Review

A must read for those trying to bring an entrepreneurial mindset into larger organisations. When the Lean Startup came out, it seemed exciting but a little unrealistic to work that way inside a larger organisation. This book explains how to bring that small company agility to larger companies. Another great book by Eric Ries.

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Key Takeaways

The 20% that gave me 80% of the value.

The Startup Way is a comprehensive system for continuous innovation that combines traditional management's need for discipline with entrepreneurship's experimental mindset. It helps organisations repeatedly uncover and scale new growth opportunities while maintaining core operations.

Core Principles

1. Continuous Innovation: Create structures for ongoing, repeatable innovation at all levels
2. Startup as Atomic Unit of Work: Treat entrepreneurial teams like internal startups capable of rapid experimentation
3. The Missing Function: Establish entrepreneurship as a formal discipline with distinct practices and metrics
4. The Second Founding: Install this discipline as a significant transformation, especially for established companies
5. Continuous Transformation: Build organisations ready to reinvent themselves repeatedly as markets evolve

Traditional management frameworks—built on stable planning, rigid forecasts, and precise accountability—fail under high uncertainty. Modern companies need two complementary systems: one to produce high-quality offerings at scale, and another to discover what to build in the first place.

The contrast between traditional and modern companies is stark:

• Steady, capacity-driven growth vs. continuous innovation through small experiments
• Specialised functional silos vs. cross-functional teams iterating toward customer needs
• "Failure is not an option" culture vs. productive failures that enable pivoting
• Traditional competitive barriers vs. constant, data-driven innovation

Entrepreneurship as a Missing Function

Most organisations lack formal systems for turning new ideas into outcomes. Treating the internal startup as the "atomic unit of work" addresses uncertainty through teams that test assumptions quickly before heavy investment. To embed entrepreneurship as a core discipline, organisations need seven capabilities:

1. Islands of Freedom: Safe zones for limited-liability experiments
2. New Funding Models: Investments based on evidence rather than forecasts
3. Redefined Milestones: Learning-focused targets that guide pivots
4. Professional Development: Training and mentoring for entrepreneurial skills
5. Networking: Communities of practice for "corporate entrepreneurs"
6. Talent Alignment: Systematic assignment of people to high-uncertainty projects
7. Incentives: Evaluation systems that reward experiment-driven progress

Lean Startup Tools and Approaches

Teams identify "leap-of-faith assumptions" about their initiatives and design quick experiments to validate them. A Minimum Viable Product (MVP) tests these assumptions with minimal effort. The build-measure-learn loop creates continuous iteration where teams build an MVP, measure outcomes, and learn whether to pivot or persevere.

Leaders must emphasise learning over blame, replacing adherence to plans with a discovery mindset. The approach shifts teams from fearing mistakes toward learning through small-scale tests.

Innovation at Scale: A Management System

The Startup Way contrasts general management with entrepreneurial management across four dimensions:

• People: Experts become cross-functional teams; optimisers become two-pizza teams; consistent managers become entrepreneurs; specialists adopt a founder's mindset.
• Culture: "Failure is not an option" transforms to "I eat failure for breakfast"; risk mitigation gives way to productive failures; innovation shifts from noun to verb; compliance evolves to "black swan farming."
• Process: Functional hand-offs become highly iterative processes; huge programs transform to build-measure-learn cycles; quality through reduced variability becomes economies of speed; economies of scale evolve into portfolios of rapid experiments.
• Accountability: ROI transforms to innovation accounting; cost reduction gives way to leading indicators; market share shifts to future absolute cash flow; margins become metered funding.

Three-Phase Transformation

1. Phase One - Critical Mass:
• Start small and build success stories through experimentation
• Recruit champions to make exceptions to company policies
• Enlist early adopters and establish criteria for scaling
• Demonstrate that new methods work better than old ones
2. Phase Two - Scaling Up:
• Rapidly expand successful methods across the organisation
• Build coaching programs and accountability mechanisms (like the "whiteboard method")
• Establish "metered funding" to replace traditional budgets
• Implement growth boards that award resources based on validated learning
3. Phase Three - Deep Systems:
• Transform gatekeeping functions (finance, legal, HR) into enablers
• Create simple guidance documents with preapproved parameters for experiments
• Revise core processes to align with rapid experimentation
• Achieve full organisational adoption of entrepreneurial behaviour

Innovation Accounting

Innovation accounting measures progress when traditional metrics are near zero. It uses leading indicators to predict success early, focuses teams on crucial assumptions, bridges gaps between innovation teams and finance, and provides audit-ability for value creation.

It operates at three levels:

1. Dashboard: Track simple leading metrics to show improvement
2. Business Case: Transform assumptions into input metrics for a business plan
3. Net Present Value: Update financial models with real data from experiments

Growth boards use these metrics to make evidence-based decisions about which projects receive continued funding, following a venture capital approach within the organisation.

The Way Forward

Managers create small, cross-functional teams empowered to test assumptions in safe “islands of freedom.” Finance, HR, and legal shift from blocking to facilitating experiments. Leaders hold teams accountable for genuine learning, not inflated projections. Employees know they can try bold ideas, retain ownership if they succeed, and learn valuable lessons if they fail.

