The Lean Startup Vocabulary

Critical vocabulary and concepts from Eric Ries's 'The Lean Startup' regarding entrepreneurial management and scientific innovation methodologies.

Startup

A human institution designed to create a new product or service under conditions of extreme uncertainty.

Validated Learning

The process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.

Build-Measure-Learn

The fundamental feedback loop of a startup: turning ideas into products, measuring customer response, and learning whether to pivot or persevere.

Minimum Viable Product (MVP)

That version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time.

Pivot

A structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth.

Innovation Accounting

A new kind of accounting designed for startups to measure progress, set up milestones, and prioritize work by turning leap-of-faith assumptions into a quantitative financial model.

Genchi Gembutsu

A Japanese term from the Toyota Production System meaning "go and see for yourself" so that business decisions are based on deep firsthand knowledge.

Vanity Metrics

Metrics that give the rosiest possible picture but do not accurately reflect the health or progress of a startup, such as gross number of customers or total registered users.

Actionable Metrics

Metrics that demonstrate clear cause and effect, enabling teams to learn from their actions and judge whether results are improvements or just optimizations.

Five Whys

An investigative method developed by Taiichi Ohno used to understand the root cause of a problem—frequently a human problem—by asking the question "Why?" five times.

Sticky Engine of Growth

A growth model where companies track the attrition rate or churn rate carefully, relying on high customer retention to ensure the rate of new acquisition exceeds the churn rate.

Viral Engine of Growth

A growth model where products spread rapidly from person to person as a natural consequence of product usage, measured by a viral coefficient.

Paid Engine of Growth

A growth model where the cost of acquiring a new customer is less than the revenue that customer generates, allowing the marginal profit to be reinvested in further acquisition.

Continuous Deployment

A software development process where changes are released to customers immediately after passing automated tests, allowing for rapid iteration and feedback.

Leap-of-faith Assumptions

The two most important assumptions entrepreneurs make upon which the whole venture rests: the value hypothesis and the growth hypothesis.

Single-piece Flow

A lean manufacturing concept where work proceeds one unit at a time in small batches to identify quality problems sooner and reduce waste.

Cohort Analysis

An analytics tool that looks at the performance of independent groups of customers who come into contact with the product during a specific time period.

Innovation Sandbox

A mechanism for empowering innovation teams by allowing them to run split-test experiments that affect only a specific part of the product or customer segment.

Customer Archetype

A brief document that seeks to humanize a proposed target customer to ensure prioritization decisions are aligned with the intended audience.

Lean Startup

The application of lean thinking to the process of innovation, characterized by extremely fast cycle times, customer insight, and a scientific approach to decision making.