Lean startup: Innovation Manufacturing 101

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October Lean Startup 101 presentation to Lean Startup Circle Boston

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  • In particular, eliminate work that doesn’t create value (for Customers)\n\nWhat is the greatest source of waste in a startup? Innovation process or product development?\n\nBuilding something no one wants\n
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  • Mention the religious wars on lean methodology\n\nThis is about the Meta principles, not a checklist or cookie cutter formula\n
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  • Ask audience about how many of them are or were entrepreneurs, created new products etc.\n
  • Ask audience for reasons\n
  • They had no interest, thought it sucked, it was too expensive etc. etc.\n
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  • Hold up Kellogg brochure\n
  • No. So, why is that?\n
  • The capacity for vision (cough) combined with our bias for action (cough) makes innovators prone to jumping over knowledge gaps and running through indifference without even noticing.\n\nThat gets us in a lot of trouble.\n
  • The capacity for vision (cough) combined with our bias for action (cough) makes innovators prone to jumping over knowledge gaps and running through indifference without even noticing.\n\nThat gets us in a lot of trouble.\n
  • A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty\n
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  • Tell John Boyd’s story of discovering patterns in aerial combat in Vietnam \n
  • Tell John Boyd’s story of discovering patterns in aerial combat in Vietnam \n
  • Tell John Boyd’s story of discovering patterns in aerial combat in Vietnam \n
  • Tell John Boyd’s story of discovering patterns in aerial combat in Vietnam \n
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  • What is Validated learning?\n
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  • The premise of the lean startup is simple: if we can reduce the time between these major iterations, we can increase the odds of success.\n
  • The premise of the lean startup is simple: if we can reduce the time between these major iterations, we can increase the odds of success.\n
  • The premise of the lean startup is simple: if we can reduce the time between these major iterations, we can increase the odds of success.\n
  • We knew these ideas were big when we saw this\n
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  • If we can reduce the time between pivots\n \n We can increase the odds of success\n \n Before we run out of money, support etc.\n \n Runway = # of iterations remaining\n
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  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
  • Talk through stories and examples of using these tactics\n
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  • Lean startup: Innovation Manufacturing 101

