Lean innovationSOME COMMON MISCONCEPTIONS:

X lean innovation is not synonymous with new

businesses

X a start up is not defined by the age of an

enterprise; start ups also exist in large corporations, charities and other non profit organisations

X lean innovation does not apply solely to

technology based initiatives

DEFINITIONS:

A start up is a ‘human institution designed to create a new product or service under conditions of extreme uncertainty’

Lean innovation involves ‘the use of hypotheses testing processes, during conditions of extreme uncertainty. It determines what a market wants before fully investing in any one solution’

Adopted from Eric Ries, Lean Start Up

Extreme uncertainty

CHARACTERISTICS OF EXTREME UNCERTAINTY INCLUDE:

Nothing goes to plan; strategy does not yield the desired results. In times of uncertainty, results cannot be accurately timed. There are multiple unknowns; do other people really have this problem? Is this solution the best alternative there is? Can my resources deliver the solution? Is this innovation scalable?

EVERY solution or idea is a hypothesis until assumptions become fact and the market risk is reduced or

eliminated

An innovator’s dilemma:

Option One Option TwoTest one idea at a time Test multiple ideas in search of

factsCreate one ideal product Create the outline of several

productsInvest in traditional market research Invest in field research and

changeIdentify and prevent risks Respond quickly to risks

10 steps to create products and services in times of

extreme uncertainty

1. Document all of the assumptions being made (eg. about the problem to be solved, the proposed solutions, what the market might pay etc)

2. Identify every market segment that might be aggravated by the problems (eg. individuals, organisations, companies) and create lists how you might find and interact with them

3. Make some more assumptions, this time focusing on the timeframes of each possible solution. Which of them could solve the problem or a fragment of it within the next 3 months

4. Consider what version of the 3 month solution could be implemented in just 3 weeks

5. Consider what versions of the 3 week solution could be implemented in just 3 days. This will be the

basis of your minimum

viable product (MVP)**Refer to the MVP slide text for more information

6. Create lead magnet, marketing messages to promote the 3 day version with a cross-section of your customer segments to test

your assumptions

7. Identify individuals within the small group of respondents who are willing to give you detailed feedback about their experience. These may be

your early adopters**Refer to the early adopters slide for more information

8a. Build the 3 day version for use across a segment of your early adopters, figure out how you need to transform the solution based on their feedback

8b. Promote for sale the transformed solutions across the remaining customer segments

identified

9. Identify the processes to help you scale from the 3 day product or service to the 3 week and 3 month versions. Document the

proven business model** Refer to the business model slide text for more information

10. Roll out the range of

products / services (your value proposition*) to the wider audience of identified segments

* Refer to the Value Proposition slide text for more information

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Alexander Bain is a pioneering management consultancy focused on solving the complex problems faced by small and medium sized businesses.

Every year about 80% of new businesses fail. Extreme uncertainties and rapid change in markets, mean that those that survive death, rarely grow although billions is spent annually. Statistically less than 1% of all businesses actually achieve exponential growth. To turn such results around there needs to be significant, transformational change in the way businesses operate.

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