The Lean Startup's from the perspective of an entrepreneur to explain the key contents of this book to all of you.
In this day and age, we see businesses flourishing almost everywhere. Wherever you go, you see small and large shops, and commerce advertised in all directions. So, what is business? How do you define it? In this book, it's defined as follows: business is the activity of selling products or providing services to people who have a need in order to make a profit.
In this era, it's an era of spending. We see many different small and large businesses emerging in the market. And in the minds of every businessperson and entrepreneur, day in and day out, they only think about how to make a lot of money from the market. Therefore, before starting a business, it requires us to have a deep and clear understanding of business and how to sell products to the target audience.
Today, this book titled 'Understanding Business' is a guide that will help you understand business from all angles. This book has been used by many major universities in the United States as a teaching document for students specializing in business leadership. Published for over 30 years, it has been indispensably used as a teaching document by famous professors around the world. Listening to this book is like taking a three-month MBA class.
The author of this book name Eric Ries. A famous professor and expert in the field of education. After reading this book, we have gained a lot of unique knowledge. We will divide the key contents of this book into three parts: Part one: Finding a starting point. Part two: Methods for motivating the team. And part three: Businesspeople must know how to adapt to circumstances.
First, let's look at the first key to business: finding a starting point. This is the very first thing you need to think about before starting anything. Entrepreneurs or those who want to start a business must be able to see their own unique strengths and use them to look for opportunities they can seize in the market. Find an entry point and start from there.
In this day and age, especially in the Cambodian business context, many people want to start their own businesses. But these things are not always possible. Out of 10 businesses, 5 fail within the first year. After five years, only one or two companies that can persevere until they are recognized by the market will remain.
Everyone has ambition. But if you rely only on a fighting spirit and motivation alone, but you don't understand how to create and manage a business, sooner or later you will still fail. There is no coincidence in business. If you truly cannot find a way to make money, it means you don't have a talent for business. You might be better suited to working for someone else. Saying this might seem too discouraging for those who want to start a business. But that's okay. This book will tell you a proper way to do business.
First, you must know yourself well. When you choose a business path, find a path that you think you are good at or a field that you love and want to do. Analyze your own strengths and weaknesses, and find opportunities in the market. Frequently ask yourself: What do I want to do? What can I do? How should I do it? Because these are questions that can clarify your goals, mission, and strategy. Not asking yourself these questions before starting is being irresponsible towards your own business journey.
Some entrepreneurs or businesspeople, when they first start, don't ask themselves these questions. They only want money. Sometimes they don't even think about whether this work suits them or not, whether they like it or not. They don't even know how they should do it. They have no clear direction, don't understand the market, and just want to do it right away. For example, when they see someone successfully selling products live on Facebook, they see them selling well and want to sell like them too. But when asked what products they want to sell, who their target audience is, where they get the products from, how they set the price, and who else in the market sells this product, they can't answer.
Therefore, before starting anything, you must frequently ask yourself: What do I want to do? What can I do? How do I do it? We need to understand ourselves clearly, know our own strengths, and start doing things that you think you can do better than others. Knowing yourself well is the first step. The next step is to find a starting point. The starting point here refers to a path through which you can find money. Choosing the right starting point not only gives you a better chance to win, but also allows you to move faster than others.
But the question is, how can you find a starting point that is suitable for yourself? This book doesn't answer that directly. But it mentions that skilled entrepreneurs know how to find problems that exist in the market, which we call 'pain points.' After finding this pain point, they start looking for many ways to solve those problems. We often hear people say that where there is a problem, there will be a solution. Can we see that problem? And who will find the solution? If you can solve those problems, you might become a successful entrepreneur or business owner.
By observing the successful experiences of many millionaires, we can see that their successful projects in today's market often come from creating solutions for common problems in the market. The ability to see problems that exist in the market is a special ability of a brilliant entrepreneur. So how can one see problems and seize opportunities in the market?
