LITMIR.BIZ

Preface

      IN 1602, THE DUTCH EAST INDIA COMPANY, generally regarded as the first “modern company,” issued the first stock certificates. In the intervening 300 years, companies managed to start, build and grow without formally trained executives. By the 20^th century, the complexity of modern corporations demanded a cadre of executives trained to administer large companies. In 1908, Harvard awarded the first master of business administration (MBA) degree to fill the need to bring professional education standards to big business. The MBA curriculum standardized and codified the essential elements an operating executive in a modern company needed to know: cost accounting, strategy, finance, product management, engineering, personnel management and operations.

      Formal management tools are about 100 years old.

Fast-forward to the mid-20^th century. The pairing of venture capital and startup entrepreneurship emerged in its modern form, and the startup industry they fostered has been exploding ever since. Yet for the past 50 years, finding the successful formula for repeatable startup success has remained a black art. Founders have continually struggled with and adapted the “big business” tools, rules and processes taught in business schools and suggested by their investors. Investors have been shocked when startups failed to execute “the plan,” never admitting to the entrepreneurs that no startup executes to its business plan. Today, after half a century of practice, we know unequivocally that the traditional MBA curriculum for running large companies like IBM, GM and Boeing does not work in startups. In fact, it’s toxic.

      With the benefit of hindsight, entrepreneurs now understand the problem, namely that startups are not simply smaller versions of large companies. Companies execute business models where customers, their problems, and necessary product features are all “knowns.” In sharp contrast, startups operate in “search” mode, seeking a repeatable and profitable business model. The search for a business model requires dramatically different rules, roadmaps, skill sets, and tools in order to minimize risk and optimize chances for success.

      By the beginning of the 21^st century, entrepreneurs, led by web and mobile startups, began to seek and develop their own management tools. Now, a decade later, a radically different set of startup tools has emerged, distinct from those used in large companies but as comprehensive as the traditional “MBA Handbook.” The result is the emerging “science of entrepreneurial management.” My first book, The Four Steps to the Epiphany, was one of its first texts. It recognized that the classic books about large-company management were ill-suited for early-stage ventures. It offered a reexamination of the existing product-introduction process and delineated a radically different method that brings customers and their needs headfirst into the process long before the launch.

      We are building the first management tools specifically for startups.

      At the time I wrote it, the book was my proposed methodology for getting startups right. But just as it was published, agile engineering became the preferred product-development method. This iterative and incremental method created a need and a demand for a parallel process to provide rapid and continual customer feedback. The Customer Development process I articulated in The Four Steps fit that need perfectly.

Over the past decade, thousands of scientists, engineers and MBAs in my classes at Stanford’s engineering school and U.C. Berkeley’s Haas School of Business—plus those sponsored by the National Science Foundation—have discussed, deployed, assessed and enhanced the Customer Development process. It has since been implemented by tens of thousands of entrepreneurs, engineers, and investors worldwide.

      While the fundamental, powerful “Four Steps” remain at its core, this book is far more than a second edition. Nearly every step in the process, and in fact the entire approach, have been enhanced and refined based on a decade of Customer Development experience.

      Customer development is paired with agile product development.

      Even more gratifying: now, a decade later, multiple books and authors, are filling shelves in the newly created section for the strategy and science of entrepreneurship. Some of the other areas in this emerging field of entrepreneurial management are:

No one book, including this one, offers a complete roadmap or all the answers for entrepreneurs. Yet together, the texts in the entrepreneurial management science library offer entrepreneurs guidance where none existed before. Startups, driven by potential markets measured in billions of people, will use this body of knowledge to test, refine and scale their ideas far faster and more affordably than ever.

      No one book, including this one, offers a complete roadmap…

      My co-author Bob and I hope books like this one help speed the startup revolution and enhance its success—and yours.

      Steve Blank

      Pescadero, Calif., March 2012