Such a culture raises overall productivity, keeps older companies relevant, and makes the economy more inclusive: people from all backgrounds can attempt new ventures. The Startup Way sets out a repeatable process for harnessing human creativity and renewing organisations.

Deep Summary

Longer form notes, typically condensed, reworded and de-duplicated.

Introduction

Leaders in both large corporations and young startups often ask the same questions: How can we make people more entrepreneurial? How do we build new products and enter new markets without alienating our existing customers? What metrics should we use to hold experimental teams accountable? How can we sustain a culture that balances core operations with ongoing innovation?

The Startup Way is a system for continuous innovation in any organisation. It combines traditional management's need for discipline and accountability with the iterative, experimental mindset of entrepreneurship. By recognising that anyone working under extreme uncertainty is acting as an entrepreneur, it establishes a new framework for organising resources, structuring teams, and making decisions so that companies can repeatedly uncover and scale new growth opportunities.

When businesses grow, they often lose the creative spark and lean experimentation that made them successful in the first place. At the same time, large organisations aiming to stay relevant must recapture that entrepreneurial energy to launch new products and move faster, despite layers of existing processes.

The Startup Way rests on five core principles:

• Continuous Innovation. Rather than chasing a single key innovation, create structures and incentives for ongoing, repeatable innovation at every level of the company.
• Startup as Atomic Unit of Work. Treat entrepreneurial teams like internal startups, capable of rapid experimentation and positioned to discover new growth.
• The Missing Function. Just as organisations have finance or marketing, they need entrepreneurship as a formal discipline, complete with its own practices and metrics
• The Second Founding. Installing this new discipline can be as significant as founding the company all over again—especially if the company is already large or well established.
• Continuous Transformation. Companies should be ready to reinvent themselves again and again as markets and technology evolve, rather than stopping at one big change effort.

In practice, not everyone works as an entrepreneur all the time. Only those projects facing genuine uncertainty require this startup approach. Still, senior managers must learn enough about entrepreneurial methods to support them. This means updating gatekeeping functions (finance, HR, legal, IT) so they enable fast learning cycles instead of stifling them.

Managers shift from "playing Caesar" (deciding which ideas live or die upfront) to "playing the scientist" (letting small, data-driven experiments prove or disprove their hypotheses).

Because many organisations are still run on strict quarterly targets, they often overinvest in predictable extensions of existing products. Counterintuitively, that short-term focus can discourage true rapid experimentation. The Startup Way provides a process to hold teams accountable for real progress while freeing them to experiment. It aims to replace outdated, one-size-fits-all planning with a balanced system: disciplined where outcomes are known, entrepreneurial where future possibilities are uncertain.

By applying these principles, companies can achieve long-term impact: sustaining their existing business while nurturing the next wave of innovation. The ultimate goal is a culture of continuous entrepreneurship, where new ideas can flourish, and where the legacy of each generation of leaders is an organisation built to adapt—no matter how the world changes.

Part One: THE MODERN COMPANY

Chapter 1: Respect the Past, Invent the Future: Creating the Modern Company

For much of the twentieth century, growth was limited primarily by capacity: as soon as a company had the ability to produce more, it simply made additional products and sold them. Today, globalisation, rapidly shifting technology, and the easy availability of capital have multiplied the competitive environment, making ongoing experimentation essential for long-term success. Companies face not just external uncertainty from new entrants and swiftly changing markets, but also internal pressure to launch groundbreaking products and discover new sources of growth.

Traditional management frameworks—rooted in stable planning, rigid forecasts, and precise accountability—fail under high uncertainty. Methods devised for repeatable, predictable production often force teams to pretend their guesses are facts. This leads to confusion about why projects fail and who's truly accountable. In fast-moving conditions, old-style management offers no built-in process for learning quickly and iterating before serious resources are spent.

How a company handles failure in this dynamic environment is key. Rigid, perfectionist approaches such as "failure is not an option" work for producing known products at massive scale but hinder the experimentation needed to discover new ideas. Productive failures—where teams learn critical lessons about customer needs and adjust direction—are vital to sustainable innovation. Even top companies make big missteps, but they turn them into fuel for learning and improvement rather than punishments and fear.

It's a different discipline to launch brand-new products.' The awareness of the need to both protect and grow an existing product while also being able to experiment with new ones in this way is critical to success in the twenty-first century, and a hallmark of a modern company. Todd Jackson · Director of Product Dropbox

This balance between strengthening the core and investing in the unknown allows organisations to remain relevant as conditions change.

Leaders have a crucial role in shaping these new practices. Instead of being mere decision-makers who evaluate forecasts, they must become champions who create structures that unleash employees' entrepreneurial energy. By seeing themselves as investors in internal startups, leaders provide guidance, demand evidence of real progress, and offer the right kind of accountability. Their job is to foster an environment where teams feel safe to experiment rapidly, learn from customers, and adapt.

This shift requires new skills. Managers used to focusing on efficiency and execution must learn how to encourage small cross-functional teams, practise rapid experimentation, measure learning with meaningful metrics (not vanity metrics), and pivot based on real customer feedback. Developing internal entrepreneurs means ensuring that each team understands both disciplined execution and creative discovery, blending precision with the willingness to make early, imperfect prototypes.

