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41631 lecture 3 pt2 lean startup

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  • 1. A method for entrepreneurshipLean Startup - IntroductionJakob Bejbro Andersenjaban@mek.dtu.dk Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:“Original material by Thomas J. Howard and Jakob Bejbro Andersen for course 41631 – Innovation andProduct Development Department of Mechanical Engineering, The Technical University of Denmark”
  • 2. Background• Author: Eric Ries (founder of three startups).• Cases used: Several IT and Web startups.• One of the first frameworks specificallyMinded on entrepreneurship (!).• Many principles/ideas borrowed from Lean.• Now a ”must read” book for entrepreneurs. Eric Ries, 20112 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 3. Current focus in teaching entrepreneurship• Presentation rather than substance. – Elevator pitches.• The special breed: the entrepreneurs. – Either you have it or you don’t.• Putting people together results inBusinesses. – Startup weekend, incubators etc.3 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 4. The novelty in Lean Startup• From: Entrepreneurship and its succes depends on the opportunity and the entrepreneur’s ability to exploit it.• To: The entrepreneur, the opportunity and the process are all part of the creation of successful ventures. Meaning: Entrepreneurship can be taught! Build -> Measure -> Learn! (loop)4 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 5. Relation to Development Log Measure/ Input Data Learn (from mentor, supervisor, market etc.) (Updated!) (none) New gap/need Result identified Need(data, surveys, drawings, excel sheets etc.) or given higher priority Build Execution of Choice of approach approach 5 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 6. Questions?6 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 7. A method for entrepreneurshipLean Startup – Central ConceptsJakob Bejbro Andersenjaban@mek.dtu.dk Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:“Original material by Thomas J. Howard and Jakob Bejbro Andersen for course 41631 – Innovation andProduct Development Department of Mechanical Engineering, The Technical University of Denmark”
  • 8. A case for the following: EdgeFlow Aps• Founded in 2009 with PLH Architects and SEED Capital• I am currently the CEO.• A tech startup.• Each prototype iteration has cost EdgeFlow EUR 250.000. – Two in all.8 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 9. Link to movie:www.edgeflow.dk/EF_movie.avi9 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 10. The central hypotheses• The company’s value proposition is attractive. – The customer is going to buy the product at the projected price.• The company’s ”growth engine” can perform. – Will the company grow as quickly and effectively as intended? – Are the mechanisms in place for achieving this?•Needs validation!10 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 11. Validated learning • • - • o –• What (exactly) is creating the value / improvement? • o – –• To be certain, tests/experiments should be set up.• All dimensions of the business model should be validated – in this manner. – – A B • • § Av § D Lean startu Engine ana11 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 12. Validated learning II – EdgeFlow as case• Formulating value propositions. – CSR dimensions were deamed unattractive to industry – Financials first!• But… – Later, we realised that (some) customers were actually quite interested in a value proposition that included CSR dimensions. What should I have done?12 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 13. Minimal Viable Product• Designing for value – not for perfection.• Get to the market and learn. – Fail fast!• MVP has the functionality needed to go through one build -> measure -> learn loop• MVP types: – Video – Concierge13 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 14. MVP – Another EdgeFlow learning• Go full scale from day 1! – This will help us in completing the technical development faster.• But… – What about the customers? Will they buy it? – A scaled model would be cheaper, easier to produce and safer to install on a customer location. – No need for having a finished product if the customer is not interested in buying it.14 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 15. Exercise:•What could your minimal viable product be?•Spend 3 minutes deciding on a customer.•Spend 12 minutes on conceptualising MVPs for testing your assumptions (sketch!) – What will you be testing and how do you measure?•After 15 minutes (in total), we discuss your ideas.15 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 16. Innovation accounting• Results from need to be gathered continuously and compared.• Growth figures can hide underlying problems. – Use ”cohort” analysis (analysis by group)16 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 17. Pivot or Persevere?• Is the business performing? (based on innov. accounting)• If not, you can either: – Persevere (incrimental improvements) – Pivot (Rethink the whole parts of the business)• Types of pivots (help me guess): – Zoom in/out – Customer segment – Customer need pivot – Engine of growth – Platform17 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 18. Pivots in EdgeFlow• Same story, different light: The switch to CSR – A ”customer need pivot”.• But… – What about the customers? Will they buy it? – A scaled model would be cheaper, easier to produce and safer to install on a customer location. – No need for having a finished product if the customer is not interested in buying it.18 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 19. Lean Startup - shortcomings• ”If you can think it – you can build it” – Cost of technology – adding a new feature costs $ and time – Technological uncertainty – Technology ”lock in” – Technology can resist change.• Focus on measurements – No descriptions of the development processes required. • The ”build” step is simplified / neglected.• Assumes free access to customer (B2C) and A LOT of data.19 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark
  • 20. Questions?20 Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development 2013 Department of Mechanical Engineering, Technical University of Denmark

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