The Leader's Guide Workshop walks through the 8 Sections of Eric Reis's Leader's Guide, breaking out each section into actions that you can take as a leader to bring Lean Startup to your organization. We'll cover some of the basics of Lean Startup and how to reframe them for easier consumption in your organisation, then delve into the difficult areas of people, money, and scale.
2. Workshop Agenda
OPENER
REFRESH
PROOF
SIMPLIFY
LEARN
TRUST
PEOPLE
MONEY
SCALE
The Change Imperative
Opening minds to Lean Startup
Recognizing the components of evidence
Combatting scope in your MVPs
The surprising mechanics of learning
The most powerful transformation tool
Creating effective teams
Accountability for entrepreneurs
GE’s Lean Startup Transformation Playbook
5. “To meet the demands of
the fast-changing
competitive scene, we
must simply learn to love
change as much as we
have hated it in the past.”
–Tom Peters, 1987
6.
7. $4.3B Valuation
Financial Services
$62.5B Valuation
Transportation
$55B Valuation
Entertainment
$25.5B Valuation
Travel & Hospitality
$3.2B Acquisition by Google
Home Automation
Software is disrupting entire industries
10. For 100 years, management
has emphasized planning and
control as a means of ensuring
predictable outcomes.
11. When change is your greatest
threat, plans and predictions are
(literally) unbelievable.
12. Tom Peters saw the problem
coming in 1987, but nobody
really figured out what to do
about it, until now.
13. Lean Startup is a management approach
that mitigates the risk of change, turning it
into an asset that can be leveraged, by
supporting entrepreneurship throughout
any company.
14. Lean Startup is not religion.
These are not rigid rules set in stone.
We don’t care if you use the jargon.
It’s the thought behind your action that counts.
15. How do you retool for
entrepreneurship when your
planning and accountability
processes look like this?
Analyze
Plan
Stakeholders
Feedback
Revise
Budget (staged-gate system)
Approve
Execute
Measure
20. We practice Lean Startup so that we don't
waste time on things that ultimately won’t
deliver value.
We avoid waste by learning early where our
strategies are wrong.
This takes courage.
22. COACHING ACTIVITY
Keep a “Predictions Log”
1. Before you interact with a customer or
colleague, jot down in a little book, in one
sentence, what you think will happen at that
meeting.
2. After the meeting, look at your prediction
and write down what actually happened.
3. Make a habit of doing this.
Changing Mindsets
This small habit forms a solid base for an
experimental mindset.
Predictions
Expectations, assumptions and
hypotheses are more- or less-
formal predictions about the
future.
Becoming mindful about
predictions, in small ways, helps
people see how often we’re wrong,
and how inconsequential it can be
to be wrong.
23. Make a Prediction
Q: What do you already believe about this first
working session of the day?
24. ACTIVITY
In 4 minutes, list as many assumptions as you can:
➔ Anything you already believe about the project.
➔ Your predictions for the future.
➔ Every expected product feature.
(See page 4 in your handout for specific ideas.)
25. ACTIVITY
Now, read through the list slowly.
Take a moment with each assumption to consider
that maybe you’re wrong.
When you find that thought making you really
uncomfortable, circle it.
26. Some assumptions are unexceptional— well-
established facts or straightforward deductions.
Hidden among these mundane details are a handful of
assumptions that require courage to state.
That’s what we’re looking for.
28. ACTIVITY
6 minutes to share them with your partner.
● Why does it make you uncomfortable?
● What would be the impact if you’re wrong?
29. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about PROOF.
31. Consider a few of the things we referred to
as assumptions in the last activity:
● Requirements
● Forecasts
● Customer requests
● Plans for scaling
● Distribution strategies
32. “The laws of physics are required.
Everything else is optional.”
–Eric Ries
36. Eric’s strategy for dealing with customer requests:
1. Listen for repeated requests.
2. Talk to (listen to) as many layers of the customer
organization before responding to a request.
3. Determine how real the request is before creating an MVP.
4. Observe customer behavior in response to your MVP.
37. Until you really understand your customers*,
you won’t know what’s actually important to
them.
(So you’re going to have to spend a lot of
time talking to them.)
38. *Customer
Any person who you hope will find enough
value in your product or service to make
some kind of investment in it, or partnership
with you.
