The Lean Start UpEvan Huevan@alavetta.comtwitter @evnhu
Why are youhere today
Share withthe personbeside you(that you did not show up with)
MarshmallowTowerChallenge
18Minutes…In
teams mustbuild theTallestfreestandingstructure.
Out of20 sticks of spaghetti1 yard of tape1 yard of stringAnd 1 marshmallow
The marshmallow needs to be on top!If you have done/seen this before…leave your table and form the “special” team!
Tom Wujec has run this samemarshmallow experimenthundreds of times and foundsome interesting patterns.
Business studentsand lawyersbuilt about half theaverage heightof 20 inches.
Engineers andArchitects did thebest (and so theyshould)!
BUT here is the really interesting thing...
Kindergarten KIDS usually do as wellas architects and engineers!
HUH?
MBAs and lawyers want totheir way to an optimaloutcome and then execute onthe plan.PLAN
Instead of wasting time trying tomake a plan or establish who is incharge, kindergarten kids simplyover and over until the...
On virtuallyevery measureof innovationthey createtaller and moreinterestingstructures.
Under conditions ofambiguity, where outcomesare unknown, most people fallback on a planning mindset.
A planning mindset increasesyour chances of failurebecause you waste timedevising strategiesinstead of trying out ideas.
And incentivesincrease thechances offailure!
What if youengaged in anexperimentationmindset?
discovery skillsdistinguish the most innovativeentrepreneurs from other executives(Dyer, Gregersen and Christensen)Researc...
Questioningallows innovators to breakout of the status quo andconsider new possibilities.
Through observinginnovators detect small behavioraldetails—in the activities of customers,suppliers, and other companies—t...
Inexperimentingthey relentlessly try on newexperiences and explore the world.
Throughnetworkingwith individuals and ideas from diversebackgrounds they gain radicallydifferent perspectives.
the four patterns of action togetherhelp innovators associate tocultivate new insights.Associational Thinking
Associational Thinking:the ability to make connections betweenseemingly unconnected things.
A calligraphyclass inspiredSteve Jobsemphasis ontypography onthe revolutionaryMacintosh.
DOINGquestioningobservingexperimentingnetworking
ASSOCIATIONALTHINKINGassociate to cultivate new insights
35through continuous product andprocess improvement and theelimination of non-value addedactivities.Leanpreserving value w...
36Waste is any human activity which absorbs resources but creates no value.Eliminating wasteis the fundamental principle o...
• Principles of the Lean StartupTheSteve Blank, Eric Ries, Alexander Osterwalder
You don’t have to work in a garage to be ina startup…Entrepreneurs AreEverywhere
Entrepreneurship IsManagementA startup is an institution, not just a product.It requires management…a new kind of manageme...
40ValidatedLearningStartups exist not to make stuff, make money, orserve customers.They exist to learn how to build a sust...
41InnovationAccountingTo improve entrepreneurial outcomes, and to holdentrepreneurs accountable, we need to focus on borin...
The fundamental activity of a startup is toturn ideas into products,measure how customers respondand then learn whether to...
The minimum viable productis that version of a new product which allows a teamto collect the maximum amount of validated l...
Hypothesis(Leap of Faith Assumptions)“Genchi Gembustsu”(go see for yourself)“Get Out of the Building”Learning MilestonesMi...
45whathypotheseswill yoube testing ?
46Whether a product orservices really deliversvalue to customersonce they are using it.ValueHypothesis
47GrowthHypothesisHow a customer willdiscover a product orservice.
48More HypothesesCustomer (Arch-type)Technical FeasibilityProductionDevelopmentScalability
49The minimum viable productMVP is that version of a newproduct which allows a team tocollect the maximum amount ofvalidat...
MVPApproaches50
- Smoke test- Mock-up demo- Wizard of Oz prototype ( fake-it No. 1)- Concierge prototype (fake-it No. 2)- Ghetto mash-up- ...
Hypothesis(Leap of Faith Assumptions)“Genchi Gembustsu”(go see for yourself)“Get Out of the Building”Learning MilestonesMi...
Your resources are precious.EnergyTimeMoney
timeis more valuable thanmoneyWhile money can fluctuate up or down time onlymoves in one direction.
PersonalEnergyYou only have a finite reservoir that you can drawfrom and must share with family and friends.is the most pr...
Iterateuntil you find asustainable and scalablebusiness model beforeyou run out of resources:personal energy, time,money.
