what is lean startup? - session 5
Post on 14-Sep-2014
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MAIN TOPICS: - How to capture value? - How to generate value? - Introduction to Business Model Generation --- This session is part of a 10-weeks course given to master students of the SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT by professor Olivier WITMEUR.TRANSCRIPT
www.solvayentrepreneurs.be
WHAT IS LEAN STARTUP? SESSION 5 (out of 10)
LEAN ENTREPRENEURSHIP
This session is part of a 10-weeks course given to master students of the SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT by professor Olivier WITMEUR.
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR 2
• The importance of assumptions
• How to test fast and cheap
• What is the ‘lean’ movement? A revolution in entrepreneurship?
QUESTIONS AGENDA RESOURCES • Back to Product-Market fit
• Introduction to Lean entrepreneurship
• Lean Canvas and dashboards
• Limitations of lean
• Why lean startup changes everything (HBR)
Desired Outcomes of the Session
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
PRODUCT MARKET FIT
#1
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Customer – Value Canvas
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Looking for product-market fit? Focus! B. Cooper, 2013
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
How to segment?
• Different level pain or passion
• Seek to solve problem differently
• Require different marketing
• Require different distribution
• Require different sales
• Not necessarily demographic-based
• …
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Select your customer segment (Segment matrix)
Compare different segment in terms of
– Depth of pain
– Budget
– Market size
– Time to prototype
– Easiness to reach
– Fit with personal values
– …
Rate: High/moderate/low
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
What are your hypothesis?
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
LEAN ENTREPRENEURSHIP
#2
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Why so many startups fail?
• Ignore customers
• No market need
• Need of business model
• Poor product
• Pricing issues
• Failure to adapt their offering / business model
• Rely to heavily on their (business) plan à Too much rigidity?
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Hot topic!
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
The new Gurus
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STEVE BLANK
ERIC RIES
BRANT COOPER
ASH MAURYA
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Lean Startup Movement Mindset
“Life’s too short to build something nobody wants” - Eric Ries
“Customers don’t care about your solution, they care about their problems” - Dave McClure
“Bind a solution to your problem as late as possible” - Ash Maurya
“It’s not the customer’s job to know what they want” - Steve Jobs
“Given the right context, customers can clearly articulate their problems, but it’s your job to come up with the
solution” - Ash Maurya
“Remove any feature, process or effort that does not contribute directly to the learning you seek” - Eric Ries
“A good design is one that changes customer behaviour for the better” - Eric Ries
“Real learning comes from facts and commitment, not opinions and promises” - Eric Ries
“Get out of the building” - Steve Blank
“Startups that succeed are those that manage to iterate enough times before running out of resources” - Eric
Ries
“While ideas are cheap, acting on them is quite expensive” - Ash Maurya
“Fail often and fail fast… in order to succeed soon.”
“You waste if you don’t learn.“
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
What is Lean Startup?
Optimize efficiency in the discovery of customers and how to create value.
Eliminate non value-add activities.
Validated learning.
Influenced by lean management, bootstrapping, agile product development methods, design thinking,
qualitative market research methods…
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
The Lean Startup Cycle
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BUILD
MEASURE
LEARN
IDEA
Value Creation & Business Model
Hypotheses
PRODUCT
• Basic tests • Minimum Viable
Product (MVP) • Prototype • Proof of Concept
DATA
Metrics
PERSEVERE or PIVOT?
* Adapted from E. Ries, Lean Startup, 2012
A pivot is a structured course correction designed to test a new fundamental hypothesis about the
product, business model and engine of growth. (E. Ries)
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
BUILD - Minimum Viable Product
“The minimum viable product is that version of a new product which allows a team to collect the maximum
amount of validated learning about customers with the least effort” - Eric Ries
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
MVP vs. Prototype
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• Validate the market assumptions
• Can be different from the final product
• Must show the features to the
potential customers and enables to
gather information from the market
• Verify technical assumptions
• Is a demonstration to potential
investors/customers but is not
launched on the market.
• Nice if it can be built at minimum cost
MVP PROTOTYPE
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Minimum Viable Product Types
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• Open interviews
• Pitch of a fake product:
email, call, face-to-face…
• Low fidelity prototypes
• Mock-up
• Basic advertising campaign
• Like on Facebook, sign-up
page…
• Landing page with call-to-
action.