39. Write down 5-10 “customers” who need to
“invest” in your product.
ACTIVITY
Choose one to focus on for the remainder
of the day.
41. ● resources
● reputation
● social capital
● time
● money
● space
Proof = Measured Customer Action
To gather proof, think of some way to invite the
customer to exchange something of value with you:
43. ACTIVITY
Drawing from any of the assumptions you’ve
listed so far today, make a prediction that will
allow you to gather proof from that customer.
This time, use the format:
If I [do x] , my customer will [do y] .
45. DEFINITIONS
What do we mean by “customer”?
Any person who you hope will find enough
value in your product/service/project to make
some kind of investment or partnership.
What needs to be proven?
Assumptions, “requirements”, specifications,
plans, backlogs, distribution models, pricing
schemes—anything required for success.
What constitutes proof?
Customer actions that represent an exchange
of value.
Proof
Entrepreneurial management relies
on evidence to guide decision-
making. We gather that evidence
by asking customers to exchange
something of value.
Seeking proof for our predictions
helps us know where our
strategies are correct and where
they need to change.
46. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about SIMPLICITY.
48. ● De-featured version of a product
● New customer service agreement
● Sales process
● Standing outside the whole foods
● Physical configurations using simpler
materials
● Pitch meeting (“talk track”)
● Virtual models
● Concept drawings
● Prototype
● Brochure
● Value proposition
● Website
● Physical product
What qualifies as an MVP?
49. DEFINITIONS
Quality
High quality can only be known by observing
customer behavior in response to our MVPs.
We will know what customers value through
their actions.
Focus
It’s easy to confuse focus with sacrifice, but it’s
not. It’s the freedom to do one thing at a time.
YAGNI [google search term]
“You ain’t gonna need it.”
Simplify
We simplify, make MVPs, to make
sure we don’t waste our time and
skills over-delivering features that
are not actually important to the
customer.
Simplifying enables us to leave
dead-end efforts behind, so that
we can invest our skills, values,
and instincts into work that truly
matters.
50. “This approach is about asking our innovators to make
sure they don’t waste their time and skills over-
delivering features that are not actually important to
the customer.”
Work Efficiently
51. ACTIVITY
Pull out your prediction:
If I [do x] , my customer will [do y] .
Write down all the things doing that will entail—every
step, feature, activity, supply, approval—needed to do
this.
Think about how long it will take. How expensive? How
many person hours?
52. ACTIVITY
Now think about what you need to learn and
consider, How you could get a result in 2
weeks (or 2 days)?
53. ACTIVITY
Talk with your partner — 4m, then switch
What’s the worst that could happen if you
did the experiment in this crappy,
embarrassingly low-rent way?
What might you learn if you did it?
54. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about LEARNING.
56. COMPONENTS
Vision
The “true north” goal that represents success.
Clarifies pivot or persevere decisions.
Productive Failure
Deliberately exposing a weakness in strategy
(usually caused by faulty assumptions) in order
to reduce waste.
Learning Metrics
Are actionable, accessible, and auditable.
Learn
All innovators begin with some good ideas
as well as some toxic ones. But ultimately
of these ideas exist in service to some
vision.
With clarity about our vision and an
experimentation mindset, we can
deliberately probe our plans to expose
toxic ideas early and stay on course.
59. ACTIVITY
Share your Vision Pyramid with your partner.
3m, then switch
Discuss what it would mean if you learned
that your prediction is false.
What would you do?
60. Pivot or Persevere Meeting
Possible
outcomes
Double-down, persevere, pivot, stop
Cadence 2x a month is common. At least once every two months.
Who
attends
The core team + business leadership
What to
bring
A complete report of product optimizations over time
A comparison of how these results stack up against expectations
Detailed accounts of conversations with customers
Learning metrics to make mathematically informed decisions
And, of course, your Vision Pyramid.
Look for
Did our customer validation continually fail? Are we having problems hitting actionable
targets? Are our targets failing to improve over time? Is this getting us closer to our vision?
61. When you expose a flawed assumption or a faulty
aspect of your strategy, it must not be considered
failure.
Even if the project is discontinued, you will, in fact,
have saved your company the huge sum of money
that had been set aside to fund the project.