57Failure
I have not failed,Ive just found10,000 waysthat wont work.- Thomas A. Edison
59- Samuel Beckett “Worstword Ho” 1983All of old.Nothing else ever.Ever tried.Ever failed.No matter.Try again.Fail again.F...
60David Kelley, Ideo 1997Fail faster to succeed sooner.
61Eric Raymond, Art of Unix Programming 1999Fail early, fail noisily.
62John Maxwell, Falling Forward 2007Fail early, fail often, fail forward.
about failing63It’s notlearningIt’s about
Learn EarlyLearn OftenLearn CheapValidate (or invalidate)your assumptions.
Learn EarlyLearn OftenLearn CheapGet out of the office.
Learn EarlyLearn OftenLearn CheapPivot or Persist.
67Learn EarlyLearn OftenLearn Cheap
68OF ITERATIONSBEATSSPEEDQUALITYOF ITERATIONS
69In a Nutshell…
70- What are your Hypothesis?- What do you Measure to validate your Hypothesis?- MVP features = measurement- Build an MVP ...
71Find a business model that works before you run out of:Personal Energy. Time. Money.
BusinessModelGeneration72
73A business modeldescribes the rationaleof how an organizationcreates, delivers, andcaptures value.
The Money Earning LogicPlanningLevelArchitecturalLevelImplementationLevelStrategicBusinessModelProcessVision, Goals&Object...
BusinessModelCanvas
76Ideation tool that distilsthe essence of yourbusiness down to onepage that articulatesyour hypotheses.
77SimpleFastPortableConciseIterative
78EveryoneOne Page for
79Value PropositionWhat are you offeringthem?What is thatgetting done for them?Do they care?Characteristics:- Newness- Per...
80Customer SegmentsWhich customersand users are youserving?Which jobs do theyreally want to getdone?Mass MarketNiche Marke...
81Customer RelationshipsWhat relationshipsare you establishingwith each segment?Personal?Automated?Acquisitive?Retentive?E...
82Channelshow does each customersegment want to be reached?through which interactionpoints?Channel Phases:1. AwarenessHow ...
83Revenue StreamsWhat are customersreally willing to pay for?How?Are you generatingtransactional orrecurring revenues?Exam...
84Key Activitieswhich activities do youneed to perform well inyour business model?what is crucial?Categories:- Production-...
85Key Resourceswhich resourcesunderpin yourbusiness model?which assets areessential?Types:- Physical- Intellectual (brand ...
86Key Partnerswhich partners andsuppliers leverageyour model?who do you need torely on?Motivations for partnerships:- Opti...
87Cost Structureswhat is theresulting coststructure?which keyelements driveyour costs?Is your business more:- Cost Driven ...
88BMC is Open: Lean Canvas by Ash Mauya
89How to use the BMCCreate a poster size copy of the BMC.Stick it to a wall.Write your hypothesis on post-it notes.Place t...
Ask lots ofquestionsProduct vs. ServiceTransactional vs. recurring revenuesFixed vs. variable costsAcquisition vs. Retenti...
91EvergreenKeep it
92Share
93Exercise:Apple iPod/iTunes Business ModelSplit up in teams of 4-5.Sketch out the businessmodel.Each team must present al...
94MoreEric RiesAlexander OsterwalderSteve Blank
95
Experimentation MindsetDiscovery SkillsLean Startup Approach
The Lean Start UpEvan Huehu@mtroyal.catwitter @evnhu
The Lean Startup Overview
The Lean Startup Overview
The Lean Startup Overview
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The Lean Startup Overview

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Overview for Startup Weekend Vancouver 2013

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  • The average height for most teams is just over 20 inches.+    Business students average about half.+    Lawyers do a bit better. But not much better. Like business students, they spend too much time seeking power and making plans.+    Kindergartners, as we've seen, do better than most adults.+    And who does the very best?+    Thankfully - Engineers and Architects - create the tallest stable structures. So far, the largest I've seen is 39 inches. Architects and Engineers have specialized skills and experiences. They know that triangles and self-reinforcing geometrical patterns produce the most stable spaghetti towers. +     CEOs are bit better than average.+    But here's where it gets interesting. If an executive administrator works with the CEO team, that team almost always wins. It seems that the admin's skills of facilitation makes a big difference. Any team member who pays close attention the process of work - encouraging timing, improving communication, cross pollinating ideas - increases the teams performance significantly.Winning teams are specialists. But the next best are those with facilitation skills.