This book presents a few methods for all of you. This method is excerpted from another book titled 'A More Beautiful Question,' written by Mr. Warren Berger. It is a method of asking yourself three questions to find a truly genuine answer. First, you must ask yourself: Why do customers have this problem? Then ask: What if we created a product or service to solve this problem? Would customers accept it? Would they be happy? Would they be able to take money out of their pockets to buy it? And the final question is: How can we make this 'what if' become a reality?
In daily life, there is no shortage of successful examples of products from some large companies. For example, the use of Wi-Fi in this era is very widespread. The Wi-Fi machine that you all use at home, we call a router. I believe that if you are not a technical person or have never had experience installing a router before, you will not know how to install it. And this problem exists in almost every place.
The company Xiaomi found this one problem, and they created the Xiaomi Wi-Fi router device, which has the simplest features. Just by following the instructions in only three steps, you can install Wi-Fi in your house. Even a child can install it. This is the product that made Xiaomi receive strong support from users.
After we find a problem in the market, we will definitely need people to work with us. It is recommended that you start with a small team at the beginning. The advantage of a small team is that it can quickly adapt itself to the market, easily understand customers, and keep up with the demands of users. They have a quick reaction to rapid changes in the market. There is a saying that a small boat is easy to turn.
If we compare this market to a jar of water, then those big companies are like the rocks in that jar. Putting in just a few rocks can fill the jar. But between those rocks, there are large gaps that can be filled with sand. And this sand is like the small startup companies in the market that are creating many products or services to fill the gaps in the market. Sometimes, big companies don't see that problem; sometimes they see it but don't do anything about it, for example. These are the opportunities for small companies.
There are many stories of small companies transforming into large ones. For example, Alibaba started with the 18 'Lohans' who were co-founders, and later became the largest and most widespread cross-border e-commerce platform in the world. Steve Jobs created the company Apple starting from his garage. David McConnell borrowed $500 from a friend, created the company Avon, using a network marketing business model, selling over 20,000 cosmetic products to 145 countries. As of now, this company has over 43,000 employees, with an annual revenue growth of over 5.7 billion US dollars.
Therefore, starting small is not a problem. The problem lies in whether you can see an opportunity when the market has a problem or is in chaos. As Jack Ma said, opportunity arises when the market is in chaos and disappears when the market is calm. The smart ones can find the opportunity and create a game for everyone to play.
The above is the first part that I have summarized for all of you, which is to see your own special strengths, analyze yourself to see what you can do best, and find a good starting point to enter the market. Then you must know how to ask yourself three questions according to a principle called 'A More Beautiful Question'. Find problems that exist in people's daily lives, create a solution, start with a small team, and start making money.
Next, we come to the second important content in this book, which talks about techniques for motivating a team using the least amount of capital. They say people are the most difficult to manage. If you can manage people, you can manage a business. Knowing how to create a mechanism to motivate employees is an important factor in driving a business to success.
In this book, they have raised a number of theories, such as Maslow's Pyramid of Needs by Abraham Maslow, and Theory X and Theory Y by Douglas McGregor, for example. These theories are very complex and long-winded. But to summarize, we can use two words to grasp the meaning of these theories, which is that employees have two needs: tangible needs and intangible needs. Tangible needs include things like salary, accommodation, bonuses, and stocks, for example.
Speaking of small startup companies, it's very difficult to talk about stocks. And it's also rare to have a company that has the ability to provide good conditions and high salaries to the team. Because small companies have an uncertain fate and little capital. Sometimes, even employee salaries are not paid in full. On the other hand, having money doesn't guarantee that you can attract capable people to work with us.
So if our company is small, how can we attract strong people to work with us and even make them stay with us for a long time? If there's no money and no good conditions to offer them, we have another method, which is to fulfill their intangible needs. This includes having a shared vision and dream, and making them feel a warmth that goes beyond money and the resources you have provided them. This book describes four methods for motivating a team using the least amount of capital.
First, have a shared vision. Second, provide sufficient decision-making authority. Third, dissolve the barriers between upper and lower levels. And fourth, strike while the iron is hot.
