Aubrey Smith, Sparked Advisory
In this training, we will build on the foundation established in Lean Startup 101 and 201 by delving into examples and cases of the Lean Startup concepts in action. Attendees of Lean Startup 301 will be exposed to cutting edge work from thought leaders and experts using Lean Startup in practice today — at startups and within the enterprise. Participation in this session is essential: You will be asked to help design an MVP and experiment to test critical Leap of Faith Assumption(s) in groups and will be encourage to share experiences. The session is designed to allow attendees to stretch their skills and to push one-another to ‘learn by doing’. The session will also include:
Sample cases and live interviews with practitioners highlighting the application of core concepts;
Exercises designed to bring the concepts to life and challenge participants to deepen their skills;
Discussion of advanced topics such organizational culture and governance as well as industry-specific concepts such as using Lean Startup in heavily regulated markets.
Thanks to Lean Startup Co.’s law firm, Orrick, for being the sponsor for this track.
2. Agenda
1. Who is in the room?
2. How will this be valuable?
3. What will we cover?
4. How to participate?
5. What should I do next?
3. Who is in the room?
• Founders
• 1st
Time Entrepreneurs
• Serial Entrepreneurs
• Intrapraneurs
• Designers
• Developers
• Newbies
• Book Readers
4. How will this be valuable?
This Session Is
• Practical
• Clear
• Direct
• Simple
• Introductory
• Wisdom sharing
• Hands-on
This Session Is Not
• Book review
• Brainstorming
session
• Full of jargon
5. How will this be valuable?
Addressing the Main Questions
• What is it?
• Why does it work?
• How does it work?
• Why does it matter?
• How can I get started?
• How can I apply this to my company?
6. What will we cover?
What we will cover today
• Deep dive into MVPs, experiments
• Discussion of Advanced Topics
• Live Case Studies
• Exercise: Design an Experiment
Innovation
Accounting
Governance
Application in
the
Enterprise
Regulated
Markets
8. What is the Lean Startup?
Key Areas to Discuss
History
Basic Terminology / Definitions
Application / Applicability
Advanced Topics
9. What is the Lean Startup?
History
• Robert Deming
• Toyota Lean Manufacturing
• Agile Software Development
• Lean Startup
• Steve Blank
• Eric Ries
• Alexander Osterwalder
• Lean Startup Community
10. What is the Lean Startup?
A method to systematically address
uncertainty through rapid iteration and market
learning.
11. Core Principles
Entrepreneurs are everywhere
Entrepreneurship is management
Validated Learning
Build-Measure-Learn Loop
Innovation Accounting
What is the Lean Startup?
12. Common Purpose
We share a vision for the kind of company we
want to create:
A company that continuously creates new
sources of growth.
14. Who’s accountable?
• Jack Stack: The Great Game of Business
Build a culture of ownership
• Key Parallels
Lean Startup capability and accountability
should be the job of everyone at the company
Governance will vary
Customer learning trumps internal feedback
loops and decisions about products/features
15. Case 1: Lean Startup at GE?
What is FastWorks?
- Organizational change
- Teams to Growth Boards
- 500 projects, 500 coaches
What are GE Beliefs?
- Customers Determine our Success
- Stay Lean to Go Fast
- Learn and Adapt to Win
- Empower and Inspire Each other
- Deliver Results in an Uncertain
World
16. Key Areas to Discuss
History
Basic Terminology / Definitions
Application / Applicability
Advanced Topics
What is the Lean Startup?
17. What is The Lean Startup?
Terminology / Definitions
• Entrepreneurs
• Startups
• Uncertainty
• Vision
• Assumptions
• Hypotheses
• Minimum Viable Product
• Validated Learning
• Pivots
19. Now, get the facts...
• Biggest mistake you can make is to not test
the underlying assumptions of your
business plan
• Leap of Faith Assumptions:
If you prove your Leap of Faith
assumptions false, your business plan falls
apart
22. • “If then” statements that help design tests
for an assumption
Paypal - If people can easily transact across multiple
devices, they will be more frequent users of the service
• Clarifies your current understanding of what
uncertainty you seek to resolve
Paypal - Specific action? Timing? Value/amount
Draft your Hypothesis
23. Minimum Viable Product
• Experiment that helps you validate (or
invalidate) hypotheses about the value
or growth potential for a new product
• An MVP helps you answer a specific
question about one or a few of your
critical assumptions
24. Case 2: Testing @ AirBnb
Test:
• Photography Concierge
MVP
• 20 Photographers in
the field
Critical Hypothesis:
“Professional photographed listings
get 2-3 times more business (and host
don’t turn down free professional
photography.”
(SXSX, Airbnb)
26. MVP: Expert Tip
The MVP begins the process of
validated learning…
• This is an experiment, not a product
• No such thing as “an MVP”
• The smallest possible product we can
imagine to achieve maximum learning
about our hypothesis
28. Minimum Viable Product
Translate your critical assumptions into an
experiment:
Validated Learning
1. Isolate critical
assumptions for testing
2. Draft your hypothesis to
be tested
3. Build an experiment
4. Measure the results
5. Collect the data and
learning in a systematic
1. What artifact will
you use?
2. How will you
use/test it?
3. Who will you test
with (segments)
29. Minimum Viable Product
Translate your critical assumptions into an
experiment:
Validated Learning
1. Isolate critical
assumptions for testing
2. Draft your hypothesis to
be tested
3. Build an experiment
4. Measure the results
5. Collect the data and
learning in a systematic
1. What artifact will
you use?