  • Adding incentives, like prizes or cash only makes the problem worse—planning goes up and average tower height goes down.
  • The lesson in the marshmallow challenge is that we need to identify the assumptions in our project - the real customer needs, the cost of the product, the duration of the service - and test them early and often. That’s the mechanism that leads to effective innovation.MBAs actually perform the worst on average in building marshmallow towers. Engineers perform moderately well (thank goodness), but which group performs the best? Kindergartners! But why? The reason is quite simple: MBAs want to plan their way to an optimal outcome and then execute on the plan. Furthermore, adding incentives, like prizes or cash only makes the problem worse—planning goes up and average tower height goes down. In contrast, kindergartners do something much different. Instead of wasting time trying to establish who is in charge or make a plan, they simply experiment over and over until they find a model that works.✦Prototyping Matters: The reason kids do better than business school students is kids spend more time playing and prototyping. They naturally start with the marshmallow and stick in the sticks. The Business School students spend a vast amount of time planning, then executing on the plan, with almost no time to fix the design once they put the marshmallow on top.✦The Marshmallow is a Metaphor for the Hidden Assumptions of a Project: The assumption in the Marshmallow Challenge is that marshmallows are light and fluffy and easily supported by the spaghetti sticks. When you actually try to build the structure, the marshmallows don’t seem so light. The lesson in the marshmallow challenge is that we need to identify the assumptions in our project - the real customer needs, the cost of the product, the duration of the service - and test them early and often. That’s the mechanism that leads to effective innovation.
  • pretty simple distinction between known and unknown problems. Although the distinction may be simple, a remarkable number of entrepreneurs make the mistake of acting like they are executing on a known problem and so go out of business. Instead these entrepreneurs need to recognize they are tackling an unknown problem and need to apply the right tactics to quickly validate their assumption. So if the contrast between known and unknown problems is so simple, why do entrepreneurs and managers make this common mistake?So why do so many smart entrepreneurs fall back into the planning mindset? Quite simply because entrepreneurial problems are ambiguous and uncertain. In deep ambiguity, planning feels like progress. Indeed, making a plan and hitting milestones feels like you are moving forward but can lead you straight into failure. Eric Ries, my coauthor and advocate of the Lean Startup, described it best when he talked about “achieving grandiose failure” in one of his early startups. But there is another reason so many entrepreneurs fall back into the planning mindset. Quite simply, they didn’t know they had an alternative. They thought they were supposed to write a business plan and start building their product. They didn’t know about the tools of the experimentation mindset.The Science of EntrepreneurshipThe experimentation mindset applied to unknown problems lies at the core of the new entrepreneur and the shifting entrepreneurial paradigm. Underneath ideas like Customer Development, Lean Startup, and Nail It then Scale It is a bigger problem: the science of tackling entrepreneurial problems. It may sound absurd that we haven’t figured this out yet, but I will explain why in the future posts. And for those of you chomping at the bit to find out what to do or to see these ideas in action, thank you for being patient. I’m trying to motivate why these things matter, why we have made so many mistakes in practicing entrepreneurship, and how, if we take the time to understand where we have been in the past, we can get it right in the future. By looking in the mirror first, we can see what we did wrong and then transform everything we know about what it means to be an entrepreneur. Keep reading and stay with me.
  • pretty simple distinction between known and unknown problems. Although the distinction may be simple, a remarkable number of entrepreneurs make the mistake of acting like they are executing on a known problem and so go out of business. Instead these entrepreneurs need to recognize they are tackling an unknown problem and need to apply the right tactics to quickly validate their assumption. So if the contrast between known and unknown problems is so simple, why do entrepreneurs and managers make this common mistake?So why do so many smart entrepreneurs fall back into the planning mindset? Quite simply because entrepreneurial problems are ambiguous and uncertain. In deep ambiguity, planning feels like progress. Indeed, making a plan and hitting milestones feels like you are moving forward but can lead you straight into failure. Eric Ries, my coauthor and advocate of the Lean Startup, described it best when he talked about “achieving grandiose failure” in one of his early startups. But there is another reason so many entrepreneurs fall back into the planning mindset. Quite simply, they didn’t know they had an alternative. They thought they were supposed to write a business plan and start building their product. They didn’t know about the tools of the experimentation mindset.The Science of EntrepreneurshipThe experimentation mindset applied to unknown problems lies at the core of the new entrepreneur and the shifting entrepreneurial paradigm. Underneath ideas like Customer Development, Lean Startup, and Nail It then Scale It is a bigger problem: the science of tackling entrepreneurial problems. It may sound absurd that we haven’t figured this out yet, but I will explain why in the future posts. And for those of you chomping at the bit to find out what to do or to see these ideas in action, thank you for being patient. I’m trying to motivate why these things matter, why we have made so many mistakes in practicing entrepreneurship, and how, if we take the time to understand where we have been in the past, we can get it right in the future. By looking in the mirror first, we can see what we did wrong and then transform everything we know about what it means to be an entrepreneur. Keep reading and stay with me.
