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ENABLING
INNOVATION
Using Lean Startup &
Innovation Accounting
                                                                            LUKAS FITTL
                                                                                        @lfittl
                                                                                  spark59.com


           Lean Startup is trademarked by Eric Ries and used with permission.
   Business Model Canvas is created by Alex Osterwalder and licensed under CC-BY-SA.
About Myself
 Founded 2 tech startups,
worked with many others
                            &   Spark59
Innovation in an
Agile Environment
Waterfall
Risk
                         BU ILD


                BU ILD


       B UILD

                                       Time
                            Release!
Agile / XP / SCRUM
Risk




       BUILD    BUILD     BUILD    BUILD
                                                Time
          Release! Release! Release! Release!
Are we making our
     product
 better or worse?
Are we efficient?
       vs
Are we effective?
The Definition of Done
should include testing
 customer behaviour
Validated Learning
IDEAS



LEARN             BUILD




 DATA              PRODUCT


        MEASURE




                  Experiment
“State, before you do the work,
this is what I believe will happen,
 and when you do the the work
 see whether it happens or not.”

         - Jabe Bloom
Hypotheses
 instead of
Requirements
Requirement:
Users can create 3D avatars.
Hypothesis:
We believe that users will create a 3D
avatar and spend more time on other
           users profiles.
Falsifiable Hypothesis:
  50% of newly signed up users will create a 3D avatar,
Avg time spent on user profiles will go from 30s to 1min+
Be closer to reality,
      and avoid
bias & comfort zones
User Stories != Experiments

 Missing the “Measure” Stage
No Way to Validate the Learning
Deploy != Launch
if $rollout.active?(:chat, current_user)
   ...
else
   ...
end
Deploy Every Commit
Release To A Small Set of Customers
Launch The New Feature When Ready
Experiments need to be
shown to actual customers

   Not just to your team!
Tools & Ta
                       c   tics

    Lean Stack:
Experiment Reports
EXPERIMENT REPORT                              Title: [TITLE]                                  Author: [NAME]                 Created: [DATE]


Background                                                                  Results
What are you trying to learn or achieve?                                    Enter the data.




Falsifiable Hypothesis
 Your list of statements on the expected outcome of the experiment.

 Use this format:
 [Specific Repeatable Action] will [Expected Measurable Outcome]




                                                                            Validated Learning                              VALIDATED or INVALIDATED

                                                                             Summarize your learning from the experiment.

Experiment Scope
 How many and/or how long will the experiment last?




Minimum Build Plan
 List the build plan step by step to get your measurement and experiment.




                                                                            Next Action
                                                                             Whatʼs the next experiment?




                                                                                                                                    Lean Stack by Spark59.com
EXPERIMENT REPORT                              Title: [TITLE]                                  Author: [NAME]                 Created: [DATE]


Background                                                                  Results
What are you trying to learn or achieve?                                    Enter the data.




Falsifiable Hypothesis
 Your list of statements on the expected outcome of the experiment.

 Use this format:
 [Specific Repeatable Action] will [Expected Measurable Outcome]




                                                                            Validated Learning                              VALIDATED or INVALIDATED

                                                                             Summarize your learning from the experiment.

Experiment Scope
 How many and/or how long will the experiment last?




Minimum Build Plan
 List the build plan step by step to get your measurement and experiment.




                                                                            Next Action
                                                                             Whatʼs the next experiment?




                                                                                                                                    Lean Stack by Spark59.com
Background
  What are you trying to learn or achieve?




Give Context.
Why is this relevant?
Falsifiable Hypothesis
   Your list of statements on the expected outcome of
   the experiment.

   Use this format:
   [Specific Repeatable Action] will
   [Expected Measurable Outcome]




Quantify Your Goals
Experiment Scope
   How long will the experiment last?




  Minimum Build Plan
   List the build plan step by step to get your
   measurement and experiment.




Set Scope & Timebox
Planning an Experiment
1. Context - Why is this relevant?
2. Quantify Your Goals
3. Set Scope & Timebox
Test your
Value and your Growth
   Hypothesis first
Validated Learning:
     Define Hypothesis,
Build & Launch Experiment,
  Learn from the Results
Concepts for making this work:
1. Product Ownership
2. Shared Understanding
3. Accountability
4. Scoping & Timeboxing
Hierarchy
               1. Product Ownership

               2. Shared Understanding
  Anarchy
               3. Accountability

               4. Scoping & Timeboxing
Lean Startup
1. Product Ownership
2. Shared Understanding

3. Accountability

4. Scoping & Timeboxing
Centralized Product Ownership



Cross-Functional   Product
                             Customers
     Team           Owner
Distributed Product Ownership



 Business     Cross-Functional
                                 Customers
Stakeholder        Team
Product Ownership is about
  Defining Customer Value,
       not Aesthetics
Business Experiments
  instead of ( just)
 Development Tasks
Experiments are
    Owned By
 A Team Member
Draws Expert
Resources as needed
  (e.g. through pairing)
1. Product Ownership

2. Shared Understanding
3. Accountability

4. Scoping & Timeboxing
Why?
 are we doing
what we’re doing
Team needs to
Understand The Impact
    of their work
“Shared understanding is about
getting everyone to walk in the
 other person’s shoes a little.”
   Bill Scott - UX at Netflix, PayPal

This includes the business owner’s shoes!
Are we making progress
towards our business goal?
Tools & Ta
                      c   tics

 Company-Wide
Metrics Dashboard
Actionable
Accessible
Auditable
Actionable
Tie specific repeatable actions to
observed results.
Accessible
Let everyone in the company
see and understand whats going on.
Auditable
Tie the numbers back to actual
customers, so you can verify the metric
and believe in it.
You need all three




            ACTIONABLE




AUDITABLE                ACCESSIBLE
Unit Economics
  instead of
Gross Revenue
Dave McClure’s AARRR Metrics
       ACQUISITION   How do users find you?



