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Day 1
28-Feb-15
The Next Industrial Revolution
How Continuous Innovation Creates Successful
Entrepreneurs
So, why are we here? To LEARN…
By the end of this workshop, you will be
able:
 To understand how a ‘lean’ approach can work wonders
 To learn more effe...
Target audience of this workshop:
 Students learning business or engineering
 Fresh graduates
 Young and Experienced Ma...
Who are we?
Gold-medalist and multi-award winning Masters in Chem. Eng. (Hons.) from University of Manchester
Credible wor...
Agenda for Day 1 (28-Feb-15)
Topic Outline Duration Time
Workshop
Introduction
Introductory Presentation on the
Lean Start...
Agenda for Day 1 (28-Feb-15)
Topic Outline Duration Time
Phase 2: STEER
Explanation on Steer including the
following parts...
Learning Outcomes for Day 1 (28-Feb-15)
 Understand the basics of the ‘lean’ approach – what is it?
 Define ‘Vision’ and...
1. Introduction to the concept of ‘Lean’
1.1 What is ‘Lean’?
This workshop centres around the application of concepts borr...
1. Introduction to the concept of ‘Lean’
1.2 What is the ‘Lean’ model and what is waste?
1. Introduction to the concept of ‘Lean’
1.3 Essence of ‘Lean’
Define value
for the
customers
Identify the
value
stream
Ma...
1. Introduction to the concept of ‘Lean’
1.4 Summary – What ‘Lean’ taught us?
The Lean approach taught the world the diffe...
1. Introduction to the concept of ‘Lean’
1.5 What Lean Startup is all about?
5 Key Principles
Entrepreneurs
are Everywhere...
1. Introduction to the concept of ‘Lean’
1.6 Where do we go from here?
ACCELERATE
STEER
VISION
1. Introduction to the concept of ‘Lean’
1.6 Where do we go from here?
• Start
• Define
• Learn
• Experiment
Vision
• Leap...
1. Introduction to the concept of ‘Lean’
1.6 Where do we go from here?
• Framing the case to develop a different method to...
1. Introduction to the concept of ‘Lean’
1.6 Where do we go from here?
In-line with the learning outcomes of this workshop...
2. Phase 1: Vision
2. Phase 1: Vision
2.1 Start
We start by appreciating that startup entrepreneurship involves management of a
different nat...
2. Phase 1: Vision
2.2 Define
Before we describe the principles of Lean Startup in detail, it is important to define
an en...
2. Phase 1: Vision
2.3 Learn: Concept of Validated Learning
It is often said, “We learn from our failures”. Very true!
Lea...
2. Phase 1: Vision
2.3 Learn: Concept of Minimum Viable Product
Minimum Viable Product is the product, constituting minimu...
2. Phase 1: Vision
2.3 Learn: Building an MVP – all what Lean Startup
focuses onBuild:
Build the MVP, as an experiment, as...
2. Phase 1: Vision
2.3 Learn: Building an MVP – all what Lean Startup
focuses on
Build-Measure-Learn feedback loop
does no...
2. Phase 1: Vision
2.4 Experiment: Just like we did in our Science Labs at
school!The Lean Startup Methodology reconceives...
2. Phase 1: Vision
2.4 Experiment: What to remember whilst doing so?
 Think big, start small
This implies that your ultim...
2. Phase 1: Vision
2.4 Experiment: Assumptions and how to make them?
The two most important assumptions entrepreneurs make...
2. Phase 1: Vision
2.4 Experiment: Important Facts
 Experiments take less time (than traditional strategic planning alone...
2. Phase 1: Vision
2.4 Experiment: Split Testing – A key approach
A split or A/B test is an experiment in which different ...
Case Studies 1 and 2
Testing your knowledge of Vision (DEFINE and EXPERIMENT)
Case Study 1
Startup: Web App
In 2010, Justin and Eric were fresh on the startup scene. With two months of client
business...
Case Study 1
Case Analysis
Question 1: What could have been the problem they faced?
Question 2: What according to you coul...
Case Study 2
The Story of Zappos – Online Shoes Retail
Founder Nick Swinmurn was frustrated because there was no central, ...
Case Study 2
The Story of Zappos – Online Shoes Retail
Question 1: What approach did Swinmurn follow to increase his appea...
