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!