Lean Analytics

Foreword

For some reason, the Lean Startup movement has proven excellent at producing bumper stickers. Odds are, if you’re reading this, you know some of our most popular additions to the business lexicon: pivot, minimum viable product, Build-Measure-Learn, continuous deployment, or Steve Blank’s famous “get out of the building.” Some of these you can already buy on a t-shirt.

Given that the past few years of my life have been dedicated to promoting these concepts, I am not now trying to diminish their importance. We are living through a transformation in the way work is done, and these concepts are key elements of that change. The Lean Series is dedicated to bringing this transformation to life by moving beyond the bumper stickers and diving deep into the details.

Lean Analytics takes this mission to a whole new level.

On the surface, this new world seems exciting and bold. Innovation, new sources of growth, the glory of product/market fit and the agony of failures and pivots all make for riveting drama. But all of this work rests on a foundation made of far more boring stuff: accounting, math, and metrics. And the traditional accounting metrics—when applied to the uncertainties of innovation—are surprisingly dangerous. We call them vanity metrics, the numbers that make you feel good but seriously mislead. Avoiding them requires a whole new accounting discipline, which I call “innovation accounting.”

Trust me, as an entrepreneur, I had no interest in accounting as a subject. To be ...