Modern companies need to integrate two complementary systems:

• One to reliably produce high-quality offerings at scale (e.g. the Toyota Production System).
• One to discover what to build in the first place. A structured approach to testing new ideas before scaling them.

Old-fashioned vs. modern companies:

• Steady, capacity-driven growth; invests in large, slow projects; relies on rigid forecasts and ROI
• vs → sustained impact through continuous innovation; invests in small, rapid experiments; uses metrics that reveal early signals of value.
• Operates in specialised functional silos; measures success by meeting pre-set milestones
• vs → cross-functional teams iterating toward customer needs; measures learning and real customer impact.
• Believes "failure is not an option" and conceals mistakes
• vs → failure is inevitable in uncertain work and harnesses it to pivot productively.
• Protects itself from competition by traditional barriers to entry
• vs → outpaces competitors with constant, data-driven innovation and the ability to scale successful ideas quickly.

Chapter 2: Entrepreneurship: The Missing Function

Many organisations lack a formal system for turning new ideas into tangible outcomes. No single function or manager is directly responsible for nurturing high-potential projects that could become major new parts of the business. As companies grow, they also inherit "big company DNA" that favours established processes over experimental, iterative approaches. Consequently, promising concepts often stall or vanish before they can be tested.

Because these tasks usually fall to no one in particular, large companies struggle to develop a repeatable framework for identifying, testing, and scaling innovative ideas.

To thrive in an unpredictable environment, companies need a reliable way to make bets on high-risk, high-reward ventures without risking the core business. This means creating structures where internal teams can test assumptions quickly and cheaply, gain evidence from real customers, and apply those findings before the parent organisation invests heavily in unproven ideas.

Viewing the startup as the "atomic unit of work" helps address uncertainty. An internal startup combines the discipline of engineering, the rigour of research, and the customer focus of marketing into rapid experimentation. However, the biggest challenge is managing success: if a team actually succeeds, how should its product or service be integrated back into the main organisation? During its life cycle, a team's work transitions from heavy experimentation to focused execution, validating ideas in small increments before scaling.

Creating these internal startups affects leadership style and the broader organisation. Entrepreneurially-minded teams need autonomy and accountability, but they also need guidance from leaders who understand experimental methods. This often clashes with traditional management's emphasis on predictable forecasts, stable processes, and avoiding conflict. Fostering entrepreneurship means developing new ways to promote, evaluate, and coach people who excel in uncertain scenarios.

Entrepreneurial thinking isn't only for designated startup teams. There are three reasons it's relevant to everyone:

• lean experimentation can improve even routine tasks by revealing better ways of working
• non-startup managers need to understand and support internal entrepreneurs who challenge established norms
• genuine entrepreneurial talent can come from anywhere—people often don't realise they have that potential until given the opportunity.

In nearly every organisation, an "underground network" of forward-thinking employees already take risks for the customer's benefit. They often lack official support or recognition, but given the right structures and tools, these "hidden" entrepreneurs can become powerful engines of innovation. The goal is to create a culture and formal function where such initiative is celebrated and given the resources to succeed.

To embed entrepreneurship as a core discipline, organisations must develop seven missing capabilities:

1. Islands of Freedom. Establish safe zones for limited-liability experiments where teams can test assumptions quickly without risking the entire enterprise.
2. New Funding Models. Learn to invest in uncertain projects based on evidence and iterative milestones, rather than upfront ROI forecasts.
3. Redefined Milestones. Replace traditional forecasts with learning-focused targets that help teams pivot or persevere based on real customer insight.
4. Professional Development. Provide training, coaching, and mentoring so entrepreneurs can refine their skills and grow within the company.
5. Networking and Matchmaking. Create internal and external networks so "corporate entrepreneurs" can share experiences, find collaborators, and build a community of practice.
6. Talent Alignment. Place the right people on high-uncertainty projects by making entrepreneurial assignments more systematic and less political.
7. Incentives and Advancement. Design evaluation and promotion systems that reward experiment-driven progress and do not penalise productive failures.

By establishing these practices, organisations can move beyond one-off innovation labs or sporadic skunkworks. Instead, they develop a repeatable method to test and integrate bold ideas—bringing genuine entrepreneurship into the company's ongoing operations.

Chapter 3: A Startup State of Mind

A startup state of mind relies on "Think big. Start small. Scale fast," meaning teams pursue an ambitious vision, begin with tightly focused experiments, and quickly ramp up what works. It's a culture built around risk-taking, adaptability, and constant learning. Traditional management usually seeks big-team, top-down strategies, but startups favour small, cross-functional groups that can pivot rapidly based on real-time feedback.

Team quality is everything: early-stage investors back great teams more than great ideas because a dedicated group can figure out how to adjust strategy as it learns. Small teams have the advantage of constant communication, shared accountability, and intense focus. Resource constraints and a powerful sense of mission help them produce dramatic results with minimal bureaucracy.

All startup work starts with the customer problem. Even internal projects are treated as having customers who can vote with their feet or find workarounds if the solution isn't compelling. Cross-functional teams ensure that engineering, marketing, sales, or other perspectives converge on this customer focus from the outset. Iterative experiments, often starting simple, then inform product and strategy decisions.