  • The lesson in the marshmallow challenge is that we need to identify the assumptions in our project - the real customer needs, the cost of the product, the duration of the service - and test them early and often. That’s the mechanism that leads to effective innovation.The benefits of mistakesBy John C MaxwellOne group graded solely on the quantity of work The other group solely on the quality of workweigh the work of the “quantity” group: fifty pounds of pots rated an “A,” forty pounds a “B,” and so on.Those being graded on “quality,” however, needed to produce only one pot – albeit a perfect one – to get an “A.” the works of the highest quality were all produced by the group being graded for quantity. the “quantity” group was busily churning out piles of work – and learning from their mistakes the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.The only way you can get ahead is to fail early, fail often, and fail forward.I recently shared a few quotes on mistakes here. And based on the comments, they seemed to strike a chord for many of you. I believe you can’t have too much instruction on the value of mistakes. So I thought I’d share one of my favorite illustrations on the subject. This is quoted in my book, Failing Forward.Working artists David Bayles and Ted Orland, in their book, Art & Fear: Observations On the Perils (and Rewards) of Artmaking, tell a story about an art teacher who did an experiment with his grading system for two groups of students. It is a parable on the benefits of failure. Here is what happened:The ceramics teacher announced on opening day that he was dividing the class into two groups. All those on the left side of the studio, he said, would be graded solely on the quantity of work they produced, all those on the right solely on its quality. His procedure was simple: on the final day of class he would bring in his bathroom scales and weigh the work of the “quantity” group: fifty pounds of pots rated an “A,” forty pounds a “B,” and so on. Those being graded on “quality,” however, needed to produce only one pot – albeit a perfect one – to get an “A.” Well, came grading time and a curious fact emerged: the works of the highest quality were all produced by the group being graded for quantity. It seems that while the “quantity” group was busily churning out piles of work – and learning from their mistakes – the “quality” group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.It doesn’t matter whether your objectives are in the area of art, business, ministry, sports, or relationships. The only way you can get ahead is to fail early, fail often, and fail forward.
  • The Innovator’s DNAby Jeffrey H. Dyer, Hal B. Gregersen, andClayton M. ChristensenHarvard business review • December 2009Hal Gregersen at INSEAD, Jeffrey Dyer at BYU, and Clayton Christensen at HarvardThe Idea in BriefCOPYRIGHT © 2009 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.The habits of Steve Jobs, Jeff Bezos, andother innovative CEOs reveal much aboutthe underpinnings of their creative thinking.Research shows that five discoveryskills distinguish the most innovativeentrepreneurs from other executives.DOING•Questioningallows innovators to breakout of the status quo and consider newpossibilities.•Throughobserving, innovators detectsmall behavioral details—in theactivities of customers, suppliers, andother companies—that suggest newways of doing things.•Inexperimenting, they relentlessly try onnew experiences and explore the world.•And throughnetworkingwith individualsfrom diverse backgrounds, they gain radicallydifferent perspectives.THINKING•The four patterns of action together helpinnovatorsassociateto cultivate newinsights.
