Lean Startup Zurich- An Introduction to Lean Startup Methodology
Lean Startup 301
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Transcript of Lean Startup 301
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Welcome to Lean Startup 301
Aubrey SmithNovember 16, 2015
Sponsored by:
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Agenda
1. Who is in the room?
2. How will this be valuable?
3. What will we cover?
4. How to participate?
5. What should I do next?
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Who is in the room?• Founders• 1st Time Entrepreneurs• Serial Entrepreneurs• Intrapraneurs• Designers• Developers• Newbies• Book Readers
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How will this be valuable?
This Session Is• Practical• Clear• Direct• Simple• Introductory• Wisdom sharing• Hands-on
This Session Is Not• Book review• Brainstorming
session• Full of jargon
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How will this be valuable?
Addressing the Main Questions• What is it?• Why does it work?• How does it work?• Why does it matter?• How can I get started?• How can I apply this to my company?
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What will we cover?
What we will cover today• Deep dive into MVPs, experiments• Discussion of Advanced Topics
• Live Case Studies• Exercise: Design an Experiment
Innovation Accounting Governance
Application in the
Enterprise
Regulated Markets
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How to participate?
ExperimentExercise
Live Case Studies• Listen• Share• Please, ask questions!
• Need Volunteers • Group Participation• Sharing
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What is the Lean Startup?
Key Areas to Discuss
HistoryBasic Terminology / DefinitionsApplication / ApplicabilityAdvanced Topics
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What is the Lean Startup?
History
• Robert Deming• Toyota Lean Manufacturing
• Agile Software Development• Lean Startup
• Steve Blank• Eric Ries
• Alexander Osterwalder• Lean Startup Community
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What is the Lean Startup? A method to systematically address uncertainty through rapid iteration and market learning.
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Core Principles
Entrepreneurs are everywhere
Entrepreneurship is management
Validated Learning
Build-Measure-Learn Loop
Innovation Accounting
What is the Lean Startup?
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Common Purpose We share a vision for the kind of company we want to create:
A company that continuously creates new sources of growth.
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The Lean Startup is…Everywhere.
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Who’s accountable?
• Jack Stack: The Great Game of Business
Build a culture of ownership
• Key ParallelsLean Startup capability and accountability should be the job of everyone at the companyGovernance will varyCustomer learning trumps internal feedback loops and decisions about products/features
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Case 1: Lean Startup at GE?What is FastWorks?
- Organizational change- Teams to Growth Boards- 500 projects, 500 coaches
What are GE Beliefs?- Customers Determine our Success- Stay Lean to Go Fast- Learn and Adapt to Win- Empower and Inspire Each other- Deliver Results in an Uncertain
World
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Key Areas to Discuss
HistoryBasic Terminology / DefinitionsApplication / ApplicabilityAdvanced Topics
What is the Lean Startup?
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What is The Lean Startup?
Terminology / Definitions• Entrepreneurs• Startups• Uncertainty • Vision• Assumptions• Hypotheses• Minimum Viable Product• Validated Learning• Pivots
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Your Vision
What business do you want to create?And, why?
What will you not pursue?And, why?
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Now, get the facts...• Biggest mistake you can make is to not test
the underlying assumptions of your business plan
• Leap of Faith Assumptions:If you prove your Leap of Faith assumptions false, your business plan falls apart
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Isolating critical assumptions
What is the riskiest element of your business plan?
Impact
Time horizon
OR
Will kill
Won’t kill
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Customer Problem
Solution
Business Model
Scale / Growth
Types of Assumptions
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• “If then” statements that help design tests for an assumptionPaypal - If people can easily transact across multiple
devices, they will be more frequent users of the service
• Clarifies your current understanding of what uncertainty you seek to resolve
Paypal - Specific action? Timing? Value/amount
Draft your Hypothesis
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Minimum Viable Product• Experiment that helps you validate (or
invalidate) hypotheses about the value or growth potential for a new product
• An MVP helps you answer a specific question about one or a few of your critical assumptions
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Case 2: Testing @ AirBnbTest:
• Photography Concierge MVP
• 20 Photographers in the field
Critical Hypothesis:
“Professional photographed listings get 2-3 times more business (and host don’t turn down free professional photography.” (SXSX, Airbnb)
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Case 2: Testing @ AirBnb
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MVP: Expert Tip
The MVP begins the process of validated learning…
• This is an experiment, not a product• No such thing as “an MVP” • The smallest possible product we can
imagine to achieve maximum learning about our hypothesis
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Build, Measure, Learn Loop
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Minimum Viable Product
Translate your critical assumptions into an experiment:
Validated Learning
1. Isolate critical assumptions for testing
2. Draft your hypothesis to be tested
3. Build an experiment4. Measure the results5. Collect the data and
learning in a systematic
1. What artifact will you use?
2. How will you use/test it?
3. Who will you test with (segments)
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Minimum Viable Product
Translate your critical assumptions into an experiment:
Validated Learning
1. Isolate critical assumptions for testing
2. Draft your hypothesis to be tested
3. Build an experiment4. Measure the results5. Collect the data and
learning in a systematic
1. What artifact will you use?
2. How will you use/test it?
3. Who will you test with (segments)
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Fears
• Change in direction without a change in vision
• OR
• Persevere: A team’s decision to test the next most important hypothesis
Pivot
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Innovation Accounting
• The problem with Vanity Metrics• Quantitative vs. Qualitative Data• Leading vs. Lagging Indicators
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Key Areas to Discuss
HistoryBasic Terminology / DefinitionsApplication / ApplicabilityAdvanced Topics
What is the Lean Startup?
