16. Business Schools
• Made the American Century
• Embraced entrepreneurship
– Myles Mace HBS 1947, Stanford 1953
– But as an activity you execute
• Now embracing search
TEACHING POINT
18. Why?
Startups are Not Smaller Versions of a
Large Company
Search versus Execution
TEACHING POINT
19. Startups versus existing companies
• That startups begin with a series of unknowns (mostly)
– They Search
• That existing companies deal with execution of knowns
(mostly)
– They Execute
• The insight is that management tools built to execute do
not work in search
• Early stage ventures need their own tools
TEACHING POINT
22. What’s A Startup
A temporary organization designed to search for a
repeatable and scalable business model
• This is what the class is about
• It’s a definition filled with action
• Each word has meaning
– Temporary
– Search
– Repeatable
– Scalable
– Business Model
TEACHING POINT
30. Business Model versus Business Plan
• We are not saying never to a business plan
• We are saying, “not first”
• Plans are static
• Models are dynamic
• Planning comes before the plan
TEACHING POINT
33. Tradition – Hire Marketing
Concept/
Seed Round
Product
Dev.
Alpha/Beta
Test
Launch/
1st Ship
- Create Marcom
Materials
- Create Positioning
- Hire PR Agency
- Early Buzz
- Create Demand
- Launch Event
- “Branding”
Marketing
34. Tradition – Hire Sales
Concept/
Seed Round
Product
Dev.
Alpha/Beta
Test
Launch/
1st Ship
- Create Marcom
Materials
- Create Positioning
- Hire PR Agency
- Early Buzz
- Create Demand
- Launch Event
- “Branding”
• Build Sales
Organization
Marketing
Sales • Hire Sales VP
• Hire 1st Sales Staff
35. Tradition – Hire Bus Development
Concept Product
Dev.
Alpha/Beta
Test
Launch/
1st Ship
- Create Marcom
Materials
- Create Positioning
- Hire PR Agency
- Early Buzz
- Create Demand
- Launch Event
- “Branding”
• Hire Sales VP
• Pick distribution
Channel
• Build Sales Channel /
Distribution
Marketing
Sales
• Hire First
Bus Dev
• Do deals for FCSBusiness
Development
36. Tradition – Hire Engineering
Concept Product
Dev.
Alpha/Beta
Test
Launch/
1st Ship
- Create Marcom
Materials
- Create Positioning
- Hire PR Agency
- Early Buzz
- Create Demand
- Launch Event
- “Branding”
• Hire Sales VP
• Pick distribution
Channel
• Build Sales Channel /
Distribution
Marketing
Sales
• Hire First
Bus Dev
• Do deals for FCSBusiness
Development
Engineering • Write MRD • Waterfall • Q/A •Tech Pubs
37. Customer Problem: known
Product Features: known
Waterfall / Product Management
Execution on Two “Knowns”
Requirements
Design
Implementation
Verification
Maintenance
Source: Eric Ries
http://startuplessonslearned.blogspot.com
43. Why?
Customer & Agile Development versus
Product Launch and Waterfall
TEACHING POINT
44. Customer & Agile Development versus
Product Launch and Waterfall
• Product Launch process assumes hypotheses are facts
• Waterfall development assumes you know:
– the customer problem
– Entire solution
TEACHING POINT
53. Functional Organizations
• An easy trap for startups
• Large companies have VP’s of Sales, Marketing &
Business Development
• I guess we should too
• Titles are the same, functions are radically different
TEACHING POINT
55. The Canvas in Class
• Forces students to articulate all 9 parts of a business
model (static)
• Used to keep score of customer development progress
(dynamic)
• Allows visualization of the entrepreneurial process
• 9 boxes provides a convenient tempo for weekly classes
Different from Osterwalder's original intent - strategy
TEACHING POINT
63. Multiple Customer Segments
• Might have multiple segments of users
• Might have users and payers
• Might have 5 or 6 different customers
– Medical devices have doctors, hospitals, patient, insurance
company, FDA, etc.
• For every customer segment you need:
– Value proposition
– Revenue model
– And may have unique channels, cust relationships, etc.
TEACHING POINT
85. Canvas Components
• We overview all the 9 boxes in the first lecture
• Subsequent classes detail each of canvas components
• But that’s a sleight of hand
• What we are really doing is getting the students to talk to
100 customers in a quarter
• The class is not about the lectures
• It’s about the work the students do outside the building
TEACHING POINT
91. Customer Development
• While so far the class looked like an easy business model
canvas class …
• The class is actually all about Customer Development!
• Drawing the canvas hypotheses are easy
• Testing them is really, really hard
• Just like a startup
TEACHING POINT
96. Test the Problem then the Solution
• Customer development is about hypothesis testing
• It’s why scientists do great in this class
• What are you testing? All the nice, neat assumptions in
the business model canvas
• First, you test basic assumptions
• Then, you test the solution itself
• Customer discovery and validation is a fairly rigorous
process
TEACHING POINT
100. Build the minimum viable product
• This is easy if you use Agile development
• You build your product iteratively and incrementally
• The goal is feedback, learning, insight, orders, etc. with
the minimum feature set
TEACHING POINT
104. The Pivot
• A core concept of Customer Development
• In the past a failure to make “the plan” meant a failure of
an individual to execute
• In the past we fixed problems and changed strategies by
firing executives
• Now we first fire the plan
• A pivot is a substantive change in one or more business
model canvas components
• An iteration is a minor change in one or more business
model canvas components
TEACHING POINT
110. Keeping Score with the Canvas
• A core concept of the class
• Weekly updates of the canvas allow the teaching team to
visually see customer development process
• Visualize the canvas extending in the Z-axis
• That axis represents the customer development process
over time
TEACHING POINT