First, let's look at the first method: making the team have a shared vision. A vision is your ultimate goal. You created this business, so what do you want it to become? It is the future for all of us. We must know how to break down the shared vision into smaller visions and show them to everyone, so that we can move towards our goal in unison. It's like pointing to a place we want to go. We have to tell everyone that this is the place we want to go. It is our vision; we must make everyone see it clearly.
This goal doesn't necessarily have to be money or any resource. Sometimes it can be something meaningful and valuable for everyone. For example, we do this to facilitate the job search for the public. Or we do this to make everyone's life better than before. When the team has a mission to fulfill in order to achieve a valuable shared goal, they will work hard with all their hearts, not for money or salary, but for something more valuable than that.
Therefore, if we are founders or business owners with a team we are leading, we must talk clearly about our vision, always motivate them, and always remind them of our vision. You all probably know the company IBM. Before, this company was named Computing-Tabulating-Recording Company, or called CTR. The computer hardware and software that you all use today are products of this very company. Established in 1914, it was a small company that no one knew. At that time, the two products that fed IBM's rice pot were scales and wall-mounted punch clocks.
To motivate the team and show his vision, the CEO of CTR at the time, Mr. Thomas J. Watson, changed the company's name to International Business Machines Corporation. This name sounded more powerful, bigger, and more successful than before. And in fact, they did it. Under the leadership and motivation of the top leaders of IBM, over a period of 32 years, from its establishment in 1914 to 1946, IBM's profits increased by 38 times.
Besides motivating by presenting a shared vision, the second method is to grant sufficient decision-making authority. When we know how to grant sufficient decision-making authority to subordinates, they will have confidence in you. Trusting each other within an institution is very important. It's even more important than hard work. If the team doesn't trust each other, no matter how hard they try, it's useless. The character Cao Cao in the story of the Three Kingdoms also once said: 'When using people, don't be suspicious. If you are suspicious, don't use them.'
Using people with trust and giving them sufficient authority allows them to release their full potential and achieve results beyond your expectations. Any employee wants to receive authority and recognition from their superiors. All of this is more valuable than salary and bonuses or the annual rewards you give them.
In practical application, a company owner can assign a clear task to an employee to complete the work alone from beginning to end, and also have them take responsibility for the work they have done, to give them a chance to try, and they will feel proud when they achieve it successfully. The former CEO of Chrysler Automobile, Mr. Robert Eaton, was asked by an interviewer... ...how was it possible for Chrysler to increase sales by 246%, with revenue jumping up to 3.7 billion dollars in one year? He said, 'If I had to say it in just one word, it would be 'empowerment'.
This confirms that giving sufficient authority to subordinates to work independently and having them take responsibility for their own work can truly create magnificent and surprising results.
Besides motivating through creating a shared vision and building trust between the team, let's look at the third method: eliminating communication barriers with the team so they can work in harmony with each other, allowing them to express their opinions freely. Ensuring communication and cohesion among the team can enable them to express their abilities from all angles and work more effectively than before. Employees feel that they are an important part of the company, and managers can also see their abilities and opinions.
The number one billionaire in the world, Mr. Elon Musk, when he first started the company Tesla, he didn't have a personal office. He worked at a desk with the employees to understand the company's operations and build good relationships with them. Sometimes, just a wall can create an obstacle in communication between team members. For small companies that are just starting out, they can arrange their workspace like this: no small ranks, no big ranks, no boss, no subordinates. Everyone works together, eats pizza together, sleeps together, goes out together. Doing this will make the team's relationship better and closer than before.
In the Ford company, there is a group of employees they call 'The Kicking Horse'. This group of employees came from different departments but could work together very well. They worked together without pressure and without any division of job titles. The engineering team could sit at the same table with the designers, a TV director could go and sit at a table to discuss with an accountant. Sometimes they worked through the night, sleeping at the company frequently. This team of employees completed their work much faster than planned and created many good car models for the Ford company, achieving surprisingly high sales in the market.