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Minimum Viable Product
Translate your critical assumptions into an experiment:
Validated Learning
1. Isolate critical assumptions for testing
2. Draft your hypothesis to be tested
3. Build an experiment4. Measure the results5. Collect the data and
learning in a systematic
1. Who will you test with (segments)
2. What artifact will you use?
3. How will you use/test it?
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Culture of Testing1. Experiment design is important2. But, recording and evaluating the learning is
more important
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1. Experiment design is important2. But, recording and evaluating the learning is
more important• Establish an organization that learns together
• Only step up to the sophistication of the experiment and innovation accounting when you are ready to do so as a team
• Team learning is the most important outcome
Culture of Testing
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Discipline of Testing1. Focus the learning 2. Establish the baseline 3. Track MVPs on a dashboard4. Employ the right cadence of testing
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1. Focus the learning 2. Establish the baseline 3. Track MVPs on a dashboard4. Employ the right cadence of testing
• Only as sophisticated as your organization is ready to handle
• Remember: A well-designed experiment will inform what your next experiment will be
• Parallel path testing should only be employed if you have available resources
Discipline of Testing
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Minimum Viable Product
Translate your critical assumptions into an experiment:
Validated Learning
1. Isolate critical assumptions for testing
2. Draft your hypothesis to be tested
3. Build an experiment4. Measure the results5. Collect the data and
learning in a systematic
1. Who will you test with (segments)
2. What artifact will you use?
3. How will you use/test it?
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• Customers do not always do what they say they will
• Avoid “Voice of Customer”• Measure conversion on the path to
purchase (ex. Funnel metrics)• “Purchase intent” may require a ‘new’ rung
in the funnel
Exchange of Value
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Identify “Early Adopters”• What customers have this problem/need?• Who uses a ‘workaround’ today?• Who values this solution for a unique reason?• How would we classify segments?
• Innovations may cut across traditional segmentation
• Dig for segmentation variables (time, cost)
A. Build – What segments?
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A. Build – What artifact?Begin with a low fidelity artifact
• Paper brochure• PowerPoint• Landing page• Website• Clickable Mobile App• 3d CAD Rendering• Video
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A. Build – What test?Pick a test
• Interviews (Face-to-face, phone, video)• Digital Campaign• Google Adwords• U/X in-person Test• Email• Live Demonstration
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Test Problem/Solution Fit• Bring bare bones “artifact”• Set Context• Focus on hypotheses to be tested
• Begin with direct statements (“We believe”)
• Allow customers to hint/point you to what pain / need they do have
• Seek an “exchange of value”
c
The Interview
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A. BuildAdvanced Concepts
• Concierge MVP (“Man behind the curtain”)• A/B Split Test
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A. BuildAdvanced Concepts
• Concierge MVP (“Man behind the curtain”)• A/B Split Test
• Helps you obtain statistically significant information about your potential offering
• Allows you to see what customers do with your product / service / site
• Gives you information to make decisions – such as, which features to cut / build
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Experiment Example[software]
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❶ MVP #1
Display non-working prototype at a showroom
❷ MVP #2
Build full-scale driving prototype to verify technology
Avg. down-payment
Pre-order rate
Prototype
• Driving prototype (MVP2) improved which indicates strategy effectiveness
• MVP #2 validated technical feasibility assumptions
Learning
↗
↗
• Purchase intent was validated by innovation metrics: Pre-order rate & avg. down payment
Case 3: Lit Motors Test
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Exercise – Part I
Please see White Board
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Live Case
Ursula Shekufendeh AppFolio
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Live Case: AppFolioAbout AppFolio
• Web-based real estate property management software
• Property managers can market & manage property portfolio
Testable Hypothesis:“If we build a tenant screening service that landlords can subscribe to, then we can sell a service to 80% of RentApp users (and, quickly reach profitability).”
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Exercise – Part II
Please see White Board
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B. Measure Results• One metric that matters, OR• Simple Dashboard / Excel Spreadsheets, AND• “Exchange of Value”
• Customers say and do different things
• Avoid “Voice of Customer”
• Measure conversion on the path to purchase (ex. Funnel metrics)
• Create “proxy” in funnel, if needed
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Sample Dashboard❷
✓
✓
✗
→
❸
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• Pivot vs. Persevere• Continuous Deployment
Tips:• Pivoting is a team sport• Ground decisions entirely in the learning• Learning is cumulative• Good experiments should teach you what
experiment to do next
C. Commit to Learning
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Key Areas to Discuss
HistoryBasic Terminology / DefinitionsApplication / ApplicabilityAdvanced Topics
What is the Lean Startup?
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Innovation Accounting
• Actionable• Must demonstrate cause and effect
• Removes bias to report / overvalue “numbers that go up”
• Accessible• Simple, easy for the team to understand
• Should not require retraining team to read reports
• Auditable• Credible data reduces the ability to place blame
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• The growth operating system requires new management principles
• No “one size fits all” Lean Startup Process
• Start small to get big
• Small, honest success cases will bring leaders into the fold
• Sophistication should be aligned with team capability and resources
Lean Startup in Enterprise
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Live CaseChris BrownVodafone Global Enterprise
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Questions?
Aubrey SmithSparked Advisory
(202) 907-3993
Heather McGoughCo-Founder, Lean Startup Company(415) [email protected]
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Appendix
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• Vision -> Strategy -> Team
• Strategy is leadership-led:
Governance
PortfolioTeam Company
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Startup approach opens market opportunities
Important Themes:
• Dialogue is critical• Layering regulation improves impact
Regulated Markets
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Prioritize Assumptions• Focuses you, your team• Draws a line in the sand • Introduces accountability• Saves time• Introduces culture of “learning”
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Eric’s Point of View