Venture-backed startups feature a unique financial structure that incentivises learning. A startup's potential value can grow when it

1. Builds valuable assets like new products or revenue streams
2. Raises the probability that its future success will be substantial
3. Increases the size of that success. Because employees often receive equity, each experiment that clarifies and boosts future impact benefits the entire team. This focus on leading indicators (such as user engagement or repeat usage) ensures early progress isn't obscured by flat or modest short-term revenue.

Metered funding is a critical process for mitigating risk. Teams get modest funding, and if they show tangible progress—validated by leading metrics—they secure further investment. The board or investors don't micromanage the day-to-day but keep a watchful eye, driven by results. This structure preserves freedom to innovate while protecting against runaway spending. Board dynamics are therefore vital: a supportive board can provide insight on strategic pivots (changes in strategy without changing the vision) while trusting the team to iterate freely.

Value meritocracy. Great ideas can come from anyone, and entrepreneurs prove themselves by what they accomplish, not by résumé or hierarchy. Coupled with an experimental culture, this leads to many small bets. Most fail, but a few transform entire industries. Founders and employees unite around a mission and vision they refuse to abandon, even if they pivot multiple times to get there. Ultimately, entrepreneurship becomes a career path, where people learn to launch, iterate, and lead cross-functional teams with a clear customer focus and a willingness to adapt quickly.

Chapter 4: Lessons from the Lean Startup

Lean Startup tools and processes focus on testing key assumptions rapidly so teams can learn fast and adapt before investing too much. They begin by identifying “leap-of-faith assumptions”—the beliefs that must be true for a product or initiative to succeed. Teams then design quick experiments to check whether customers share the problems they’re solving and want the proposed solution.

Validating ideas by talking to people is hard but crucial to understand if people really have the problem you are trying to solve. One way that works for me is to build a simple three-question survey that validates key assumptions: 1. Do people really have the problem you think they do? 2. How do they approach the problem today? 3. Is your concept a better alternative for them?

By focusing on a few core assumptions, teams avoid “analysis paralysis” and quickly gather real evidence.

A Minimum Viable Product (MVP) is an early version of a product or feature built to learn whether leap-of-faith assumptions hold true. It can be as simple as a rough prototype, a mocked-up interface, or a basic service—whatever yields maximum learning with minimal effort. Many organisations brainstorm multiple MVP ideas and use a scoring chart to select one that tests the most assumptions at the lowest cost.

Validated learning occurs when each experiment reveals genuine insight about customer behaviour. Data must be actionable, accessible, and auditable so teams know which changes drive meaningful progress. Instead of vanity metrics (like raw visitor counts), leading indicators show whether users are truly engaging or finding value in a product. This helps teams refine future experiments based on real evidence rather than guesses.

Build-measure-learn is the continuous loop that makes Lean Startup an iterative process. Teams build an MVP to test a specific assumption, measure outcomes with clear metrics, and learn whether to stay the course or adapt. Each cycle drives the product closer to what customers actually need. Releasing small, imperfect prototypes feels uncomfortable but accelerates discovery of what truly works.

At regular intervals, teams decide whether to pivot or persevere. They pivot if data persistently invalidates an assumption, changing strategy without abandoning the overarching vision. They persevere if results confirm they’re on a promising path. This structured approach to shifting direction avoids wasting months—or years—on ideas with little customer traction.

For leaders, adopting Lean Startup means emphasising learning over blame and replacing strict adherence to plans with a discovery mindset. It involves asking “What did you learn?” and “How do you know?” instead of punishing teams when results differ from projections. Leaders can pre-schedule “pivot-or-persevere” checkpoints, making experimentation routine rather than a crisis response. This shift liberates teams to adapt quickly and prevents deep investments in projects that won’t deliver real value.

Chapter 5: A Management System for Innovation at Scale

Traditional management and entrepreneurial management differ in their assumptions about accountability, process, culture, and people. In many companies, each department optimises its own responsibilities without anyone questioning whether the final product genuinely serves the customer’s needs. An entrepreneurial approach addresses this by making innovation a formal, repeatable process with clear accountability for experiments, feedback loops, and data-driven decisions.

People

• Experts → Cross-functional teams. Instead of specialised silos, small, mixed-skill groups solve problems end-to-end.
• Optimisers → Two-pizza teams. For speed and agility, smaller teams are accountable for complete projects rather than handing tasks off.
• Consistent Managers → Entrepreneurs. Leaders empower teams to pivot, learn, and drive new initiatives within resource constraints.
• Specialists → Founder’s mindset. Even non-founders adopt a founder-like approach—question assumptions, talk to customers, and move quickly.

Culture

• “Failure is not an option” → “I eat failure for breakfast.” Entrepreneurial culture sees learning in every failed experiment rather than punishing people.
• Risk mitigation → Productive failures. Instead of avoiding risk at all costs, teams iterate rapidly in ways that contain the downside and maximise learning.
• Innovation as a noun → Innovation as a verb. Teams actively test and create new offerings rather than viewing innovation as a distant project or department.
• Compliance → “Black swan” farming. Rather than rigid rules, teams systematically pursue new ideas, aware that some can become breakout successes.
• Predictability → Entrepreneurial culture tolerates uncertain outcomes where evidence takes precedence over forecasts.

