Lean Startup and now Lean Analytics can provide an answer to manage the balancing act of giving everything you can without chasing a lost cause.
Running Lean by Ash Maurya is the first in the O'Reilly Lean Startup Series. It is brilliant. Lean Analytics by Alistair Croll and Benjamin Yoskovitz is the second in the series. It is equally brilliant. It is comprehensive and it should change how you do business in your startup. Eric Ries writes a wonderful Foreword to Lean Analytics which he describes as moving beyond the Lean Startup bumper stickers and diving deep into the details of innovation accounting thereby avoiding the perils of vanity metrics. He concludes that the book is a `guide for all practitioners who seek new sources of growth'. I believe that `measuring what you do is critical to achieving success in a new business venture' - this book will help you to figure out what you should be measuring by helping you to ask the most important questions and get clear answers quickly. It is critically important that you can firstly measure your progress and communicate that with your internal and external team.
The Preface explains that Lean Startup helps you identify the riskiest parts of your business plan, then finds ways to reduce those risks in a quick, iterative cycle of learning. Most of its insights boil down to one sentence: Don't sell what you make; make what you can sell. And that means figuring out what people want to buy. Lean Analytics shows you how to figure out your business model and your stage of growth. It explains how to find the One Metric That Matters to you right now, and how to draw a line in the sand so you know when to step on the gas and when to slam on the brakes.
Who the book is for:
The preface acknowledges that the book details tools and techniques which were first applied in consumer web applications, adding that they are now being applied to a much broader audience and that the authors have talked to tiny family businesses, global corporations, fledging startups, and charities, all of whom are applying lean analytical approaches **.
I think Lean Analytics can be read in isolation but armed with knowledge from books such as The Entrepreneur's Guide to Customer Development, The Lean Startup; and of course Running Lean, I think that this book will put you in a frame of mind that you have to take action. The book is broken into four parts. Part 1 summarises (brilliantly) all the building blocks of Lean Startup to include the aforementioned books to prime you for the next 3 parts.
I love the structure of this book. It gives you just enough and then moves on to another area but returning again to build on that knowledge. For the record, Part II looks at six sample business models and the five stages that every startup goes through as it discovers the right product and the best target market. When you are done, you'll know what business you're in, what stage you're at, and what to work on. Part III, looks at what's normal. After reading this part, you'll get some good baselines for key metrics and learn how to set your own targets. Finally, part IV shows you how to apply Lean Analytics to your organisation making the point that data-driven approaches apply to more than just new companies.
The book looks at six sample business models:
- eCommerce chapters 8 and 22;
- SaaS chapters 9 and 23;
- Free Mobile App chapters 10 and 24;
- Media Site chapters 11 and 25;
- User-generated content chapters 12 and 26; and finally
- Two Sided Marketplaces chapters 13 and 27.
** The common denominator is online, and if you are operating in one of these six areas, this book is a Must Read - these are all relatively new areas and this book makes an excellent contribution to understanding success in these domains.
If you are not operating in these areas but have a strong interest in Lean Startup and want to move to the next level, there is plenty of food for thought provided by this book. Chapter 29 deals with enterprise focused B2B software startups. The metrics to measure here are focused on the stages of your Sales funnel with some real nuggets of advice on what to measure and watch out for e.g. ease of customer engagement; integration and support costs; and measuring customer use of your APIs as a strategy for customer retention.
If you are commercialising a physical product I would probably read the Startup Owner's Manual by Steve Blank and Bob Dorf first.
What I really liked about the book
Chapter 2 `How to Keep Score' talks about what makes a good metric and is the best discussion of vanity metrics to include plenty of reference to Donald Rumsfeld, former US Secretary of Defense. This is followed by a great introduction to Leading metrics, Segments, Cohorts and A/B Testing.
Chapter 5 presents a Lean Analytics framework with five distinct stages: Empathy, Stickiness, Virality, Revenue and Scale, that every startup goes through. The model includes the `gating' metrics that indicate that it is time to move to the next stage. The chapter summaries the four primary Lean Startup Frameworks:
- Running Lean Lean Canvas
- Lean Startup by Eric Ries
- Dave McClure Pirate Metrics
- Sean Ellis Growth Pyramid
And on Page 53 presents them visually in one figure along with the Lean Analytics framework thereby adding superb clarity to the discussion. The framework is referenced in the remainder of the book to allow visualisation of business models and user flow through the systems of the business.