Activity 1
Compare the Lean Startup approach with the Traditional approach
Activity 1
Comparing the Lean Startup approach with the
TraditionalThis activity will help you choose, which of the two ap...
3. Phase 2: Steer
ACCELERATE
STEER
VISION
3. Phase 2: Steer
3.1 Leap
This phase introduces the leap way of developing – which means that once the
vision is explored...
3. Phase 2: Steer
3.1 Leap: Making better (and safer!) assumptions
Assumptions can be made fool-proof and safer by followi...
3. Phase 2: Steer
3.2 Test
Once the leap-of-faith assumptions are in place, all efforts should spring into the
development...
3. Phase 2: Steer
3.2 Test: Journey to finding the right customer!
3. Phase 2: Steer
3.2 Test: Make use of early adopters!
Sell the early versions of your products at cheaper rates or for f...
3. Phase 2: Steer
3.2 Test: Simulanis Early Adopters (Thanks to them!)
3. Phase 2: Steer
3.3 Measure
After developing the MVP and testing the leap-of-faith assumptions, a startup
should rigorou...
3. Phase 2: Steer
3.3 Measure: How Innovation Accounting works?
Innovation Accounting works in three steps:
1. Use a MVP t...
3. Phase 2: Steer
3.3 Measure: Importance of Innovation Accounting
The innovation accounting framework makes it clear when...
3. Phase 2: Steer
3.3 Measure: The Metrics
The 3 A´s of Metrics:
Actionable
For a report to be considered actionable, it ...
3. Phase 2: Steer
3.4 Pivot
Pivot or Preserve is defined as a structured course correction designed to test a new
fundamen...
3. Phase 2: Steer
3.4 Pivot: Understanding it better
3. Phase 2: Steer
3.4 Pivot: Types
 Zoom-in Pivot: What preciously was considered a single feature in a product
becomes t...
3. Phase 2: Steer
3.4 Pivot: Types
 Business-architecture Pivot: For example, when a startup goes from high
margin/low vo...
Case Study 3
Testing your knowledge of Steer
Case Study 3
Online Grocery Store – What Went Wrong?
Jimmy Cray Pvt. Ltd in the initial stage of its incorporation develop...
Case Study 3
Online Grocery Store – What Went Wrong??
Question 1: What do you think was the major problem they faced?
Ques...
4. Innovative Business Modelling
4.1 Introduction and Relevance
A lot of success stories are based on new business models....
4. Innovative Business Modelling
4.2 What is this and how to go about it?
It’s quite simple and easy!
Simply build your bu...
4. Innovative Business Modelling
4.3 Demonstration 1: Start Simple!
 Start getting acclimatised with the concept through ...
4. Innovative Business Modelling
4.3 Demonstration 1: Start Simple!
 Start getting acclimatised with the concept through ...
4. Innovative Business Modelling
Now we learn through applications on real world
examples
4. Innovative Business Modelling
4.4 Example 1: Think about the EBay® Business Model
4. Innovative Business Modelling
4.5 Example 2: Think about the Dropbox Business Model
4. Innovative Business Modelling
4.6 Example 3: Think about the Groupon® Business
Model
Activity 2
Demonstrating Innovative Strategies for Business Modelling
Activity 2
Innovative Business Modelling: Group Task
Activity 2
Innovative Business Modelling: Group Task
In this activity, you will be provided with basic information of FIVE...
Feedback and Closing the Session
Your feedback is of utmost importance! Please support
us.
Small Snippet of what’s in store on Day 2!
Know the Customer Development Process
Small Snippet of what’s in store on Day 2!
 Are you really solving your customers’ problems?
 How do you know if you hav...
End of Day 1
We hope today’s session was insightful and that the
learning outcomes were achieved. We welcome your
comments.
Lean Startup - The Next Industrial Revolution - Day 1
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Lean Startup - The Next Industrial Revolution - Day 1

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Understanding how lean approach works and applying it to your organization.

