Copyright 2014 Cowan Publishing
The
Lean
Startup
Model
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
ABOUT ME
Entrepreneur (5x)!
Intrapreneur (1x)
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
ABOUT ME
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
ABOUT ME
www.alexandercowan.com
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
WHAT DRIVES VALUE HAS CHANGED
Then Now
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
THE ARITHMETIC IS THE SAME
Profit!
Drivers
Revenue...
Copyright 2014 Cowan Publishing
THE MIX OF BUSINESS TYPES HAS CHANGED
Infrastructure-Driven
UTILITIES TELECOM COMMODITIES
...
Copyright 2014 Cowan Publishing
OLD SCHOOL VS. NEW SCHOOL
How it
was done
How to 

do it
$ !?
? ! ? ? ?
Copyright 2014 Cowan Publishing
THE STARTUP IS DIFFERENT
≠
Copyright 2014 Cowan Publishing
OLD SCHOOL VS. NEW SCHOOL
Output != Outcome
(not equal to)
Scaling != Learning
(not equal ...
Copyright 2014 Cowan Publishing
THINK SEE
FEEL DO
PERSONAS
Who?
X
PROBLEM!
SCENARIOS &
ALTERNATIVES
What?
VALUE
PROPOSITIO...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
DISCOVERY & LEARNING: PERSONAS
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
DISCOVERY & LEARNING: PERSONAS
Copyright 2014 Cowan Publishing
NOT A GOOD PERSONA
• Women!
• Age 28-45!
• Has kids!
• Socialize with other mom’s!
• Onlin...
Copyright 2014 Cowan Publishing
• Women!
• Age 28-45!
• Has kids!
• Socialize with other mom’s!
• Online with Facebook!
• ...
Copyright 2014 Cowan Publishing
A BETTER PERSONA
Mary is a mom by choice. She had a successful career in accounting,
but w...
Copyright 2014 Cowan Publishing
A BETTER PERSONA
the use of a first name helps
w/ vividness (a little)
these full sentences...
Copyright 2014 Cowan Publishing
A DAY IN THE LIFE
Copyright 2014 Cowan Publishing
DISCOVERY & LEARNING: PROBLEM SCENARIOS
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
XPROBLEM SCENARIO
DISCOVERY & LEARNING: PROBLEM S...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
XWhat job(s) are you doing for
the customer?
What...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
?
X
ALTERNATIVE(S)
PROBLEM SCENARIO
DISCOVERY & L...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
?
X
If they currently use
spreadsheets, watch the...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
YOUR VALUE PROPOSITIONS
!
ALTERNATIVE(S)
?
PROBLE...
Copyright 2014 Cowan Publishing
ALEX COWAN!
AlexanderCowan.com!
@cowanSF
X
Are they better enough than the
alternative(s)?...
Copyright 2014 Cowan Publishing
… and they have a certain
PROBLEMS(S) …
… where they’re currently using
certain ALTERNATIV...
Copyright 2014 Cowan Publishing
PLANNING
!5,000,000%
0%
5,000,000%
10,000,000%
15,000,000%
20,000,000%
25,000,000%
30,000,...
Copyright 2014 Cowan Publishing
EXPERIMENTATION & VALIDATION
Do I have real evidence from my buyer
that this is compelling...
Copyright 2014 Cowan Publishing
ASSUMPTIONS
Priority Key Assumption Needs Proving? Experimentation
1
[A key assumption abo...
Copyright 2014 Cowan Publishing
FOCUS AND THE LEAN STARTUP
Crossing t’s

