Lean Startup and Entrepreneurship

1. Lean Startup and Entrepreneurship Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics California State University Channel Islands Minder.chen@csuci.edu Jan. 15, 2014

2. Clairvoyance

3. 屯卦屯名的說文解字 • 《說文》曰:「屯,難也。象艸木之初生,屯然而難。」 • 序卦曰:「屯者,物之始生也。」 往上發芽,破土而出。 地表 種子,幼芽破殻而出 種子往下生出的根 根和芽都有屈曲之象,有能屈能伸的涵意

4. 屯卦

5. 創業 vs. 守成 貞觀十年，太宗謂侍臣曰：「帝王之業，草創與守成孰難？」尚書左僕射房玄齡對曰：「天地草昧，群雄競起，攻破乃降，戰勝乃克。由此言之，草創為難。」魏徵對曰：「帝王之起，必承衰亂，覆彼昏狡，百姓樂推，四海歸命，天授人與，乃不為難。然既得之後，志趣驕逸，百姓欲靜而徭役不休，百姓凋殘而侈務不息，國之衰弊，恆由此起。以斯而言，守成則難。」太宗曰：「玄齡昔從我定天下，備嘗艱苦，出萬死而遇一生，所以見草創之難也。魏徵與我安天下，慮生驕逸之端，必踐危亡之地，所以見守成之難也。今草創之難既已往矣，守成之難者，當思與公等慎之。」 • 唐、吳兢，《貞觀政要》〈君道第一〉

6. 徽商之家訓 • 讀書好，營商好，學好便好; • 創業難，守成難，知難不難。 來源:安徽省徽州古民居(黟縣西遞村)中有康熙年間造的「履福堂」，廳堂上的對聯。

7. 屯卦總論 創業維艱，勇於冒險； 鍾其所愛，義無反顧。 結合人才，建立團隊； 抓緊技術，掌握市場。 權衡時機，或進或退； 成敗得失，盡其在我。

8. Mind and Hand http://www.mensetmanus.net/mit-motto/motto.shtml MIT's motto is "Mens et Manus," which translates from the Latin to "Mind and Hand." 

9. The Startup Owner’s Manual Steve Blank video at http://www.youtube.com/watch?v=6t0t-CXPpyM • A startup is a temporary organization designed to search for a repeatable and scalable business model (under extreme uncertainty). - Steve Blank, The Startup Owner’s Manual

10. Resources • http://theleanstartup.com/ • http://steveblank.com/ • http://steveblank.com/2012/11/27/open-source-entrepreneurship/ • http://www.slideshare.net/sblank/lean-launchpad-educators-handbook-sept-2013

11. 10 Top Ten Mistakes of Entrepreneurs Guy Kawasaki, The Top 10 Mistakes of Entrepreneurs https://www.youtube.com/watch?v=HHjgK6p4nrw • Multiplying big numbers by 1percent • Scaling too soon • Partnering • Pitching instead of prototyping • Using too many slides and too small a font • Doing things serially • Believing 51% = control • Believing patents =defensibility • Hiring in your own image • Befriending your VCs • Thinking VCs can add value

12. Describe • Design • Invent • Validate • Pivot • Discuss Source: http://businessmodelgeneration.com/canvas Video

13. What How Who Cash Flow Source: Alexander Osterwalder & Yves Pigneur, Business Model Generation (Preview version), 2009.

14. Reverse Engineering Facebook’s Business Model with Ballpark Figures http://www.businessmodelalchemist.com/

15. Questioning Business Model Components

16. Validate Your Business Model No startup business plan survived first contact with customers. “Get out of the building approach” – It is not a business plan. Most startups lack a structured process for testing their business model hypotheses.

17. A Starting Point of Innovation A customer friction is a (re)discovered of relevant and often unmet needs in a recognizable situation from a target group. • Adapted form http://www.innovationexcellence.com/blog/2011/07/08/solve-customer-frictions/

18. Three Attributes of User Experiences Experience, Expectancy, Envy Excitement, Enjoyment, Enforcement Entertainment, Esthetic, Escape, Education

19. Product Experience

20. Hypotheses Testing and Insight Business Model Hypotheses Facts

21. Learning and Assumptions Testing

22. Persona • Name • Age • Photo • Candid quotes • Personal information • Work environment • Computer proficiency • Motivation for using the product • Information-seeking habits • Personal and professional goals • Evokes a strong sense of empathy in the project team • Eliminates the need to design for an abstract, elastic “user group” whose goals and needs are not fully understood • Facilitates user-centered design – the focus is now on the goals of your typical customer rather than the project team A persona is an archetype of an organization’s typical customer, and is defined primarily by a customer’s goals when interacting with the products. They are not real people, but are used to represent real users during the design process. Products generally have a “cast” of personas, ranging from 3 to 8, one of which is considered the primary persona. These are best presented as narratives. Providing a persona with real characteristics: Source: The ABCs of Personas: Design for People, Design for Success

