Lean Startup for Healthcare: Workshop at Healthbox

Lean Startup for HealthcareRocket FuelFor Your ProductGrowth Bernhard Kappe Founder and CEOLean Startup Strategy bkappe@pathf.comUser Experience Design 312.372.1058 x 6002Agile Software Development @bernhardkappeCustomer Acquisition and Retention pathﬁndersoftware.com/blog http://pathﬁndersoftware.com Innovate Products Faster with Lean + UX + Agile

Agenda• Introduction• Lean Startup 101• The Lean Startup Path• Risks in Healthcare• Mentors and Advisors• Questions Innovate Products Faster with Lean + UX + Agile

Pathﬁnder: 300+ Successful Releases Innovate Products Faster with Lean + UX + Agile

Healthcare Clients Innovate Products Faster with Lean + UX + Agile

Innovate Products Faster with Lean + UX + Agile

+• Design Strategy and Research• Medical Systems Design and Development‣ Medical Devices‣ Integration, Analytics and Clinical Decision Support‣ Web and Mobile Interfaces• Risk Mitigation and Quality Management Innovate Products Faster with Lean + UX + Agile

Lean Startup• A Product Management Approach for New Products• Accepts Situation of Extreme Uncertainty• Focuses on Rapidly Reducing Risks Innovate Products Faster with Lean + UX + Agile

9 Out of 10 New Products Fail Innovate Products Faster with Lean + UX + Agile

Why Do They Fail?• New Product Uncertainty: Unknown Problem, Unknown Solution, Unknown Customer• The Path to Disaster‣ Business Plan Built on Untested Assumptions‣ Market Research Serves to Support Your Assumptions Rather than Validate Them‣ Scale Based on the Business Plan‣ Lack of Customers and Markets‣ Change Business at Scale (Slow and Expensive)‣ Run Out of Money Innovate Products Faster with Lean + UX + Agile

Product/Market Fit• The point at which you know you can scale proﬁtably‣ The customer is willing to pay for the product.‣ The Unit Cost Per Customer < Unit Revenue Per Customer‣ There’s sufﬁcient evidence indicating the market is large enough to support the business.‣ The sales model is repeatable and scalable Innovate Products Faster with Lean + UX + Agile

Product/Market Fit Benchmarks• (Sean Ellis) 40% of paying customers would be very disappointed without your product• Net Promoter Score Over 30• Lifetime Value Per Customer > Customer Acquisition Cost * 3 (or LTV/3 > CAC) Innovate Products Faster with Lean + UX + Agile

Steve Blank • Companies that scaled before they get to product/market ﬁt tended to fail. • Companies that scaled after they get to product/market ﬁt tended to succeed. Innovate Products Faster with Lean + UX + Agile

Mark AndreesenLife Before Product/Market Fit: Your goal is to get toproduct/market ﬁt any way you can.Life After Product/Market Fit: Your goal is to scale. Innovate Products Faster with Lean + UX + Agile

Your Job as an Entrepreneur: Discover a Business Model that works before you run out of Money and Time. (Then scale it.) Innovate Products Faster with Lean + UX + Agile

Customer Development Search Execution Innovate Products Faster with Lean + UX + Agile

Customer Discovery• Question Your Assumptions• Engage with your customers in specific ways that test those assumptions:‣ “Get Out of the Building” and test your core customer-problem solution assumptions.‣ Define and build Minimal Viable Products (MVPs) that test technological or market risk (the willingness of customers to pay for a specific set of features)‣ Document and test your assumptions on the mechanics of your business ecosystem/business model‣ Create a value path for mitigating high risk items first in the hopes of making major pivots as early as possible. Innovate Products Faster with Lean + UX + Agile

Customer Validation• Get to Product-Market Fit• Business Model Validation• Sales and Marketing Road Map Innovate Products Faster with Lean + UX + Agile

Lean Startup Principles• A Business Model, Not a Business Plan• Fast Learning Loops: Build-Measure-Learn• Learning Japanese: Genchi Genbutsu• MVP - It’s Not What You Think Innovate Products Faster with Lean + UX + Agile

1. A Business Model, Not aBusiness Plan Innovate Products Faster with Lean + UX + Agile

No business plansurvivesthe ﬁrstcustomercontact Innovate Products Faster with Lean + UX + Agile

Questions Your Assumptions• Is this problem worth solving?• Who’s problem are you solving?• How are they solving it now?• Does anyone care about your solution?• Will they buy it?• How do you create value for your customers?• How will you grow?• What’s your unfair advantage?• What channels will you use to get to your customers?• What are your acquisition costs per customer?• What is the lifetime value of your customer?• What’s your unit cost model? Unit revenue model? Innovate Products Faster with Lean + UX + Agile

