Date post: | 10-Jul-2015 |
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Agenda
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Lean Start up
A Game
effectuation
LEAN START-UP
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FROMBUSINESS MODEL CANVAS
TO THE LEAN CANVASITERATE FROM PLAN A TO A PLAN THAT WORKS
-before you run out of resources...
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Business Model Canvas
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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
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Src: https://canvanizer.com/how-to-use/business-model-canvas-vs-lean-canvas
Meta-Principles
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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
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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
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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
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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
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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
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Understanding Problem
Defining Solution
Validating Qualitatively
Verifying Qualitatively
Problem Solution Fit Problem Market Fit
The Process
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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!
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The Key Metrics
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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!
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Lets have at least 2 teams volunteering for a presentation
A SIMPLE GAME...
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Interpreting the outcomes...
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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?
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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
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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/
EFFECTUATION
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What is learnable in entrepreneurship?
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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
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Effectuation Cycle
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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
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