Lean Startup Workshop

Lean Startup

Workshop Tathagat Varma

VP, Strategic Process Innovations [24]7 Innovation Labs

So I have an idea…a BIG idea!!!

How should I proceed?

http://blog.comsysto.com/2012/08/13/continuous-delivery-of-waste/

I could do…

OR

Dot-com-era style “Stealth Mode”

Startup

Cowboy style “Just Do It”

Startup

What do you need to create successful products?

90%

Tech Startups FAIL…!!!

Performance of Traditional Startups

http://www.statisticbrain.com/startup-failure-by-industry/

http://blog.amplifiedanalytics.com/wp-content/uploads/2011/07/New-product-failure-rate.png

http://inspiredmagz.com/infographic-why-startups-fail/

Guess what’s so special about this beautiful city?

Picture: http://www.news.com.au/travel/holiday-ideas/inside-china8217s-ghost-cities/story-e6frfqd9-1226716277487

“Build and they will come” is not a strategy, it’s a prayer. – Steve Blank

Isn’t execution enough?

Necessary, but not sufficient…

Meet the most ferocious lion in Sweden…

...built

without customer feedback…?

Internet Hall of Shame…

http://themyndset.com/2013/05/catch-the-wave-right-mindset-digital-iq/ http://www.cnet.com/1990-11136_1-6278387-1.html

Google’s Hall of Shame

4.85yrs to pull out??? http://blog.priceonomics.com/post/46028291791/digging-around-in-the-google-graveyard

…and in ROTW

Of those who succeed, drastically

change their plans along the way!

2/3rd

Remember…

http://blog.comsysto.com/2012/08/13/continuous-delivery-of-waste/

Guess them?

So what works then?

“Not a better Plan A but a path to a plan that works

before running out of resources”

- Ash Maurya, Running Lean

http://www.capgemini.com/technology-blog/2011/06/paving-path-scrum-adoption-product-people/

http://www.emilianosoldipmp.info/wp-content/uploads/2012/08/Stacey.png

That’s the problem we need

to solve!

And these are the methods we

are using!!!

http://steveblank.files.wordpress.com/2010/11/two-assumptions.jpg

Problem with traditional model

From: Running Lean – Ash Maurya The Startup Owners Manual – Steve Blank

“In large companies, the mistakes just have additional zeroes in them”. – Steve Blank

https://onlineashu.wordpress.com/2012/05/18/a-framework-for-waterfall-vs-agile-vs-lean-startup/

“So what is it that makes some startups successful and leaves others selling off their furniture? Simply this: startups that survive the first few tough years do not follow the traditional product-centric launch model espoused by product managers or the venture capital community. Through trial and error, hiring and firing, successful startups all invent a parallel process to Product Development. In particular, the winners invent and live by a process of customer learning and discovery. I call this process "Customer Development,” a sibling to "Product Development” and each and every startup that succeeds recapitulates it, knowingly or not.” – Steve Blank

Customer Development

The Customer Development Insight Cycle

“A startup is NOT a smaller version of a large company” – Steve Blank

What’s a Startup?

“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty”

The products a startup builds are really experiments; the learning about how to build a sustainable business is the outcome of those experiments.

Lean Startup Model

•  The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers' hands faster. The Lean Startup method teaches how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration. It is a principled approach to new product development.

•  Lean Startup favors –  experimentation over elaborate planning, –  customer feedback over intuition, and –  iterative design over traditional ‘big design up front’

development

Lean Startup Principles

Entrepreneurs are everywhere

Entrepreneurship is management

Validated Learning

Build-Measure-Learn

Innovation Accounting

Are all Startups the same?

Lifestyle Startups

Work to live their passion

Small business Startup

Work to fee the family

Funded from savings

Barely profitable

Not designed for scale

Scalable Startup

Born to be big

Founders have a vision

Require risk capital

Buyable startup

Acquisition targets

Social Startup

Driven to make a

difference

Large-company Startup

Innovate or Evaporate

3 Stages of a startup

“Do I have a problem worth solving?”

“Have I built something people want?”

“How do I accelerate growth?”

From: Running Lean – Ash Maurya

Three Stages of a Startup

http://www.thesups.com/wp-content/uploads/2014/07/3-stages.jpg

http://newentrepreneurship.nl/business-model-canvas/

http://torgronsund.com/wordpress/wp-content/uploads/2011/04/Slide1.jpg

GET OUT OF THE BUILDING…

A Pivot is a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth. It is not a failure!

http://steveblank.files.wordpress.com/2010/11/pivot-the-model.jpg

So, what is your product?

