Lean startups Partial Summary

Download Lean startups Partial Summary

Post on 21-Oct-2014

6.554 views

Category:

Business

0 download

Embed Size (px)

DESCRIPTION

A brief introductory summary of the principles found in Eric Ries' book Lean Startups

TRANSCRIPT

Lean Startups

Lean Startups by Eric Ries

General Concepts summarized (partial) by George Howard (@gah650)

2

Partial Summary of Eric Reis' Lean Startups

Intro

This deck provides a basic and partial summary of the book Lean Startups by Eric Ries. You should buy the book.

3

Partial Summary of Eric Reis' Lean Startups

Its the boring stuff that matters the most

4

Partial Summary of Eric Reis' Lean Startups

Entrepreneurship is a kind of management

5

Partial Summary of Eric Reis' Lean Startups

Lean Startup

Builds onLean manufacturingDesign thinkingCustomer developmentAgile development

6

Partial Summary of Eric Reis' Lean Startups

Lean Startup

Characterized byExtremely fast cycle timeFocus on what customers want without asking them)Scientific approach to decision making

7

Partial Summary of Eric Reis' Lean Startups

5 principles

Entrepreneurs are everywhereEntrepreneurship is managementValidated LearningBuild-Measure-LearnInnovation Accounting

8

Partial Summary of Eric Reis' Lean Startups

Why Startups Fail

9

Partial Summary of Eric Reis' Lean Startups

Established business metrics dont apply

Startups dont yet know who their customer is or what their product should bePlanning and forecasting are only accurate when based on a long, stable operating history, and relatively static environment

10

Partial Summary of Eric Reis' Lean Startups

Just Do it is a myth

An unmanaged startup will failEntrepreneurship is managementEntrepreneurship is a discipline

11

Partial Summary of Eric Reis' Lean Startups

Part One

Vision

12

Partial Summary of Eric Reis' Lean Startups

Entrepreneurial management

Problem many Entrepreneurs eschew traditional management theory as too constrainingProblem traditional management not designed to deal with the chaos of startups

13

Partial Summary of Eric Reis' Lean Startups

Theory of Entrepreneurship must encompass

Vision and conceptProduct developmentMarketing and salesScaling upPartnerships and distributionStructure and organizational design

14

Partial Summary of Eric Reis' Lean Startups

Theory of Entrepreneurship must encompass

Provide method for measuring progress in the context of extreme uncertaintyGive Entrepreneurships clear guidance on how to make trade-off decisions:Whether and when to invest in processFormulating, planning, and creating infrastructureWhen to go it alone/when to partnerWhen to respond to feedback and when to stick to visionHow and when to invest in scaling the business

15

Partial Summary of Eric Reis' Lean Startups

Theory of Entrepreneurship must (more than anything else)

Allow Entrepreneurs to make testable predictions

16

Partial Summary of Eric Reis' Lean Startups

Lean Startup

Ask people to start measuring their productivity differentlyStartups accidentally build something nobody wants, it doesnt matter if they do it on time and on budgetThe goal of the startup is to figure out the right thing to build the thing customers want and will pay for as quickly as possible

17

Partial Summary of Eric Reis' Lean Startups

Lean Startup

Emphasizes fast iteration and customer insight a huge vision, and great ambition, all at the same time

18

Partial Summary of Eric Reis' Lean Startups

Engine of growth

Every new version of a product, every new feature, and every new marketing program is an attempt to improve the engine of growthDirectional planning more rocket ship than daily commute (i.e. over-adherence to a set-in-stone direction) - is badRigorous and faithful achievement of failure

19

Partial Summary of Eric Reis' Lean Startups

Drive a startup

LS approach: instead of making complex plans that are based on a lot of assumptions, you can make constant adjustments with a steering wheel called the build-measure-learn feedback loop.Sharp turn = pivot

20

Partial Summary of Eric Reis' Lean Startups

True North

Startups have a True North a destination in mindLS refers to this as its visionTo achieve that vision, startups employ a strategyBusiness modelProduct road mapPov about partners and competitorsIdeas about who the customer will beThe product is the end result of this strategy

21

Partial Summary of Eric Reis' Lean Startups

22

Partial Summary of Eric Reis' Lean Startups

Change/constant

Products change constantly through the process of optimization (tuning the engine)The strategy may have to change (less frequently) = a pivotThe overarching vision rarely changesEntrepreneurships are committed to seeing the startup through to that destinationEvery setback is an opportunity for learning how to get where they want to go

23

Partial Summary of Eric Reis' Lean Startups

Define

24

Partial Summary of Eric Reis' Lean Startups

Intrapreneurs

Convert raw materials of innovation into real-world breakthrough successesEntrepreneurs who operate inside an established organization sometimes are called Intrapreneurs because of the special circumstances that attend building a startup within a larger company.