Productive Failure
62. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about TRUST.
63. Trust
30 minutes to consider that trust is the magic
pixie dust that brings innovation to life.
65. “Entrepreneur, you spent $10k wisely, so I gave you
$50k. You spent that wisely, so I gave you $100k.
Your mistakes were productive, and you didn’t hide
them. You demonstrated progress and learning all the
way. ”
“Leader, you reward me for telling the truth, even
when it’s bad news. You aren’t breathing down my
neck. You gave me support, so I asked for support
again. I know that you are going to support me.”
Here’s what
TRUST looks like
66. From the start, manager and entrepreneur need to
candidly discuss:
“If we do this, what can go wrong?”
“And if that goes wrong, what’s the worst that can
happen?”
Build trust by
addressing fear
67. ACTIVITY
Write down 5 things that could go wrong if you did
the (shoddy, embarrassingly low-rent) experiment
you designed earlier?
If those thing do go wrong, what’s the worst that
could happen? Write down some of the worst
possible outcomes.
68. ACTIVITY
Now admit all of that to your partner. Every single
negative consequence that could happen.
● Which would endanger a person or cause
irreparable harm to your company? (E.g., safety,
security, compliance) Circle these and talk
about how you could prevent those effects.
● Which would be merely embarassing? Cross
these out.
69. Benefits of talking frankly about fears
FEAR Possible Consequences
You can devise boundaries and constrain experiments,
so that the worst case scenario isn’t very bad.
Working together to reduce risk builds trust.
>
70. Islands of Freedom
An operational model for entrepreneurship within organizations
Entrepreneurs agree to be held accountable for results in exchange for independent authority
to do what is best for the customer. The team operates semi-autonomously.
CORE TEAM
–4-5 people
–fully dedicated
–cross-functional
–incl. gatekeeper functions
COMMITTED volunteers
Well-chosen, intelligent PARAMETERS
that facilitate innovation, rather than
stifle it.
Islands of Freedom have:
AUTHORITY
Over small but secure funding
ACCOUNTABILITY
For pre-negotiated, measurable
outcomes
RESPONSIBILITY
For exploring the advisability of an
entrepreneurial venture
71. Entrepreneurship Process Model
GROWTH
BOARD
Initial Pitch,
provisional yes! BUILD the foundation for trust
● Discuss “what could go
wrong”
● Agree on parameters
● Agree on metrics
● Agree on cadence
● Create an island of freedom
● Assemble a dedicated, cross-
functional team
Experiments
GROWTH
BOARD
Periodic
Reviews
Double-down based
on measured results
Pivot or
Persevere
Kill the project
72. Semi-autonomous teams are responsible for determining
the advisability of entrepreneurial ventures.
This is not just for exploring an initial idea. These teams should be built for scale,
and the board should be prepared to double down when they see validation.
Islands of Freedom Model at Scale
GROWTH
BOARD
GROWTH
BOARD
GROWTH
BOARD
73. Yanking people
Yanking budget
Not letting people make their own mistakes
Punishing mistakes
Cancelling the project at the first sign of bad news
Not holding teams accountable
Changing accountability metrics without agreement
Not providing a safe landing if the project is killed
Things that kill trust
74. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about PEOPLE.
82. Individuals will continue to be evaluated by their
organizational silo for individual functional
excellence.
“Startup initiatives will fail because there was not
enough accountability among team members for the
success of the entire project.”
The inevitable
outcome of part-
time startup teams
83. Consider a team member who is still being evaluated
on performance in their pre-existing functional duties,
who has no guarantee of safety if the innovation
project should cease.
That person can’t afford to spend their limited time on
innovation projects, because doing so likely threatens
their future.
84. If our engineer wrote elegant code...
And if our marketer made great competetive analyses...
And our designer made beautiful interfaces…
And if that team built a product they couldn’t sell, it
doesn’t matter that each hit their personal goal.
We don’t want teams that are content to meet their
personal, functional goals.
85. Tiny team,
Tiny $$
LEVERAGE
● 100% Committed team
● Cross-functional team
● Results-based incentives
● Safe re-entry
86. ACTIVITY
Imagine you’ve been asked to create one cross-
functional startup team.
You’re going to give them two weeks, 100% dedicated.
You’re going to pursue one vision, and one vision only.
