Under the “Read & Grow” series, MMA held a discussion on the theme of the book “The Lean Startup: How Constant Innovation Creates Radically Successful Business” by Eric Ries. Sreenivassan Ramaprasad, Director, CADD Centre Training Services led the conversation with S Srikanth, Management Consultant & Executive Coach and Kannan Gopalakrishnan, Co-founder, Habitat Design Studio.
Sreenivassan Ramaprasad: Startups are the backbone of our economy as we move forward. In The Lean Startup, Eric Ries provides a new perspective on how startups should think. He introduces a scientific approach to entrepreneurship, focussing on efficiency, learning, and adaptability to minimise risk and uncertainties while maximising success.
Build, Measure, Learn
The first key concept is what he calls the Build-Measure-Learn loop, an iterative process. Many organizations, when they come up with a new idea, invest heavily in building a product before testing it. Later, if the product fails, the entire investment is lost. Ries suggests building a Minimum Viable Product (MVP), releasing it to the market, measuring its performance, gathering quick customer feedback, and then iteratively improving the model. For example, Dropbox initially launched just a video demonstrating its benefits for file management. Once they received significant interest, they began full-scale product development.
The Minimum Viable Product (MVP) is the foundational skeleton of a product. It is the simplest version that allows startups to gather maximum validated learning, based on the assumption that the product or concept will work. Start small, test assumptions, and avoid over-engineering before meeting customer needs. Ries gives the example of Zappos, an online shoe retailer. Initially, they only displayed photographs of shoes with prices online to test whether customers were willing to buy shoes digitally. Once they saw strong demand, they developed a full-fledged platform, eventually selling the company to Amazon for a significant value within ten years.
Validated Learning
The third key concept is Validated Learning, which refers to systematically testing ideas through experiments and customer feedback. Entrepreneurs test hypotheses to determine what works and what doesn’t. Ries cites IMVU, where he was a co-founder. Initially, the platform introduced avatars for chatting, assuming users would embrace this feature. However, after testing, he realised it wasn’t gaining traction. Because he had not heavily invested in this direction, he was able to pivot efficiently. This illustrates the importance of validating assumptions with an MVP before full-scale development.
The next concept is Innovative Accounting, a framework for measuring progress in startups that focuses on actionable metrics rather than vanity metrics. For example, if you develop an app, don’t just measure downloads—analyse actual usage. Ries gives an example of a fitness app: if people download it but don’t use it, it holds no value. Instead, tracking engagement with core features provides meaningful insights for further development.
Pivot or Persevere
Another key principle is Pivot or Persevere, which involves deciding whether to make a significant change to the product or strategy or continue on the same path based on insights from the Build-Measure-Learn loop. Ries explains that Groupon originally started as a platform for collective action and fundraising. However, the founders realised users were more engaged with group discounts and deals rather than activism. This insight led them to pivot toward the group-buying model, ultimately shaping Groupon into a successful business.
In CADD Centre, when we started, our original intention was to provide CAD related printing services. However, after a few months, we realised that the market was not ready—there was little demand for CAD prints. By the third or fourth month, revenue was stagnant. Instead of investing heavily in printing machinery, we quickly pivoted to training services, which led to significant growth, making us one of the largest training providers in the Asia-Pacific region.
Another crucial concept is Continuous Deployment, which involves rapidly deploying updates and iterations to gather quick feedback and respond to customer needs. Startups must quickly adapt to changing demands while minimising wasted effort. Ries discusses how Amazon continuously deploys small updates and new features, testing customer responses to inform further development.
Next is Lean Thinking, a concept derived from Toyota’s Lean Manufacturing principles. The idea is to build only what is necessary, eliminating waste and optimising efficiency. In Lean Thinking, startups focus on value creation, resource optimisation, and risk reduction to improve efficiency in operations.
The book is structured into three parts:
Vision: This part discusses the entrepreneurial mindset. Many believe that only creativity is required for success, but Ries emphasises the importance of strong management principles. Entrepreneurs, regardless of company size, must adopt structured decision-making similar to large organizations.
Steer: This covers the Build-Measure-Learn feedback loop and explains how startups can either pivot or persevere based on expert insights. For example, Instagram initially started as a check-in app with multiple features, but after analysing user behavior, the founders discovered that photo sharing was the most used feature. This led them to pivot into a dedicated photo-sharing platform, which became a massive success.
Accelerate: Once a startup identifies what customers want, it should scale in that direction. If demand is lacking, a pivot is necessary. Airbnb’s success stemmed from enhancing trust between hosts and guests by introducing features like host verification and professional photography, which significantly contributed to its growth.
Srikanth: Lean manufacturing is well-known in industrial circles, but applying it to startups is quite intriguing. I have interacted with many startup founders and entrepreneurs, and one common pattern I observe is that they often become fixated on a single idea. They continue investing resources into it, even at the cost of financial losses for their investors. If they embraced the Pivot or Persevere concept, they might recognise the need to change direction sooner.