  • Jobs: 'Find What You Love'Steve Jobs, who died Wednesday, reflected on his life, career and mortality in a well-known commencement address at Stanford University in 2005.Here, read the text of that address:I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. Today I want to tell you three stories from my life. That's it. No big deal. Just three stories.Associated PressSteve Jobs speaks at graduation ceremonies at Stanford University, in Palo Alto, Calif., on June 12, 2005.The first story is about connecting the dots.I dropped out of Reed College after the first 6 months, but then stayed around as a drop-in for another 18 months or so before I really quit. So why did I drop out?It started before I was born. My biological mother was a young, unwed college graduate student, and she decided to put me up for adoption. She felt very strongly that I should be adopted by college graduates, so everything was all set for me to be adopted at birth by a lawyer and his wife. Except that when I popped out they decided at the last minute that they really wanted a girl. So my parents, who were on a waiting list, got a call in the middle of the night asking: "We have an unexpected baby boy; do you want him?" They said: "Of course." My biological mother later found out that my mother had never graduated from college and that my father had never graduated from high school. She refused to sign the final adoption papers. She only relented a few months later when my parents promised that I would someday go to college.And 17 years later I did go to college. But I naively chose a college that was almost as expensive as Stanford, and all of my working-class parents' savings were being spent on my college tuition. After six months, I couldn't see the value in it. I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. And here I was spending all of the money my parents had saved their entire life. So I decided to drop out and trust that it would all work out OK. It was pretty scary at the time, but looking back it was one of the best decisions I ever made. The minute I dropped out I could stop taking the required classes that didn't interest me, and begin dropping in on the ones that looked interesting.It wasn't all romantic. I didn't have a dorm room, so I slept on the floor in friends' rooms, I returned coke bottles for the 5¢ deposits to buy food with, and I would walk the 7 miles across town every Sunday night to get one good meal a week at the Hare Krishna temple. I loved it. And much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on. Let me give you one example:Reed College at that time offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand calligraphed. Because I had dropped out and didn't have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating.None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do. Of course it was impossible to connect the dots looking forward when I was in college. But it was very, very clear looking backwards ten years later.Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.My second story is about love and loss.I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30. And then I got fired. How can you get fired from a company you started? Well, as Apple grew we hired someone who I thought was very talented to run the company with me, and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. When we did, our Board of Directors sided with him. So at 30 I was out. And very publicly out. What had been the focus of my entire adult life was gone, and it was devastating.I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me — I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.During the next five years, I started a company named NeXT, another company named Pixar, and fell in love with an amazing woman who would become my wife. Pixar went on to create the worlds first computer animated feature film, Toy Story, and is now the most successful animation studio in the world. In a remarkable turn of events, Apple bought NeXT, I returned to Apple, and the technology we developed at NeXT is at the heart of Apple's current renaissance. And Laurene and I have a wonderful family together.I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did. You've got to find what you love. And that is as true for your work as it is for your lovers. Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don't settle.My third story is about death.When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something.Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure - these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.About a year ago I was diagnosed with cancer. I had a scan at 7:30 in the morning, and it clearly showed a tumor on my pancreas. I didn't even know what a pancreas was. The doctors told me this was almost certainly a type of cancer that is incurable, and that I should expect to live no longer than three to six months. My doctor advised me to go home and get my affairs in order, which is doctor's code for prepare to die. It means to try to tell your kids everything you thought you'd have the next 10 years to tell them in just a few months. It means to make sure everything is buttoned up so that it will be as easy as possible for your family. It means to say your goodbyes.I lived with that diagnosis all day. Later that evening I had a biopsy, where they stuck an endoscope down my throat, through my stomach and into my intestines, put a needle into my pancreas and got a few cells from the tumor. I was sedated, but my wife, who was there, told me that when they viewed the cells under a microscope the doctors started crying because it turned out to be a very rare form of pancreatic cancer that is curable with surgery. I had the surgery and I'm fine now.This was the closest I've been to facing death, and I hope it's the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept:No one wants to die. Even people who want to go to heaven don't want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life's change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.When I was young, there was an amazing publication called The Whole Earth Catalog, which was one of the bibles of my generation. It was created by a fellow named Stewart Brand not far from here in Menlo Park, and he brought it to life with his poetic touch. This was in the late 1960's, before personal computers and desktop publishing, so it was all made with typewriters, scissors, and polaroid cameras. It was sort of like Google GOOG +2.63% in paperback form, 35 years before Google came along: it was idealistic, and overflowing with neat tools and great notions.Stewart and his team put out several issues of The Whole Earth Catalog, and then when it had run its course, they put out a final issue. It was the mid-1970s, and I was your age. On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: "Stay Hungry. Stay Foolish." It was their farewell message as they signed off. Stay Hungry. Stay Foolish. And I have always wished that for myself. And now, as you graduate to begin anew, I wish that for you.Stay Hungry. Stay Foolish.Thank you all very much.