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Lean Startup - The Next Industrial Revolution - Day 1

  1. 1. Day 1 28-Feb-15 The Next Industrial Revolution How Continuous Innovation Creates Successful Entrepreneurs
  2. 2. So, why are we here? To LEARN…
  3. 3. By the end of this workshop, you will be able:  To understand how a ‘lean’ approach can work wonders  To learn more effectively how to develop products faster and cheaper  To test your vision for your idea continuously  To work smarter not harder  To grow business with maximum acceleration  To develop effective business models and increase chances of securing funds  To understand how constant innovation creates radically successful products  To reduce product failures through Validated Learning  To easily apply a “lean” methodology to real business environments
  4. 4. Target audience of this workshop:  Students learning business or engineering  Fresh graduates  Young and Experienced Management Professionals  Technocrats, Engineering and IT Professionals  1st Time Entrepreneurs and Startup Owners  Experienced Business Owners  Professionals working in diverse range of industries
  5. 5. Who are we? Gold-medalist and multi-award winning Masters in Chem. Eng. (Hons.) from University of Manchester Credible working experience in the FMCG, Engineering Consultative and Process Design industries Directly involved in technical consulting projects; plans, manages and executes the technical operations Expert trainer and delivers training to graduates and engineering professionals in his domain of work CEO & Founder Director, Simulanis Raman Talwar Takes a keen interest in developing innovative computer-aided engineering methods and believes in leveraging through IT Has worked with the world famous companies like Arvia Technology (UK), RB (UK) and Jacobs (India) Contact Details: Email: ramantalwar@simulanis.com Phone Direct: 011 41321322 Mobile: +91 9711116695
  6. 6. Agenda for Day 1 (28-Feb-15) Topic Outline Duration Time Workshop Introduction Introductory Presentation on the Lean Startup Methodology 15 min 10:00 am – 10:15 am Phase 1: VISION Explanation on Vision including the following parts:  Start  Define  Learn  Experiment 60 min 10:15 am – 11:15 am TEA BREAK 15 min 11:15 am – 11:30 am Case Study 1 and 2 Case Discussions 1 and 2 30 min 11:30 am – 12:00 pm Activity 1 Activity 1: Lean v/s Traditional 45 min 12:00 pm – 12:45 pm
  7. 7. Agenda for Day 1 (28-Feb-15) Topic Outline Duration Time Phase 2: STEER Explanation on Steer including the following parts:  Leap  Test  Measure  Pivot 60 min 12:45 pm – 01:45 pm LUNCH BREAK 45 min 01:45 pm – 02:30 pm Case Study 3 Case Discussion 3 30 min 02:30 pm – 03:00 pm Introduction to Business Modelling Explanation of innovative concepts and their application 30 min 03:00 pm – 03:30 pm Activity 2 Activity 2: Business Modelling 30 min 03:30 pm – 04:00 pm WORKING TEA BREAK AND OPEN DISCUSSION 15 min 04:00 pm – 04:15 pm Activity 2 Activity 2: Business Modelling 30 min 04:15 pm – 04:45 pm Feedback and Closing Day 1 Feedback and Closing 15 min 04:45 pm – 05:00 pm
  8. 8. Learning Outcomes for Day 1 (28-Feb-15)  Understand the basics of the ‘lean’ approach – what is it?  Define ‘Vision’ and building the case for starting, defining, learning, and experimenting  Demonstrate ‘Vision’ through Case Study  Define ‘Steer’ and building the case for leap, test, measure, and proof  Demonstrate ‘Steer’ through Case Study  Learn how to prepare business models using innovative methods  Demonstrate the application of innovative business modelling
  9. 9. 1. Introduction to the concept of ‘Lean’ 1.1 What is ‘Lean’? This workshop centres around the application of concepts borrowed from the LEAN MANUFACTURING revolution, which was an approach pioneered by Taiichi Onho and Shigeo Shingo at Toyota, leading to the much-famed Toyota Production System (TPS). TPS is renowned for its focus on reduction of the original Toyota seven wastes to improve overall customer value. Lean manufacturing or lean production, often simply "lean", is a systemic method for the elimination of waste within a manufacturing process. Lean also takes into account waste created through overburden and waste created through unevenness in work loads. Working from the perspective of the client who consumes a product or service, "value" is any action or process that a customer would be willing to pay for. In-line with the above, essentially, lean is centered on making obvious what adds value by reducing everything else, viz. “waste”, using a set of ‘tools’ that assist in the identification and steady elimination of the same.
  10. 10. 1. Introduction to the concept of ‘Lean’ 1.2 What is the ‘Lean’ model and what is waste?