23. The Customer Development Process More startups fail from a lack of customers than from a failure of product development Try many times before you get it right. It is OK to fail so plan to learn from it. Only move to the next stage when you learn enough and reach the “escape velocity” http://www.ctinnovations.com/images/resources/Startup%20Owners%20Manual%20-%20BlankDorf.pdf

24. BioIQ.Com Case Study

25. The Lean Start-Up Steve Blank, "Why The Lean Start-up Change Everything," HBR, May 2013. (link)

26. What Is Pivot? • Pivot: A change to business model component based on customer feedbacks. A pivot is not a failure. • Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, engine of growth, etc. • Eric Ries, The Lean Startup, 2013. • Pivots are vision driven.

28. MVP In product development, the Minimum Viable Product (MVP) is a strategy used for fast and quantitative market testing of a product or product features. It is an iterative process of idea generation, prototyping, presentation, data collection, analysis and learning.

29. An MVP Example Source: http://michaelrwolfe.com/2013/10/19/why-is-dropbox-more-popular-than-other-programs-with-similar-functionality/ Why is Dropbox more popular than other programs with similar functionality? • Well, let’s take a step back and think about the sync problem and what the ideal solution for it would do: • There would be a folder. • You’d put your stuff in it. • It would sync.

31. Startup vs. Large Company http://steveblank.com/2012/03/05/search-versus-execute/

32. Lessons Learning http://steveblank.com/2012/03/05/search-versus-execute/ The search for the business model is the front end of the startup process The goal is to find a repeatable/scalable model, and then execute Customer and Agile Development are the processes to search and build the model Execution requires operating plans and financial forecasts Product management is the process for executing the model This is true in the smallest startup or largest company

33. From Startup to Large Company Sustaining Sustaining Innovation Innovate or Evaporate Goal is to solve for: unknown customer and unknown features Build Search Execute Scalable Startup Transition /Buyout Large Company • Existing Market / Known customer • Known product feature needs Disruptive Innovation • New Market • New tech, customers, channels • Exit Criteria • Business model found • Total Available Market > $500m • Can grow to >$100m/year • Can be Venture capital funded

34. The Lean Startup Method • Entrepreneurs are everywhere. • Entrepreneurship is management. • Validated learning. • Build-Measure-Learn. • Innovation accounting. • Eric Ries, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, 2011.

35. SCRUM Process Source: https://www.youtube.com/watch?v=WxiuE-1ujCM

36. Lean Startup = Customer Development + Agile Method

37. Investment Readiness: Levels 1 & 2 • Hypotheses • Value Proposition summarized • Canvas hypotheses articulated Hypotheses

38. Investment Readiness: Levels 3 & 4 • Problem / Solution Fit • Problem Solution fit • Low fidelity MVP Problem/Solution Hypotheses

39. Investment Readiness: Levels 5 & 6 • Validate • Product/Market fit • Right side of canvas Product/Market fit Problem/Solution Hypotheses

40. Investment Readiness: Levels 7 & 8 • Validate • Left side of canvas Product/Market fit Problem/Solution Hypotheses

41. Investment Readiness: Levels 9 Metrics That Matter Left side of the canvas Product/Market fit Problem/Solution Hypotheses

42. Technology Readiness Level Investment Readiness Level Metrics that Matter Validate Left side of Canvas Validate Right side of Canvas Product/Market Fit Problem/Solution Hypotheses

43. Source: Link

44. Innovator’s DNAs http://strategicorganizationdesign.com/the-innovator%E2%80%99s-dna-disruptive-research-disruptive-writing

45. Finding the Sweet Spot

46. http://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdfhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

47. Inspiration

48. Empathy Map Customer (user) what really counts major preoccupations, worries & aspirations Empathy Map environment friends what the markets offers what friends say what boss says what influences say GAIN “wants”/needs, measures of success, obstacles PAIN fears, frustrations, obstacles attitude in public appearance behavior towards others http://www.gogamestorm.com/?p=42 http://www.slideshare.net/AdilsonJardim/empathy-map-poster-3201288

49. Inspiration

50. Ideation