Lean Canvas Problem Solution Unique Value Unfair Customer Proposition Advantage Segments Top 3 Problems Top 3 features that address the Single, clear, Can’t be easily Target Customers problem compelling copied or bought message why you are different and worth buying Key Channel Activities Path to customers Activity that drives for marketing and acquisition/ sales revenue Cost Structure* Revenue Model* •Customer acquisition costs (Unit, per customer) •Revenue Model •Distribution costs •Lifetime Value (Unit- per customer) •Hosting •Revenue •People, etc. •Gross Margin Innovate Products Faster with Lean + UX + Agile

• Business Model Resources‣ SteveBlank.com‣ Osterwalder: Business Model Generation‣ Maurya: Running Lean• Business Model Tools‣ Paper/Whiteboard/Post-Its‣ Keynote/Powerpoint‣ Lean Canvas (http://leancanvas.com/)‣ Business Model Toolbox iPad App (http://www.businessmodelgeneration.com/)‣ Lean Launch Lab (https://www.leanlaunchlab.com/) Innovate Products Faster with Lean + UX + Agile

2. Fast Learning Loops Innovate Products Faster with Lean + UX + Agile

Fast Learning Loops Innovate Products Faster with Lean + UX + Agile

3. Learning Japanese:Genchi Genbutsu Innovate Products Faster with Lean + UX + Agile

Genchi Genbutsu =Go To The Source(Get Out of the Building) Innovate Products Faster with Lean + UX + Agile

4. MVP (Minimum Viable Product) -It’s Not What You Think! Innovate Products Faster with Lean + UX + Agile

Example MVPs• Dropbox: Smoke Test• Egyptian Democracy Movement: Mini Demonstrations• GLIF: Kickstarter Campaign, 3D Print + Video• eSpark: Paper Instructions and Tests (Concierge MVP)• Groupon: Wordpress Blog, Widget from The Point, PDF Coupons via email. Innovate Products Faster with Lean + UX + Agile

More on MVP• Not one snapshot, but a progression of experiments Innovate Products Faster with Lean + UX + Agile

The Lean Startup Path Innovate Products Faster with Lean + UX + Agile

Customer/Problem Hypotheses Problem Solution Unique Value Unfair Customer Top 3 features that Proposition Advantage Segments Top 3 Problems address the Can’t be easily problem copied or bought Single, clear, Target Customers ? ? compelling message why you are different and worth buying ? Key Activities Channel Path to customers ? Activity that drives acquisition/ ? for marketing and sales revenue ? ? Cost Structure Revenue Model •Customer acquisition costs •Revenue Model •Distribution costs •Hosting ? •Lifetime Value •Revenue ? •People, etc. •Gross Margin Innovate Products Faster with Lean + UX + Agile

Problem Interviews• Customer Demographics (Discover 1 4 Subsegments)• Validate Their Top Three Problems 2 5• Discover New Problems• Rank the Problems 3• How Do They Solve Them Now? Innovate Products Faster with Lean + UX + Agile

Guidelines for Interviews• There are no right or wrong answers• Ask open-ended questions• Don’t ask leading questions• Don’t ask if they will use something/some feature• Keep a straight face, always• Find out why• Remember to thank them Innovate Products Faster with Lean + UX + Agile

Personas and Goals WorkshopWho: UXD, PM, Visual Designer, Lead Developer, Client• Determine the universe of people that are using or inﬂuencing the use of the product• Persona is a “representative” for each type of user• Allows for easy reference in future discussions• Includes stock photo, goals, major tasks, etc. Innovate Products Faster with Lean + UX + Agile

Solution Hypotheses Problem Solution Unique Value Unfair Customer Top 3 features that Proposition Advantage Segments Top 3 Problems address the Can’t be easily problem copied or bought Single, clear, Target Customers ? ? compelling message why you are different and worth buying ? Key Activities Channel Path to customers ? Activity that drives acquisition/ ? for marketing and sales revenue ? ? Cost Structure Revenue Model •Customer acquisition costs •Revenue Model •Distribution costs •Hosting ? •Lifetime Value •Revenue ? •People, etc. •Gross Margin Innovate Products Faster with Lean + UX + Agile

Solution Design Innovate Products Faster with Lean + UX + Agile

Workflows WorkshopWho: UXD, PM, Visual Designer, Lead Developer, Client• Determine all of the workflows for each persona.• No activity should reside outside of a flow. Innovate Products Faster with Lean + UX + Agile

Prototyping• Way to get feedback on ideas before they are completely set• Much cheaper to modify a prototype than real code• People tend to give better feedback if it’s not completely polished• Just enough information to get your point across and test key features• Don’t focus on colors, layout, low-level interactions Innovate Products Faster with Lean + UX + Agile

Types of Prototypes• Paper prototype• Clickable pdf• HTML• Foam blocks Innovate Products Faster with Lean + UX + Agile

