Lean Startup and the Enterprise Applying Lessons from Entrepreneurs to Large Organizations Brian Bozzuto

Many Startups Began Pretty Lean Dell Founded 1984 Started with about $300k from family members Sold 2013 for $24 Billion Apple ► Founded 1976 ► Early capital raised was $250k ► Currently worth ~ $400 Billion

Tech Startups Weren’t Always Lean… Founded 1999 Raised $375 Million Closed 2001 ► Founded 1998 ► Raised $80 Million ► Closed 2000 Pets.com ► Founded 1998 ► Raised $280 Million ► Closed

And then… Google Finance

Why Lean & Startups? Assembly line at Motomachi Plant (1959), Toyota

What Can We Learn from Startups? The goal of a startup is to figure out the right thing to build—the thing customers want and will pay for—as quickly as possible. Ries, Eric ( ). The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (p. 20). Random House, Inc.. Kindle Edition. The goal of a startup is to figure out the right thing to build—the thing customers want and will pay for—as quickly as possible. Ries, Eric ( ). The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (p. 20). Random House, Inc.. Kindle Edition.

Iteration Plan How Does this Apply to Agile? Product Product Backlog 2-4 Weeks Inspect & Adapt 24 Hours

Iteration Plan Product Product Backlog 2-4 Weeks Inspect & Adapt 24 Hours The Myth of the Product Owner The single, wring able neck The voice of the Customer The decider Responsible for the Return on Investment Able to answer requirement questions Always knows what to do next The single, wring able neck The voice of the Customer The decider Responsible for the Return on Investment Able to answer requirement questions Always knows what to do next Exactly how is the product owner supposed to do all of this?

Key Principles of Lean Startup Entrepreneurs are everywhere Entrepreneurship is management Validated learning is valuable in its own right We can measure progress with innovation accounting IdeaBuild Product Measure DataLearn

Lean Startup isn’t for Everything © 2013 BigVisible Solutions10 Simple Best Practice Complicated Good Practice Complex Emergent Chaos Novel Work with experts to inform our hypothesis Run experiments to gain new knowledge Sense Analyze Respond Sense Categorize Respond Probe Sense Respond Act Sense Respond Cynefin framework by David Snowden, Cognitive Edge

This is All Great, But…  “Experiments are risky for us”  “We don’t sell directly to customers in high quantities”  “Releases take us a long time” You don’t work for a startup!

Build IdeaBuild Product Measure DataLearn Agile practices help us build faster Sometimes “production ready code” is too much Lean practices look to build the simplest thing to test our theories Agile practices help us build faster Sometimes “production ready code” is too much Lean practices look to build the simplest thing to test our theories

Make it Safe to Test Testing has some risks… Cost incurred of testing Negative impact to brand Making the wrong decision Perception of failed tests as “failure in general”

Playing in Sandboxes

A Sandbox May be Theoretical

Wizard of Oz Testing

Measure IdeaBuild Product Measure DataLearn Focus on actionable metrics to inform decisions Beware vanity metrics that just flatter us Focus on actionable metrics to inform decisions Beware vanity metrics that just flatter us

Which of these metrics provide the most insight into a product? Source: Adapted from Dave McClure a.1,000,000 unregistered unique visits b.500,000 visitors who view 2+ pages c.250,000 visitors who engaged for 10+ seconds d users with registered address e.1000 monthly subscribers Not All Metrics are Created Equal

An Example… Let’s talk about this box…

Identify Measures for Learning Start Up Metrics for Pirates Acquisition Activation Retention Referral Revenue Source: adapted from Dave McClure AARRR!!!

Identifying B2B and Internal Metrics Behavior Driven Adoption Usage patterns User behaviors User Feedback Net Promoter Score User Journaling

Learn IdeaBuild Product Measure DataLearn Test hypothesis and learn based on collected data Be aware of our cognitive biases when constructing tests and evaluating results Test hypothesis and learn based on collected data Be aware of our cognitive biases when constructing tests and evaluating results

© 2013 BigVisible Solutions23 Source: Alex Osterwalder

© 2013 BigVisible Solutions24 Level 1 Checklist

© 2013 BigVisible Solutions25 Source: Alex Osterwalder For whom are we creating value?

© 2013 BigVisible Solutions26 Source: Alex Osterwalder What value do we deliver to the customer?

© 2013 BigVisible Solutions27 Source: Alex Osterwalder How do we deliver the value we create to the customer? How do we create & maintain relationships with our customers?

© 2013 BigVisible Solutions28 Source: Alex Osterwalder How much will these customers pay for the value we create? How much will this cost to create and maintain?

© 2013 BigVisible Solutions29 Source: Alex Osterwalder Who and what will we need to create this value What will we do with these resources to build value

© 2013 BigVisible Solutions30 Source: Alex Osterwalder Who would we partner with that will provide us with Key Resources or Key Activities

© 2013 BigVisible Solutions31 This level of understanding is a good starting point.

© 2013 BigVisible Solutions32 Level 2 Hypothesis

“I wonder how much of this is reality…” © 2013 BigVisible Solutions33 ?? ?? ? ? ? ? ? ? ? ? Source: Adapted from Alex Osterwalder

© 2013 BigVisible Solutions34 Level 3 Validation

“Let’s validate our riskiest assumptions” © 2013 BigVisible Solutions35 ?? ?? ? ? ? ? ? ? ? ? Source: Adapted from Alex Osterwalder

© 2012 BigVisible Solutions36 This is most likely your Riskiest Assumption Source: Adapted from Alex Osterwalder

© 2012 BigVisible Solutions37 This is most likely your other Riskiest Assumption

© 2012 BigVisible Solutions38 What happens when we subtract costs from revenue? Source: Adapted from Alex Osterwalder

Putting It All Together…

A View of Value Delivery © 2013 BigVisible Solutions40 Value Time Prioritize Learning Prioritize Value Watch for Gold Plating

One Small Thing You can Do Tomorrow Map out your organization’s business model canvas

Another Small Thing You can Do Tomorrow Add a column to validate assumptions after you build something

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