The CIO Reading List: The Startup Way

CIO Reading List

Eric Ries’ first book, The Lean Startup, was a must-read for every tech entrepreneur at a newly launched business. Now he’s shifted focus to the established enterprise. His second book, The Startup Way, is aimed squarely at leaders driving change and institutionalizing innovation in large organizations. It’s a practical resource, packed with field-tested advice on giving a “Lean Startup” boost to bigger businesses.

Ries is focused on creating a culture of continuous transformation, which he says is vital to long-term success—especially in the face of sudden, disruptive change. He describes the way aging startups lose their all-hands-on-deck entrepreneurial spirit, shifting from innovative disruptors to creative dead zones. “When employees are subject to traditional organizational structures and incentives,” Ries writes, “certain specific bureaucratic behaviors result.”

I don’t know about you, but I’ve never been in a meeting where someone said, “What this company needs is more bureaucracy.”

Ries lays out five principles around restoring the entrepreneurial spirit and agility most companies had at inception but lost along the way. The book explains how to build and manage teams of innovators, encouraging entrepreneurship at a grassroots level. The result is a company that can “rewrite (its) DNA in response to new and diverse challenges.”

And while the standard pep talk about creating an innovative culture has been done, Ries goes deeper to make it fresh.

Entrepreneurship and the enterprise

The argument at the heart of the book is simple—every enterprise can adopt startup principles to remain innovative and agile. Ries is emphatic that he’s not imagining a company where every employee is constantly, magically innovating—but one where the structure and leadership techniques exist to foster teams that act with the creative mindset of a startup.

The key lies in empowering internal entrepreneurs to realize their true potential. Champion these people and you’ll create a culture of positive disruption. In practical terms, this means identifying innovators and giving them the budget and latitude to create “mini startups” within the business. It also means educating managers, who must understand why some people are working differently, with different accountability, within the greater organization.

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Ries explains how to create such an organizational structure. He shares advice on clearing bureaucratic obstacles that stymie innovation and urges enterprises to establish growth boards—councils that bridge the gap between internal startups and senior executives.

Things get really interesting in the middle third of the book. Ries outlines a “roadmap to transformation” that shows how businesses can develop experiments, build cross-functional teams, and set KPIs that nurture entrepreneurial spirit within departments. He then explains how to go from “critical mass” to “scaling up” to creating “deep systems” that embed this thinking into the DNA of the enterprise.

The book is peppered with real-world examples* and anecdotes, drawn from disruptive upstarts like Airbnb and Dropbox, and global manufacturing giants like Toyota. He even suggests an interesting approach to accounting designed to make constant innovation possible. There are also tips from Amazon on creating the perfect team, and instructive stories about GE’s struggles to align its appraisal system with a newly asserted culture of rewarding failure.

The Startup Way isn’t a complete guide to building an evergreen enterprise. But it identifies a vacuum at the top of most management structures and offers a valuable starting point for anyone looking to become a better leader and a smarter innovator.

What do you think? Can we embed entrepreneurship and innovation in more established corporations—and is this the way to do it?

*If real-world insights are your thing, then read our Data Strategy Playbook. It’s a comprehensive guide to planning and executing a data strategy that includes interviews with pivotal CIOs who are transforming their businesses today.