Finally, let's look at the fourth method, which is to strike while the iron is hot. This means to blame or praise in a timely manner, don't leave it for too long. Motivation doesn't have to be a monetary bonus or any kind of award. And it doesn't need to be made complicated either. Showing recognition and giving a few words of praise when an employee does a good job is also a very effective method of motivation. And this point is what employees need the most.
When any employee does a good job, you must praise them publicly and in front of other employees. Praise makes them more confident in themselves and love their work even more. You must remember: praise in public, but criticize in a private, one-on-one setting. Striking while the iron is hot refers to praising in a timely manner, don't wait too long. Because it might make them forget or not receive the special feeling as when they do a good job and are praised immediately.
So why should it be done publicly? Because it makes them feel proud and sets a good example for other employees. On this point, you can say this: 'Thida, even though you didn't express many opinions in today's meeting, I was interested in the few words you said. I want to hear more. Can you speak a little more clearly?' Or when an employee does a good job, you can praise them like this: 'Thida, the report that you did was very detailed, and it was on time too. Thida's work has eased the workload for many colleagues.' "I hope that Thida will continue to strive further."
In a famous book, 'A Thousand and One Ways to Reward Employees' by Mr. Bob Nelson, it is mentioned that... "Saying a word of praise or thanks to a good employee in the right circumstances is more valuable than monetary rewards, certificates of appreciation, and all awards."
The above is the second important content that I have brought up to summarize for all of you. It is the technique of motivating employees using the least amount of capital. People are the most important part in driving an institution to have growth. Knowing how to manage people, to make people motivated, to continue the journey together with us, is truly something that cannot be missed, especially for small companies, startup companies that have just been newly established. Because a small company doesn't have enough capital to provide employees with high salaries and great perks. Therefore, you can choose to apply this low-capital motivation method, which, when we sum it up, has four aspects.
First, create a shared vision. Second, build trust within the team. Third, eliminate obstacles in communication within the team. And fourth, strike while the iron is hot, praise people on time.
We come to the final important content. Besides motivation, we have three more important points that make a business successful, which are: having high flexibility, having quick decision-making, and knowing how to withstand risk. In this world, there is no decision that is always right. And there is no business that is always profitable either.
Speaking of entrepreneurs, leading a business is not an easy thing. It has high risks and can cost a lot of time and money. Besides facing some risks like market factors, economic factors, and management factors, there are many other factors that cannot be controlled. But among the factors above, market factors are the highest risk, and also one of the main reasons that a new business fails.
In one study, it showed that the reasons that cause a business to fail, among them, the factor of 'no market need' accounts for up to 42%, while the factor of lack of capital is 29% and the team factor is 23%. This proves that the market factor is what entrepreneurs must ask themselves first of all: whether what you create truly has a need in the market or not. No matter what era or country, it's all like this. Among 10 projects, only one or two can be successful.
Therefore, every entrepreneur must hold on to a firm hope and know how to motivate themselves constantly to continue the journey towards the goal they have set. If you haven't reached the goal, you can't rest. Be ready to accept all failures and be flexible according to the circumstances, making the fastest and most correct decisions.
Knowing how to be flexible is a very important quality for an entrepreneur. We must know how to see the evolution of the market and know how to grasp some resources to do big things in the future. You can make small adjustments to your strategy and methods according to the market context. If you are not flexible, stubborn against the market, create products or services based only on your own thoughts, not understanding the users, it's no different from rowing a boat against the wind. It will surely fail one day.
Besides being flexible, entrepreneurs must know how to make the right decisions. This book raises the 7D principle to assist in your decision-making. The first D is Define: provide a definition. It is to speak clearly about the problem or matter that you have to decide on. The second is Describe: collect the necessary information. The third is Develop: find as many choices as possible. Fourth, Develop Agreement: those choices must have the agreement of others. Fifth, Decide: make a decision. Sixth, Do: do or implement. And seventh, Determine. Make a judgment on the good and bad points of each choice, then proceed with implementation.