Brisbane Lean Start-Up Meetup
29 Mar 2012Contact: [email protected]
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Lean Product Development Focus
• Traditional Product Development Model• Why it doesn’t work for start ups• Lean Product Development Model• Where, how and when can the lean model be applied?• World’s Biggest Lean Startup Meetup @ SXSW 2012 • OPEN DISCUSSION: Michael Holmstrom– Product Development and Innovation– GroundProbe Pty Ltd and Makelab– Highlights, lowlights, thoughts and advice
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Traditional Product Development Model
Ideation
Business Case
Development
Testing
Launch
Crystallisation of Passion & Vision
Product Definition, Market Research (Product, Pricing, Promotion, Distribution)
Engineering builds product,Marketing develops strategy & resources
Engineering/Sales engage users,Marketing support sales, CEO raises money
Sales builds capacity, marketing plan deployed, board measures performance and looks to scale-up
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Technology Adoption Curve
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
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Technology Adoption Curve
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
Start Up
Land
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Technology Adoption Curve
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
Start Up
LandRarely actually ‘buy’ anything
Not happening until you first understand
the market
Not really a smooth curve
Supposes linear progression with
focus on execution and adoption
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Why it doesn’t work for start-ups …
• High risk environment, where assumptions are not tested until the end
• Real customers only engaged late in the process• Sole focus on getting to market, not understanding
the market• Metrics typically about speed of execution, not
about whether outcomes are sustainable• Marketing, Sales and Engineering work in silos• High Risk of premature scaling
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The Lean Start-Up Alternative
• Company has to first– Prove market actually exists– Verify someone will pay ‘real’ money for
product/service– Create the market
• Learning and discovering customers/markets requires separate process– Should be done as early as possible– Funding not going to help accelerate greatly
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Customer Development Model
• Scientific Approach– Observe and describe– Develop hypothesis to explain– Predict results– Measure success rate of predictions using experiments
• Used to discover and validate– Product solves a problem for defined group of users (Customer
Discovery)– Market is viable for business (Customer Validation)– Business is scalable (Company Creation)– Company processes can support growth (Company Building)
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Customer Development Model
Source: Cooper B. & Vlaskovits P, The Entrepreneur’s Guide to Customer Development
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Types of Start Up MarketsExisting Markets Re-segmented
MarketsNew markets
Customers Existing Existing New/New Usage
Customer Needs Performance 1. Cost2. Perceived Need
Simplicity & convenience
Performance Better/Faster 1. Good enough at low end
2. Good enough for new niche
Based on new customer metrics
Competition Existing Incumbents Existing Incumbents Non-Use / Other Startups
Risks Existing Incumbents 1. Existing Incumbents
2. Niche strategy fails
Market adoption
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Types of Start-Up MarketsMarket Share Cost of Entry
(vs Leader’s Sales / Marketing Budget)
Entry Strategy
Monopoly >75% 3x Re-segment/New
Duopoly >75% 3x Re-segment/New
Market Leader >41% 3x Re-segment/New
Unstable Market >26% 1.7x Existing/Re-segment
Open Market >26% 1.7x Existing/Re-segment
Source: Blank S. & Dorf B., The Startup Owner’s Manual
Market Type – Cost of Entry(Based on Military Operations Research)
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OPEN DISCUSSION
• Topic– Product Development and Innovation– GroundProbe Pty Ltd and Makelab– Highlights, lowlights and advice
• Led by Michael Holmstrom (B.E Electrical Engineering, M.SC Digital Design)– 10+ Years experience in Innovation & Commercialisation– Co-Founder of GroundProbe Pty Ltd & Previous GM for
Product Innovation
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To Learn More
• Reading Materials– The Lean Startup, Eric Ries– The Entrepreneur’s Guide to Customer Development, Brant Cooper and
Patrick Vlaskovits– The Four Steps to Epiphany, Steve Blank– The Startup Owner’s Manual, Steve Blank
• Online– Lean Startup Wiki: http://leanstartup.pbworks.com – Mailing List: http://leanstartupcircle.com
• Forums– Startup Lessons Learnt: http://sllconf.com – Local Meetups – Silicon Beach, BarCamp