Jason Bennett - LEAN: Ultimate Collection - Lean Startup, Lean Analytics, Lean Enterprise, Kaizen, Six Sigma, Agile Project Management, Kanban, Scrum (Lean Thinking, Lean Manufacturing, Management, Running Lean)

One of the most important principles of a lean startup is that the startup must use every one of its resources effectively and efficiently. Since most startups do not have enough investment they use the lean business model to encourage the effective deployment and continuous development of the resources that the company does have.

A lean startup must continuously evaluate how the initial investment can be used to meet their targets and their customer requirements. The startup must also ensure that it does not spend more than what is necessary to test, evaluate and refine its products.

If the costs are kept at a minimum, the startup can maximize its profits whenever there is a sale.

Every lean startup is dependent on organic growth since it does not have huge capital investment. When the profits made at the early stages are reinvested in the company, the startup can scale its operations up in a controlled manner without sacrificing quality. This is commonly called innovation accounting. This is covered in detail in the following chapter.

Eric Ries believes that every individual in the world is an entrepreneur. There are some successful entrepreneurs who have built their organization in their garage. You can find entrepreneurs in Hollywood, in the IRS and even in well-established organizations. These people are always looking for a way to develop products that increase value to the customer.

It is important to remember that every startup is not defined by its products but is an institution. Therefore, there must be a management team in place to understand and develop the startup. This is covered in further detail in the later chapters of the book.

A startup does not exist only to build products for the customers or to make money. It exists only when the management learns how to build a sustainable business. The learning can be validated through statistic measures by running experiments that test the startups' vision. This concept is covered in further detail in the next chapter.

A startup must focus on the following to improve outcomes and also hold every entrepreneur accountable:

How can progress be measured

How can milestones be set

How can work be prioritized

This requires a new type of accounting for startups, which is covered in the next chapter.

Every startup looks for ways to convert its ideas into a product or service and measure how its customers receive that product or service. When they understand the response, they will understand whether they need to pivot or persevere. This process is covered in further detail in the next chapter.