  11. 11. 1. Introduction to the concept of ‘Lean’ 1.3 Essence of ‘Lean’ Define value for the customers Identify the value stream Make the process flow Pull from the customers Head towards perfection
  12. 12. 1. Introduction to the concept of ‘Lean’ 1.4 Summary – What ‘Lean’ taught us? The Lean approach taught the world the difference between value-creating activities and waste, and showed how to build quality into products from the inside out, by focusing on the following (for instance):  shrinking of batch sizes,  just-in-time production,  inventory control,  acceleration of cycle times,  continuous improvement,  focused problem solving,  learning from failure quickly,  scaling-up based on success,  drawing on the knowledge and creativity of individual workers Through this workshop, we learn how to adapt the ideas from the ‘lean’ approach pioneered at Toyota, to the context of entrepreneurship and the world of startups.
  13. 13. 1. Introduction to the concept of ‘Lean’ 1.5 What Lean Startup is all about? 5 Key Principles Entrepreneurs are Everywhere Entrepreneurship is Management Validated Learning Build – Measure – Learn Innovation Accounting
  14. 14. 1. Introduction to the concept of ‘Lean’ 1.6 Where do we go from here? ACCELERATE STEER VISION
  15. 15. 1. Introduction to the concept of ‘Lean’ 1.6 Where do we go from here? • Start • Define • Learn • Experiment Vision • Leap • Test • Measure • Pivot Steer • Batch • Grow • Adapt • Innovate Accelerate Phase # 1 Phase # 2 Phase # 3
  16. 16. 1. Introduction to the concept of ‘Lean’ 1.6 Where do we go from here? • Framing the case to develop a different method to entrepreneurial management • Identifying who is an entrepreneur • Defining a startup • Developing methods to evaluate whether startups are generating value and becoming successful • After making mistakes, how to learn from them and validate the learning Vision • Discussing the lean methodology in detail • Following the ‘Build-Measure-Learn’ feedback loop to develop products and services • Formulating a set of assumptions, referred to as the ‘leap-of-faith’ assumptions • Perform rigorous experiments, with an aim to develop what is termed as Minimum Viable Product • Developing a new accounting system to evaluate the success of the experiments, map the progress and on its basis, decide whether to ‘pivot’ or to ‘persevere’ Steer • Exploring the techniques to speed up and accelerate through the Build-Measure-Learn feedback loop • Figuring out how to scale up • Following the Build-Measure-Learn feedback loop to quickly develop products and services • Speeding the processes of developing products and services by working in small batches • Discussing organization design to cope with the lean approach Accelerate Phase # 1 Phase # 2 Phase # 3
  17. 17. 1. Introduction to the concept of ‘Lean’ 1.6 Where do we go from here? In-line with the learning outcomes of this workshop, after explaining Phase 2 and 3, we will explain an innovative method to perform business modelling. On Day 2, we follow-up this activity with another novel set of tools to revolutionize your business plans.
  18. 18. 2. Phase 1: Vision
  19. 19. 2. Phase 1: Vision 2.1 Start We start by appreciating that startup entrepreneurship involves management of a different nature. Classical and traditional rules of management do not necessarily translate into guaranteed startup success, as:  They may impede the creative and the dynamically adaptable process which leads to innovation  They may not work entirely in an extremely uncertain, complex and at times ‘chaotic’ nature of startups in general  They may invite bureaucracy at an early stage which may not be conducive for the early success a startup craves for The same principles do, however, work very well in a more stable work environment, where there has been a long history of success through years of hard-work and perseverance.
  20. 20. 2. Phase 1: Vision 2.2 Define Before we describe the principles of Lean Startup in detail, it is important to define an entrepreneur and a startup  Entrepreneur An entrepreneur is a person who finds ways to convert raw materials of innovation into successful ventures and is well-equipped by a proper team structure and composition, a strong vision for the future and a naturally risk-taking ability.  Startup A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. Lean Startup methodologies are not restricted to startups alone! In fact, they are applicable to companies of all sizes and shapes, working in any industry or sector, at any stage of development.
