Lean Start Up Workshop

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<ul><li><p>8/2/2019 Lean Start Up Workshop</p><p> 1/60</p><p>LEAN</p><p>STARTUPWORKSHOP</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 2/60</p><p>AGENDA</p><p>1. Intro</p><p>2. Overview of the bases of Lean Startup</p><p>1. Lean Manufacturing</p><p>2. Customer Development3. Agile Development</p><p>3. Entrepreneurship is Management</p><p>4. Validated Learning</p><p>5. Build - Measure Learn</p><p>6. Innovation Accounting</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 3/60</p><p>INTRO</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 4/60</p><p>WHAT IS A STARTUP?</p><p> A startup is a human institution designed to deliver a newproduct or service under conditions of extremeuncertainty.</p><p> Nothing to do with size of company, sector of theeconomy or industry</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 5/60</p><p>WHY DO STARTUPS</p><p>FAIL</p><p> Rarely fail because the product doesnt work</p><p> Usually fail because there are no customers</p><p> Quality of the initial idea is not correlated with success</p><p> Startups that succeed are those that manage to iterateenough times before they run out of resources</p><p> Time between these iterations is fundamental</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 6/60</p><p>THE LEAN STARTUP</p><p> Anything we can do to shrink the time between majoriterations will increase the likelihood of success.</p><p> Speed is theStartup competitive advantage.</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 7/60</p><p>LEAN STARTUPS GO</p><p>FASTER</p><p> Commodity technology stack, highly leveraged (free/open</p><p>Source, usergenerated content, SEM). Customer development find out what customers want</p><p>before you build it. Agile software development but tuned to the startup</p><p>condition.</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 8/60</p><p>CUSTOMERDEVELOPME</p><p>NTBASES OF LEAN STARTUP</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 9/60</p><p>WHATS WRONG WITH</p><p>THIS?</p><p>Customer Development in the High-Tech Enterprise</p><p>September 20089</p><p>Concept/Seed Round</p><p>Product Dev. Alpha/BetaTest</p><p>Launch/1st Ship</p><p>Product Development</p><p>- Create MarcomMaterials</p><p>- Create Positioning</p><p>- Hire PR Agency- Early Buzz</p><p>- Create Demand- Launch Event- Branding</p><p>Marketing</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 10/60</p><p>BUILD IT AND THEY</p><p>WILL COME</p><p>Only true for life and death products</p><p> i.e. Biotech Cancer Cure</p><p> Issues are development risks and distribution,not customer acceptance</p><p>Not true for most other products</p><p> Software, Consumer, Web</p><p> Issues are customer acceptance and market adoption</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 11/60</p><p>CUSTOMER</p><p>DISCOVERY: STEP 1</p><p>Stop selling, start listening</p><p> There are no facts inside your building, so getoutside</p><p>Test your hypotheses</p><p> Two are fundamental: problem and product concept</p><p>CustomerDiscovery</p><p>CustomerValidation</p><p>CompanyBuilding</p><p>CustomerCreation</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 12/60</p><p>CUSTOMER</p><p>VALIDATION: STEP 2</p><p> Develop a repeatable sales process</p><p> Only earlyvangelists are crazy enough to buy</p><p>CustomerDiscovery</p><p>CustomerValidation</p><p>CompanyBuilding</p><p>CustomerCreation</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 13/60</p><p>CREATION</p><p>STEP 3</p><p> Creation comes after proof of sales</p><p> Creation is where you cross the chasm</p><p> It is a strategy not a tactic</p><p>CustomerDiscovery</p><p>CustomerValidation</p><p>CompanyBuilding</p><p>CustomerCreation</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 14/60</p><p>COMPANY BUILDING:</p><p>STEP 4</p><p> (Re)build your companys organization &amp;management</p><p> Re look at your mission</p><p>CustomerDiscovery</p><p>CustomerValidation</p><p>CompanyBuilding</p><p>CustomerCreation</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 15/60</p><p>GENCHI</p><p>GEMBUTSUGO AND SEE FOR YOURSELF</p><p>GET OUT OF THE BUILDING STEVE BLANK </p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 16/60</p><p>LEANMANUFACT</p><p>URINGBASES OF LEAN STARTUP</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 17/60</p><p>JUST IN TIME</p><p>The right material</p><p>At the right time</p><p>At the right place</p><p>In the exactamount</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 18/60</p><p>STOP THE LINE</p><p>stop and fix</p><p>problems as they</p><p>occur rather than</p><p>pushing them</p><p>down the line to be</p><p>resolved later</p><p>Jeffrey Liker andDavid Meier, ToyotaWay Fieldbook</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 19/60</p><p>THE ESSENCE OF LEAN IS ENGAGING</p><p>EVERYONE IN IDENTIFYING ANDSOLVING PROBLEMS</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 20/60</p><p>Waste</p><p>Un-Evenness</p><p>Overburden</p><p>Activities