The Chapters on eCommerce are particularly illuminating for me as I have limited direct experience in this area.
Finally, I can hardly believe that I have not yet mentioned the Case Examples used in the book. They are interesting and well written and used to illustrate key points - Startup Analytics Lessons Learned.
Overall, Lean Analytics is a fantastic book and definitely value for money!
on 12 August 2013
This is quite a long book. I think it's excellent, and a natural follow-on to The Lean Start Up, which I'd also rate 5/5. I've just finished it. Here is what I can remember:
It lists the different types of (mainly software) companies: e-commerce; Software as a Service, free mobile app, media site, user-generated content, 2-sided marketplace.
A start-up company goes through 5 stages of growth: Empathy - listening to the customer to learn whether you've got a business or not; Stickiness - making sure you have a product that users will come back to, one that is "sticky", by iterating; Virality - once you've got a sticky product, and not before, think about getting more users. Virality can be inherent, artificial and/or word of mouth. Next, is Revenue, when you start to really concentrate on making money (before, you were getting the product and market fit right); Scale - growing the business.
What is also very useful, and most apt for the title of the book, is knowing what is a good metric. There are lines in the sand for all the business types, and the different growth stages. These can help you know when to move to the next stage, or even whether to pivot, and change company type.
I'm going to read it again, faster this time, and make notes. I think it's well worth a second read.
on 13 April 2013
A groundbreaking combination of analytics and startup strategy depictions with very effective explanations, models and case studies, a complete how to and very interesting indeed
on 15 April 2014
This is the book I was looking for, after I had read The Lean Startup. It is absolutely a manual to the Lean world, analysing existing approaches and introducing the "one metric that matters" concept into the field. By organising the book in 6 different business models, it makes it much easier to run lean, to put priorities and build progressively products that matter. I fully recommend it as the best combination with Lean Startup.
on 4 April 2015
An excellent summary of the data that every business owner needs to be thinking about in the modern era. Although the authors aim this books squarely at companies in the IT space, the methodologies and data points that EVERY young (ie not yet-quoted) company needs to focus on. We are all operating in the digital age and understanding the metrics which matter in a digital world is essential to keeping one business moving forward. I found this an excellent book, even though I described it to my business partner as akin to a "horror story" you keep on turning every page knowing that the next discovery is yet another "body" to be uncovered, ie some metric/measure that you know you really should have data for, but for some reason has eluded you! A very useful practical guide to thinking about what metrics really matter in modern business.
on 28 September 2013
I'm still in the process of reading this, however, even at 50% completion this book has saved me a lot of time.
Some context: I'm focused on ecommerce and therefore parts of the book are relevant, whereas others need to be skipped over.
What I found valuable is the segmentation of metrics based on business model (e.g. what type of ecommerce business should be avoiding loyalty programs and focusing on customer acquisition). Also, the survey guidance alone has saved me hours of trial and error. Finally, the guidance on typical KPIs gave a quick leg up instead of starting with a blank piece of paper.
You won't read this book cover to cover, but it will guide you based on your business model through the book.
The reading style is quite easy going, and isn't laden with academic terminology.
on 7 August 2014
This is a must-read for entrepreneurs.
Alistair and Ben have pioneered the idea that you should only track 'one metric that matters' at any given stage in your startup's trajectory. That metric becomes a rallying cry, a call to arms, a focus for your entire company. Startups fail because they try to do too much and can't see the wood for the trees. This will help bring clarity and hopefully success.
These guys are lean mean analytics machines. Saw them talk in person at UCL in 2013 and they were excellent speakers as well, fast on their feet and insightful with the Q&A afterwards too.
on 2 September 2013
A very good introduction to metrics and measuring progress. If you are thinking of launching a startup or are currently in the early stages of launching this is a good book for you.
on 1 April 2016
Very thoughtful, anchored and practical guide to the steps and the guidance needed to get a concept off the ground and into the market. Provides a wealth of detailed approaches and key metrics. Well worth it