Dotting i’s

Doesn’t matter unless it helps
prove...
Copyright 2014 Cowan Publishing
CASE STUDY #1: DROPBOX
Startup looking to fund a better file sharing
product. !
!
Many exis...
Copyright 2014 Cowan Publishing
CASE STUDY #1: DROPBOX
Persona
Tom the Techie- early adopter who works on projects that re...
Copyright 2014 Cowan Publishing
DROPBOX MVP & EXPERIMENTATION
Result: Excellent traction and
conversion to sign-up’s. Stro...
Copyright 2014 Cowan Publishing
CASE STUDY #2: ZAPPOS
In the beginning, just a guy with an idea to
sell shoes online. !
!
...
Copyright 2014 Cowan Publishing
CASE STUDY #2: ZAPPOS
Persona Sam the shoe-hound- knows what he wants but not where to get...
Copyright 2014 Cowan Publishing
CASE STUDY #2: ZAPPOS
Result: It worked and the rest
is history.
Photographed shoes and pu...
Copyright 2014 Cowan Publishing
DEVELOPMENT
Waterfall
Then
Agile
Now
Copyright 2014 Cowan Publishing
AGILE & THE BEAUTY OF SMALL BATCHES
PERSONAS
PROBLEM SCENARIOS
STORIES
Epic Stories
Storie...
Copyright 2014 Cowan Publishing
AGILE & THE BEAUTY OF SMALL BATCHES
Copyright 2014 Cowan Publishing
STAY ON PLAN AND HAVE A BUSINESS MODEL
This work is licensed under the Creative Commons At...
Copyright 2014 Cowan Publishing
FULL CIRCLE
!
PRODUCT &
PROMOTION
USER
STORIES &
PROTOTYPES
Did the implementation
deliver...
Copyright 2014 Cowan Publishing
acowan@alexandercowan.com
@cowanSF
www.alexandercowan.com/venture-design
www.alexandercowa...
Copyright 2014 Cowan Publishing
IMAGE CREDITS
FACTORY FLOOR
By Ministry of Information Photo Division Photographer [Public...
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EPFL MoT: The Lean Startup Model

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EPFL MoT: The Lean Startup Model