  • “Lean Thinking” by Womak/Jones
  • Colonel John Boyd, a military strategist and Air Force fighter, found this by studying an anomaly in dogfights where an inferior aircraft (F-86) consistently beat a superior aircraft (MiG-15) because it was able to iterate faster thanks to a hydraulic versus manual flight stick.Eric Ries applies Boyd’s Law to lean startups by highlighting the importance of maximizing cycle time through the build/measure/learn loopFind a business model that works before running out of resources.
  • Alexander Osterwalder
  • Mass MarketNiche Market Segmented Diversified Multi-sided Platform
  • examples Personal assistanceDedicated Personal Assistance Self-ServiceAutomated Services CommunitiesCo-creation
  • transactional vs.recurring revenuesfixed vs. variablecostsacquisition vs. retentionone customer segmentvs. anothercapital expenditure vs.partnershippaid vs. freeproduct vs. servicecopyright vs. copyleftopen vs. closedhuman intensive vs.system intensivepersonal vs.automateddirect sales vs.indirect salesadvertising vs.salesniche market vs.mass marketscale vs. scopeblue ocean vs. redocean
  • The Lean Startup Overview

    1. 1. The Lean Start UpEvan Huevan@alavetta.comtwitter @evnhu
    2. 2. Why are youhere today
    3. 3. Share withthe personbeside you(that you did not show up with)
    4. 4. MarshmallowTowerChallenge
    5. 5. 18Minutes…In
    6. 6. teams mustbuild theTallestfreestandingstructure.
    7. 7. Out of20 sticks of spaghetti1 yard of tape1 yard of stringAnd 1 marshmallow
    8. 8. The marshmallow needs to be on top!If you have done/seen this before…leave your table and form the “special” team!
    9. 9. Tom Wujec has run this samemarshmallow experimenthundreds of times and foundsome interesting patterns.
    10. 10. Business studentsand lawyersbuilt about half theaverage heightof 20 inches.
    11. 11. Engineers andArchitects did thebest (and so theyshould)!
    12. 12. BUT here is the really interesting thing...
    13. 13. Kindergarten KIDS usually do as wellas architects and engineers!
    14. 14. HUH?
    15. 15. MBAs and lawyers want totheir way to an optimaloutcome and then execute onthe plan.PLAN
    16. 16. Instead of wasting time trying tomake a plan or establish who is incharge, kindergarten kids simplyover and over until they find a modelthat works.EXPERIMENT
    17. 17. On virtuallyevery measureof innovationthey createtaller and moreinterestingstructures.
    18. 18. Under conditions ofambiguity, where outcomesare unknown, most people fallback on a planning mindset.
    19. 19. A planning mindset increasesyour chances of failurebecause you waste timedevising strategiesinstead of trying out ideas.
    20. 20. And incentivesincrease thechances offailure!
    21. 21. What if youengaged in anexperimentationmindset?
    22. 22. discovery skillsdistinguish the most innovativeentrepreneurs from other executives(Dyer, Gregersen and Christensen)Research shows that
    23. 23. Questioningallows innovators to breakout of the status quo andconsider new possibilities.
    24. 24. Through observinginnovators detect small behavioraldetails—in the activities of customers,suppliers, and other companies—thatsuggest new ways of doing things.
    25. 25. Inexperimentingthey relentlessly try on newexperiences and explore the world.
    26. 26. Throughnetworkingwith individuals and ideas from diversebackgrounds they gain radicallydifferent perspectives.
    27. 27. the four patterns of action togetherhelp innovators associate tocultivate new insights.Associational Thinking
    28. 28. Associational Thinking:the ability to make connections betweenseemingly unconnected things.
    29. 29. A calligraphyclass inspiredSteve Jobsemphasis ontypography onthe revolutionaryMacintosh.
    30. 30. DOINGquestioningobservingexperimentingnetworking
    31. 31. ASSOCIATIONALTHINKINGassociate to cultivate new insights
    32. 32. 35through continuous product andprocess improvement and theelimination of non-value addedactivities.Leanpreserving value with less work
    33. 33. 36Waste is any human activity which absorbs resources but creates no value.Eliminating wasteis the fundamental principle of lean thinking.
    34. 34. • Principles of the Lean StartupTheSteve Blank, Eric Ries, Alexander Osterwalder
    35. 35. You don’t have to work in a garage to be ina startup…Entrepreneurs AreEverywhere
    36. 36. Entrepreneurship IsManagementA startup is an institution, not just a product.It requires management…a new kind of management specifically geared toits context.