Solution Interviews• Recap Demographics and Problem• Describe and Show 1 4 Solution (don’t sell it!)• Does it Resonate?• What’s most important, 2 5 what’s missing, what can you take away?• How do they ﬁnd out 3 about solutions to this 6 problem?• Will they pay $X? Innovate Products Faster with Lean + UX + Agile

Drill down to Minimum ViableProduct (MVP) 1 4 2 5 X 3 X 6 Innovate Products Faster with Lean + UX + Agile

Customer DiscoveryBusiness Model Problem Generation Interviews MVP Solution Solution Design Interviews Innovate Products Faster with Lean + UX + Agile

When Do You Stop Solution Interviews?• Not Learning Anything New• Prototyping takes too long Innovate Products Faster with Lean + UX + Agile

Development• It’s Expensive• Need Developers• Do cheaper, faster experiments ﬁrst• Need to deliver small experiments Innovate Products Faster with Lean + UX + Agile

Cowboy Coding • It’s Fast • It’s Cheap (for a while) • It’s not maintainable • Be prepared to throw it out Innovate Products Faster with Lean + UX + Agile

Lean Startup: Two Fast Feedback Loops Innovate Products Faster with Lean + UX + Agile

Customer Validation The Path to Product Market Fit 9000 Customer Acquisition Cost You Are Here Customer Lifetime Value/3 6750 4500 You Need to Get Here! Product/Market Fit: 2250 LTV/3 >= CAC 0 Month 1 Month 2 Month 3 Month 6 Month 5 Month 6 Month ? Month 8 Month 9 Month 16 Month 11 Month 12 Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV • Improve value to customer Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV • Improve value to customer Add features Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV • Improve value to customer Add features Improve Features Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV • Improve value to customer Add features Improve Features Remove features Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC ‣ Increase LTV • Improve value to customer Add features Improve Features Remove features • Find and foster loyalty behaviors Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC‣ Decrease CAC ‣ Increase LTV • Improve value to customer Add features Improve Features Remove features • Find and foster loyalty behaviors Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC‣ Decrease CAC ‣ Increase LTV • Changes to messaging • Improve value to customer Add features Improve Features Remove features • Find and foster loyalty behaviors Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC‣ Decrease CAC ‣ Increase LTV • Changes to messaging • Improve value to customer • Changes to marketing Add features channels Improve Features Remove features • Find and foster loyalty behaviors Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC‣ Decrease CAC ‣ Increase LTV • Changes to messaging • Improve value to customer • Changes to marketing Add features channels Improve Features • Does the Experience Match the Marketing? Remove features • Find and foster loyalty behaviors Innovate Products Faster with Lean + UX + Agile

Post Launch Goal:• Increase LTV and Decrease CAC‣ Decrease CAC ‣ Increase LTV • Changes to messaging • Improve value to customer • Changes to marketing Add features channels Improve Features • Does the Experience Match the Marketing? Remove features • Changes to Optimize • Find and foster loyalty Customer Acquisition behaviors Funnel/Experience for New Users Innovate Products Faster with Lean + UX + Agile

Post Launch Fast Feedback Loops• You have real users and precise usage data on individuals - analyze it!• Make small changes fast (hours, not weeks to get into production)• When you make changes - A/B test (or do multivariate if you have big enough volumes.) Innovate Products Faster with Lean + UX + Agile

Metrics for Pirates• Acquisition‣ Users come to site from various channels• Activation‣ Users enjoy 1st visit: "happy" experience• Retention‣ Users come back, visit site multiple times• Referral‣ Users like product enough to refer others• Revenue‣ Users conduct some monetization behavior Innovate Products Faster with Lean + UX + Agile

Build Metrics Into Your MVP Innovate Products Faster with Lean + UX + Agile

Tool: KISSmetrics Innovate Products Faster with Lean + UX + Agile

Feedback• What are users doing?• What aren’t they doing?• Where do they seem to be having problems?• What else do they want?• Why? Innovate Products Faster with Lean + UX + Agile

Feedback - What users are (& aren’t) doing• Acquisition and retention funnels, interventions• Cohorts• A/B or multivariate testing Innovate Products Faster with Lean + UX + Agile

Feedback• Feature Requests - User Voice• Net Promoter Score - KISSinsights• % Who Would Be Very Disappointed Without Your Product. Innovate Products Faster with Lean + UX + Agile

Feedback - Why users are behaving asthey are• Usability testing‣ what users as they use the product‣ have them talk out loud • ﬁnd out why they are doing things • what they are looking for • what they expect to see Innovate Products Faster with Lean + UX + Agile

Feedback• Continuous Deployment: roll small tests into production in hours, get feedback• Bigger feature changes, new features - use agile• Consider adding “Validated” to stories being done Innovate Products Faster with Lean + UX + Agile