2. How will you
use/test it?
3. Who will you test
with (segments)
30. Fears
• Change in direction without a change in
vision
• OR
• Persevere: A team’s decision to test the
next most important hypothesis
Pivot
31. Innovation Accounting
• The problem with Vanity Metrics
• Quantitative vs. Qualitative Data
• Leading vs. Lagging Indicators
32. Key Areas to Discuss
History
Basic Terminology / Definitions
Application / Applicability
Advanced Topics
What is the Lean Startup?
33. Minimum Viable Product
Translate your critical assumptions into an
experiment:
Validated Learning
1. Isolate critical
assumptions for testing
2. Draft your hypothesis to
be tested
3. Build an experiment
4. Measure the results
5. Collect the data and
learning in a systematic
1. Who will you test
with (segments)
2. What artifact will
you use?
3. How will you
use/test it?
34. Culture of Testing
1. Experiment design is important
2. But, recording and evaluating the learning is
more important
35. 1. Experiment design is important
2. But, recording and evaluating the learning is
more important
• Establish an organization that learns together
• Only step up to the sophistication of the experiment
and innovation accounting when you are ready to do
so as a team
• Team learning is the most important outcome
Culture of Testing
36. Discipline of Testing
1. Focus the learning
2. Establish the baseline
3. Track MVPs on a dashboard
4. Employ the right cadence of testing
37. 1. Focus the learning
2. Establish the baseline
3. Track MVPs on a dashboard
4. Employ the right cadence of testing
• Only as sophisticated as your organization is ready
to handle
• Remember: A well-designed experiment will inform
what your next experiment will be
• Parallel path testing should only be employed if you
have available resources
Discipline of Testing
38. Minimum Viable Product
Translate your critical assumptions into an
experiment:
Validated Learning
1. Isolate critical
assumptions for testing
2. Draft your hypothesis to
be tested
3. Build an experiment
4. Measure the results
5. Collect the data and
learning in a systematic
1. Who will you test
with (segments)
2. What artifact will
you use?
3. How will you
use/test it?
39. • Customers do not always do what they
say they will
• Avoid “Voice of Customer”
• Measure conversion on the path to
purchase (ex. Funnel metrics)
• “Purchase intent” may require a ‘new’ rung
in the funnel
Exchange of Value
40. Identify “Early Adopters”
• What customers have this problem/need?
• Who uses a ‘workaround’ today?
• Who values this solution for a unique reason?
• How would we classify segments?
• Innovations may cut across traditional segmentation
• Dig for segmentation variables (time, cost)
A. Build – What segments?
41. A. Build – What artifact?
Begin with a low fidelity artifact
• Paper brochure
• PowerPoint
• Landing page
• Website
• Clickable Mobile App
• 3d CAD Rendering
• Video
42. A. Build – What test?
Pick a test
• Interviews (Face-to-face, phone, video)
• Digital Campaign
• Google Adwords
• U/X in-person Test
• Email
• Live Demonstration
43. Test Problem/Solution Fit
• Bring bare bones “artifact”
• Set Context
• Focus on hypotheses to be tested
• Begin with direct statements (“We believe”)
• Allow customers to hint/point you to what pain /
need they do have
• Seek an “exchange of value”
c
The Interview
45. A. Build
Advanced Concepts
• Concierge MVP (“Man behind the curtain”)
• A/B Split Test
• Helps you obtain statistically significant
information about your potential offering
• Allows you to see what customers do with your
product / service / site
• Gives you information to make decisions – such
as, which features to cut / build
50. Live Case: AppFolio
About AppFolio
• Web-based real estate property
management software
• Property managers can market &
manage property portfolio
Testable Hypothesis:
“If we build a tenant screening
service that landlords can
subscribe to, then we can sell a
service to 80% of RentApp users
(and, quickly reach profitability).”
52. B. Measure Results
• One metric that matters, OR
• Simple Dashboard / Excel Spreadsheets, AND
• “Exchange of Value”
• Customers say and do different things
• Avoid “Voice of Customer”
• Measure conversion on the path to purchase (ex.
Funnel metrics)
• Create “proxy” in funnel, if needed
54. • Pivot vs. Persevere
• Continuous Deployment
Tips:
• Pivoting is a team sport
• Ground decisions entirely in the learning
• Learning is cumulative
• Good experiments should teach you what
experiment to do next
C. Commit to Learning
55. Key Areas to Discuss
History
Basic Terminology / Definitions
Application / Applicability
Advanced Topics
What is the Lean Startup?
56. Innovation Accounting
• Actionable
• Must demonstrate cause and effect
• Removes bias to report / overvalue “numbers that go
up”
• Accessible
• Simple, easy for the team to understand
• Should not require retraining team to read reports
• Auditable
• Credible data reduces the ability to place blame
57. • The growth operating system requires new
management principles
• No “one size fits all” Lean Startup Process
• Start small to get big
• Small, honest success cases will bring leaders into the
fold
• Sophistication should be aligned with team capability
and resources
Lean Startup in Enterprise
61. • Vision -> Strategy -> Team
• Strategy is leadership-led:
Governance
PortfolioTeam Company
62. Startup approach opens market opportunities
Important Themes:
• Dialogue is critical
• Layering regulation improves impact
Regulated Markets
63. Prioritize Assumptions
• Focuses you, your team
• Draws a line in the sand
• Introduces accountability
• Saves time
• Introduces culture of “learning”