Norbert ZellerSchaan, 2. November 2017
Lean InnovationHow to increase the Success Rate of Startups
Introduction for
Lean Startup InvestorNur 1 von 10 Startups ist erfolgreich?!
Warum Lean Innovation – Warum Lean Startup Investor?Der Vorteil von “Lean Innovation” zeigt sich bereits, bevor ein Produkt fertig entwickelt ist. So werden Learnings schneller umgesetzt und dadurch der Erfolg massiv gesteigert.Investoren können damit das Risiko und das Potenzial eines Investments früher und kontinuierlich einschätzen.
2. November 2017
Norbert Zeller•Electrical & Computer Science Engineer, FH Winterthur•Master of Management, MZSG•Partner at Trivadis AG•Member of StartAngels Network (startangels.ch)•Agile executive coach at pragmatic-‐solutions.ch•Board Member equitypitcher.com•Board Member of a Lean Startups
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AGENDA
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Content•Part 1:•Introduction to the Lean Innovation Framework
•Part 2:•Lean Governance
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INTRODUCTIONTO LEAN INNOVATION FRAMEWORK
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Goal: To improve the success rate
Source: Ash Maurya «Running Lean»7
•66% of successful products/companies significantly change original business idea
•Develop products in half the time and at half the cost (GE)
•Reduce failure: “wrong” product and “premature” scaling
•"Using lean methods across a portfolio of start-‐ups will result in fewer failures than using traditional methods“.•Steve Blank: https://hbr.org/2013/05/why-‐the-‐lean-‐start-‐up-‐changes-‐everything
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Why do startups fail?The vast majority of startups do NOT fail because they could not build a great product, but because no one wanted the product. Steve Blank
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The majority of successful startups abandoned their initial plans and learned what would and would not work in the market. Clayton Christensen
Traditional versus lean approach
Source: Ash Maurya: Running Lean9www.pragmatic-‐solutions.ch
Core Lean PrincipleGet out of the building
1 2 3 4 5 6 7 8 9
Lean Innovation is …
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a company culture touching all aspects:Values, Leadership, Incentives, Empowerment, Organization, Accountability, …
not a collection of tools
A culture can not be copied easily !
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Lean Innovation Framework
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Lean Innovation Framework
ScaleProduct Market
fit
Problem Solution
fit
Customer Discovery
Customer Validation
Customer Creation
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Each assumption is validated via an experiment with BML feedback loop
Is problem worth solving, are people willing to pay, is business model profitable, repeatable and scalable
Assumption of plan A, …
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LEAN CANVAS
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Source: Ash Maurya: Running Lean
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Source: Ash Maurya: Running Lean
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BUILD – MEASURE - LEARN FEEDBACK LOOP
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Feedback loop
Design experiment
Minimum Viable ProductResults
Analyze results:-‐ persevere,-‐ pivot or-‐ quit?
weeks not years
Assumption/Hypothesis
Run experiment
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Source: Eric Ries: The Lean Startup
BUILD: Design Experiment
We will know we have succeeded when [quantitative/measurable outcome] or [qualitative/observable outcome]
Janice Fraser
We believe that [customer type] have a need for [need/action/behavior]
The smallest thing we can do to prove that need is [experiment]
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Lean Innovation Framework
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LEAN GOVERNANCE
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Content - Agenda
• Risk Management• Validation of Business Model• Reporting progress• Governing Startups • Lean Investor• Lean Investment Process
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RISK MANAGEMENT
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Lean Canvas: Where is the risk?
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Lean Canvas: Prioritise risks and …
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Source: Running Lean was developed by AshMaurya. The card deck was created by Miles Galliford.
De-risking with BML Feedback loop
Build experiment
Measure your Metric
Hypothesis + Success Metric + Goal
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Compare result against forecast.Is the hypothesistrue or false?
Measure
Experiment Report
Why is it relevant?
Quantify your goalsset scope/timebox
Plan how to execute experiment
Results = Data
Document the learning (validated, invalidated or inconclusive)
Test value and growth hypothesis first
Move to next experiment
Build Learn
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Advantage of Validated Learning
Its all about facts and not opinions.
Build a culture of •generating facts instead of debating opinions•learning instead of being right
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?!
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VALIDATION OF BUSINESS MODEL
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Lean Innovation Framework
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Measure progress without sales?
See: http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/
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How?
ScaleProduct Market
fit
Problem Solution
fit
Qualitative Validation
Quantitative Validation
Is Business Model profitable, repeatable and scalable?
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By iterating Lean Canvas Ideas with Build-‐Measure-‐Learn Feedback Loop through 3 stages until we reach:
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REPORTING PROGRESS
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Goal: Problem Solution Fit => ValueProblem Solution FitYou validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.
Brant Cooper
Value assumption – test whether a product or service really delivers value to specific customers once using it.
ScaleProduct Market
fit
Problem Solution
fit
Customer Discovery
Customer Validation
Customer Creation
Is the identified problem real? Will the target customer pay? Can the problem be solved?
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The growth assumption – test how new customers will discover a product or service. Through what engine will you acquire new customers at affordable cost.
Goal: Product Market Fit => GrowthProduct Market FitCustomer is willing to pay. Cost of acquiring new customers is smaller than profit. Evidence that market is large enough
Brant Cooper
ScaleProduct Market
fit
Problem Solution
fit
Customer Discovery
Customer Validation
Customer Creation
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Measure
Experiment Report
Why is it relevant?
Quantify your goalsset scope/timebox
Plan how to execute experiment
Results = Data
Document the learning (validated, invalidated or inconclusive)
Test value and growth hypothesis first
Move to next experiment
Build Learn
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GOVERNING STARTUPS
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Lean Dash Board (Lean Stack)
Flow
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Lean Dash Board: Example
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Customer Example:Insurance Company
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Source: Ash Maurya: Running Lean
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THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TO FAIL.
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Dave Mc Clure @http://500.co
• Silicon Valley VC fund + startup accelerator• 40 people / 15 investing partners• 2000+ founders / 200+ mentors• 900+ Portfolio Co’s:•Wildfire USD 350•MakerBot USD 400•
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Lean Innovation Investment Process
Source: Hans Däpp, StartAngels Networkwww.pragmatic-‐solutions.ch 49
Assumption/Goal: Halving & Slicing of Angel Investments
FFFFLean Canvas V12, Problem Solution fit & Product Market fit & Dash Board Re
sults &
Bus.C
anv.
V X
tMileston
e 1
Lean Investmen
twhe
n?
Investmen
ttoday
Busin
ess
Plan V 1.0
EffortManpower (%) 1 10 80Elapsed time (month) 1 -‐ 3 2 -‐ 3 18 -‐…
Public BPcoursemachine still running
No/few public Lean InnovationTrainingsavailable
Lean Innovationis part of BAinvestment(= risk insurance)
Goal:On portfolio basis toGet higher Success Rate & less get funds & more quits
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SUMMARY: BENEFITS
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Savings Potentials with Lean
• Lean Canvas instead of Business Plan• Identification & priorisation of risks instead oftesting the whole Business Model• Solution interviews instead of Market Research• Pretotype/MVP instead of perfect Product• Speed has biggest impact on profit
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DISCUSSION
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Feedback Door1. How likely is it that you would recommend thisintroduction to a friend or colleague?
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Source: NetPromoter Score
2. What changes would we have to make for you to give us one point more?
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THE END
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