School of Management & Governance

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PD Dr. Rainer HarmsDr. Michel Ehrenhard

r.harms@utwente.nl

International New Business DevelopmentSession 1: Intro to Lean Startup

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www.capstonebranding.com/ about/capstone.php

Typical issues with this class

Comment: „We dont learn much content!“

Reply: „True. You had content throughout your Bachelor, and you will

create your own, specific content while you research.“

Comment: „We are left alone during project execution!“

Reply: „Partially true. But finding your own way in an entrepreneur‘s

reality

Comment: „We dont recieve much feedback!“

Reply: „Partially true. But we have extensive walk-in opportunities

Comment: „The projects are so vague and complex“

Reply: True. Thats real business. We try to help you deal with it.School of Management & Governance 3

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Planning, storming the castle, or something else?

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sikh-heritage.co.uk

Startups as experiments: Validated learning

7http://blog.amt.in/the-new-science-of-product-development

http://www.youtube.com/watch?feature=player_embedded&v=WAdikBfKeD8

The scientific method

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http://blog.amt.in/the-new-science-of-product-development

Lean Startup – merging the scientific method and entrepreneurship

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1. Talk to customers – real cases2. Form hypotheses to test3. Write code (produce)4. Roll out to % customers5. Analyze data6. Interpret data7. Share learning

http://blog.amt.in/the-new-science-of-product-development

The B – M – L cycle

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IMVU: Eric Ries‘ Lean Startup Story

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www.microsoft .comhttp://www.imvu.com/catalog/web_landing.php?p=ls1 llcollection-groupll.blogspot.com

http://www.youtube.com/watch?v=fEvKo90qBns minutes 23 to 35

Testing assumption: two IMVU examples

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brucebucks.com zazzle.com

The problem-solution fit

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Refers to a implicitly defined customer segment -> make expliciti

The MVP

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„The MVP is the smallest group of features that will elicit customer

feedback about the validity of the customer problem or solution“

Steve Blank

The mechanical turk

Getting deeper into the MVP

Low-Fi MVP

Problem exploration MVP: customer inverviews

Product Pitch MVP: asking cash at the end; landing pages, video

demos

Concierege MVP: real delivery, but „Wizard of Oz“

Hi-Fi MVP

Removal of any feature that might distract from the core learning

goal (google, dropbox - > plain interfaces

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Analyzing

Qualitative analysis Quant. analysis: A/B testing, conjoint

analysis etc.

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„Pivot“ or presevere

http://cdn.elezea.com/images/local-maximum.gif

Pivot = strategic change: one way of listing …

Zoom-in-pivot

Zoom-out-pivot

Customer segment pivot

Customer need pivot

Platform pivot

Business architecture pivot

Value capture pivot

Engine of growth pivot

Channel pivot

Technology pivot

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Key metrics (example)

Industry-Specific KPI

„Conversion rate“ – from view to click, from click to buy

Reference: the metrics page

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Example of empirical project (validated learning)

1. Problem: Mediocre evaluation of BK III course

2. Preliminiary research, eg. Brainstorming: Limited feedback as main problem, mentoring as potential

solution, best practices

3. Hypothesis: „Mentoring is positively related to the course evaluation

4. Test design:

4.1: Sample: this BK III class, all students

4.2: Operationalization: main satisfaction score, project support and feedback score,

assignment feedback score

4.3: Method of analysis: 2-sample mean comparison (t-test)

5. Analyse data

6. Conclusion

7. Results

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Example your project

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1. Problem: Newsletter services can be expanded to other segments

2. Preliminiary research, e.g. Brainstorming: lit research, customer interviews about what they value

most about current project, interview with prospective customers etc., SMT, Porter5forces etc.

3. Hypothesis (better: Assumption!): „Customers derive value from newsletters “ (operationalize!)

4. Test design:

4.1: Sample: x number of prospective customers

4.2: Operationalization: find ways to collect your material and / or find fitting metrics !

4.3: Method of analysis: qualitative vs. quantiative

5. Analyse data

6. Conclusion

7. Results

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Businnes Model

Generation/Validation

MinimalViable

Product(MVP)Usage

3-5 clients

MarketResearch Idea?

MVPfor

Adoption

MVPfor

Revenue

Month 1 Month 2,3 & 4 Month 5 Month 6

Idea

Business Plan

Func. Spec

Design

Build

Test

Market

Sell

Some learning

More learning

Most learning

The lean canvas – where does BML hide?

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Deliverables

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StartingcanvasDP 1

SuggestsolutionDP 3

Exam

< 10.02 12.02 26.02 12.03 19.03 26.03 17.4.

Find projectcompany / own venture

Probleminterview DP 2

SolutioninterviewDP 4

PitchDP 5

In short

Find a company / a venture with a (I)NBD issue

Set up a meeting with the entrepreneur, and identify customer-

reserach project

Describe current venture with Lean Canvas (DP 1)

Carry out and report customer interview (DP 2)

Suggest a solution (DP 3)

Get customer feedback from solution (DP 4)

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Getting started with the interviews

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Coffee shops

Lurking: on the street, in a location,

online...

@MeetUpsWhere do I find them?Facebook / LInkedIn

Existing Customers

1st Degree Networks

http://de.slideshare.net/LeanStartupConf/jon-irwin-rocktheinterview-slides

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Is the problem worth solving? Make a problem interview.

This is a problem statement

This is another problem statement.(Priority [ ] | Pain: low, medium, high) | How I solve this

today:This is a third problem statement.(Priority [ ] | Pain: low, medium, high) | How I solve this today:

This is a blank problem the customer can fill in.(Priority [ ] | Pain: low, medium, high) | How I solve this

today:This is a blank problem the customer can fill in.(Priority [ ] | Pain: low, medium, high) | How I solve this

today:Name:Email Address:

Referrals:Notes:

http://de.slideshare.net/LeanStartupConf/jon-irwin-rocktheinterview-slides

Opener

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Hey, I’m [name], and I’m working on a project to help conferenceattendees connect and collaborate. Do you wish it was easier toconnect and share ideas with other attendees like you? [smile]

Yes? Awesome, here we go / No? Okay, thanks. [smile]

http://de.slideshare.net/LeanStartupConf/jon-irwin-rocktheinterview-slides

Analyse the problem interview

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Do the problems really exist?

Are the problems commonly experienced?Are the problems severe?

Are there problems you didn’t anticipate?Is this the right customer?

Take an opportunity to refine your target groupShould you Kill / Pivot / Persevere?

http://de.slideshare.net/LeanStartupConf/jon-irwin-rocktheinterview-slides

Our role

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