        ACTIVATION   Do users have a reat first experience?



        RETENTION    Do users come back?



         REVENUE     How do you make money?



         REFERRAL    Do users tell others?
Value Metrics
              How do users find you?      ACQUISITION


Do users have a great first experience?   ACTIVATION


                Do users come back?      RETENTION


           How do you make money?        REVENUE


                 Do users tell others?   REFERRAL
Growth Metrics
              How do users find you?      ACQUISITION


Do users have a great first experience?   ACTIVATION


                Do users come back?      RETENTION


           How do you make money?        REVENUE


                 Do users tell others?   REFERRAL
Tools & Ta
                     c   tics

Cross-Functional
     Pairing
Tools & Ta
                          c   tics

Weekly Strategy Meeting
   Part 1: Ideation
Avoid Brainstorming.

      It causes
Premature Convergence
   Around One Idea.
By Daniel Cook
http://www.lostgarden.com/2010/08/visualizing-creative-process.html
Design Studio
   by Will Evans
   @semanticwill
Observe & Explain      Ideate       Discuss
  To The Group          Alone     In the Group


                     Sketch &
                    Write down!
Review Experiments
Only In Weekly Meeting

 Focus On Efficiency
  In Daily Stand-ups
1. Product Ownership

2. Shared Understanding

3. Accountability
4. Scoping & Timeboxing
Tools & Ta
                           c   tics

       Lean Stack:
Validated Learning Board
Kan-ban Board

         IDEAS              Build   Measure   Learn

LEARN             BUILD                        ✓
                                               ✘

 DATA             PRODUCT


        MEASURE
Build   Measure   Learn

                   ✓

                   ✘
1 experiment
per team member
Separate Task Board
for tracking the details

Swimlane for each Experiment
Tools & Ta
                          c   tics

Weekly Strategy Meeting
    Part 2: Review
Review Experiment Results
    Challenge the Interpretation
Kill / Restart overdue Experiments
EXPERIMENT REPORT                              Title: [TITLE]                                  Author: [NAME]                 Created: [DATE]


Background                                                                  Results
What are you trying to learn or achieve?                                    Enter the data.




Falsifiable Hypothesis
 Your list of statements on the expected outcome of the experiment.

 Use this format:
 [Specific Repeatable Action] will [Expected Measurable Outcome]




                                                                            Validated Learning                              VALIDATED or INVALIDATED

                                                                             Summarize your learning from the experiment.

Experiment Scope
 How many and/or how long will the experiment last?




Minimum Build Plan
 List the build plan step by step to get your measurement and experiment.




                                                                            Next Action
                                                                             Whatʼs the next experiment?




                                                                                                                                    Lean Stack by Spark59.com
Results
Enter the data.




 Actual data you Measured,
 based on your Hypothesis.
Validated Learning
Summarize your learning from the experiment.




                                +
 Validated
 Invalidated                                   Why?
 Inconclusive
Next Action
Whatʼs the next experiment?




 What will you do next
 based on your learning?
✘
   Failure is good.
 Validated Learning is our
Measurement of Progress.
1. Product Ownership

2. Shared Understanding

3. Accountability

4. Scoping & Timeboxing
Timeboxing
Build   Measure   Learn

                   ✓

                   ✘
Experiment Scope

Build      Measure   Learn

                      ✓

                      ✘
Startups don’t starve,
       they drown.

Open-ended learning is dangerous,
        always timebox.
Recommended Timeboxes:
Interviews/Prototypes:   1-2 Weeks
Qualitative Tests:       1 Month
Quantitative Tests:      2-3 Months
Customer Interview
               (Paper) Prototype
                            MVP
            “The Perfect Product”
Inside-the-Building Comfort Zone
Get-out-of-the-Building Reality
            Customer Interview
              (Paper) Prototype
                           MVP
          “The Perfect Product”
Justify the Cost of MVPs
       with Proof
Understand Problem:
          Explorative Customer Interviews

                  Define Solution:
            User Testing With Prototypes

              Validate Qualitatively:
      Release MVP and hand-collect feedback
             10s to 100s of customers

                 Verify Quantitatively:
Partial Rollout or Split Test and measure improvement
             100s to 10,000s of customers
In Summary
0. Validated Learning
1. Product Ownership
2. Shared Understanding
3. Accountability
4. Scoping & Timeboxing
Tools & Ta
                             c   tics
  Experiment Reports
Company-wide Dashboard
Validated Learning Board
Weekly Strategy Meeting
Thanks!
leanstack.com
lukas@spark59.com

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