presentation to swissnex on behalf of nsrcel-iimb on 12/11/2014

Welcome

Sachidananda B SNSRCEL, IIM Bangalore

[email protected]

11/12/2014 1© Sachidananda

Agenda

11/12/2014 © Sachidananda 2

Lean Start up

A Game

effectuation

LEAN START-UP


FROMBUSINESS MODEL CANVAS

TO THE LEAN CANVASITERATE FROM PLAN A TO A PLAN THAT WORKS

-before you run out of resources...


Business Model Canvas


Key Partners Value Proposition

Customer Segments

Customer Relationships

Key Activities

Key Resources Channel

Cost Structure Revenue Streams

Lean Canvas

Problems Solutions

Key Metrics

Unfair Advantage

A comparison

BM Canvas

• Target: New and Existing Businesses

• Focus: Customers, Investors, Entrepreneurs, Consultants, Advisors

• Customers: Lays emphasis on customer segments, channels and customer relationships for all businesses

• Approach: It lays down the infrastructure, lists the nature and sources of financing and the anticipated revenue streams of the business

• Competition: It focuses on value proposition in quantitative and qualitative terms as way to stay smart in the market

• Application: It fosters candid understanding, creativity, discussion and constructive analysis

L Canvas

• Target: Purely Start up businesses

• Focus: Purely Entrepreneurs

• Customers: Does not lay much emphasis on customer segments because start-ups have no known or tested products to sell.

• Approach: It begins with the problem, a proposed solution, the channels to achieving the solution, costs involved and the anticipated revenue streams

• Competition: It assesses whether the business has an unfair advantage over the others and how to capitalize on it for better grounding

• Application: It is a simple problem-solution oriented approach which enables the entrepreneur to develop step-by-step


Src: https://canvanizer.com/how-to-use/business-model-canvas-vs-lean-canvas

Meta-Principles


Principles guide what you do, Tactics show you how

Essential 3 Steps:

1. Document your Plan A2. Identify the riskiest parts of your plan3. Systematically test your plan

Share it with at least one other person

One page is quick!

Most Importantly

Your product is NOT “The Product”

Your “business model” is the Product

Identify the Riskiest Parts of your business


Building a successful product is fundamentally about risk mitigation

For most parts, the solution is not what’s riskiest!

Problem/Solution Fit1

Key Question: Do I have a problem worth solving?• Is it something customers want? (must-have)• Will they pay for it? If not, who will? (viable)• Can it be solved? (feasible

Problem/Market Fit2

Key Question: Have I built something people want?

Scale3

Key Question: How do I accelerate growth?

Vision – Strategy - Product

Product

Strategy

Vision


Strategy: Employed by the start up to achieve its vision & includes – business model, product road map, partners, competitors, who is a customer etc.

Change in Strategy is a Pivot

Product: Is the end result of the strategy

Change in Product is Optimization

Vision: The true north! The destination the start up intends to reach

Entrepreneurs are committed to seeing what the start up to its destination

Pivoting - Optimize


Focus:

Experiments:

Growth

Optimizations

Focus:

Experiments:

Validated Learning

Pivots

Finding a plan that works Accelerating that plan

Validate Refine

Course Correction Efficiency

Your Goal:

Investor’s Goal:

Growth

Growth

Your Goal:

Investor’s Goal:

Learning

Growth

Pick bold outcomes instead

of chasing incremental

improvements

Ideal time to raise funding

Problem/Solution Fit Problem/Market Fit Scale

Systematically testing your plan


Idea

BUILD

Product

MEASURE

Data

LEARN

Minimize TOTAL timethrough the

loop

Build Faster

Unit Tests

Usability Tests

Continuous Integration

Incremental Deployment

Free & Open-Source

Cloud Computing

Cluster Immune System

Just-in-time Scalability

Refactoring

Developer Sandbox

Minimum Viable Product

Measure Faster

Funnel Analysis

Cohort Analysis

Net Promoter Score

Search Engine Marketing

Predictive Monitoring

Measure Faster

Split TestsContinuous Deployment

Usability Tests

Real-time Monitoring & Alerting

Customer Liaison

Learn Faster

Split Tests

Customer Development

Five Whys

Customer Advisory Board

Falsifiable Hypotheses

Product Owner

Accountability

Customer Archetypes

Cross-functional Teams

Semi-autonomous Teams

Smoke Tests

BUILD-MEASURE-LEARN

Experiment is a cycle

around the validated

learning loop

The Iteration Meta-Pattern


Understanding Problem

Defining Solution

Validating Qualitatively

Verifying Qualitatively

Problem Solution Fit Problem Market Fit

The Process


01 IDEA !

02 HYPOTHESIS

03 EXPERIMENTAL DESIGN

04 EXPERIMENTATION

05 PIVOT OR PERSEVERE?

6.b PERSEVERE

Do I have real evidence from my buyer that this is compelling?