Split Testing Tools: Innovate Products Faster with Lean + UX + Agile

Split Testing Tools Innovate Products Faster with Lean + UX + Agile

Feedback Tool Innovate Products Faster with Lean + UX + Agile

Common Mistakes• Too Broad a Segment• Not a Big Enough Problem• Not a Big Enough Market• Don’t Test the Riskiest Assumptions First• Surveys Instead of Interviews• Mix Problems and Solutions• Confuse Users and Customers• Build Too Much (Fat Experiments)• Don’t Test Revenue Model Early Enough• Stop Experimenting When You Have Customers (No Metrics and no qualitative feedback)• No UX and No Agile Innovate Products Faster with Lean + UX + Agile

10 types of innovation: move beyond products to win 67

10 types of innovation: move beyond products to win 5. Product performance basic features, performance and functionality 6. Product system extended system that surrounds an offering 7. Service how you service your customers Offering Product Product Service performance system 67

10 types of innovation: move beyond products to win 5. Product performance basic features, performance and functionality 6. Product system extended system that surrounds an offering 7. Service how you service your customers Process. Offering Enabling Core Product Product Service process process performance system3. Enabling process assembled capabilities 4. Core process proprietary processes that add value 67

10 types of innovation: move beyond products to win 5. Product performance basic features, performance and functionality 6. Product system extended system that surrounds an offering 7. Service how you service your customers Process. Offering Delivery Enabling Core Product Product Service Channel Brand Customer process process performance system experience 8. Channel how you connect your offerings to3. Enabling process your customers assembled capabilities 9. Brand how you express your offering’s 4. Core process benefit to customers proprietary processes that add value 10. Customer experience how you create an overall experience for customers 67

10 types of innovation: move beyond products to win1. Business model 5. Product performance how the enterprise makes money basic features, performance and functionality 2. Networking 6. Product system enterprise’s structure/ extended system that surrounds an offering value chain 7. Service how you service your customers Finance Process. Offering Delivery Business Networking Enabling Core Product Product Service Channel Brand Customer model process process performance system experience 8. Channel how you connect your offerings to3. Enabling process your customers assembled capabilities 9. Brand how you express your offering’s 4. Core process benefit to customers proprietary processes that add value 10. Customer experience how you create an overall experience for customers 67

Pharmaceuticals 68

Health insurance and managed care 69

Key value chain areas--healthcare Patient 70

Physicians andKey value chain areas--healthcare surgeons Hospital systems Patient Health insurance & managed care 70

Physicians andKey value chain areas--healthcare surgeons Pharmaceuticals Hospital systems Medical appliances Patient Health insurance & managed care Medical equipment 70

Healthcare Challenges• Complex Ecosystems• Lots of Complex Knowledge Domains• Lots of Regulations• Important Stakeholders Are Hard to Reach• Getting to Product/Market Fit Can Be Expensive Innovate Products Faster with Lean + UX + Agile

Mitigation Strategies• Understand the Landscape• Lean Hypothesis Testing is Even More Essential• Go To the Source/Get Out of the Building• Start with High Risk Items• Get Advisors and Mentors, and Leverage Them‣ Domain and Ecosystem Knowledge‣ Introductions, Access to Customers (for Research)‣ Regulatory Knowledge‣ Entrepreneurial Experience Innovate Products Faster with Lean + UX + Agile

More on Advisors and Mentors• Get Them• Use Their Network (But Not To Sell)• Communicate With Them‣ Weekly Summary, Asks‣ Lean Launch Lab Innovate Products Faster with Lean + UX + Agile

https://www.leanlaunchlab.com/ Innovate Products Faster with Lean + UX + Agile

Startup Scoreboard How do investors, employees, advisors and partners evaluate a startup?Prioritized Criteria Risk Traction Metrics Value Low Proﬁt High1.Traction Revenues2.Team Pilot Customers3.Social Proof Non-Paying Customers4.Model High Validated Hypothesis Low Idea/Non-Validated Too Hypothesis High Innovate Products Faster with Lean + UX + Agile

Resources Innovate Products Faster with Lean + UX + Agile

Resources• steveblank.com• startuplessonslearned.com• chicagoleanstartup.com• pathﬁndersoftware.com/category/lean- startups/ Innovate Products Faster with Lean + UX + Agile

Lean Startup for HealthcareRocket FuelFor Your ProductGrowth Bernhard Kappe Founder and CEOLean Startup Strategy bkappe@pathf.comUser Experience Design 312.372.1058 x 6002Agile Software Development @bernhardkappeCustomer Acquisition and Retention pathﬁndersoftware.com/blog http://pathﬁndersoftware.com Innovate Products Faster with Lean + UX + Agile

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Lean Startup for Healthcare: Workshop at Healthbox

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Lean Startup for Healthcare: Workshop at Healthbox Presentation Transcript