From: Running Lean – Ash Maurya

In reality…

MVP A strategy used for fast and quantitative market testing of a product or product feature   A Minimum Viable Product has just those features that allow the product to be deployed, and no more. The product is typically deployed to a subset of possible customers, such as early adopters that are thought to be more forgiving, more likely to give feedback, and able to grasp a product vision from an early prototype or marketing information. It is a strategy targeted at avoiding building products that customers do not want, that seeks to maximize the information learned about the customer per dollar spent. "The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort." The definition's use of the words maximum and minimum means it is decidedly not formulaic. It requires judgment to figure out, for any given context, what MVP makes sense. An MVP is not a minimal product,[3] it is a strategy and process directed toward making and selling a product to customers. It is an iterative process of idea generation, prototyping, presentation, data collection, analysis and learning. One seeks to minimize the total time spent on an iteration. The process is iterated until a desirable product-market fit is obtained, or until the product is deemed to be non-viable.

MVP

http://startitup.co/guides/376/mvp-minimum-viable-product

http://custdevday.files.wordpress.com/2012/01/mvp_pareto1.png

Coffee Shop MVP

Good MVP: You have a menu with only a few selection of coffee, but all of them taste great. Your shop is clean and tidy with white painted walls and decent looking coffee tables with comfortable seats. Your cashier is polite and you take Visa and Mastercard. No American Express though (we're cool with that).

Bad MVP: You have a menu with a few selection of coffee, but most of them taste horrible. Your shop is below par and your seats are uncomfortable. Also, your store only takes cash and your cashiers are flirting with each other.

Horrible MVP: You have 40 items on your menu - Coffee, frappuccino, espresso, cakes, croissants, biscuits, tea, fried rise, chicken nuggets, etc (you get the idea). You gold plate your store front and your store interior is pimped out with the most expensive furniture and coffee mugs. You put Samsung LCD TVs at every table and the chairs are massage chairs. You take Visa, Mastercard, American Express, and Home Depot gift cards.

http://startitup.co/guides/376/mvp-minimum-viable-product

If you’re not embarrassed by your first product release, you’ve released too late – Reid Hoffman

Build-Measure-Learn Loop

Pivot

Pivot now, Optimize later

From: Running Lean – Ash Maurya

Make the transition only after you have a ‘scalable startup’

How to optimize?

From: Running Lean – Ash Maurya

When to raise money?

From: Running Lean – Ash Maurya

A/B Testing

http://wp.streetwise.co/wp-content/uploads/2012/07/A-B-testing.jpg

Validated Learning •  Validated learning about customers is the measure of progress in a Lean

Startup – not lines of working code or achieving product development milestones.

•  Process in which one learns by trying out an initial idea and then measuring it to validate the effect. Each test of an idea is single iteration in a larger process of many iterations whereby something is learnt and the lessons applied to the succeeding tests.[1]

•  Typical steps in validated learning: –  Specify a goal –  Specify a metric that represents the goal –  Act to achieve the goal –  Analyze the metric - did you get closer to the goal? –  Improve and try again

Innovation Accounting

•  Enables startups to prove objectively that they are learning how to grow a sustainable business –  Use an MVP to establish real data on where the company is right

now –  Startups must attempt to tune the engine from the baseline

toward the ideal. This could take many attempts. –  Pivot or persevere

•  Actionable vs. Vanity Metrics –  For a report to be considered actionable, it must demonstrate

clear cause and effect. Otherwise, it is a vanity metric. –  Actionable metrics can lead to informed business decisions and

subsequent action.[24][1] These are in contrast to 'vanity metrics' - measurements that give “the rosiest picture possible” but do not accurately reflect the key drivers of a business.

Innovation =

Ideate

+ Productize

+ Commercialize

+ Discover Business Model

Running Lean

Case Study: Ash Maurya’s Running Lean book

From: Running Lean – Ash Maurya

Pivot vs. Optimizations

•  Pivot is change in direction without change in strategy •  Pivot before Product/Market Fit, Optimize After •  Pivots are about finding a plan that works, while

optimizations are about accelerating that plan.

Some examples…

Recap

•  Don’t build something no one wants!

Discover customers first

•  Search for the business model

Validate your assumptions •  Build, measure

and learn iteratively

Build products iteratively

•  Aggressively execute business plan and optimize

Scale-up for execution

“I never perfected an invention that I did not think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent....” - Thomas Edison

References

•  The Startup Owners Manual – Steve Blank •  Four Steps to Ephphany – Steve Blank •  The Lean Startup – Eric Ries •  Running Lean – Ash Maurya •  Business Model Generation – Alexander Osterwalder •  www.steveblank.com •  http://blog.startupcompass.co/ •  http://blogs.wsj.com/accelerators/2013/06/24/steve-blank-the-6-types-of-

startups-2/ •  www.ashmaurya.com •  http://www.slideshare.net/torrg/10-scrappy-minimum-viable-products-that-

made-it-big-9397834 •  http://www.hackerchick.com/2013/02/5-mvp-examples.html •  http://techcrunch.com/2011/10/19/dropbox-minimal-viable-product/