    37. 37. 40ValidatedLearningStartups exist not to make stuff, make money, orserve customers.They exist to learn how to build a sustainablebusiness.
    38. 38. 41InnovationAccountingTo improve entrepreneurial outcomes, and to holdentrepreneurs accountable, we need to focus on boringstuff such as:how to measure progress, how to setup milestones,how to prioritize work.This requires a new kind of accounting, specific tostartups.
    39. 39. The fundamental activity of a startup is toturn ideas into products,measure how customers respondand then learn whether to pivot or persevere.BuildMeasureLearn
    40. 40. The minimum viable productis that version of a new product which allows a teamto collect the maximum amount of validated learningabout your hypothesis with the least effort.It puts your hypotheses to the test. MVP
    41. 41. Hypothesis(Leap of Faith Assumptions)“Genchi Gembustsu”(go see for yourself)“Get Out of the Building”Learning MilestonesMinimizeTOTAL timeof the MVPthrough loopPivot (or Persevere)Innovation Accounting(evaluate progress)Build. Measure. Learn.Most learning forthe least effort
    42. 42. 45whathypotheseswill yoube testing ?
    43. 43. 46Whether a product orservices really deliversvalue to customersonce they are using it.ValueHypothesis
    44. 44. 47GrowthHypothesisHow a customer willdiscover a product orservice.
    45. 45. 48More HypothesesCustomer (Arch-type)Technical FeasibilityProductionDevelopmentScalability
    46. 46. 49The minimum viable productMVP is that version of a newproduct which allows a team tocollect the maximum amount ofvalidated learning about yourhypotheses with the leasteffort.It puts your hypotheses to thetest.
    47. 47. MVPApproaches50
    48. 48. - Smoke test- Mock-up demo- Wizard of Oz prototype ( fake-it No. 1)- Concierge prototype (fake-it No. 2)- Ghetto mash-up- Minimally functioning working prototype51
    49. 49. Hypothesis(Leap of Faith Assumptions)“Genchi Gembustsu”(go see for yourself)“Get Out of the Building”Learning MilestonesMinimizeTOTAL timeof the MVPthrough loopPivot (or Persevere)Innovation Accounting(evaluate progress)Build. Measure. Learn.Most learning forthe least effort
    50. 50. Your resources are precious.EnergyTimeMoney
    51. 51. timeis more valuable thanmoneyWhile money can fluctuate up or down time onlymoves in one direction.
    52. 52. PersonalEnergyYou only have a finite reservoir that you can drawfrom and must share with family and friends.is the most precious of all.
    53. 53. Iterateuntil you find asustainable and scalablebusiness model beforeyou run out of resources:personal energy, time,money.
    54. 54. 57Failure
    55. 55. I have not failed,Ive just found10,000 waysthat wont work.- Thomas A. Edison
    56. 56. 59- Samuel Beckett “Worstword Ho” 1983All of old.Nothing else ever.Ever tried.Ever failed.No matter.Try again.Fail again.Fail better.
    57. 57. 60David Kelley, Ideo 1997Fail faster to succeed sooner.
    58. 58. 61Eric Raymond, Art of Unix Programming 1999Fail early, fail noisily.
    59. 59. 62John Maxwell, Falling Forward 2007Fail early, fail often, fail forward.
    60. 60. about failing63It’s notlearningIt’s about
    61. 61. Learn EarlyLearn OftenLearn CheapValidate (or invalidate)your assumptions.
    62. 62. Learn EarlyLearn OftenLearn CheapGet out of the office.
    63. 63. Learn EarlyLearn OftenLearn CheapPivot or Persist.
    64. 64. 67Learn EarlyLearn OftenLearn Cheap
    65. 65. 68OF ITERATIONSBEATSSPEEDQUALITYOF ITERATIONS
    66. 66. 69In a Nutshell…
    67. 67. 70- What are your Hypothesis?- What do you Measure to validate your Hypothesis?- MVP features = measurement- Build an MVP with least effort- Get out of the office and Measure- Learn From your Data that you measure
    68. 68. 71Find a business model that works before you run out of:Personal Energy. Time. Money.
    69. 69. BusinessModelGeneration72
    70. 70. 73A business modeldescribes the rationaleof how an organizationcreates, delivers, andcaptures value.
