Lean methodology
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The document discusses the Lean Startup methodology. It describes the stages of identification, evaluation, initiation, progress, persistence, and success. It then discusses the typical questions entrepreneurs should ask themselves at each stage. Finally, it summarizes the key aspects of the Lean Startup process including building minimal viable products, measuring metrics, learning through experiments and customer feedback, and deciding whether to pivot or persevere with the business idea. The overall goal is to systematically test business hypotheses through short development cycles to achieve product-market fit.
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Lean methodology
- 1. The Lean Methodology Sachidananda B S 3/9/2016 © Sachidananda 1
- 3. 1Identification 2 Evaluation 3Initiation 4 Progress 5Persistence 6 Success The Entrepreneurial Process 3/9/2016 3© Sachidananda
- 4. Typical Questions 3/9/2016 4 1 Identificatio n • I know this technology, I find these things happening in the environment, I think can do it • What all could I build? • Do I have the means to do it? Evaluation • Is there a need for something that I would like to build? Technology? • Family support? Financial Considerations? • Impact of action? Self awareness 2 Initiation • What is the MVP I could build? • Who are the people I could meet to get a good assessment of the product/service3 Progress • What feedback should I incorporate? What should I discard? • What markets would be attractive to pursue? What features should I project? 4 Persistence • Should I pursue or pivot? • What do the metrics tell me?5 Success • Scaling issues! 6 © Sachidananda
- 5. The Golden Circle 3/9/2016 © Sachidananda 5 What How Why Traditional Business Approach Suggested Business Approach Understanding the root of the issue we decide to work on is essential
- 6. The 5 why approach 3/9/2016 © Sachidananda 6
- 7. Before we start! 3/9/2016 © Sachidananda 7 What How Why Product Strategy Vision Long term Failure is not for the entrepreneur, its only for these stages!
- 8. FOR START-UPS THE CHALLENGE IS.... 3/9/2016 © Sachidananda 8
- 9. 3/9/2016 © Sachidananda 9 MARKETPRODUCT Your product is NOT “the product” Your “Business Model” is the product Remember
- 10. FOR START-UPS THE CHALLENGE IS.... ITERATE FROM PLAN A TO A PLAN THAT WORKS -before you run out of resources... 3/9/2016 © Sachidananda 10
- 11. LEAN START-UP 3/9/2016 © Sachidananda 11 Vision Steer Accelerate
- 12. Vision 3/9/2016 © Sachidananda 12 Product Strategy Vision Strategy: Employed by the start up to achieve its vision & includes – business model, product road map, partners, competitors, who is a customer etc. Change in Strategy is a Pivot Product: Is the end result of the strategy Change in Product is Optimization Vision: The true north! The destination the start up intends to reach Entrepreneurs are committed to seeing what the start up to its destination A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty 5 Principles of Lean Startup Method 1. Entrepreneurs are everywhere 2. Entrepreneurship is management 3. Validated Learning 4. Build-Measure-Learn 5. Innovation Accounting
- 13. Steer 3/9/2016 © Sachidananda 13 • Startup is a catalyst that transforms ideas into products • As customers interact with the products they generate feedback and data •Feedback Loop - Build Measure Learn 1. Identify the hypothesis to test – leap of faith assumptions 2. Build the MVP – version that enables a full turn of the BML loop 3. Measure: Is the product development effort leading to real progress – 1. Innovation Accounting 2. Learning Milestones 01 IDEA ! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 PIVOT OR PERSEVERE? 6.b PERSEVERE Experiment proves hypothesis 6.a PIVOT Experiment s disprove hypothesis Pivot?
- 14. Accelerate 3/9/2016 © Sachidananda 14 Batch The power of small Batches - Equivalent of the andon card - Continuous deployment -Feedback on design decisions almost instantaneous -Large batches could initiate death spirals for the organization! - pull instead of push (learn- measure-build)! Growth New customers come from the action of past customers. Growth Through - word of mouth - aside effect of product usage - funded advertisement - repeat purchase or use 3 engines of growth 1. Sticky engine 2. Viral 3. Paid Adapt The 5 why approach 1. Be tolerant to all mistakes the first time 2. Never allow the same mistake to be made twice Innovate Structure - • Scarce but secure resources • Independent development authority • Personal stake in the outcome • Innovation sandbox • Internal teams accountable Watch out - • Protect from the parent organization • Rational fears • Hiding innovation inside the black box People Culture Process Accountability The Startup Way
- 15. Identify the Riskiest Parts of your business 3/9/2016 © Sachidananda 15 Building a successful product is fundamentally about risk mitigation For most parts, the solution is not what’s riskiest! Problem/Solution Fit 1 Key Question: Do I have a problem worth solving? • Is it something customers want? (must-have) • Will they pay for it? If not, who will? (viable) • Can it be solved? (feasible Product/Market Fit 2 Key Question: Have I built something people want? Scale 3 Key Question: How do I accelerate growth?