Process

• Functional hand-offs → Highly iterative, scientific process. Rapid experiments replace big-batch hand-offs so teams learn in real time.
• Huge programs → Build-measure-learn. Projects start small, measure results early, and refine repeatedly.
• Quality through reduction of variability → Economies of speed. Instead of perfecting known processes, move quickly to test uncertain products.
• Economies of scale → Portfolio of rapid experiments. Multiple parallel tests find the few that truly solve customer problems.
• Statistical process control →The focus shifts from stable outputs to validated learning under uncertain conditions.

Accountability

• ROI → Innovation Accounting. Track progress with metrics that reflect genuine customer traction, not pure financial predictions.
• Cost reduction → Leading indicators. Real-time signals (engagement, repeat usage) guide teams before revenue changes show up.
• Market share → Future absolute cash flow. Focus on growth potential rather than current or short-term indicators alone.
• Margins → Metered funding. Continue investing only when experiments prove enough value to justify scaling.
• Incremental growth → (No direct counterpart). Entrepreneurial teams seek significant opportunities and pivots.
• Entitlement funding → (No direct counterpart). Budgets aren’t guaranteed; teams earn more resources as they deliver validated results.

Entrepreneurship should sit as its own function alongside existing ones (engineering, marketing, finance, etc.) to support internal startups, coach cross-functional teams, and keep the company iterating. This structure ensures that employees who discover new opportunities or suspect wasted effort can form small “startup” teams to experiment, pivot if needed, and scale successes—without relying on traditional siloed processes.

Five Outcomes of Transformation

• More leadership opportunities. Internal startups grant individuals real P&L responsibility on a small scale, letting them prove themselves quickly.
• Reduced talent loss. Would-be founders and creative employees stay in-house instead of leaving to start or join external ventures.
• Less wasted time/effort. Teams stop building features no one uses by testing early and scrapping ideas that don’t resonate.
• Better project exits. Failed initiatives are ended by the teams themselves using data, preventing politics and “zombie projects.”
• Faster solutions for diverse problems. Agile, self-organising teams tackle both big and small challenges quickly, scaling solutions when evidence supports them.

Part Two: A ROAD MAP FOR TRANSFORMATION

The three phases of organisational transformation:

1. Phase One: Laying the foundation through experimentation. Building success stories and demonstrating that new methods work better than old ones before making major changes.
• Goal: Build critical mass to get senior leadership bought into rolling this out company-wide. Translate the Startup Way into company-specific culture.
2. Phase Two: Rapid scaling and deployment. This is when resisters emerge and the transformation either gains political strength or fails. The HealthCare.gov rescue happened during this phase.
• Goal: Build organisational clout to have the political capital necessary to tackle the thorny issues of Phase Three.
3. Phase Three: Addressing deep organisational systems. Only after success in earlier phases can fundamental structures be changed to prevent regression to old ways.
• Goal: Build an organisational capability for continuous transformation.\

Chapter 6: Phase One: Critical Mass

Documenting leap-of-faith assumptions often reveals how much a team doesn't know. Making assumptions can explicitly help identify which features genuinely matter to customers. Once engineers realise how much is uncertain about a product's market and distribution, it can become obvious that testing a simpler version much earlier will save time, money, and frustration.

Pushing teams to show something concrete to customers early—rather than waiting for a fully finished product—uncovers real behaviour and real demand. Even an executive who objects that "it's only one customer" can be reminded that if the forecast is truly perfect, no learning is needed. If, however, there's any doubt in the plan, then a small-scale test is far cheaper than discovering a fatal flaw years and millions of dollars later.

This approach shifts teams' attitudes away from "fear of mistakes" toward "learning by trying." Instead of obsessing over getting approvals for a massive launch, they build a scrappier prototype or smaller feature set to see how actual users respond. The result is more engagement, less wasted effort, and a willingness to pivot when evidence contradicts assumptions.

Organisations typically launch these transformations in three scenarios:

• Crisis: A meltdown forces people to try something new.
• Strategy: Top leadership decides the company must change its method of working.
• Hypergrowth: Startups or rapidly growing companies must preserve their entrepreneurial mindset and avoid stalling as they add more people.

In early stages, starting small is crucial. A few selected teams run new ways of working on pilot projects, gather results, and build momentum. Teams should be dedicated and cross-functional so they can address all challenges at once. To cut through red tape, leaders use the "golden sword"—giving pilot teams air cover, secure funding, and the ability to move fast. In exchange, teams promise rigorous measurement and regular progress updates.

Good experiments always have a falsifiable hypothesis, a clear next step, and strong risk containment. If the result is negative, the team should know exactly what action to take (pivot or drop the plan). When experimenting with business models—like pay-per-use or bundled services—the same mindset applies. Sketch possible revenue streams, test them with a small set of customers, and measure real behaviour rather than relying on secondhand opinions.

Success metrics often must shift to leading indicators, such as shorter cycle times, higher user engagement, or early signups. This reassures leadership that small pilot projects are creating a greater likelihood of long-term success. Progress is then evaluated "by exception," meaning teams seek help only when they hit serious roadblocks, freeing them from constant reporting overhead.

