4.3 lean startup


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4.3 lean startup

  1. 1. This presentation is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this presentation are the sole responsibility of Rick Rasmussen and do not necessarily reflect the views of USAID or the United States Government. The Lean Startup
  3. 3. Lean Startup Method • Inspired by Toyota’s lean manufacturing system • Build-Measure-Learn – Captures customer data – Uses to adjust product strategy • Only do Value Creating Activities – Identify what customers find valuable – They are willing to pay for value – Key metric for developing products
  4. 4. Ideas • Applying the Scientific Method to a Startup ! • It’s not whether a product CAN be built, but whether it SHOULD be built • Run Validated Learning experiments to assess customer demand • Uncertain environments deserve Customer Discovery
  5. 5. Build • Design experiments to test your product hypotheses with customer feedback • Value Hypothesis: Measures how valuable customers find the product • Growth Hypothesis: Measures the extent to which customers can discover and spread the product • Upon experiment completion, modify/optimize the hypothesis and test with new experiments
  6. 6. Product • Construct a Minimum Viable Product (MVP) in order to start getting feedback. • Goal of an MVP is to test hypotheses as early in the development cycle as possible • Test during development from concept to early prototype under a fictitious brand name • MVP helps minimize wasted time and results (hopefully) in products that customers want
  7. 7. Measure • “Only 5% of entrepreneurship is the big idea… The other 95% is the gritty work that is measured by innovation accounting” - Eric Ries • Collecting data in three key areas: – Establish the baseline – Tune the engine – Pivot or persevere • Metrics associated with innovation accounting should have three key attributes (the three As) – Actionable – Accessible – Auditable • Use data to decide whether to “pivot or persevere”
  8. 8. Learn and Potentially Pivot “A pivot is the heart of the Lean Startup method” – Eric Ries • Zoom-in pivot: Single feature becomes entire product • Zoom-out pivot: Entire product becomes a single feature of a larger product • Customer need pivot: Company understands customer so well, understanding there is a different product than originally hypothesized
  9. 9. Learn continued • Platform pivot: Product changes from being a platform to an application or an application to a platform • Business architecture pivot: Switching from a high margin/low volume business to high volume/low margin or vice versa • Engine of growth pivot: The way a product captures value (revenue or profit) is reconsidered and modified • Channel pivot: A new distribution channel • Technology pivot: Same solution, new technology
  10. 10. Engines of Growth “Startups have to focus on the big experiments that lead to validated learning. The engines of growth framework helps them stay focused on the metrics that matter” - Eric Ries • Sticky engine of growth: Rate of customer acquisition exceeds discontinuation. This churn rate results in a sticky product. • Viral engine of growth: Number of users recruited by each user (viral coefficient) exceeds one. • Paid engine of growth: Customer acquisition costs are less than customer lifetime value.
  11. 11. Innovation in Larger Companies • Nurture disruptive innovation: – Secure resources for innovation – Make them scarce • Create a platform for experimentation: – Isolate main organization from experimentation and findings – “Innovation sandbox” allows multiple teams to run small experiments against similar result metrics • Cultivate management portfolio: – Empower early-stage “entrepreneurs” to independently create product for handoff to larger organization – Ethos of Build-Measure-Learn must become status quo within the organization
  12. 12. Questions? • The Lean Startup by Eric Ries • Rose to #2 on NY Times Best Seller List • 90,000 copies sold PRODUCTDATA BUILDLEARN IDEAS MEASURE