    1. 1. Lean Startup Circle Boston October 2011Wireless Access: Connect to CAMBRIDGE. Access Code is sc1027 November Event with Brett Durrett,VP Engineering at IMVU Space is limited. Register Now at: http:/bit.ly/LscNov
    2. 2. Lean StartupsThe Manufacturing of Innovation
    3. 3. Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    4. 4. Founder of Blueleaf.com Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    5. 5. Founder of Blueleaf.com Board Member oneforty Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    6. 6. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    7. 7. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken Franchiseesjohn@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    8. 8. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken FranchiseesProduct Management at a series of startups john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    9. 9. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken FranchiseesProduct Management at a series of startups Investment Banker for Tech Cos john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    10. 10. Lean Startups
    11. 11. Name has caused confusion
    12. 12. Toyota Production System Lean Manufacturing
    13. 13. Minimize waste ... http-//www.flickr.com/photos/editor/172690560/sizes/l/in/photostream/.jpg
    14. 14. Not cheap or bootstrapped
    15. 15. Startups?
    16. 16. It’s where innovation happens
    17. 17. What is a startup?
    18. 18. What is a startup?• A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty• Nothing to do with size of the company, sector of the economy or industry
    19. 19. Said Differently ...
    20. 20. Innovation
    21. 21. Innovation Manufacturing
    22. 22. Innovation ManufacturingRepeatable process for creating market accepted innovation
    23. 23. Innovation ManufacturingApply lean manufacturing principles and the scientific method to the process of innovation
    24. 24. Lean StartupsApply lean manufacturing principles and the scientific method to the process of innovation
    25. 25. CAUTION_http-//www.flickr.com/photos/32315759@N00/452776240/sizes/z/in/photostream/
    26. 26. Methodology Can’tReplace Judgement
    27. 27. Or Replace Vision
    28. 28. Why bother with this?
    29. 29. Source: Eric Ries
    30. 30. Most Innovations Fail Source: Eric Ries
    31. 31. It doesn’t need to be that way . . .
    32. 32. Why Do Startups Fail?
    33. 33. Lack of Customers
    34. 34. Question?
    35. 35. Does it make sense that we haveproduct development process ... Source: Steve Blank
    36. 36. ... but a not a Customer Development Process?
    37. 37. Entrepreneurial Superpowers
    38. 38. Vision / Delusional CapacityEntrepreneurial Superpowers
    39. 39. Vision / Delusional Capacity Bias for ActionEntrepreneurial Superpowers
    40. 40. Steve Blank Hypotheses• Entrepreneurs and Investors are generally executing on guesses• Startups aren’t small versions of large organizations• They are about learning/discovery, not execution• Need to surface hypotheses/assumptions and test against facts• However, the Facts Live Outside of the Building
    41. 41. Led to CustomerDevelopment Model Source: Steve Blank
    42. 42. Customer Development is at the Heart of Lean Startups
    43. 43. Surface Hypotheses & Test
    44. 44. Facts Live Outside of the Building
    45. 45. Separate Vision from Delusion
    46. 46. Customer Development
    47. 47. Eric Ries Extended Model• Steve realized the Problem was unknown,• Eric’s Insights • Given that the Solution is also unknown • Agile development needed to match Customer development speed
    48. 48. Built To Learn IDEAS LEARN BUILD DATA CODE MEASURE
    49. 49. John Boyd’s Insight IDEAS LEARN BUILD DATA CODE MEASURE
    50. 50. John Boyd’s InsightOODA Loop IDEAS LEARN BUILD DATA CODE MEASURE
    51. 51. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD DATA CODE MEASURE
    52. 52. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD• Depends on accurate external data DATA CODE MEASURE
    53. 53. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD• Depends on accurate external data DATA CODE MEASURE• Speed through the loop beats quality of iteration
    54. 54. Changes Context of Progress
    55. 55. Not About Working Big Plan
    56. 56. Progress =Validated Learning About Customers
    57. 57. Or we can accelerate into a brick wall
    58. 58. Changes scope ofdevelopment efforts
    59. 59. Changes scope of development efforts• Huge feature lists don’t make sense
    60. 60. Changes scope of development efforts• Huge feature lists don’t make sense
    61. 61. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense
    62. 62. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense
    63. 63. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense• Create the smallest amount of “product” necessary to learn
    64. 64. Minimum Viable Product
    65. 65. Product / Market Fit“Do whatever is required to get to product/market fit. Including: changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital —whatever is required.” — Marc Andreessen http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html
    66. 66. Great Startups Adjust To Facts
    67. 67. The Pivot http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
    68. 68. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
    69. 69. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
    70. 70. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site.• Pivot: change directions but stay grounded in what we’ve learned. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
    71. 71. The Pivot PIVOTCARTOON_http-//www.newyorker.com/humor/issuecartoons/2010/04/26/cartoons_20100419#slide=2
    72. 72. On Pivots @dbinetti
    73. 73. On Pivots @dbinetti
    74. 74. On Pivots• Pivots are restatements of your business model; not synonymous with product change @dbinetti
    75. 75. On Pivots• Pivots are restatements of your business model; not synonymous with product change @dbinetti
    76. 76. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product @dbinetti
    77. 77. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product @dbinetti
    78. 78. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product• Pivots are vision-driven, not testing driven @dbinetti
    79. 79. Speed Wins ...
    80. 80. What about management process?
    81. 81. Leading & Managing Lean
    82. 82. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”
    83. 83. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”
    84. 84. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results
    85. 85. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results
    86. 86. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop
    87. 87. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop
    88. 88. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty
    89. 89. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty
    90. 90. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty• Iteration speed is governed by speed of learning not “building”
    91. 91. Start with Vision and adjust
    92. 92. Unit Economics & Biz model NOT projections
    93. 93. Openness NOT command and control
    94. 94. Learning Can Be Scary
    95. 95. Innovation accounting
    96. 96. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now
    97. 97. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now
    98. 98. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal
    99. 99. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal
    100. 100. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal• Pivot or persevere • When experiments reach diminishing returns some distance from goal
    101. 101. In Action - Stanford Lean Launchpad
    102. 102. Tactical fun with MVPs
    103. 103. Minimum Viable Product• Minimum set of features needed to learn from earlyvangelists - visionary early customers • Avoid building products that nobody wants • Max learning per $• Probably much more minimum than you think
    104. 104. Minimum Viable Product• Visionary customers can “fill in the gaps” on missing features, if the product solves a real problem• Allows us to achieve a big vision in small increments without going in circles• Requires a commitment to iteration• MVP is only for BIG VISION products; unnecessary for minimal products
    105. 105. Minimum Viable Product
    106. 106. Minimum Viable Product• Smoke testing with landing pages, adwords
    107. 107. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day
    108. 108. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing
    109. 109. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes
    110. 110. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products
    111. 111. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products• Concierge tests
    112. 112. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products• Concierge tests• Cohort and Engagement
    113. 113. MVP Fears
    114. 114. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision
    115. 115. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision
    116. 116. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”
    117. 117. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”
    118. 118. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”• Too busy to learn: “it would be faster to just built it right, all this measuring distracts from delighting customers”
    119. 119. Lean Startup Principles
    120. 120. Lean Startup Principles• Innovation & Entrepreneurship is management
    121. 121. Lean Startup Principles• Innovation & Entrepreneurship is management
    122. 122. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning
    123. 123. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning
    124. 124. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn
    125. 125. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn
    126. 126. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality
    127. 127. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality
    128. 128. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality• Innovation Accounting
    129. 129. People and Resources Textjohn@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    130. 130. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    131. 131. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    132. 132. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    133. 133. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    134. 134. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    135. 135. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    136. 136. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    137. 137. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/ john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    138. 138. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/• Lean Startup Circle online - ~4,000 members with active discussions john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
    139. 139. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/• Lean Startup Circle online - ~4,000 members with active discussions https://groups.google.com/group/lean-startup-circle john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

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