Ultimately, each organisation should adapt this methodology to its own language and norms. Align behind new behaviours without rejecting the company's existing culture. By translating Lean Startup principles into familiar internal frameworks, teams can spread entrepreneurial thinking more smoothly, preserve morale, and ensure each step of the transformation supports genuine business needs.

Chapter 7: Phase Two: Scaling Up

In Phase Two, the organisation rapidly scales the methods discovered in Phase One. Common patterns emerge: a spike in energy and creativity, leaders pushing the transformation beyond isolated pilot teams, and a scramble to address structural barriers. Teams that tested Lean Startup methods now provide evidence for sceptics and practical lessons on how to organise budgets, retool compliance requirements, and measure meaningful results.

The "whiteboard method" is one tactic to hold executives accountable. A senior leader gathers direct reports and makes them write a specific innovation project and an assigned team lead on a whiteboard. The leader then promises to personally follow up with each named individual and ask them: ‘How are you being held accountable for success by your leaders? What kind of questions are they asking in your reviews?’ This puts real pressure on managers to guide teams differently, ask better questions, and demonstrate measurable progress in the next review.

Pilot teams often face similar challenges. They can vanish from official records if they look like they're in trouble, go underground to keep experimenting, or run into bureaucratic logjams—like compliance or a rigid stage-gate process. Executive-level champions cut through these obstacles. They authorise one-off exceptions and publicly endorse Lean Startup approaches, letting teams gain trust in the new process. Meanwhile, all internal functions—finance, legal, HR, engineering, etc.—must learn enough Lean Startup basics to prevent them from inadvertently blocking new initiatives.

An in-house coaching programme accelerates culture change by guiding teams through experiments without replacing team leadership. Coaches focus on how to apply lean practices to specific projects. They help refine assumptions, design small tests, and hold up a mirror when teams ignore inconvenient data.

Successful models include Techstars' "Mentor Manifesto," which sets guidelines for constructive, respectful mentorship:

• Be Socratic.
• Expect nothing in return (you'll be delighted with what you do get back).
• Be authentic/practise what you preach.
• Be direct. Tell the truth, however hard.
• Listen, too.
• The best mentor relationships eventually become two-way.
• Be responsive.
• Adopt at least one company every single year. Experience counts.
• Clearly separate opinion from fact.
• Hold information in confidence.
• Clearly commit to mentor or do not. Either is fine.
• Know what you don't know. Say "I don't know" when you don't know.
• Guide, don't control. Teams must make their own decisions.
• Accept and communicate with other mentors who get involved.
• Be optimistic.
• Provide specific actionable advice; don't be vague.
• Be challenging/robust but never destructive.
• Have empathy. Remember that startups are hard.

Metered funding replaces traditional "entitlement" budgets that run indefinitely. Instead, a team gets freedom to spend a small amount of money (or resources) to prove its assumptions. If it shows validated learning, more investment is unlocked in measured stages—similar to VC funding. Growth boards manage these decisions, reviewing each team's evidence. This tight feedback loop motivates teams to test assumptions early and pivot if needed. Together, metered funding and growth boards reduce wasteful politics and give promising ideas a fair shot at scaling within the company.

Chapter 8: Phase Three: Deep Systems

Organisations that want ongoing innovation need to overhaul the underlying systems that govern day-to-day work. In many companies, essential departments such as finance, legal, HR, and procurement function as gatekeepers. By shifting them to "enabling functions," teams gain the freedom to experiment while still respecting risk and compliance boundaries. This final stage of transformation—sometimes called a second founding—equips entire organisations for continuous innovation rather than perpetuating bureaucracy.

A practical step is creating a simple one-page guidance document that lays out, in plain language, preapproved parameters for early experiments. It specifies safe limits on user exposure, liability, and costs so teams know when they can act without additional reviews. By removing vague fear of "legal" or "compliance," it helps teams start small, contain risk, and adjust quickly—then consult gatekeepers only if they aim beyond that safe scope.

Gatekeeper functions can become enablers by adopting a service mindset. Legal can offer standardised guidelines for micro-experiments. Finance can practise "metered funding," ensuring teams have freedom to test ideas while awarding more budget only if they validate leap-of-faith assumptions. HR can evolve from rigid annual performance systems to frameworks that reward learning and iterative progress. Procurement can shorten long approval cycles for small, high-potential projects, letting teams prove value on a limited scale before rolling out more broadly.

Company-wide innovation emerges when every function takes up entrepreneurial behaviour, each in its own domain. Cross-functional teams no longer focus just on building one new product; they also revise core processes—like HR's performance management or IT's project approvals—to align with rapid experimentation. The result is a culture in which all levels, from major R&D efforts to daily administrative tasks, adopt iterative, customer-focused methods.