- 16. The Process 3/9/2016 © Sachidananda 16 01 IDEA ! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 PIVOT OR PERSEVERE? 6.b PERSEVERE Do I have real evidence from my buyer that this is compelling? What are the key assumptions required to make this business work? How do I definitely prove or disprove the assumption with minimum time or effort? Am I reacting or am I focused on validating my pivotal assumptions? Pivot or Persevere Experiment proves hypothesis 6.a PIVOT Experiment s disprove hypothesis
- 17. The Iteration Meta-Pattern 3/9/2016 © Sachidananda 17 Understanding Problem Defining Solution Validating Qualitatively Verifying Quantitatively Problem Solution Fit Product Market Fit
- 18. Pivoting - Optimize 3/9/2016 © Sachidananda 18 Focus: Experiments: Growth Optimizations Focus: Experiments: Validated Learning Pivots Finding a plan that works Accelerating that plan Validate Refine Course Correction Efficiency Your Goal: Investor’s Goal: Growth Growth Your Goal: Investor’s Goal: Learning Growth Pick bold outcomes instead of chasing incremental improvements Ideal time to raise funding Problem/Solution Fit Product/Market Fit Scale
- 19. The Key Metrics 3/9/2016 © Sachidananda 19 Acquisition Activation Retention Revenue Referral How do users find you? Do users have a great first experience? Do users come back ? How do you make money? Do users tell others?
- 20. Systematically testing your plan 3/9/2016 © Sachidananda 20 Idea BUILD Product MEASURE Data LEARN Minimize TOTAL time through the loop Build Faster Unit Tests Usability Tests Continuous Integration Incremental Deployment Free & Open-Source Cloud Computing Cluster Immune System Just-in-time Scalability Refactoring Developer Sandbox Minimum Viable Product Measure Faster Funnel Analysis Cohort Analysis Net Promoter Score Search Engine Marketing Predictive Monitoring Measure Faster Split Tests Continuous Deployment Usability Tests Real-time Monitoring & Alerting Customer Liaison Learn Faster Split Tests Customer Development Five Whys Customer Advisory Board Falsifiable Hypotheses Product Owner Accountability Customer Archetypes Cross-functional Teams Semi-autonomous Teams Smoke Tests Experiment is a cycle around the validated learning loop BUILD-MEASURE-LEARN
- 21. Recollect: Vision – Strategy - Product Product Strategy Vision 3/9/2016 © Sachidananda 21 Strategy: Employed by the start up to achieve its vision & includes – business model, product road map, partners, competitors, who is a customer etc. Change in Strategy is a Pivot Product: Is the end result of the strategy Change in Product is Optimization Vision: The true north! The destination the start up intends to reach Entrepreneurs are committed to seeing what the start up to its destination
- 22. Pivots – Catalogue 3/9/2016 © Sachidananda 22 Platform Pivot Business Architecture Pivot Zoom-out Pivot Engine of Growth Pivot Customer Segment Pivot Channel Pivot Zoom-in Pivot Value Capture Pivot Customer Need Pivot Technology Pivot Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, business model and engine of growth Companies that cannot bring themselves to pivot to a new direction on the basis of feedback from the marketplace can get stuck in the land of the living dead Pivot is a special kind of change designed to test a new fundamental hypothesis about the product, business model and engine of growth PIVOTS! A pivot is better understood as a new strategic hypothesis that will require a new MVP (minimal viable product) to test. Successful pivot puts a company on a path toward growing a sustainable business
- 23. QUESTIONS 3/9/2016 23 THANK YOU References: 1. Lean Startup – Eric Ries 2. Running Lean – Ash Maurya Image courtesy: Difference images thrown up by Google search... Thanks a ton! © Sachidananda