  21. 21. 2. Phase 1: Vision 2.3 Learn: Concept of Validated Learning It is often said, “We learn from our failures”. Very true! Learning is a continuous process in general, but unfortunately learning is also an excuse for managers who fail to achieve the results so promised. Learning can be a cold comfort to employees who are following an entrepreneur into the unknown. As per the Lean Startup Methodology, learning assumes the most critical role and it does so through the concept of Validated Learning. Validated learning is:  The process of demonstrating empirically that a team has discovered valuable truths about a startup’s present and future business prospects.  It is more concrete, accurate and faster than market forecasting or business planning.  It is the principal antidote to the lethal problem of achieving failure successfully (and quickly!) executing a plan that leads nowhere
  22. 22. 2. Phase 1: Vision 2.3 Learn: Concept of Minimum Viable Product Minimum Viable Product is the product, constituting minimum features and developed by investing minimum resources, as a test or an experiment to determine the response of the customers upon purchase. An MVP approach can help us learn about what the customer truly values before we’ve invested too much time and money into building something they don’t need or want. Our work is not done until the customer is, in fact, delighted.
  23. 23. 2. Phase 1: Vision 2.3 Learn: Building an MVP – all what Lean Startup focuses onBuild: Build the MVP, as an experiment, as quickly as possible that will allow you to test a clear hypothesis (set of assumptions) we have about our product or strategy Measure: Measure the impact of the MVP in the marketplace using actionable metrics that help us analyze customer behavior and feedback Learn: Learn whether our original assumptions about the product, process, and customer needs were correct or whether we need to change strategies to better meet our vision Build Measure Learn Repeat this FEEDBACK LOOP Fundamentals of the LEAN APPROACH
  24. 24. 2. Phase 1: Vision 2.3 Learn: Building an MVP – all what Lean Startup focuses on Build-Measure-Learn feedback loop does not end once we’ve put our first product into the market. Every new launch of an MVP is an opportunity to gain valuable information about how well we’re meeting customer needs - and whether we need to adjust our strategy or not. Build Measure Learn Repeat this FEEDBACK LOOP Fundamentals of the LEAN APPROACH
  25. 25. 2. Phase 1: Vision 2.4 Experiment: Just like we did in our Science Labs at school!The Lean Startup Methodology reconceives a startups efforts and all what they develop in the name of products, as experiments (in the form of MVPs) that test its strategy to see which parts of the product are brilliant and which are not-so- brilliant. A true experiment follows the scientist method.  It begins with a clear hypothesis that makes prediction about what is supposed to happen.  It then test those predictions empirically through customer interaction and feedback.  Just a scientific experimentation is informed by theory, startup experiments are guided by startup's vision. The goal of every startup experiment is to discover how to build a sustainable business around that vision.
  26. 26. 2. Phase 1: Vision 2.4 Experiment: What to remember whilst doing so?  Think big, start small This implies that your ultimate goals should be big but realistic as well, but invest little resources into the business so that the risk involved is less.  For long term change, experiment immediately Long term change in the system requires an immediate need to experiment and imply the changes as needed this work should be fast tracked in a manner to achieve the long term goals through immediate and prompt changes.  Break it Down This steps include the breakdown of the grand vision into its component parts.
  27. 27. 2. Phase 1: Vision 2.4 Experiment: Assumptions and how to make them? The two most important assumptions entrepreneurs make are:  Value Hypothesis testing whether a product or service really delivers value to customers once they are using it.  Growth hypothesis testing how new customers will discover a product or service, and how to increase our customer growth.
  28. 28. 2. Phase 1: Vision 2.4 Experiment: Important Facts  Experiments take less time (than traditional strategic planning alone!), provide a more accurate gauge, and a real picture of our market size.  An experiment is more than just a theoretical model, in a lean model it is treated as a first product.  If this or any other experiment is successful, it allows the managers to get started with his or her campaign: enlisting early adopters, adding employees to each further experiment or iteration and eventually starting to build a product.  This way by the time that product is ready to be distributed widely, it will already have established customer’s unlike a traditional strategic planning or market research process.  This approach has its roots in feedback on what is working today, rather than in anticipation of what might work tomorrow.
  29. 29. 2. Phase 1: Vision 2.4 Experiment: Split Testing – A key approach A split or A/B test is an experiment in which different versions of a product are offered to customers at the same time. The goal of a split test is to observe differences in behavior between the two groups and to measure the impact of each version on an actionable metric. A/B testing can also be performed in serial fashion where a group of users one week may see one version of the product while the next week users see another. Though, caution must be observed at times whilst following this approach where external events may influence user behavior one time period but not the other. For example, a split test of two ice cream flavors performed in serial during the summer and winter would see a marked decrease in demand during the winter where that decrease is mostly related to the weather and not to the flavor offer.