that donot</p><p>add value</p><p>workload that is</p><p>not balanced</p><p>work that creates burden forthe</p><p>team members or processesPicture Source Toyota Motor Company Australia</p><p>REDUCE ALL FORMS</p><p>OF WASTE</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 21/60</p><p>8 WASTES</p><p>In LEAN 8 types of waste have been identified</p><p>Over-production</p><p>Waiting</p><p>Transport orConveyance</p><p>Rework</p><p>Motion</p><p>Stock &amp;Materials</p><p>Over-processing</p><p>All of these 8 can be either</p><p>Necessary Waste orUn-necessary Waste</p><p>Depending on circumstance</p><p>Not using</p><p>PeopleResource</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 22/60</p><p>AGILE</p><p>DEVELOPMENT</p><p>BASES OF LEAN STARTUP</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 23/60</p><p>AGILE DEVELOPMENT</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 24/60</p><p>COMMODITY</p><p>TECHNOLOGY STACK</p><p> Leverage = for each ounce of effort you invest in yourproduct, you take advantage of the efforts of thousands ormillions of others.</p><p> Its easy to see how highleverage technology is drivingcosts down.</p><p> More important is its impact on speed.</p><p> Time to bring a new product to market is falling rapidly. </p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 25/60</p><p>ENTREPRENEURSHIP IS</p><p>MANAGEMENT</p><p>THAT SOUNDS BORING</p><p>BUSINESS PLAN VS JUST</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 26/60</p><p>BUSINESS PLAN VS JUST</p><p>DO IT SCHOOL OF</p><p>ENTREPRENEURSHIP</p><p> Business Plan</p><p> A business plan never survives a client first contact</p><p> A bad plan greatly executed = dead company</p><p> Just do it Have you ever cut a chickens head? (you got the picture)</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 27/60</p><p>STARTUP = EXPERIMENT</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 28/60</p><p>VALUE OF A STARTUP =</p><p>VALIDATED LEARNING</p><p> What products do customers really want?</p><p> How will the product grow?</p><p> Who is our customer?</p><p> Which customer should we listen to and which should weignore?</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 29/60</p><p>VALIDATED</p><p>LEARNING</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 30/60</p><p>VALIDATED LEARNING</p><p>Focus energies on validated learning, learning where andwhen to invest energy results in saving time and money</p><p>To apply scientific method, we need to identify whichhypotheses to test.</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 31/60</p><p>MINIMIZE TOTAL TIME</p><p>THROUGH THE LOOP</p><p>IDEAS</p><p>CODEDATA</p><p>BUILDLEARN</p><p>MEASURE</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 32/60</p><p>LEARNING</p><p>MILESTONES</p><p>Planned the opposite way:</p><p> What do we need to learn?</p><p> Use Innovation accounting to figure out what needs to be</p><p>measured to know if we are gaining validated learningWhat product needs to be built to run the experiment andmeasure?</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 33/60</p><p>MINIMUM VIABLE</p><p>PRODUCT</p><p>If you say this feature should be there, it doesnt belong in</p><p>your MVP</p><p> Video MVPMake a video how it works as if its alreadydone</p><p> The Concierge MVP Do it by hand, customer bycustomer</p><p> Wizard of Oz MVP 8 people behind a curtain</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 34/60</p><p>QUALITY IN</p><p>AN MVPIF WE DONT KNOW WHO THE CUSTOMER</p><p>IS, WE DONT KNOW WHAT QUALITY IS </p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 35/60</p><p>STARTUPS JOB</p><p> Measure where it right and wrong</p><p> Confronting hard truths</p><p> Devise Experiments to learn how to move the real</p><p>numbers closer to the ideal reflected in the business plan</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 36/60</p><p>BUILD</p><p>MEASURE</p><p>LEARN</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 37/60</p><p>BUILD MEASURE</p><p>LEARN</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 38/60</p><p>EXPERIMENTS</p><p> Do them with early adopters, not average customers</p><p> GOAL: Measure what customers did (unlike focus groups)</p><p> An experiment is a PRODUCT</p><p>YOUR TWO MOST</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 39/60</p><p>YOUR TWO MOST</p><p>IMPORTANT</p><p>ASSUMPTIONS</p><p> Value Hypothesis</p><p> Growth Hypothesis</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 40/60</p><p>INNOVATION</p><p>ACCOUNTING</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 41/60</p><p>INNOVATION</p><p>ACCOUNTING</p><p>1. Baseline - Use MVP to establish real data on where thecompany is right now</p><p>2. Tuning the engine - Fine tune from baseline towards ideal</p><p>3. Pivot or persevere</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 42/60</p><p>BASELINE</p><p> Test riskiest assumptions first</p><p> Careful with vanity metrics (up and to the right)</p><p> Use Learning