41631 lecture 3 pt2 lean startup

A method for entrepreneurship

Lean Startup - IntroductionJakob Bejbro [email protected]

Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:

“Original material by Thomas J. Howard and Jakob Bejbro Andersen for course 41631 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark”

mailto:[email protected]

2013Original material by Thomas J. Howard & Jakob Bejbro for 41631: Innovation in Product Development Department of Mechanical Engineering, Technical University of Denmark

2

Background

• Author: Eric Ries (founder of three startups).

• Cases used: Several IT and Web startups.

• One of the first frameworks specifically

Minded on entrepreneurship (!).

• Many principles/ideas borrowed from Lean.

• Now a ”must read” book for entrepreneurs.

Eric Ries, 2011


3

Current focus in teaching entrepreneurship• Presentation rather than substance.

– Elevator pitches.

• The special breed: the entrepreneurs.– Either you have it or you don’t.

• Putting people together results in Businesses.

– Startup weekend, incubators etc.


4

The novelty in Lean Startup• From:

Entrepreneurship and its succes depends on the opportunity and the entrepreneur’s ability to exploit it.

• To:The entrepreneur, the opportunity and the process are all part of the creation of successful ventures.

Meaning:

Entrepreneurship can be taught!Build -> Measure -> Learn! (loop)


5

Relation to Development Log

Data

(none)

New gap/need identified Need or given higher

priority

Input(from mentor,

supervisor, market etc.)

Choice of approach

Execution of approach

Result(data, surveys, drawings,

excel sheets etc.)

(Updated!)

Measure/

Learn

Build


6

Questions?

A method for entrepreneurship

Lean Startup – Central ConceptsJakob Bejbro [email protected]

Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:

“Original material by Thomas J. Howard and Jakob Bejbro Andersen for course 41631 – Innovation and Product Development Department of Mechanical Engineering, The Technical University of Denmark”

mailto:[email protected]


8

A case for the following: EdgeFlow Aps

• Founded in 2009 with PLH Architects and SEED Capital

• I am currently the CEO.

• A tech startup.

• Each prototype iteration has cost EdgeFlow EUR 250.000.

– Two in all.


9

Link to movie:

www.edgeflow.dk/EF_movie.avi

http://www.edgeflow.dk/EF_movie.avi


10

The central hypotheses

• The company’s value proposition is attractive.

– The customer is going to buy the product at the projected price.

• The company’s ”growth engine” can perform.– Will the company grow as quickly and effectively as intended?– Are the mechanisms in place for achieving this?

•Needs validation!


11

Validated learning

• What (exactly) is creating the value / improvement?

• To be certain, tests/experiments should be set up.

• All dimensions of the business model should be validated

in this manner.

•

• - A DEVELOPMENT FRAMEWORK FOR STARTUPS: “LEAN STARTUP” – 45 minutes (2nd module)• o Background for the framework

– § Ries background– § Lean in established industry

• o Principles of the framework– § Validated learning

• · Planning for feedback• · Relate to conventional design work• · Cohort analysis (by group, not aggregated)• · Q: How would the different groups get systematic feedback?

– § Minimal viable product• · Getting the product launched vs. getting it exactly right• · Types of MVPs (concierge etc.)• · Q: What would an MVP look like for the groups?

– § Central hypotheses• · Value (-proposition)• · Growth (-engine)

– § Time between “pivots” (tuning the engine)• · Pivot or persevere• · Fail fast (related to MVP)• · Catalog of pivot types• · Relevance of Development Log

• § Aversion to analogs (similar products)• § Discussion on pros and cons for Lean startup in a tech entrepreneurship context.

Lean startup def: p 20Engine analogy p 20

A B


12

Validated learning II – EdgeFlow as case• Formulating value propositions.

– CSR dimensions were deamed unattractive to industry– Financials first!

• But…– Later, we realised that (some) customers were actually quite

interested in a value proposition that included CSR dimensions.

What should I have done?


13

Minimal Viable Product

• Designing for value – not for perfection.

• Get to the market and learn.

– Fail fast!

• MVP has the functionality needed to go through one

build -> measure -> learn loop

• MVP types:

– Video

– Concierge


14

MVP – Another EdgeFlow learning

• Go full scale from day 1!– This will help us in completing the technical development faster.

• But…– What about the customers? Will they buy it? – A scaled model would be cheaper, easier to produce and safer to

install on a customer location.– No need for having a finished product if the customer is not interested

in buying it.


15

Exercise:

•What could your minimal viable product be?

• Spend 3 minutes deciding on a customer.• Spend 12 minutes on conceptualising MVPs for testing your assumptions (sketch!)

– What will you be testing and how do you measure?

• After 15 minutes (in total), we discuss your ideas.


16

Innovation accounting• Results from need to be gathered continuously and

compared.• Growth figures can hide underlying problems.

– Use ”cohort” analysis (analysis by group)


17

Pivot or Persevere?

• Is the business performing? (based on innov. accounting)

• If not, you can either:– Persevere (incrimental improvements)– Pivot (Rethink the whole parts of the business)

• Types of pivots (help me guess):– Zoom in/out– Customer segment– Customer need pivot– Engine of growth– Platform


18

Pivots in EdgeFlow

• Same story, different light: The switch to CSR– A ”customer need pivot”.

• But…– What about the customers? Will they buy it? – A scaled model would be cheaper, easier to produce and safer to

install on a customer location.– No need for having a finished product if the customer is not interested

in buying it.


19

Lean Startup - shortcomings

• ”If you can think it – you can build it”– Cost of technology – adding a new feature costs $ and time– Technological uncertainty– Technology ”lock in”– Technology can resist change.

• Focus on measurements– No descriptions of the development processes required.

• The ”build” step is simplified / neglected.

• Assumes free access to customer (B2C) and A LOT of data.


20

Questions?

41631 lecture 3 pt2 lean startup

Documents

howard jakob bejbro

loop4 original material

jakob bejbro andersen

startup weekend

tech startup

attributionsharealike

following statement

creative commons