  30. 30. Case Studies 1 and 2 Testing your knowledge of Vision (DEFINE and EXPERIMENT)
  31. 31. Case Study 1 Startup: Web App In 2010, Justin and Eric were fresh on the startup scene. With two months of client business under their belt and the launch of their first “web app“, they discovered a new problem that they thought could be solved, Social Media Management. While there were plenty of tools available, the process of learning how to use them effectively (for business) was complicated. They tried many of the typical software solutions that were available, but their clients rarely succeeded with these tools. Most of the time, they became even more frustrated than ever. The problem with those tools was that while they technically allowed users to complete social media tasks, they were messy and did little to help make customers actually better at social media marketing. Business owners are busy, and they found that the failure rate was rising with these products.
  32. 32. Case Study 1 Case Analysis Question 1: What could have been the problem they faced? Question 2: What according to you could be the solution to their problem? Question 3: What strategy would you suggest, to help solve their problem?
  33. 33. Case Study 2 The Story of Zappos – Online Shoes Retail Founder Nick Swinmurn was frustrated because there was no central, online site with a great selection of shoes which gave him the idea to create a shoe Mega Online Store. Swinmurn could have waited long time and might have employed a lot of its financial resources on promotion and warehousing. Instead he started by running experiment and tested the market by asking local shoe store if he could take pictures of their inventory. In exchange for permission to take pictures, he would post the pictures online and come back to buy the shoes at full price if a customer bought them online. Zappos began with a tiny, simple product – shoes, it was designed to answer one question above all; is there already sufficient demand for a superior online shopping experience for shoes, however a well-designed startup experiment like the one Zappos began with does more than test a single aspect of a business plan. In the course of testing this first assumption, many other assumptions were tested as well.
  34. 34. Case Study 2 The Story of Zappos – Online Shoes Retail Question 1: What approach did Swinmurn follow to increase his appeal? Question 2: How did this approach help? Question 3: What other assumptions he have tested following his approach? Question 3: How can you apply this to your Business?
  35. 35. Activity 1 Compare the Lean Startup approach with the Traditional approach
  36. 36. Activity 1 Comparing the Lean Startup approach with the TraditionalThis activity will help you choose, which of the two approaches Lean or Traditional work for your business. This activity will be a group discussion / debating activity, which will involve the class to be divided into 2 groups. Each group will either speak for Lean Approach or the Traditional Approach. Points of discussion will be the differences in strategies. Each group will choose an individual from their group to write down all the points being discussed for their respective topic. Then these points will be discussed in detail against their pros and cons. Finally, after the activity it will be up to you to decide which approach suits your business / idea the best.
  37. 37. 3. Phase 2: Steer ACCELERATE STEER VISION
  38. 38. 3. Phase 2: Steer 3.1 Leap This phase introduces the leap way of developing – which means that once the vision is explored, it is time to make certain assumptions and put the things into action to develop the MVP. The riskiest elements of a startup plan are the assumptions (Value Hypothesis and Growth Hypothesis) and that is why they are referred to as leap-of-faith assumptions. These assumptions canmake or break your business. Example of a leap-of-faith assumption: In the iPod business, one of those leaps of faith was that people would pay for music.
  39. 39. 3. Phase 2: Steer 3.1 Leap: Making better (and safer!) assumptions Assumptions can be made fool-proof and safer by following:  Genchi Gembutsu: Japanese for “Go and see for yourself”. Means that business should be based on deep firsthand knowledge. Until you have seen something for yourself firsthand, you cannot be sure you really understand any part of the business problem.  Getting external customer data The facts that we need to gather about customer exist only outside the building, not inside. So it is imperative to step out of the building and collect REAL data!  Setting-up early customer contact Early contact with the customer clarifies a basic coarse level that we can use to craft a customer archetype – a brief document that seeks to humanize the proposed target customer.
  40. 40. 3. Phase 2: Steer 3.2 Test Once the leap-of-faith assumptions are in place, all efforts should spring into the development of the MVP. When building your MVP, remove any feature, process or effort that does not contribute directly to the learning you seek. Even a low quality MVP can act in service of building a great high-quality product. After building the MVP, it is important to test it and seek continuous feedback. This can be done by continually bringing in people to react to mockups, demos, prototypes and simulations.