milestones</p><p> P.e. conversion rates Sign up and trial rates</p><p> Customer lifetime value</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 43/60</p><p>TUNING THE ENGINE</p><p> Work towards second learning milestones</p><p> Every prod. Dev, marketing should be targeted atimproving one of the drivers of its growth model</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 44/60</p><p>PIVOT OR PERSEVERE</p><p>Schedule a regular meeting (every 6 weeks, for instance)</p><p>Startups that fails to converge to something like the ideal:time to pivot</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 45/60</p><p>FUNNEL METRICS</p><p>Behaviors critical to engine of Growth (specific to eachbusiness)</p><p> Customer registration</p><p> Downloads</p><p> Trials</p><p> Repeat Usage</p><p> Purchase</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 46/60</p><p>COHORT ANALYSIS</p><p> One of the most important tools of Startup Analysis</p><p> Dont look at cumulative totals or gross numbers like total</p><p>revenue and total number of customers</p><p> Look at performance of each group of customers</p><p> Each group is called a Cohort</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 47/60</p><p>VANITY METRICS</p><p> Gross Metrics</p><p> Total Registered User</p><p> Total Paying customers,</p><p> etc</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 48/60</p><p>INSTEAD OF</p><p>VANITY</p><p>METRICSUSE COHORT ANALYSIS AND SPLIT TESTS</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 49/60</p><p>THE 3 AAA OF</p><p>METRICS</p><p> Actionable Must demonstrate clear cause and effect</p><p> Accessible Make reports as simple as possible so thateveryone understands them</p><p> Auditable Ensure data is credible</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 50/60</p><p>PIVOT</p><p>Structured Course Correction designed to test a newfundamental hypothesis about a product, strategy andengine of growth.</p><p>A pivot requires that we keep one foot rooted in what weve</p><p>learned so far, while making a fundamental change instrategy</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 51/60</p><p>CATALOG OF PIVOTS</p><p> Zoom-in refocus on what was before a feature</p><p> Zoom-out what was once the product becomes a feature</p><p> Customer Segment changing the target audience</p><p> Customer need change to a higher customer need</p><p> Platform from product to platform and viceversa</p><p> Business Architecture From high margin, low volume tolow margin high volume or vice versa</p><p> Value Capture Change the way company captures value</p><p> Engine of Growth change Viral, sticky or paid</p><p> Channel change sales channel</p><p> Technology deliver the same in different technology</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 52/60</p><p>BATCH</p><p>A CAUTIONARY TALE ABOUT LETTERS</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 53/60</p><p>SINGLE PIECE FLOW</p><p>FASTER THAN BATCH</p><p> No sorting/stack/move around</p><p> Batch more efficient per step but less as a system</p><p> Faster to catch mistakes with little to no impact</p><p> Overall performance of system more important thanindividual performance</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 54/60</p><p>ENGINE OFGROWTH</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 55/60</p><p>HOW CUSTOMERS</p><p>DRIVE GROWTH</p><p>1. Word of Mouth</p><p>2. Side effect of product usage</p><p>3. Funded Advertising</p><p>4. Repeat purchase or use</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 56/60</p><p>STICKY ENGINE OF</p><p>GROWTH</p><p> Designed to attract and retain customers for the long term</p><p> Relies on having a high customer retention rate</p><p> Tracks churn rates very carefully</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 57/60</p><p>VIRAL ENGINE OF</p><p>GROWTH</p><p> Quantified by viral loop</p><p> Speed determined by viral coefficient</p><p> Viral Coefficient = how many new customers will use theproduct as a consequence of each new customer thatsigns up</p><p> Viral coefficient higher than 1 = exponential growth</p><p>G O</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 58/60</p><p>PAID ENGINE OF</p><p>GROWTH</p><p> Revenue from customers fuels cost of acquiring newcustomers</p><p> Customer lifetime value determines how much to spendper new customer</p><p> Cost of Acquisition (CPA) Money spent versus newcustomers that signed up</p><p>FIVE WHYS ROOT</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 59/60</p><p>FIVE WHYS ROOT</p><p>CAUSE ANALYSIS</p><p>A technique for continuous Improvement of companyProcess. Ask why five times when Somethingunexpected happens.</p><p> Make proportional investments in prevention at all five</p><p>levels of the hierarchy.</p><p> Behind every supposed technical problem is usually a</p><p>human problem. Fix the cause, not just the symptom.</p><p>AN EXERCISE BMC</p></li><li><p>8/2/2019 Lean Start Up Workshop</p><p> 60/60</p><p>AN EXERCISEBMC</p><p>OF TASK RABBIT</p></li></ul>