Eric Ries defines a product as anything that delivers value to a person who is, or is willing to become, a customer. I find this definition very insightful.
Kannan Gopalakrishnan: Managing a startup requires a completely different mindset compared to traditional management. Closing the feedback loop is a brilliant concept. Over time, businesses often fall into complacency, assuming that customers will always love their products and services. However, that assumption—like a soap bubble—can easily burst, leading to failure. The real magic happens when customer feedback is actively integrated into the process and system, driving continuous improvement and innovation.
Sreenivasan Ramaprasad: Among all the concepts, which one resonated with you the most?
Srikanth: Pivot or Persevere, for sure. Also, in the Build-Measure phase, Ries introduces the Value Hypothesis and Growth Hypothesis concepts that many startups overlook. The Value Hypothesis must be tested periodically, and the only true validator is the customer.
Startups cannot take customers for granted. Sometimes, even customers themselves don’t fully understand their needs, so how do you address that? Ries makes an important point: don’t rely on feedback from just one customer or a small group. Instead, collect data from a broad customer base, analyse it statistically, and identify trends.
If startups follow this approach, they can bring their product to market faster, align with real customer needs, and avoid costly mistakes. It’s not just about wasted money—many failed entrepreneurs regret the lost time more than anything else.
Kannan Gopalakrishnan: A couple of concepts deeply resonated with what we do. One is quick testing—rolling out a product before it’s 100% complete and presenting it to the client for feedback. The client doesn’t need to see the full picture to give you an initial sense of whether they like it or not.
For example, if I design a residence—a beautiful bungalow with neoclassical semicircular arches and white marble—and the client responds with, “Oh no, I’m looking for a postmodern building with steel and concrete,” then all the hours I invested in that design are wasted. I once showed a sketch of a building to a client, proud of my work, only for them to dismiss it, saying, “That’s just a sketch.” That experience taught me an important lesson in how to effectively pitch an idea to future clients.
Metrics are also crucial. In my business, I typically measure success by revenue earned, total square footage designed, or the number of projects completed. However, we rarely talk about quality, even though it’s a critical metric. The way we define success directly impacts growth, which is why we constantly refine our metrics to ensure we measure what truly matters.
Sreenivasan Ramaprasad: Are these concepts truly relevant to your business? Or are they only applicable to startups?
Kannan Gopalakrishnan: I watched a video by Simon Sinek, the author and motivational speaker, where he discussed SEAL Team Six. In his interaction with the team’s captain, he asked, “What qualities do you look for in a SEAL Team Six member?”
The general took out a piece of paper and drew a graph. On the Y-axis, he wrote performance, and on the X-axis, he wrote trust. He explained: “High performance? I triple-check; Low performance? I check only once. If a high performer has low trust, they become a toxic presence within the team. On the other hand, a high-trust individual with low performance can always improve their skills.” This made me realise the importance of defining the right metrics, just as Eric Ries emphasizes in The Lean Startup.
Getting customers is one thing, and marketing is another. But how customers react to your product, how they engage with it, and the quality of that engagement are even more crucial. Ries’ insights made me rethink how we define our customers and our business. In fact, the questions customers ask about us often shape our identity. That was a powerful realisation for me—one that applies not just to startups, but to everyday business discussions and decisions.
Srikanth: I’m a consultant and a practicing Chartered Accountant. Our firm has been around for 50 years with well-established processes. However, I see a lot of potential in applying lean concepts to service industries, and I can certainly introduce these ideas to my clients. One of the key goals of lean methodology is cycle time reduction, and Ries emphasises reducing work in process. I believe this is a powerful strategy that can significantly enhance efficiency.
Sreenivasan Ramaprasad: What are the typical challenges startups face today, and does the author offer any solutions?
Srikanth: I have a feeling—and don’t get me wrong—that many startup entrepreneurs assume they can operate in the red indefinitely. I understand that startups involve risk and uncertainty, but even conventional businesses are facing unpredictability today.
What Ries suggests can help startups shorten their learning curve and accelerate their journey to profitability. One of his key warnings is about vanity metrics—many entrepreneurs focus on numbers and metrics that don’t actually impact the bottom line.
The real question is: How long can this last? How long will funding continue to support an unsustainable model? Startups need to shift focus from vanity metrics to meaningful, actionable data that drives real business growth.
Kannan Gopalakrishnan: 99 percent of startup ideas don’t get funded. You have to fund it yourself. The author guides those 99 percent of people to survive when they don’t have deep pockets. In my opinion, three to five years is fair enough to succeed, but people still have to eat. Make sure that your business is afloat and you’re making a dent in people’s minds, maybe not in their pockets. People should buy into the idea that there is marketable potential in your concept. The FBI says that you need to have actionable intelligence. In the same way, you need to have actionable metrics. Learn along the way and see what works and what doesn’t.