25

Partial Summary of Eric Reis' Lean Startups

Startup definition

A startup is a human institution designed to create a new product or service under conditions of extreme uncertaintyNothing to do with:Size of the companyIndustrySectorA startup is greater than the sum of its parts; it an acutely human enterprise

26

Partial Summary of Eric Reis' Lean Startups

Innovators dilemma

Established companies are very good at creating incremental improvements to existing products and serving customers (sustaining innovation), but struggle to create breakthrough new products (disruptive innovation) than can create new sustainable sources of growth

27

Partial Summary of Eric Reis' Lean Startups

Importance of LS in established companies

The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking, and this creates an imperative for even the most entrepreneurial companies to invest in innovation.The only sustainable path to long-term economic growth is to build an innovation factory to create disruptive innovations on a continuous basis

28

Partial Summary of Eric Reis' Lean Startups

Learn

29

Partial Summary of Eric Reis' Lean Startups

Fundamental goal

Engage in organization building under conditions of extreme uncertaintyMost vital function is learningLearn the truth bat which elements of our strategy are working to realize our vision and which are just crazyLearn what customers really want, not what they say they want or what we think they should want

30

Partial Summary of Eric Reis' Lean Startups

Validated Learning

Not after-the-fact rationalization or a good story designed to hide failureIs a rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertaintyIs the process of demonstrating empirically that a team has discovered valuable truths about a startups present and future business prospects

31

Partial Summary of Eric Reis' Lean Startups

Validated Learning

Is more concrete, more accurate, and faster than market forecasting or classical business planningIs the principal antidote to the lethal problem of achieving failure: successfully executing a plan that leads nowhere

32

Partial Summary of Eric Reis' Lean Startups

Quantitative Targets

Create the motivation to engage in qualitative inquiry and guides questions

33

Partial Summary of Eric Reis' Lean Startups

Value v waste

Lean thinking defines value as providing benefit to the customer; anything else is wasteRemember, this is different from asking customers what they want; most customers dont know what they want in advance.

34

Partial Summary of Eric Reis' Lean Startups

Avoidance of waste

Shipping faster allows you to see what the customer values, and thus you can avoid debating what features the customer wants, etc.Learning is the essential unit of progress for startupsEffort that is not absolutely necessary for learning what customers want can be eliminatedThis is VALIDATED learning always demonstrated by positive improvement in the startups core metrics.

35

Partial Summary of Eric Reis' Lean Startups

Key points

Effort that is not absolutely necessary for learning what customers want can be eliminatedThis is VALIDATED learning always demonstrated by positive improvement in the startups core metrics.Look for synthesis b/w vision and what customers would accept

36

Partial Summary of Eric Reis' Lean Startups

The audacity of zero

37

Partial Summary of Eric Reis' Lean Startups

Zero invites imagination

At the start when the number is zero people can imagine successOnce you launch, and the numbers are small, it pours cold water over the projectTherefore, people delay launch, delay initiatives until they are CERTAIN of success.However, these delays cause waste, and decrease feedback, and thus increase risk that a startup builds something nobody wants

38

Partial Summary of Eric Reis' Lean Startups

paradox

Releasing a product w/o planning and hoping for the best is not a good plan either

39

Partial Summary of Eric Reis' Lean Startups

tension

Backers, etc want hockey-stick growthIf you lack the language of validated learning, people will focus on the wrong metricsMust look beyond small gross numbers to see real progress (assuming there is real progress being made)Must show that product dev are leading towards success w/o giving in to the temptation to fall back on success theater. Things you can do to look successful

40

Partial Summary of Eric Reis' Lean Startups

Success theater examples

Marketing gimmicksSuper bowl adsFlamboyant prAll meant to juice gross numbers = illusion of tractionEventually the fundamentals of the biz win out and the PR bump passes.

41

Partial Summary of Eric Reis' Lean Startups

Key questions

Should this product be built?Can we build a sustainable biz around this set of products?To answer, we need a method for systematically breaking down a biz plan into its component parts and testing each part empiricallyIn the LS model every product, feature, marketing campaign everything a startup does is understood to be an experiment designed to achieve validated learning.

42

Partial Summary of Eric Reis' Lean Startups

Ch 4

Experiment

43

Partial Summary of Eric Reis' Lean Startups

paradox

If the plan is to see what happens, a team is guaranteed to succeed at seeing what happens but wont necessarily gain validated learningIf you cannot fail, you cannot learn

44

Partial Summary of Eric Reis' Lean Startups

LS method

Reconceives a startups efforts as experiments that test its strategy to see which parts are brilliant and which are crazyBegins with a clear hypothesis that makes predictions about what is supposed to happenThen tests those predictions empiricallyJust as scientific experimentation is informed by theory, startup exp is guided by the startups vision

45

Partial Summary of Eric Reis' Lean Startups

goal

The goal of every startup is to discover how to build a sustainable biz around that vision

46

Partial Summary of Eric Reis' Lean Startups

Think big, start small

Zappos approachSmall-scale efforts did not prevent a huge vision from being realized

47

Partial Summary of Eric Reis' Lean Startups

For long-term change, experiment immediately

Have to deal with untested assumptions and a lot of visionBreak it down vision into component parts (TWO MOST IMPORTANT ASSUMPTIONS ENTREPRENEURS MAKE):Value hypothesis test whether a product or services really delivers value to customers once theyre using itGrowth hypothesis tests how new customers will discover a product or service

48

Partial Summary of Eric Reis' Lean Startups

An experiment is a product

That is, an experiment must be more than just a theoretical inquiry; it is also a first product Allows managers to get started with the campaignGet early adopters

49

Partial Summary of Eric Reis' Lean Startups

Key questions

Do customers recognize that they have the problem youre trying to solve?If there was a solution, would they buy it?Would they buy it from you (company)?Can we build a solution for that problem?

Typically, companies go to step 4 prior to confirming customers have the problem

50

Partial Summary of Eric Reis' Lean Startups

Success is not delivering a feature

Success is learning how to solve the customers problem

51

Partial Summary of Eric Reis' Lean Startups

Key approach

Treat the new venture as an experimentId the elements of the plans that are assumptions rather than factsFigure out ways to test themUsing these insights, build a min viable product and have something up and running before the official plan was set in motion

52

Partial Summary of Eric Reis' Lean Startups

remember

Planning is a tool that only works in the presence of a long and stable operating history

53

Partial Summary of Eric Reis' Lean Startups