This presentation illustrates the emergence and impact of a new management practice based on Steve Blank's Customer Development Model and Eric Ries' lean StartUp approach.
4. The Emergence of New Practices
1911
Scientific
Mgmt
1948
Toyota
Production
System
2001
Agile
Develo
pment
2003
Lean
Thinking
2005
Customer
Development
2009
Lean
Startup
Mvmt
5. A set of principles and frameworks that helps
startups identify a sustainable business model
with the least amount of waste possible
Entrepreneurial Management
12. Customer Development
• New 1: De-risking a new venture by breaking up the
commercialization process and prioritize business
problems to solve
• New 2: Focus on Customer Acquisition
Customer
Discovery
Customer
Validation
Customer
Creation
Company
Building
13. Lean Startup
• Lean Startup =
Customer Development
+ Agile development
• Strong build+ measure
focus
• Popularized approach –
created Lean
Movement
Build
Test
Measure
Learn
16. Step 0- Describe Idea
What kind of problem do you solve for the
customer? Is this an important problem for these
customers?
Is there a big potential market for your idea?
What is your competition and how do they solve
this problem for their customers today?
What is unique about your way of solving the
problem?
17. Step 1 – Review Assumptions
• Is the customer problem you are solving validated
by a measurable fact?
• Are you able to identify which customers are
suffering the most from this problem?
• Do you understand how the problem impacts the
customer and their business?
• Do you have evidence that links the customer
problem to the target customer?
18. Step 2 –Test
• What key piece of information would validate
or invalidate the assumption?
• Where does that information reside?
• What is the best way to gather that
information?
19. Step 4 & 5 – Measure & Evaluate
• Is the customer problem urgent?
• Is the problem pervasive?
• Will customers pay to have the problem
solved?
How do these answers measure against your
initial assumptions?
21. The Pivot
Easier when….
• You have invested little
to this point
• You are getting
absolutely no traction
Harder when…….
• High noise to signal
ratio ( no clear
feedback)
• Next step is unclear
Entrepreneurs are eternal optimists – choose to persist:
- Tweak a little: Our next version will take off!
- Easy: Our next campaign/trade show will land key customers!
22. THE 3 STAGES OF THE PROCESS
The quest for a Business Model
23. The 3 stages of the search process
Customer Problem
Product Solution
Business Model
25. Value Proposition
• What you offer and how you offer it to
customers
• What type of value or benefit is associated with
your offering (e.g., cost savings, time savings,
revenue increase, customer/employee
satisfaction) and how much of it the customer
can expect
• How the value is generated
• Why it differs from anything else on the market
26. Examples
Winners
Winners is a
department store that
offers fashion conscious
consumers the latest
brand names for up to
60 per cent off.
Google
Google is the world’s
largest search engine
that allows internet
users to find relevant
information quickly and
easily
28. Summary
• Startups are different
• Search is about learning
• Lean is about
minimizing waste
• CDM: De-risk your
venture by breaking up
the process
• Test for customer
problem first
• Test solution/MVP
• Test customer
acquisition
• Human element: Give
someone the task to
keep you accountable!
29. Conclusion
• Entrepreneurial Management offers a set of
tools and processes that makes the process of
starting up more manageable:
• The philosophy brings clarity to the skillset
required to succeed:
– Less persistence – more perception
– Stack the odds in your favour – rather than trying
to win against all odds
– Commit to the process – not the idea
Help me understand who you are? By show of hands…..
Tell the story about my first job. Loved Michael Porter and Philip Kotler, Henry Minztberg, Al Ries, David Aaker etc. But they way writing for big corporations – not startup. For people operating in established marketsWhat’s not working:Frameworks meant for established companiesA lot more is known about established markets – rate of change is slower than what is the case;So I’d create strategies and plans using what I knew, but from the outset it felt wrong; you kind of knew that this was a window dressing exercise;So I largely went through the 90’ies having to operate by trial and error; seeking to avoid repeating mistakes and duplicating whatever worked.
Entrepreneurial management is relatively new – emerged in the last decade – but its roots go way back in time. We’ll go more into how the practices of EM came about in a minute – let me first define what we mean
Read definitionUseful for entrepreneurs and their teams in early-stage start-ups as well as those seeking to launch new products from within larger companies, and governments looking to innovate to improve government itselfFundamentally, Entrepreneurial management is about de-risking a new venture in a step-wise, iterative process of investigation and learning
Blank: A startup is a temporary organization with an idea designed to search for a repeatable and scalable business model (S. Blank) The startup phase is on the left hand side – this is where we use EMThe growth phase relies more on established practices
Insert Steve Blank process form FOB presentationKey points:Iterative processPurpose is to glean and integrate learningBreaks commercialization process down to manageblepieciesCan consist of 3 circles
Insert key questions – describe your idea
What do you know - what don’t you knowIdentify assumptions that can be tested, determine how to test and test
Many different ways of testing – some sort of market exposureCustomer interviewTest usersObservationIn-field
Back at the office
Figure from presentation
Pivot – IterationDifficult choice: Have you given your strategy a chance or is there a risk you are pulling the trigger too soon?What are you changing to?If you are obviously failing, change is less gut wrenching than if you are doing OK; what’s to say that your next version won’t take off; or your next campaign won’t be a slam dunk? It is not hard to understand why entrepreneurs choose to persist in those cases.Change is easier when little has been invested – than further into the venture, when plenty has been invested (key MVP)Pivot: Most pivots will be done with a high noise to signal ratio: almost no clear feedbackFactors that matter:TimingDestinationClarityCost
ProblemSolutionBusiness ModelWell – wasn’t the whole purpose of the search to find business model – so why are we doing the other two before business model
Insert Business Model Canvas This is Alex Osterwalder’s Business Model Canvas – published in 2009 – enormously popular; we use it here at MaRS, They use it in class at business schools such as Stanford and of course in a lot of businesses for their planning.Ash Maruya has developedThe value proposition sits in the middle of the canvas – everything in the canvas depends on the value proposition; so as decision for the 9 building blocks
Show key components
Skills: not persistence but perceptive; not against all odds; but diligently stacking the odds in your favour; although still a heroTeam/co-founder skillsComittment to process – not ideaKeep each other accountableMaintain momentum