Start Up MauritiusLEAN MANAGEMENT TRAINING

DISCLAIMER: THIS TRAINING IS ADAPTED FROM THE LEAN START UP BOOK

Welcoming message Hello Dear Participant,

Welcome to the self-training module for start up Mauritius. Through these slides that are going to follow, we will attempt to impart with you the lean management techniques. We will also explain to you, how start up Mauritius functions and how you can use your training to successfully have an entrepreneurial internship.

We wish to highlight here, that as you may already know, 90% of start up fails. You are not expected to create a multi-million company while you are here. What is most important to us, and should be to you as well, is the learning process. Most successful CEO have failed several start ups before discovering their successful one. In a way, we want to be your first failure so you can go ahead in the future to be really successful by learning from the lessons of failure. However, this does not mean you cannot be successful at first try!

Enjoy your journey with us

Prologue

How does SUM (Start Up Mauritius) work?

Training

Form team

Create business

plan

Minimum Viable

Product

Arrival Day 1 & 2: Arrival and introduction

Day 3&4: Training

Day 5: team formation and planning

Day 6&7: OFF

Day 8to12: Creation of business idea

Day 12to14: OFF

Day 15 to 45: Working on specific business

What you should expect from this training!?

Learn how to manage a business LEAN style

Chapter 1START UP AND VISION

What is a start up? Def:

A human institution designed to create a new product/service UNDER CONDITIONS OF EXTREME UNCERTAINTY!

Extreme uncertainty One of the reasons why most start ups fail is because running a start up is like navigating the seas without any instrument to help us. You don’t know what to do or where to go or the weather might change, you just know you have to move forward!

Operating under this condition means that we have to be very cautious and we have to learn tools that can guide our decision making.

So where do we start? Every business has a vision. When you create a business, there is something you want to CREATE. There is a better world that you can imagine.

Question that can help you discover what business you can create:

If you could not fail, YOU CAN ONLY SUCCEED!, what project would you do?

A few examples Avon—"To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women—

globally."

Amazon—"To be earth's most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online."

Harley Davidson—"To fulfill dreams through the experiences of motorcycling."

Starbucks—"To share great coffee with our friends and help make the world a little better."

Hilton—"To fill the earth with the light and warmth of hospitality."

J.C. Penny—"To be America's shopping destination for discovering great styles at compelling prices."

CVS Caremark—"To improve the quality of human life."

Johnson & Johnson (for a department that designs & manufactures orthopedic implants)—"Restoring the joy of motion"

Kraft Foods—"To make today delicious."

Toys 'R' Us—"To put joy in kids' hearts and a smile on parents' faces."

Weyerhaeuser Company—"To release the potential in trees to solve important problems for people and the planet."

Chapter 2VALUE HYPOTHESIS AND GROWTH HYPOTHESIS

Next step is to break your vision into 2 different parts

Vision

Value hypothesis

Growth hypothesis

Value Hypothesis: Does the product really deliver value? Does your idea really solve a problem? Do people really care about your product? QUALITY ASSURANCE

Growth Hypothesis: How will new customers discover the product? Would early participants actively spread the word? QUANTITY ASSURANCE

HYPOTHESIS translates intoLEAP OF FAITH ASSUMPTIONS

The hypothesis that are created consist of a lot of assumptions. It is of vital importance to know what these assumptions are and to test if it is true! Otherwise a false assumption can lead a business to catastrophe.

It is also important to formulate them well to be able to test them.

Chapter 3ASSUMPTION TESTING

Technique 1:Genchi Gembutsu

Genchi Gembutsu is Japanese and means “GET UP AND SEE FOR YOURSELF!”

You think the customers have a problem, get up and see if its true.

TALK TO YOUR CUSTOMERS and ask them about the problem. Go see for yourself and get a ground feeling!

Technique 2:Analogs and Anti-logs

This technique involves observing trends and using analogs/antilogs to draw conclusions

However, you must be very careful to use the right analogs. They can be misleading at times

Technique 3:4 question assessment of an ideaDo customers realize that they have a problem?

Would they buy a solution?

Would they buy it from us?

Can we build a solution for that problem?

IF YOU ANSWER IS YES FOR ALL 4, GO AHEAD!!!

Technique 4:MVP (Minimum Viable Product)

Next chapter

Chapter 4MINIMUM VIABLE PRODUCT

MVP The concept of the MVP is simple. You are asked to create a beta product, a product just having the minimum features. You then use this beta product to test your assumptions

For example, if I want to make a Kebab business and one of my assumptions is that people love fried chicken meat inside.

Well the minimum product would be bread, with little vegetables.

Now I add fried chicken meat to it. If people buy more of my kebab, then it can only be caused by the fact that there is fried chicken meat! Thus I can safely say now, that my assumption was right.

An MVP is to test 1 or 2 or more assumptions. To know if it is true. This helps us reduce the effect of uncertainty. Now we are more certain of our next move and whether it will be profitable or not.