Key Process Steps:

• Create Clear Parameters. Draft a simple document pre-clearing experiments under certain limits (e.g., maximum number of customers or financial liability). Teams can move quickly within these bounds.
• Shift Gatekeeper Functions to Enablers. Legal, finance, HR, and procurement work in partnership with innovation teams. They design policies and services that speed up rather than slow down projects.
• Introduce Company-Wide Innovation. Champion small trials everywhere, not just product groups. Empower employees to tackle HR, IT, or procurement bottlenecks with the same startup techniques.
• Restructure Core Systems. Replace old yearly reviews and rigid resource allocation with iterative funding, ongoing feedback, and cross-functional collaboration.
• Support the Second Founding. Leadership transforms from controlling individual projects to building an ecosystem of internal startups. They ensure each function is structured to encourage experiments rather than block them.

When fully mature, this shift extends lean principles to the entire organisation. Every department, from HR to supply chain, can launch small, customer-driven pilots, respond to real-world signals, and either pivot or scale. The aim is a perpetually innovative institution that no longer relies on short-term exceptions, but on a standard system that values experimentation, learning, and shared responsibility for results.

Chapter 9: Innovation Accounting

Innovation accounting is a method for assessing startup or new-project progress in situations where traditional business metrics (revenue, market share, ROI) remain too small to judge. Innovation Accounting (IA) is a way of evaluating progress when all the metrics typically used in an established company (revenue, customers, ROI, market share) are effectively zero. By tracking a series of leading indicators, it replaces guesswork with concrete data about what teams are actually learning from small experiments—long before big, obvious financial results appear.

Four main benefits flow from innovation accounting.

1. It uses chained leading indicators to predict ultimate success or failure early.
2. It serves as a focusing device, ensuring teams home in on the most crucial leap-of-faith assumptions.
3. It provides a common vocabulary that bridges the gap between innovation teams and finance.
4. It offers audit-ability for value creation, allowing stakeholders to see whether learning genuinely translates into future cash flow and mitigating the guesswork behind whether an initiative should receive more resources.

Innovation accounting unfolds in three levels of complexity:

• Level 1 (Dashboard). Teams track a handful of simple, leading metrics—like retention rate or revenue per user—aiming to see them improve with each experiment. This “scorecard” shows whether the project’s underlying assumptions look more or less promising over time.

• Level 2 (Business Case). The team transforms its major leap-of-faith assumptions into input metrics that feed into a more robust business plan. Instead of measuring just revenue, the startup assesses each piece of the customer journey (e.g., acquisition, conversion, cost to serve) and ties them to the plan’s financial forecast.

• Level 3 (Net Present Value). At each iteration, updated learning is plugged into a comprehensive financial model. The result is a new net present value calculation based on real data, not guesses. Over time, small improvements in conversion or cost structure reveal meaningful changes in the startup’s overall valuation, offering a precise rationale for additional funding or a strategic pivot.

By building on these three levels, companies create rigorous “growth boards” that apply a venture-capital style approach to internal innovation. Teams pitch for metered funding and must show real progress—supported by innovation accounting metrics—to unlock more resources. This ensures that even when outcomes remain near zero, genuine learning is recognised, valued, and translated into long-term financial potential.

Bingo Card of Key Questions:

Bingo Card of Sample Key Metrics:

Growth boards function like an internal venture-capital panel that meets regularly to review each startup team's progress, decide on next steps, and approve or deny new funding based on the evidence of learning rather than simple ROI metrics. Key elements include:

1. Small, Committed Membership. Usually six to eight senior leaders, including at least one executive champion with real authority. They maintain consistent attendance so the team hears from the same decision-makers each time.
2. Regular Cadence. They convene on a predictable schedule (e.g., every six to eight weeks) to keep teams accountable. Between meetings, teams run experiments and gather data to show genuine progress.
3. Metered Funding. Teams receive resources in stages (rather than a lump-sum budget), drawing more funding only if they demonstrate validated learning that raises the likelihood of future success.
4. Evidence-Based Decisions. Growth boards use innovation accounting metrics—such as leading indicators of customer traction or cost-to-serve—to gauge which projects merit continuing investment, which need a pivot, and which should end.
5. Single Point of Accountability. Teams direct all updates to their growth board instead of fielding multiple status requests from various managers. This drastically cuts overhead, allowing teams to focus on experimentation.
6. Clarity and Action. Decisions are made at each meeting (go, pivot, or shut down), so teams leave knowing exactly where they stand. There's minimal deferral of judgement, which keeps projects moving rapidly.

Together, these practices encourage rapid learning, greater discipline in allocating resources, and a more transparent approach to managing corporate innovation.

Part Three: THE BIG PICTURE

Chapter 10: A Unified Theory of Entrepreneurship

Even large organisations need continuous transformation, and it requires the same kind of experimental approach that successful startups use. The people who spark and guide these efforts behave like founders: they face uncertain outcomes, risk entrenched power structures, and must align cross-functional teams behind a new vision. Because these skills go beyond one-time projects, companies need to treat transformation as a core piece of their entrepreneurial function.

Corporate transformations reflect the same challenges any startup faces: they need secure but limited funding, quick iteration, and accountability. Small pilot teams test new structures or policies, then scale them when evidence shows they work. Once a major transformation embeds Lean Startup–style methods across the enterprise, it should not rest on past success. New organisational experiments follow the same cycle: start small, gather real data, and then adopt what works.