• Video, 3D, pictures …
NEEDS / DEMAND PROOF OF CONCEPT VALUES / DRIVERS
• Wizard of Oz, Concierge…
• Interactive mock-up
• Video demo
• Actual prototype, Beta
version …
• Partly implemented solution
• Full offering presentation:
website, folder,
PowerPoint…
• Letter of intent, pre-order…
from customers
• Crowd funding campaign
• Offering, quote … from
suppliers
• A/B testing, incl. for pricing
strategy test, conversion
rate…
• Real life marketing
campaign
Desirability Feasibility Sustainability
* Adapted from S. Montreuil, E&I 2013
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
MEASURE - Metrics
Example of key assumptions – Problem hypothesis: test if the product really create value to customers
– Customer hypothesis: test who is the customer and how he/she (re)act
– Growth hypothesis: test how new customers will discover the product, incl. funnel metrics
Vanity vs. actionable metrics – Vanity metrics: “good for feeling awesome”
– Actionable metrics: “the only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions”
3 A’s of metrics • Actionable
• Accessible
• Auditable
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
LEARN - Persevere, Pivot or Abandon
“A pivot is a structured course correction designed to test a new fundamental hypothesis about the product,
business model and engine of growth” – Eric Ries
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Run test
Building a Business with the Lean Approach
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Prioritize
Hyp. validated
Hyp. rejected
SCALE-UP STOP
PERSEVERE
Envision
PIVOT
Revision Set vision
* Adapted from Eisenmann & al., HBS, 2013.
Create test - MVP / Experience - Market research - …
Define hypotheses
- Value proposition - Market sizing - Channels - Partnerships - …
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
MVP Examples
Dropbox 2008
Lockitron (First 1000)
Your case … from idea to real product
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
LEAN CANVAS AND DASHBOARDS
#3
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Validation canvas (To be compared with your entrepreneurial course journal)
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Lean Canvas Ash Maurya, 2012
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Solution((S)Top$3$features
Unfair(Advantage((UA)Can't$be$easily$copied$or$bought
Key(Metric((KM)Key$activity$you$measure$
Channels((CH)Path$to$customers
Problem((P)Top$3$problems
Unique(Value(Propistion((UVP)Single,$clear,$compelling$message$that$states$why$you$are$different$and$worth$buying
Customer(segments((CS)Target$custmers$(early$adopters)
Cost(Structure((C$)Customer$acquisition$costDistribution$costsHostingPeople,$etc.
Revenu(Streams((R$)Revenu$ModelLife$Time$ValueRevenueGross$Margin
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Lean Dashboard Spark59.com
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Customer Development Brant Cooper / Steve Blank
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Lean Launchpad Steve Blank
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
LIMITATIONS OF LEAN
#4
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Lean is good… but not magic. Beware the fad.
• In the past, it was called qualitative ‘market research’
• Test with the customer… but who is the customer. Is she/he ready to play the game?
• Time consuming. Too much tests?
• Ability to build MVP? Costs?
• OK when you have many customer (mass market) but how to deal with very small market
• Reputation risk (with ‘crappy’ MVP)
• Confidentiality issues
• Pivot is trendy … but not a recipe for success.
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Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
The main steps towards your final project.
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VALUE PROPOSITION
BUSINESS MODEL ROADMAP
Key activities, resources & partners Revenues model & costs structure
Problem-Solution fit Product-Market fit Market sizing Competition
Stages & milestones Get-Keep-Grow Risks & scenario
FINANCE
P&L, cash and balance sheet Financing
CREATE
TEST =
BUILD MEASURE
LEARN
YOU
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR 32
NEVER STOP WONDERING
& ASKING!
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
A real passion for entrepreneurship education and entrepreneurs.
• Student entrepreneurs: 2x
• Full time entrepreneur: once, in a team of 5
• Coach: 500+ projects over the last 20 years
• (Advisory) Board member in multiple new ventures
• Policy making: 2x
• Director of Solvay Entrepreneurs
• PhD in entrepreneurship in 2008
• … never as an investor
My wife (as Colombo), no kids, one dog (Vicky).
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Olivier Witmeur (Belgian, 46)
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Solvay entrepreneurs is the entrepreneurship center of the Université Libre de Bruxelles. We support entrepreneurs through the development of their venture, from an idea to a successful and sustainable business.
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Solvay Entrepreneurs
Entrepreneurship Course – Session 2 - 2014 © Olivier WITMEUR
Let’s keep in touch!
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