Write down what you think will happen when you take
that time to be 100% focused.
88. Eric Ries’s
“I think the team will have a sense of ownership the
other teams lack. The productivity of the team will
exceed that of teams these people have been part of
in the past.”
Mine
The team will try to do too much. By the end of the
first week, they will abandon half of what they were
going to try.
PREDICTIONS
89. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about MONEY.
91. ROI is great for forecasting in markets
where you’re firmly established.
92. “Measuring the ROI of an innovation project is
like measuring an acorn and cutting off its
water supply because it’s not yet an oak tree.”
–Eric Ries
93. Metered Funding Using Innovation Accounting
1. Entrepreneurs request a set budget based on what they’ve learned so far.
2. Entrepreneurs and leaders agree to a set of metrics.
3. Entrepreneurs must show progress to be able to secure their next round.
4. Leader’s agree to continue support for the project as long as
entrepreneurs agree that their strategy is working, or that they’re making
proper adjustments based on their discoveries.
5. Leaders agree to cancel projects that are showing the least amount of
progress rather than cutting budget from every project across the board.
94. Experiments
Pivot/Persevere
Metered Funding Process(Dollar amounts, team sizes, and durations are for example only)
PROJECT IS
INITIATED
● Entrepreneur is assigned/selected
● Team of 4 is assigned for 60 days
● Growth Board is formed
● $10k initial funding is awarded
● Board and entrepreneurs agree on
Learning Metrics
● Growth Board monitors progress via
Learning Metrics dashboard
● Growth Board reconvenes on a fixed
schedule
● Based on learning (as seen in
improved metrics), Growth Board
awards $50k funding, expands team,
extends another 2 quarters.
GROWTH
BOARD
GROWTH
BOARD
● Over time, the Growth Board
makes larger investments based
on continued learning (in the
form of improving per-customer
metrics)
GROWTH
BOARD
Experiments
Pivot/Persevere
95. ACTIVITY
Ask yourself what success looks like.
“We believe that everyone we approach is going to
want our product.”
Find a way to quantify that.
“The sales funnel will have an 80% conversion rate.”
Turn it into a per-customer metric.
“For each customer we talk to, .8 will buy.”
Do this for 3 metrics.
97. Prediction
Go back to your Predictions Log and write down what
actually happened during this session.
Was your prediction correct?
Then take a moment to write one or two sentences that
predict what will happen in the next section, which is
about SCALE.
99. In 3 years, Fastworks had a direct impact on every
division, every function, and every global region.
Hundreds of coaches and 5000 of the most-senior
executives have been trained in the methodology
The GE Story
100. GE Fastworks Year 1
10 Projects in Year 1. Executive sponsors cleared roadblocks and provided cover.
Cross-functional teams prepared with a 3-day Lean Startup workshop.
Project #1
Initial Pilot
Chairman’s Project
extreme case, real
business value
2-5
Product Teams
Started before the
first was complete,
after seeing only
initial results 6-10
Process Teams
Started before the
first was complete,
after seeing only
initial results
101. GE Fastworks Success Plan
Start: High-touch, consultant-led, small scope
Later: Systematized, peer coaches, broad scope
1. Small transformation team
2. Workshops
3. Pilot projects
4. Executive support
102. Phase 1: The First 10 Wins/Losses
1. Identify teams
2. Select one key pilot project
3. Assign a mentor or coach with Lean Startup experience
4. Identify and train exec sponsors, growth board, managers
5. Add and train additional pilot teams
6. Track early successes to demonstrate to leadership that
these methods can work across the company
7. Document the challenges teams face for later use in
making cultural & systems changes
103. 1. Review with Pilot teams to learn about
the larger cultural and systemic barriers
2. Executive session
3. Leadership training roadshow
4. More projects
5. Develop a coaching program to scale
the number of coaches
6. Test new ways to fund projects and
evaluate/place staff
Common Phase 2
Experiments
Fully dedicated teams vs.
not fully dedicated
Try out metered funding.
Phase 2: Leadership Rollout & Coach Training
104. Phase 3: Deep Systems and Culture
1. Rallying cry of “Simplification”
2. Establish a new set of values statements that are aspirational
and can guide behavior
3. Evaluate transparency, tools, and training