MVP The first products are never meant to be perfect.Compare the first iphone to the latest iphone for example. The last phone would be superior since the first one can be considered an MVP which they launched and got to know more of the customers behaviors and needs. They verified their assumptions and improved the product hence, adding and removing features

The MVP is superior to surveys or talking to people about a hypothetical product in the sense that the customers has a real product and can choose to pay for it or not. This gives you powerful information about the viability of your product. If you just ask people whether or not, they would buy a product, they might say yes. But when they actually have to pay, they don’t.

If people are not willing to pay for the beta version, chances are they will not pay for the enhanced version as well.

MVP One of the deterrent(reason not to do) to use an MVP is the fear that people are not buying the product because its not finished yet. They cant see what it could be. That’s why they don’t buy the MVP. But they will surely buy the finished product.

So how do we know that an MVP is complete?

Well there is no actual way to know so. You have to be the judge of this. According to you, the product should have the minimum features to function.

Chapter 5TESTING THE MVP

Technique 1:Smoke test

This is a test just to test if the customers are interested in a product

For example, if I wanted to create a delivery company. I would simply place an add in the newspaper and say if you want to have something delivered, call this number. In reality, I have no delivery capacity. I have nothing. I just want to see how many people actually call me. That’s all. Just check interest.

Technique 2:One month free trial

Have people sign up with a beta product. If people like it, then they should pay to get the premium version.

You see how many people actually pay for the upgrade.

Technique 3:Video

Dropbox initially made a video about what dropbox could do once its done. Sharing files instantly over the internet. People saw this video and shared it a lot and it got millions of views. This told the developers that people were really interested and would pay for it.

Here the MVP is the video itself.

Technique 4:Concierge MVP

Here you are assigned to serve only 1 customer but to the best of your abilities. You do everything the best you can in the service that you should be able to provide. While doing so, you will learn the different facets of the business and be able to learn from your 1 customer extensively.

Then you can scale to 2 clients, then 3, then more…..

How to use the results from the testing?

You have to use what is called innovative accounting. Innovative accounting takes into account leap of faith assumptions into a quantitative financial model.

They take into account what you have learnt and how you use what you learnt to improve your product. If you are bringing in more revenue, then it was worth investment.

Innovative accounting protects from vanity metrics which tells us a rosy picture.

For example, a vanity metric could be cumulative growth:If cumulatively, our number of customers keep on increasing while we improve our product, it seems great.

Innovative accounting: If we look at the rate of growth, it might be constant. That would mean that despite improving the product, the result is the same. I might as well not improve the product, I would still have the same results.

Innovative accounting takes this into account to see if we are really making progress or not.

Chapter 6TUNING YOUR ENGINE

Improving your product acc. to results

To demonstrate that we are actually learning, VALIDATED learning, we need to see improvements in our metrics (metrics are what we measure to see if business is improving)

Techniques to test if the improvement we are making are actually causing a positive customer behavior, follow in the next slides.

Cohort analysis Measures performance of metrics with each group of customers that come into contact with products independently

Does not look at gross number or cumulative totals

Split testing The concept is simple.

Make 2 exactly same product.

Add feature A to one product and feature B to the other.

Now, since everything is same except for feature A and B, and you launch the product towards two similar but different target groups, you can see which is better, A or B, based on performance of each.

Use KanbanBacklog In progress Built Validated

The rule of Kanban says that there can only be 3 items only in each column.

Backlog is a feedback of customerIn progress means we are building a solution based on that feedbackBuilt means solution is hereValidated means that solution really works or improvement made on feedback was actually useful

Kanban allows proper management of resources to allow proper investment in time, money and energy.

Caution: 3 A’s Make sure your tests are:

Actionable

Clear cause and effect

Accessible

Make reports available to everyone

Auditable

Validity of data can easily be tested. Also conclusions must be from master data, not intermediate data.

Chapter 7PIVOT OR PERSEVERE

3 steps

product

Strategy

Vision

Persevere From all the testing, and subsequent improvements made on results of test, you can now start establishing whether your business is going the right direction or not.

If you have the right vision and strategy, then you should see improvements as you go along improving your product.

Pivot If you can not see result, then the thing that might be wrong is your strategy.

That’s where you need to PIVOT. Pivoting means keeping one foot in the ground and rotate the other. Your one foot is firmly rooted in your vision and does not change. However, you change the way you carry out your business.

Maybe in the beginning you assumed that the business should be a B2C with low margin and high volume. However, while developing this product, you see people are not willing to buy but you gain so much information, that you can just change a few things and make the business a B2B with high margin and low volume. You changed strategy.

Different types of pivotSingle feature of initial product becomes the new product

Initial product becomes a feature in new product

Customer segment pivot

Platform pivot: from a killer app to a platform

Business architecture pivot: B2B to B2C

Value capture pivot

Engine of growth pivot

Channel pivot

Technology pivot

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