Lean Product Development

Brisbane Lean Start-Up Meetup 29 Mar 2012 Contact: christopher_tia@yahoo.com

Lean Product Development Focus• Traditional Product Development Model• Why it doesn’t work for start ups• Lean Product Development Model• Where, how and when can the lean model be applied?• World’s Biggest Lean Startup Meetup @ SXSW 2012• OPEN DISCUSSION: Michael Holmstrom – Product Development and Innovation – GroundProbe Pty Ltd and Makelab – Highlights, lowlights, thoughts and advice29 March, 2012 Brisbane Lean Start-Up Meetup 2

Traditional Product Development ModelIdeation Crystallisation of Passion & Vision Product Definition, Market Research Business Case (Product, Pricing, Promotion, Distribution) Development Engineering builds product, Marketing develops strategy & resources Testing Engineering/Sales engage users, Marketing support sales, CEO raises money Launch Sales builds capacity, marketing plan deployed, board measures performance and looks to scale-up29 March, 2012 Brisbane Lean Start-Up Meetup 3

Technology Adoption Curve Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html29 March, 2012 Brisbane Lean Start-Up Meetup 4

Technology Adoption CurveStart Up Land Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html29 March, 2012 Brisbane Lean Start-Up Meetup 5

Technology Adoption Curve Not really a Not happening until smooth curveStart Up you first understand the market Supposes linear Land progression with focus on execution and adoptionRarely actually‘buy’ anything Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html29 March, 2012 Brisbane Lean Start-Up Meetup 6

Why it doesn’t work for start-ups …• High risk environment, where assumptions are not tested until the end• Real customers only engaged late in the process• Sole focus on getting to market, not understanding the market• Metrics typically about speed of execution, not about whether outcomes are sustainable• Marketing, Sales and Engineering work in silos• High Risk of premature scaling29 March, 2012 Brisbane Lean Start-Up Meetup 7

The Lean Start-Up Alternative• Company has to first – Prove market actually exists – Verify someone will pay ‘real’ money for product/service – Create the market• Learning and discovering customers/markets requires separate process – Should be done as early as possible – Funding not going to help accelerate greatly29 March, 2012 Brisbane Lean Start-Up Meetup 8

Customer Development Model• Scientific Approach – Observe and describe – Develop hypothesis to explain – Predict results – Measure success rate of predictions using experiments• Used to discover and validate – Product solves a problem for defined group of users (Customer Discovery) – Market is viable for business (Customer Validation) – Business is scalable (Company Creation) – Company processes can support growth (Company Building)29 March, 2012 Brisbane Lean Start-Up Meetup 9

Customer Development Model Source: Cooper B. & Vlaskovits P, The Entrepreneur’s Guide to Customer Development29 March, 2012 Brisbane Lean Start-Up Meetup 10

Types of Start Up Markets Existing Markets Re-segmented New markets MarketsCustomers Existing Existing New/New UsageCustomer Needs Performance 1. Cost Simplicity & 2. Perceived Need conveniencePerformance Better/Faster 1. Good enough at Based on new low end customer metrics 2. Good enough for new nicheCompetition Existing Incumbents Existing Incumbents Non-Use / Other StartupsRisks Existing Incumbents 1. Existing Market adoption Incumbents 2. Niche strategy fails29 March, 2012 Brisbane Lean Start-Up Meetup 11

Types of Start-Up Markets Market Share Cost of Entry Entry Strategy (vs Leader’s Sales / Marketing Budget) Monopoly >75% 3x Re-segment/New Duopoly >75% 3x Re-segment/New Market Leader >41% 3x Re-segment/New Unstable Market >26% 1.7x Existing/Re-segment Open Market >26% 1.7x Existing/Re-segment Market Type – Cost of Entry (Based on Military Operations Research) Source: Blank S. & Dorf B., The Startup Owner’s Manual29 March, 2012 Brisbane Lean Start-Up Meetup 12

OPEN DISCUSSION• Topic – Product Development and Innovation – GroundProbe Pty Ltd and Makelab – Highlights, lowlights and advice• Led by Michael Holmstrom (B.E Electrical Engineering, M.SC Digital Design) – 10+ Years experience in Innovation & Commercialisation – Co-Founder of GroundProbe Pty Ltd & Previous GM for Product Innovation29 March, 2012 Brisbane Lean Start-Up Meetup 13

To Learn More• Reading Materials – The Lean Startup, Eric Ries – The Entrepreneur’s Guide to Customer Development, Brant Cooper and Patrick Vlaskovits – The Four Steps to Epiphany, Steve Blank – The Startup Owner’s Manual, Steve Blank• Online – Lean Startup Wiki: http://leanstartup.pbworks.com – Mailing List: http://leanstartupcircle.com• Forums – Startup Lessons Learnt: http://sllconf.com – Local Meetups – Silicon Beach, BarCamp29 March, 2012 Brisbane Lean Start-Up Meetup 14

Lean Product Development

by Christopher Tia

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