    71. 71. The Money Earning LogicPlanningLevelArchitecturalLevelImplementationLevelStrategicBusinessModelProcessVision, Goals&ObjectivesMoneyEarning LogicOrganization& Workflow74
    72. 72. BusinessModelCanvas
    73. 73. 76Ideation tool that distilsthe essence of yourbusiness down to onepage that articulatesyour hypotheses.
    74. 74. 77SimpleFastPortableConciseIterative
    75. 75. 78EveryoneOne Page for
    76. 76. 79Value PropositionWhat are you offeringthem?What is thatgetting done for them?Do they care?Characteristics:- Newness- Performance- Customization-“Getting the Job Done” Design- Brand/Status- Price- Cost Reduction- Risk Reduction Accessibility- Convenience/Usability
    77. 77. 80Customer SegmentsWhich customersand users are youserving?Which jobs do theyreally want to getdone?Mass MarketNiche MarketSegmentedDiversifiedMulti-sided Platform
    78. 78. 81Customer RelationshipsWhat relationshipsare you establishingwith each segment?Personal?Automated?Acquisitive?Retentive?Examples:- Personal assistance- Dedicated Personal Assistance- Self-Service- Automated Services- Communities- Co-creation
    79. 79. 82Channelshow does each customersegment want to be reached?through which interactionpoints?Channel Phases:1. AwarenessHow do we raise awareness about our company’sproducts and services?2. EvaluationHow doe we help customers evaluate our organization’sValue Proposition?3. PurchaseHow do we allow customers to purchase specificproducts and services?4. DeliveryHow do we deliver a Value Proposition to customers?5. After SalesHow do we provide post-purchase customer support?
    80. 80. 83Revenue StreamsWhat are customersreally willing to pay for?How?Are you generatingtransactional orrecurring revenues?Examples:- Asset Sale- Usage Fee- Subscription Fees- Lending/Renting/Leasing- Licensing- Brokerage Fees- AdvertisingFixed Pricing:- List Price- Product Feature Dependent- Customer Segment Dependent- Volume DependentDynamic Pricing:- Negotiation- Yield Management- Real-time Market
    81. 81. 84Key Activitieswhich activities do youneed to perform well inyour business model?what is crucial?Categories:- Production- Problem Solving- Platform/Network
    82. 82. 85Key Resourceswhich resourcesunderpin yourbusiness model?which assets areessential?Types:- Physical- Intellectual (brand patents,copyrights, data)- Human- Financial
    83. 83. 86Key Partnerswhich partners andsuppliers leverageyour model?who do you need torely on?Motivations for partnerships:- Optimization and economy- Reduction of risk and uncertainty- Acquisition of particular resourcesand activities
    84. 84. 87Cost Structureswhat is theresulting coststructure?which keyelements driveyour costs?Is your business more:- Cost Driven (leanest cost structure, low pricevalue proposition, maximum automation,extensive outsourcing)- Value Driven ( focused on value creation,premium value proposition)Sample characteristics:- Fixed Costs (salaries, rents, utilities) Variablecosts- Economies of scale- Economies of scope
    85. 85. 88BMC is Open: Lean Canvas by Ash Mauya
    86. 86. 89How to use the BMCCreate a poster size copy of the BMC.Stick it to a wall.Write your hypothesis on post-it notes.Place the post-it notes on your BMC.
    87. 87. Ask lots ofquestionsProduct vs. ServiceTransactional vs. recurring revenuesFixed vs. variable costsAcquisition vs. RetentionOne Customer Segment vs. AnotherCapital Expenditure vs. PartnershipLow vs. High TouchPaid vs. FreeCopyright vs. Creative CommonsOpen vs. ClosedHuman Intensive vs. System IntensivePersonal vs. AutomatedDirect Sales vs. Indirect SalesAdvertising vs. SalesNiche Market vs. Mass MarketBlue Ocean vs. Red OceanScale vs. Scope90
    88. 88. 91EvergreenKeep it
    89. 89. 92Share
    90. 90. 93Exercise:Apple iPod/iTunes Business ModelSplit up in teams of 4-5.Sketch out the businessmodel.Each team must present aleast one building block.
    91. 91. 94MoreEric RiesAlexander OsterwalderSteve Blank
    92. 92. 95
    93. 93. Experimentation MindsetDiscovery SkillsLean Startup Approach
    94. 94. The Lean Start UpEvan Huehu@mtroyal.catwitter @evnhu

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