Eric Ries, Author of The Lean Startup and The Startup Way, shares the management practices that can help leaders inspire innovation and develop breakthrough products.

In 2011, Eric Ries published a book that you may have heard of. It’s called The Lean Startup. His book has not only become a staple on the product management reading list, it’s fundamentally transformed the way both startups and large companies build products.

What I would say the biggest realization is that the startup movement globally has developed a series of what I would call management practices that we universally adopt and believe in, but we don’t really ever talk about. We kind of view them as too obvious to be worth mentioning. Things like, every startup has a board. The way we fund startups is using what I now call metered funding, but rounds of financing with fixed budgets. We believe that small teams can be big teams. We believe that the quality of an idea is irrelevant unless it is embedded within the lived experience of an actual team.

Eric developed a scientific approach to making product decisions. He uses customer development and continuous iteration to increase the chances of building something that customers actually want. Eric stresses: “no matter what the industry or size of company or sector, our project plans, our budgets, our forecast are all based around assumptions about what we think customers will want.”

Many of the startups that applied the practices Eric preached in The Lean Startup are no longer startups. They’ve built market-leading products and now have thousands of employees. The challenge, however, is that as companies grow, they lose sight of the entrepreneurial management practices that got them to where they are now.

His approach is embodied by the most important questions in Lean Startup style review: “What did you learn and how do you know?”

Companies need to reinstate those practices if they want to continue to deliver market-leading products. Similarly, large corporations are increasingly starting entrepreneurial initiatives so that they can create the next generation of innovation:

When we reframed the problem not as prioritizing the backlog as to what features are going to get built, but prioritizing what experiments do we want to run to test the hypotheses, it opened up a lot of new possibilities including the ability for the product owner themselves to start to learn what really matters to customers not based on assumptions or guesses but based on real experimental data.

After advising and investing in several startups and consulting for companies such as General Electric, Eric developed strategies for applying Lean management practices, such as metered funding, small team sizes, experimentation, and metrics-driven development. That’s what his new book, The Startup Way, is about.

In this episode, Eric shares how he’s helped GE and other companies start practicing Lean product development and scale it across the organization.

Here are the highlights: