Eric Ries Q&A: The Startup Way author on why we should see entrepreneurship as a corporate capability

Blogger and author Eric Ries is a celebrity in the startup world for his first book, The Lean Startup, which was published in 2011.

Now Ries is applying the principles of entrepreneurship and his “lean” movement to traditional companies and civic institutions in his new book, The Startup Way. Advocating for a shift in the way we view modern companies, he urges them to adopt ideas such as continuous innovation, setting up standalone startup teams within large organisations and rewarding “productive failures”.

We ask what the key takeaways should be and how much of his latest business-world blueprint the average organisation will actually adopt.

If you wanted readers to take away one key point from your new book, what would it be?

I would say it’s that the way we build our organisations today is the same basic blueprint we’ve been using for 100 years. Even our new hot technology startups when they grow up grow into this old-fashioned blueprint, and that many of the problems that we’re experiencing, not just in business but in our civic institutions, come from the fact that that blueprint was designed in a different time to solve a different set of problems.

We need to start thinking about entrepreneurship as a corporate capability, the ability to innovate to build new products, to serve new customers. To evolve our own organisational forms we have to view that as a corporate capability. I call it the missing function in those organisations today and I think we should just call it entrepreneurship and we should get serious about it.

Who do you think should be instigating this type of change within organisations?

Generally speaking these transformations are sparked by a ‘change agent’ that has a vision. But it’s not easy to identify who it’s going to be in advance because I’ve noticed that there’s no correlation between a person’s résumé and their level of creativity, because in most organisations people actually have to hide their natural passion and creativity and don’t bring it to work. They kind of have to pretend almost to be a corporate drone because that’s what’s required for them to fit in and be promoted, so there’s all this hidden entrepreneurial energy in these organisations and when executives start to talk about change in the organisation, trying something new, I’ve been astonished… people come out of the woodwork. They just appear one day like, ‘where have you been all my life?’ and it’s like, ‘well, I’ve just been a regular employee, never given the opportunity to speak up and tell you that I actually know what needs to happen, now that you’ve asked for the first time here’s my answer.’

There are lots of startups at this point that have grown beyond the size of groups we traditionally call companies. When does a startup stop being a startup and become a company?

I actually think part of the problem in our world right now is that we view company and startup as a binary category, but that’s clearly wrong. My definition of a startup that I used in The Lean Startup was a human institution designed to create something new under conditions of extreme uncertainty. The word startup can only apply to an individual team, it doesn’t make sense actually to think about a whole company as a startup, that’s actually not a logical purpose because even the tiniest startup, once it has five customers, has some amount of execution and some amount of experimentation in its portfolio. The binary categories are actually limiting how we evolve these concepts, so I think we’re much better off seeing the work that an organisation does as a management portfolio akin to a financial portfolio.

How much of all this do you think businesses will realistically implement?

The vast majority of businesses will not implement it at all. A small fraction will put their toe in the water, decide the water is too hot and give up, and a very small number will embrace it fully and then come to dominate the rest because here’s the truth: as a consumer of products I don’t care. I talk to companies all the time like, look, as your customer, I don’t care if you live or die, if you stick to your old-fashioned ways and your product becomes obsolete then some cool startup probably founded by a friend of mine, they’re going to come eat your lunch and then as a consumer I’ll buy their product and I’ll be just as happy. But from your point of view you might prefer to live than to die, in which case either embrace a modern way of working… or perish. I think it’s that simple.

You don’t have to adopt my methodology specifically (there probably are other good ones too) but we certainly can agree that what got us here is not gonna get us there. The tools and the procedures and the mindsets from the 20th century… were not designed to solve the problems that we face in 2017.

Why do you think your first book struck such a chord with entrepreneurs?

Coming out of the financial crisis there was a real hunger for new ideas and models for innovation. I think there was a real crisis of confidence in the Western world about how we build our business institutions, so that definitely helped. I think, frankly, that we were at the start of this very long process of democratising entrepreneurship and validating it as a career path. There had been all this new research about how entrepreneurship is the key to economic growth and delivery so I think there was like a societal moment where we were ready to talk about entrepreneurship in a new way and I think there just weren’t that many alternatives when we talk about having a rigorous practice around entrepreneurship.

What’s your writing process?

I’m terribly disorganised as a writer myself. I don’t know that my process is one to be emulated but, for whatever reason, these ideas come to me in my head, I do most of my composition mentally before I write anything and therefore I have a very frustrating writing process where I’m the kind of person, like I’ll block a whole day for writing, 10 straight hours, you know eight hours in have written nothing just been watching the TV, you know procrastinating going on Facebook whatever you know at 5pm will finally have the insight that I need to write it down and from you know 5.45 to 6.15 like crank out a whole day’s worth of writing, er, and then you know collapse so yeah I don’t claim that that’s even a good process but that’s the one that has worked for me.

Do you have a third book in the pipeline?

No, I don’t know. I don’t have any idea what the future holds!

City A.M. interviewed Eric Ries when he spoke recently at digital agency Zone.

To read a review of The Startup Way, click here.