A truly unified theory of entrepreneurship combines four types of innovation work under one umbrella:

• New products. Launching offerings that drive growth in the core business.
• Internal processes. Reengineering IT, HR, finance, or other enterprise systems with startup-like agility.
• Corporate development. Mergers, acquisitions, licensing—any method for acquiring or spinning out novel capabilities.
• Organisational transformation. System-wide changes in culture and management structure to keep pace with shifting conditions.

Managing these four pillars as a single function, with common career tracks, coaching, and accountability, ensures entrepreneurial practices spread evenly across the company rather than being confined to R&D or a single "innovation lab."

By recognising large-scale change as corporate entrepreneurship, businesses can make such transformations repeatable rather than one-off. Executives acting as growth-board members and mentors learn how to structure risk, supply metered funding, and hold teams accountable for real data instead of near-term vanity metrics. Successful transformations produce a cadre of people skilled at this new leadership, enabling continuous transformation—the ongoing reorganisation of the business to tackle new challenges, guided by experiments and validated learning, rather than top-down dictates or emergency interventions.

Chapter 11: Toward a Pro-Entrepreneurship Public Policy

Entrepreneurship thrives when people can take risks, learn from failure, and find substantial upside for their efforts. Public policy can amplify (or inhibit) those conditions. A truly pro-entrepreneurship approach targets three drivers:

• vision and upside (ensuring founders see big potential payoffs)
• skills and resources (making it easier to form and finance new ventures)
• risks and liabilities (lowering personal or legal barriers so more people can try launching a business without catastrophic consequences).

Several reforms support entrepreneurs more directly. Affordable, portable health insurance (as opposed to job-tied coverage) makes it easier to leave a salaried role for a new startup. Streamlined regulations or "sliding scale" requirements can exempt very small ventures from complex compliance until they have traction. Simple, targeted loan programmes (or extensions of unemployment insurance) let citizens convert potential "handouts" into startup capital. Ideas like universal basic income (UBI) and less punitive bankruptcy rules help minimise the downside of trying a new venture.

Education is crucial. Exposing students at all levels to entrepreneurial thinking (risk-taking, the growth mindset, customer validation) spawns a generation comfortable with experimentation. Likewise, government has a duty to share or open data to the public, giving founders quick access to resources that can catalyse innovation. Early prototypes such as I-Corps show how entrepreneurial methods can help scientists and researchers develop market-ready applications—and provide a blueprint for universities and agencies to adopt.

Policy must also ensure that capital markets encourage long-term investment. Instead of forcing founders to cater to short-term quarterly targets, new structures like a "long-term stock exchange" (LTSE) can reward patient capital and strategic thinking. Sliding-scale regulation for high-growth "G corps" (growth-oriented companies) could offer investor transparency yet reduce early compliance burdens. Similar changes in patent law, non-compete clauses, or corporate governance rules further reduce friction for young companies.

Because the public sector can model lean approaches in its own programmes—like small local experiments in universal basic income, new guidelines for unemployment insurance, or pilot programmes to help newly unemployed become entrepreneurs—governments can iterate toward more effective policies. Even controversial changes (such as pro-worker labour reforms or partial union-management alliances) become more feasible when implemented in small, measured tests that yield real data.

Governments create the environment in which the next wave of entrepreneurs emerges. By treating policies as experiments, paying careful attention to how people respond, and removing outdated barriers, public leaders can foster a dynamic, long-term society of innovators. When everyone can seise new opportunities and adapt quickly, an economy gains not only better products and services but a more inclusive foundation for growth.

Epilogue

Companies must embrace an organisational framework that supports ongoing evolution. The Startup Way is not the final version of management but the first system that contains the seeds of its own improvement. By encouraging constant experimentation in structures and processes, organisations become more adaptive, relying on everyone's entrepreneurial potential to develop new ideas.

Society faces four major economic threats:

• Short-termism, with over-reliance on financial engineering instead of long-term investment;
• Lack of entrepreneurial opportunity, leaving many people without ladders to start new ventures;
• Loss of leadership, from both businesses and government, that stifles innovation and shared prosperity
• Low growth and instability for those left behind by the new economy. Good management underpins the solutions to these problems, as better-run organisations produce higher productivity and more equitable growth.

Reforming our culture around openness, long-term thinking, and universal entrepreneurial possibility can help reverse these trends. We need a system that supports broadly shared prosperity, democratic accountability, genuine scientific inquiry, and major public investments in education, healthcare, and R&D. Managers, investors, policymakers, and employees must all see technology and organisational change as ongoing forces that expand human creativity.

A new "civic religion" of entrepreneurship will create:

• New sources of growth and opportunity, including for people of all backgrounds.
• Leaders who prioritise a lasting vision over short-term exploitation.
• Processes rooted in rigorous experimentation.
• More equitable ownership and rewards for value creators.
• Long-term policy and corporate strategies that avoid catastrophic short-term pressures.

Each organisation owes its members certain fundamental rights: meaningful work that benefits real customers; fair testing of new ideas; the choice to become an entrepreneur if they do the work; staying with their idea as it scales; and equitable ownership in the growth they create. By adopting these principles, organisations become more resilient and humane, while society benefits from broader innovation, inclusion, and sustainable prosperity.