Enabling Innovation using Lean Startup

1. ENABLINGINNOVATIONUsing 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.

2. About Myself Founded 2 tech startups,worked with many others & Spark59

3. Innovation in anAgile Environment

4. WaterfallRisk BU ILD BU ILD B UILD Time Release!

5. Agile / XP / SCRUMRisk BUILD BUILD BUILD BUILD Time Release! Release! Release! Release!

6. Are we making our product better or worse?

7. Are we efficient? vsAre we effective?

8. The Definition of Doneshould include testing customer behaviour

9. Validated Learning

10. IDEASLEARN BUILD DATA PRODUCT MEASURE Experiment

11. “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

12. Hypotheses instead ofRequirements

13. Requirement:Users can create 3D avatars.

14. Hypothesis:We believe that users will create a 3Davatar and spend more time on other users profiles.

15. 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+

16. Be closer to reality, and avoidbias & comfort zones

17. User Stories != Experiments Missing the “Measure” StageNo Way to Validate the Learning

18. Deploy != Launchif $rollout.active?(:chat, current_user) ...else ...end

19. Deploy Every CommitRelease To A Small Set of CustomersLaunch The New Feature When Ready

20. Experiments need to beshown to actual customers Not just to your team!

21. Tools & Ta c tics Lean Stack:Experiment Reports

22. EXPERIMENT REPORT Title: [TITLE] Author: [NAME] Created: [DATE]Background ResultsWhat 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

24. Background What are you trying to learn or achieve?Give Context.Why is this relevant?

25. 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

26. 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

27. Planning an Experiment1. Context - Why is this relevant?2. Quantify Your Goals3. Set Scope & Timebox

28. Test yourValue and your Growth Hypothesis first

29. Validated Learning: Define Hypothesis,Build & Launch Experiment, Learn from the Results

30. Concepts for making this work:1. Product Ownership2. Shared Understanding3. Accountability4. Scoping & Timeboxing

31. Hierarchy 1. Product Ownership 2. Shared Understanding Anarchy 3. Accountability 4. Scoping & TimeboxingLean Startup

32. 1. Product Ownership2. Shared Understanding3. Accountability4. Scoping & Timeboxing

33. Centralized Product OwnershipCross-Functional Product Customers Team Owner

34. Distributed Product Ownership Business Cross-Functional CustomersStakeholder Team

35. Product Ownership is about Defining Customer Value, not Aesthetics

36. Business Experiments instead of ( just) Development Tasks

37. Experiments are Owned By A Team Member

38. Draws ExpertResources as needed (e.g. through pairing)

40. Why? are we doingwhat we’re doing

41. Team needs toUnderstand The Impact of their work

42. “Shared understanding is aboutgetting everyone to walk in the other person’s shoes a little.” Bill Scott - UX at Netflix, PayPalThis includes the business owner’s shoes!

43. Are we making progresstowards our business goal?

44. Tools & Ta c tics Company-WideMetrics Dashboard

45. ActionableAccessibleAuditable

46. ActionableTie specific repeatable actions toobserved results.

47. AccessibleLet everyone in the companysee and understand whats going on.

48. AuditableTie the numbers back to actualcustomers, so you can verify the metricand believe in it.

49. You need all three ACTIONABLEAUDITABLE ACCESSIBLE

50. Unit Economics instead ofGross Revenue

51. 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?

52. Value Metrics How do users ﬁnd you? ACQUISITIONDo users have a great ﬁrst experience? ACTIVATION Do users come back? RETENTION How do you make money? REVENUE Do users tell others? REFERRAL

53. Growth Metrics How do users ﬁnd you? ACQUISITIONDo users have a great ﬁrst experience? ACTIVATION Do users come back? RETENTION How do you make money? REVENUE Do users tell others? REFERRAL

54. Tools & Ta c ticsCross-Functional Pairing

55. Tools & Ta c ticsWeekly Strategy Meeting Part 1: Ideation

56. Avoid Brainstorming. It causesPremature Convergence Around One Idea.

57. By Daniel Cookhttp://www.lostgarden.com/2010/08/visualizing-creative-process.html

58. Design Studio by Will Evans @semanticwill

59. Observe & Explain Ideate Discuss To The Group Alone In the Group Sketch & Write down!

60. Review ExperimentsOnly In Weekly Meeting Focus On Efficiency In Daily Stand-ups

62. Tools & Ta c tics Lean Stack:Validated Learning Board

63. Kan-ban Board IDEAS Build Measure LearnLEARN BUILD ✓ ✘ DATA PRODUCT MEASURE

64. Build Measure Learn ✓ ✘

65. 1 experimentper team member

66. Separate Task Boardfor tracking the detailsSwimlane for each Experiment

67. Tools & Ta c ticsWeekly Strategy Meeting Part 2: Review

68. Review Experiment Results Challenge the InterpretationKill / Restart overdue Experiments

70. ResultsEnter the data. Actual data you Measured, based on your Hypothesis.

71. Validated LearningSummarize your learning from the experiment. + Validated Invalidated Why? Inconclusive

72. Next ActionWhatʼs the next experiment? What will you do next based on your learning?

73. ✘ Failure is good. Validated Learning is ourMeasurement of Progress.

75. Timeboxing

76. Build Measure Learn ✓ ✘

77. Experiment ScopeBuild Measure Learn ✓ ✘

78. Startups don’t starve, they drown.Open-ended learning is dangerous, always timebox.

79. Recommended Timeboxes:Interviews/Prototypes: 1-2 WeeksQualitative Tests: 1 MonthQuantitative Tests: 2-3 Months

80. Customer Interview (Paper) Prototype MVP “The Perfect Product”Inside-the-Building Comfort Zone

81. Get-out-of-the-Building Reality Customer Interview (Paper) Prototype MVP “The Perfect Product”

82. Justify the Cost of MVPs with Proof

83. 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

84. In Summary

85. 0. Validated Learning1. Product Ownership2. Shared Understanding3. Accountability4. Scoping & Timeboxing

86. Tools & Ta c tics Experiment ReportsCompany-wide DashboardValidated Learning BoardWeekly Strategy Meeting

87. Thanks!leanstack.comlukas@spark59.com