  1. 1. Copyright 2014 Cowan Publishing The Lean Startup Model
  2. 2. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF ABOUT ME Entrepreneur (5x)! Intrapreneur (1x)
  3. 3. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF ABOUT ME
  4. 4. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF ABOUT ME www.alexandercowan.com
  5. 5. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF WHAT DRIVES VALUE HAS CHANGED Then Now
  6. 6. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF THE ARITHMETIC IS THE SAME Profit! Drivers Revenue! Drivers Tighter Proposition (website, pres., etc.) Finite Cost Finite Deliverables Increased Use of Channels Ease of Entry Easy to See What's on MenuUpsell Intellectual Property Multipliers Tighter Talent Definition Simpler Training, Eval., Promotion Cost of Delivery Cost! Drivers Less Consultative Selling Simplified Contracting Cost of Sales Standard Project Management Comparable Post Mortems Engagement! Management (example: product-driven consulting)
  7. 7. Copyright 2014 Cowan Publishing THE MIX OF BUSINESS TYPES HAS CHANGED Infrastructure-Driven UTILITIES TELECOM COMMODITIES Scope-Driven RETAIL BANKING CORP. LAW Product-Driven PACKAGED GOODS APP. SOFTWARE MEDIA
  8. 8. Copyright 2014 Cowan Publishing OLD SCHOOL VS. NEW SCHOOL How it was done How to 
 do it $ !? ? ! ? ? ?
  9. 9. Copyright 2014 Cowan Publishing THE STARTUP IS DIFFERENT ≠
  10. 10. Copyright 2014 Cowan Publishing OLD SCHOOL VS. NEW SCHOOL Output != Outcome (not equal to) Scaling != Learning (not equal to)
  11. 11. Copyright 2014 Cowan Publishing THINK SEE FEEL DO PERSONAS Who? X PROBLEM! SCENARIOS & ALTERNATIVES What? VALUE PROPOSITIONS 
 & ASSUMPTIONS What if? ! USER STORIES & PROTOTYPES How? Scale? Pivot? PRODUCT & PROMOTION / CUSTOMER DISCOVERY & EXPERIMENTS Tell me…? APPLYING LEAN STARTUP
  12. 12. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF DISCOVERY & LEARNING: PERSONAS
  13. 13. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF DISCOVERY & LEARNING: PERSONAS
  14. 14. Copyright 2014 Cowan Publishing NOT A GOOD PERSONA • Women! • Age 28-45! • Has kids! • Socialize with other mom’s! • Online with Facebook! • 86% said they’d like to be more organized! • 70% said they’d use an application that organizes them
  15. 15. Copyright 2014 Cowan Publishing • Women! • Age 28-45! • Has kids! • Socialize with other mom’s! • Online with Facebook! • 86% said they’d like to be more organized! • 70% said they’d use an application that organizes them NOT A GOOD PERSONA Bullet points are almost never vivid or detailed Stock photo- not real This is a huge population- not exact These responses are ‘fake actionable’- survey responses like this are unreliable
  16. 16. Copyright 2014 Cowan Publishing A BETTER PERSONA Mary is a mom by choice. She had a successful career in accounting, but welcomed the opportunity to be a stay at home mom. She loves it. But it’s not like having kids purged her creative, social instincts. She wants to connect, she wants to learn, she wants to interact. Being a mom is a job and she wants to do it well. That means corresponding with other mom’s on child education and keeping track of what works. She posts to Facebook at least twice a week and responds to other moms’ items more often than that. ! She has a few blogs and publications she reads regularly… Mary the Mom
  17. 17. Copyright 2014 Cowan Publishing A BETTER PERSONA the use of a first name helps w/ vividness (a little) these full sentences look like a good start towards something vivid and detailed this is a real photo of a relevant person taken with an iPhone in the real world Mary is a mom by choice. She had a successful career in accounting, but welcomed the opportunity to be a stay at home mom. She loves it. But it’s not like having kids purged her creative, social instincts. She wants to connect, she wants to learn, she wants to interact. Being a mom is a job and she wants to do it well. That means corresponding with other mom’s on child education and keeping track of what works. She posts to Facebook at least twice a week and responds to other moms’ items more often than that. ! She has a few blogs and publications she reads regularly… Mary the Mom
  18. 18. Copyright 2014 Cowan Publishing A DAY IN THE LIFE
  19. 19. Copyright 2014 Cowan Publishing DISCOVERY & LEARNING: PROBLEM SCENARIOS ALEX COWAN! AlexanderCowan.com! @cowanSF
  20. 20. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF XPROBLEM SCENARIO DISCOVERY & LEARNING: PROBLEM SCENARIOS
  21. 21. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF XWhat job(s) are you doing for the customer? What existing need or behavior are you fulfilling? PROBLEM SCENARIO DISCOVERY & LEARNING: PROBLEM SCENARIOS
  22. 22. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF ? X ALTERNATIVE(S) PROBLEM SCENARIO DISCOVERY & LEARNING: PROBLEM SCENARIOS
  23. 23. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF ? X If they currently use spreadsheets, watch them use it and get a copy of it. If they currently put notes on the family fridge, ask about it, photograph it. ALTERNATIVE(S) PROBLEM SCENARIO DISCOVERY & LEARNING: PROBLEM SCENARIOS
  24. 24. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF YOUR VALUE PROPOSITIONS ! ALTERNATIVE(S) ? PROBLEM SCENARIO X DISCOVERY & LEARNING: PROBLEM SCENARIOS
  25. 25. Copyright 2014 Cowan Publishing ALEX COWAN! AlexanderCowan.com! @cowanSF X Are they better enough than the alternative(s)? ! ? YOUR VALUE PROPOSITIONS ALTERNATIVE(S) PROBLEM SCENARIO DISCOVERY & LEARNING: PROBLEM SCENARIOS
  26. 26. Copyright 2014 Cowan Publishing … and they have a certain PROBLEMS(S) … … where they’re currently using certain ALTERNATIVE(S) … … and I have a VALUE PROPOSITION that’s better enough than the alternatives to cause the persona to act (purchase, use, etc.). A certain PERSONA exists… AND NOW THE PRODUCT HYPOTHESIS ! ? X
  27. 27. Copyright 2014 Cowan Publishing PLANNING !5,000,000% 0% 5,000,000% 10,000,000% 15,000,000% 20,000,000% 25,000,000% 30,000,000% 35,000,000% 40,000,000% 45,000,000% 2012% 2013% 2014% 2015% 2016% 2017% 2018% 2019% 2020% Revenue% Expense% EBITDA% Five Year Plan Then Lean Now
  28. 28. Copyright 2014 Cowan Publishing EXPERIMENTATION & VALIDATION Do I have real evidence from my buyer that this is compelling? 01 IDEA! What are the key assumptions required to make this business work? 02 HYPOTHESIS How do I definitely prove or disprove the assumptions with a minimum of time and effort? 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATIONAm I reacting or am I focused on validating my pivotal assumptions? ‘Pivot or persevere?’
  29. 29. Copyright 2014 Cowan Publishing ASSUMPTIONS Priority Key Assumption Needs Proving? Experimentation 1 [A key assumption about the business] [Whether it needs proving! [Experiment to ! prove or disprove] 1 Parents want to organize the distribution of allowances with an app Yes * Post the proposition in ads
 online! * Measure sign-up’s on a landing page
 2 Parents want to link allowances to chores Yes * Show prototypes with choices
 * Test in beta 2 Parents have smart phones No n/a Focus on strategic, pivotal assumptions