What are the key assumptions required to make this business work?

How do I definitely prove or disprove the assumption with minimum time or effort?

Am I reacting or am I focused on validating my pivotal assumptions?

Pivot or Persevere

Experiment proves hypothesis

6.a PIVOT

Experiments disprove hypothesis

Lets get to your business!


The Key Metrics


Acquisition

Activation

Retention

Revenue

Referral

How do users find you?

Do users have a great first experience?

Do users come back ?

How do you make money?

Do users tell others?

Share your canvas with at least one!


Lets have at least 2 teams volunteering for a presentation

A SIMPLE GAME...


Interpreting the outcomes...


Scenario 1 Scenario 2 Scenario 3

Knightian UncertaintyRiskPredictable

You know the distribution andcan clearly predict thescenarios you could get into –very little risk if at all tooperate in such a state

The distribution is unknown tobegin with, but one could followthe draws to understand whatcould come next. You could thenprepare for the outcomes

You do not know what is going tocome next in spite of multipleattempts at the same thing.Outcome is highly uncertain!

It is this sort of uncertainty that we deal with as

entrepreneurs

Ready to Start?


Incorrect prioritization is the top contributor to waste!

PRODUCT RISK

CUSTOMER RISK

MARKET RISK

Getting the product right

Building a path to customers

Building a viable business

So much for risk mitigation! Can we abstract to

handle uncertainty itself?

But before we start


Our atmosphere is filling up with CO2 and we seem to be the major cause of that. The generallyaccepted solution seems to be cutting back on emissions as quickly as possible, but implementingsuch cuts is problematic because everyone has to agree to do more, which essentially ends upcosting a lot of time and money.There is an alternative to such measures, though. Instead of relying entirely on cutting emissions,why don’t we start taking CO2 out of the atmosphere? That’s exactly what biochemist Pierre Calleja istrying to do, and his solution almost sounds too good to be true.Calleja has developed a lighting system that requires no electricity for power. Instead it draws CO2

from the atmosphere and uses it to produce light as well as oxygen as a byproduct. The keyingredient to this eco-friendly light? Algae.Certain types of algae can feed off of organic carbon as well as sunlight, and in the process producecarbohydrate energy for themselves as well as oxygen as a waste product.Cajella’s lamps consist of algae-filled water along with a light and battery system. During the day thealgae produce energy from sunlight that is then stored in the batteries. Then at night the energy isused to power the light. However, as the algae can also produce energy from carbon, sunlight isn’trequired for the process to work. That means such lights can be placed where there is no natural lightand the air will effectively be cleaned on a daily basis.What isn’t discussed in the video is how much maintenance such a light needs. However, the goodnews is algae can also act as a biofuel once separated from the water, so even if the lights need awater change out every so often, the waste algae just forms another type of fuel where as the watercan be recycled.

Src: http://www.geek.com/news/biochemist-creates-co2-eating-light-that-runs-on-algae-1487699/

http://www.geek.com/news/biochemist-creates-co2-eating-light-that-runs-on-algae-1487699/

EFFECTUATION


What is learnable in entrepreneurship?


Study the Expert Entrepreneurs helped identify 5 principles

Bird in Hand Principle - Start with your means. Don't wait for the perfect opportunity. Start taking action, based on what you have readily available: who you are, what you know, and who you know.

Affordable Loss Principle - Set affordable loss Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside.Lemonade Principle - Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals.Crazy-Quilt Principle - Form partnerships Form partnerships with people and organizations willing to make a real commitment to jointly creating the future--product, firm, market--with you.

Don't worry so much about competitive analyses and strategic planning.

Pilot in the Plane – Control vs Prediction If you can control something, you don’t need to predict what the future would look like.

Causal and Effectual Logic


Effectuation Cycle


Thank You

Questions References

• Effectuation.org

• The Lean Start up – Eric Ries

• Presentations by Eric Ries

• Presentation by Prof K Kumar

• Presentation by Alex Cowan

• Running Lean – Ash Mourya


presentation to swissnex on behalf of nsrcel-iimb on 12/11/2014

Small Business & Entrepreneurship

productyour business

business competition

entrepreneurs customers

riskiest parts

businesses approach

successful product

advisors customers

proposed solution