  41. 41. 3. Phase 2: Steer 3.2 Test: Journey to finding the right customer!
  42. 42. 3. Phase 2: Steer 3.2 Test: Make use of early adopters! Sell the early versions of your products at cheaper rates or for free, to a select group of customers, before selling to a mass audience, and term them as early adopters. Early adopters are a special breed of customers.  They accept – in fact prefer – an 80 percent solution; you don’t need a perfect solution to capture their interest!  Early adopters use their imagination to fill in what a product is missing.  They prefer that state of affairs, because what they care about above all is being the first to use or adopt a new product or technology.  Early adopters are suspicious of something that is too polished; if it’s ready for everyone to adopt, how much advantage can one get by being early.
  43. 43. 3. Phase 2: Steer 3.2 Test: Simulanis Early Adopters (Thanks to them!)
  44. 44. 3. Phase 2: Steer 3.3 Measure After developing the MVP and testing the leap-of-faith assumptions, a startup should rigorously measure where it is right now. This involves confronting the hard truths which tests and assessments reveal and then re-devising experiments to learn how to move the real numbers closer to the ideal reflected in the business plan. This can be done through innovation accounting. Innovation accounting is a disciplined and a systematic approach to figure out if we are making progress and discovering if we are actually achieving validated learning. It is an alternative to traditional accounting, designed specifically for startups, and begins by turning the leap-of- faith assumptions into a quantified financial model.
  45. 45. 3. Phase 2: Steer 3.3 Measure: How Innovation Accounting works? Innovation Accounting works in three steps: 1. Use a MVP to establish real data on where the company is right now 2. Startups must attempt to tune the engine from the baseline toward the ideal. 3. After the startup has made all the micro changes and product optimizations it can move its baseline toward the ideal, the company reaches a decision point: pivot or preserve.
  46. 46. 3. Phase 2: Steer 3.3 Measure: Importance of Innovation Accounting The innovation accounting framework makes it clear when the company is stuck and needs to change direction. The ‘real’ importance of innovation accounting Only 5 % of entrepreneurship is the big idea, the business model, the whiteboard strategizing, and the splitting up of the spoils. The other 95 % is the gritty work that is measured by innovation accounting: product prioritizing decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback.
  47. 47. 3. Phase 2: Steer 3.3 Measure: The Metrics The 3 A´s of Metrics: Actionable For a report to be considered actionable, it must demonstrate clear cause and effect. Otherwise it is a vanity metric. When cause and effect is clearly understood, people are better able to learn from their actions. Human beings are innately talented learners when given a clear and objective assessment. Accessible Departments too often spend their energy learning how to use data to get what they want rather than as genuine feedback to guide their future actions. Remember that metrics are people, too. Everyone must understand the reports. Auditable We must ensure that the data is credible to employees.
  48. 48. 3. Phase 2: Steer 3.4 Pivot Pivot or Preserve is defined as a structured course correction designed to test a new fundamental hypothesis about the product, strategy and engine of growth. A pivot requires that we keep one foot rooted in what we have learned so far, while making a fundamental change in strategy in order to seek even greater validated learning. Vanity metrics can allow entrepreneurs to form false conclusions and live in their own private reality. When an entrepreneur has an unclear hypothesis, it’s almost impossible to experience complete failure, and without failure there is usually no impetus to embark on the radical change a pivot requires. You will always succeed - in seeing what happens. You won’t know whether to pivot or preserve. The heart of the lean startup: A pivot is not just an exhortation to change. It is a special kind of structured change designed to test a new fundamental hypothesis about the product, business model and engine of growth.
  49. 49. 3. Phase 2: Steer 3.4 Pivot: Understanding it better
  50. 50. 3. Phase 2: Steer 3.4 Pivot: Types  Zoom-in Pivot: What preciously was considered a single feature in a product becomes the whole product?  Zoom-out Pivot: What was considered as the whole product becomes a single feature of a much larger product.  Customer segment Pivot: The product hypothesis is partially confirmed, solving the right problem, but for a different customer than originally anticipated.  Customer need Pivot: The product hypothesis is partially confirmed: the target customer has a problem worth solving, just not the one that was originally anticipated.  Platform Pivot: Refers to a change from an application to a platform or vice versa.
