41631 lecture 3 pt2 lean startup

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41631 lecture 3 pt2 lean startup

  1. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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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