  30. 30. Copyright 2014 Cowan Publishing FOCUS AND THE LEAN STARTUP Crossing t’s
 Dotting i’s
 Doesn’t matter unless it helps prove (or disprove) your pivotal assumptions

  31. 31. Copyright 2014 Cowan Publishing CASE STUDY #1: DROPBOX Startup looking to fund a better file sharing product. ! ! Many existing direct competitors but few have traction. ! ! Fairly involved cross-platform product development project - substantial time and money required.! ! Youch.
  32. 32. Copyright 2014 Cowan Publishing CASE STUDY #1: DROPBOX Persona Tom the Techie- early adopter who works on projects that require swapping a lot of files between a shifting network of collaborators. Problem Scenario It’s difficult to share files between a network of collaborators, particularly if they’re: big or numerous or change a lot. Alternatives Many existing products, but none of them super compelling and widely adopted.! Also, custom setup’s which work but are cumbersome to set up and maintain. Value Prop. A file sharing service that truly feels transparent to the user across all major platforms- OSX, iOS, Windows, etc. What Minimum Viable Product (MVP)? " ! That you can bootstrap?" ! That doesn’t require software at all?
  33. 33. Copyright 2014 Cowan Publishing DROPBOX MVP & EXPERIMENTATION Result: Excellent traction and conversion to sign-up’s. Strong validation signal. Create a ‘Wizard of Oz’ demo tailored for early market (techies) and measure sign- up’s.
  34. 34. Copyright 2014 Cowan Publishing CASE STUDY #2: ZAPPOS In the beginning, just a guy with an idea to sell shoes online. ! ! At the time, online retail still nascent. !
  35. 35. Copyright 2014 Cowan Publishing CASE STUDY #2: ZAPPOS Persona Sam the shoe-hound- knows what he wants but not where to get it. Problem Scenario Sam is unable to find the shoe he wants at local retailers, wasting time and getting frustrated. Alternatives Possibly mail order or wait until he’s in a bigger market to go to the store. Value Prop. Make the shoe Sam wants accessible online and make sure he has a great experience so he’ll come back and not have to think about where to find the shoe he wants anymore. What Minimum Viable Product (MVP)? " ! That you can bootstrap?" ! That doesn’t require software at all?
  36. 36. Copyright 2014 Cowan Publishing CASE STUDY #2: ZAPPOS Result: It worked and the rest is history. Photographed shoes and put them online to observe whether anyone bought them.
  37. 37. Copyright 2014 Cowan Publishing DEVELOPMENT Waterfall Then Agile Now
  38. 38. Copyright 2014 Cowan Publishing AGILE & THE BEAUTY OF SMALL BATCHES PERSONAS PROBLEM SCENARIOS STORIES Epic Stories Stories Test Cases “As a [persona], I want to [do something] so that I can [derive a benefit]”
  39. 39. Copyright 2014 Cowan Publishing AGILE & THE BEAUTY OF SMALL BATCHES
  40. 40. Copyright 2014 Cowan Publishing STAY ON PLAN AND HAVE A BUSINESS MODEL This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  41. 41. Copyright 2014 Cowan Publishing FULL CIRCLE ! PRODUCT & PROMOTION USER STORIES & PROTOTYPES Did the implementation deliver on the story? / CUSTOMER DISCOVERY 
 & EXPERIMENT How did the customer/user react? VALUE PROPOSITIONS 
 & ASSUMPTIONS ! Was the implemented story relevant to the proposition? X PROBLEM" SCENARIOS & ALTERNATIVES Is problem relevant? Is the proposition better vs. alternatives? THINK SEE FEEL DO PERSONAS Do we understand this person? What makes them tick?
  42. 42. Copyright 2014 Cowan Publishing acowan@alexandercowan.com @cowanSF www.alexandercowan.com/venture-design www.alexandercowan.com www.alexandercowan.com/startup-sprints
  43. 43. Copyright 2014 Cowan Publishing IMAGE CREDITS FACTORY FLOOR By Ministry of Information Photo Division Photographer [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ABritain_Builds_Light_Cars-_the_British_Automobile_Industry%2C_UK%2C_1945_D26138.jpg ! MUMBAI WOMAN By Victorgrigas (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File:Mumbai_Woman_using_phone_November_2011_-9-3.jpg ! SPOTIFY SLIDE Spotify, Inc.

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