  51. 51. 3. Phase 2: Steer 3.4 Pivot: Types  Business-architecture Pivot: For example, when a startup goes from high margin/low volume to mass market or vice versa.  Value-capture Pivot: How do companies capture value?  Engine-of-growth Pivot: A company changes its growth strategy to seek faster or more profitable growth.  Channel Pivot: Is the recognition that the same basic solution could be delivered through a different channel with greater effectiveness.  Technology Pivot: When discovering a technology to achieve the same solution by using a completely different technology.
  52. 52. Case Study 3 Testing your knowledge of Steer
  53. 53. Case Study 3 Online Grocery Store – What Went Wrong? Jimmy Cray Pvt. Ltd in the initial stage of its incorporation developed a new product, powered by splashy launch, the company successfully executed its plan. Unfortunately, Customers did not flock to the product in great numbers. Even worse, the company had invested in massive infrastructure, hiring and support to handle the influx of customers, expecting huge volume of customers. When the customers failed to materialize, the company could not adapt, in time. They achieved failure – successfully and rigorously executing plan that turned out to have been utterly flawed.
  54. 54. Case Study 3 Online Grocery Store – What Went Wrong?? Question 1: What do you think was the major problem they faced? Question 2: What type of strategic implementation do they require? Question 3: What type of work flow was missing in their business idea?
  55. 55. 4. Innovative Business Modelling 4.1 Introduction and Relevance A lot of success stories are based on new business models. Through the following slides, we help you design your business ideas with these building blocks, and assist you in finding inspiration from other innovative, successful and flourishing businesses. The relevance of using such an innovative approach is straight-forward: If you can’t draw out your business plan schematically, you simply don’t know what your plan is! And hence, you will never be able to execute it.
  56. 56. 4. Innovative Business Modelling 4.2 What is this and how to go about it? It’s quite simple and easy! Simply build your business with these 16 blocks and flow directions: 6 players CompanyMy company Consumer Supplier Non-profit Government product service experience exposure reputation money less money data right credits 10 objects to exchange flow directions
  57. 57. 4. Innovative Business Modelling 4.3 Demonstration 1: Start Simple!  Start getting acclimatised with the concept through easy business models  Learn through an easy 2-step procedure: Step 1. The Basic Subscription Model
  58. 58. 4. Innovative Business Modelling 4.3 Demonstration 1: Start Simple!  Start getting acclimatised with the concept through easy business models  Learn through an easy 2-step procedure: Step 2. Introduce New Stakeholders: e.g. Advertiser
  59. 59. 4. Innovative Business Modelling Now we learn through applications on real world examples
  60. 60. 4. Innovative Business Modelling 4.4 Example 1: Think about the EBay® Business Model
  61. 61. 4. Innovative Business Modelling 4.5 Example 2: Think about the Dropbox Business Model
  62. 62. 4. Innovative Business Modelling 4.6 Example 3: Think about the Groupon® Business Model
  63. 63. Activity 2 Demonstrating Innovative Strategies for Business Modelling
  64. 64. Activity 2 Innovative Business Modelling: Group Task
  65. 65. Activity 2 Innovative Business Modelling: Group Task In this activity, you will be provided with basic information of FIVE real-world startup / established companies. Using this information, along with the canvas sheets and cue-card cutouts representing the 6 players and 10 objects of exchange, construct the business models on canvas sheets. For this activity you will be divided into FIVE groups and each group will develop the business models using the information provided. This activity will require a strong team effort for accomplishment, and ideas from every individual of the group. Solutions will be shared at the end of the activity and each business model will be judged accordingly.
  66. 66. Feedback and Closing the Session Your feedback is of utmost importance! Please support us.
  67. 67. Small Snippet of what’s in store on Day 2! Know the Customer Development Process
  68. 68. Small Snippet of what’s in store on Day 2!  Are you really solving your customers’ problems?  How do you know if you have the right customers?  How to avoid the biggest pricing mistakes?  What advice to follow being a startup?  What is the secret to successful startup partnerships?  How to get customers, keep them and attract them even more?  When to change directions and pivot – firing the plan, not people!  Why getting out of the building is important! And be able to answer the questions:
  69. 69. End of Day 1 We hope today’s session was insightful and that the learning outcomes were achieved. We welcome your comments.

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