Lean methodology

05/01/2023 © Sachidananda 1

The Lean MethodologySachidananda B S


STAGES


1Identification

2 Evaluation

3Initiation

4 Progress

5Persistence

6 Success

The Entrepreneurial Process


Typical Questions1

Identification

• I know this technology, I find these things happening in the environment, I think can do it• What all could I build?• Do I have the means to do it?

Evaluation

• Is there a need for something that I would like to build? Technology?• Family support? Financial Considerations? • Impact of action? Self awareness

2

Initiation

• What is the MVP I could build?• Who are the people I could meet to get a good assessment of the product/service

3

Progress

• What feedback should I incorporate? What should I discard?• What markets would be attractive to pursue? What features should I project?

4

Persistence

• Should I pursue or pivot? • What do the metrics tell me?5

Success

• Scaling issues!6

The Golden Circle


What

How

Why

Traditional Business Approach

Suggested Business Approach

Understanding the root of the issue we decide to work on is essential


The 5 why approach

Before we start!


What

How

Why

Produc

t

Strategy

VisionLong term

Failure is not for the entrepreneur, its only for these stages!


FOR START-UPSTHE CHALLENGE IS....


MARKETPRODUCT

Your product is NOT “the product” Your “Business Model” is the productRemember


FOR START-UPSTHE CHALLENGE IS....

ITERATE FROM PLAN A TO A PLAN THAT WORKS-before you run out of resources...


LEAN START-UP

Vision Steer Accelerate


Vision

ProductStrategy

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 strategyChange in Product is Optimization

Vision: The true north! The destination the start up intends to reachEntrepreneurs are committed to seeing what the start up to its destination

A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty

5 Principles of Lean Startup Method1. Entrepreneurs are everywhere2. Entrepreneurship is manageme

nt3. Validated Learning4. Build-Measure-Learn5. Innovation Accounting


Steer• Startup is a catalyst that transforms ideas into products• As customers interact with the products they generate feedback and data •Feedback Loop - Build Measure Learn1.Identify the hypothesis to test – leap of faith assumptions2.Build the MVP – version that enables a full turn of the BML loop3.Measure: Is the product development effort leading to real progress –

1. Innovation Accounting2. Learning Milestones

01 IDEA !

02 HYPOTHESIS

03 EXPERIMENTAL DESIGN

04 EXPERIMENTATION

05 PIVOT OR PERSEVERE?

6.b PERSEVEREExperiment proves hypothesis

6.a PIVOTExperiments disprove hypothesis

MetricsVanity

Actionable

Pivot?

Accelerate


Batch

The power of small Batches- Equivalent of the andon card- Continuous deployment-Feedback on design decisions almost instantaneous-Large batches could initiate death spirals for the organization!- pull instead of push (learn-measure-build)!

Growth

New customers come from the action of past customers.Growth Through- word of mouth- aside effect of product usage- funded advertisement- repeat purchase or use

3 engines of growth1.Sticky engine2.Viral 3.Paid

Adapt

The 5 why approach1.Be tolerant to all mistakes the first time2.Never allow the same mistake to be made twice

Innovate

Structure - • Scarce but secure resources• Independent development authority • Personal stake in the outcome• Innovation sandbox• Internal teams accountableWatch out - • Protect from the parent organization • Rational fears• Hiding innovation inside the black box

PeopleCulture

Process

Accountability

The Startup

Way


Identify the Riskiest Parts of your businessBuilding 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

Product/Market Fit2

Key Question: Have I built something people want?

Scale3

Key Question: How do I accelerate growth?


The Process01 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 PIVOTExperiments disprove hypothesis


The Iteration Meta-Pattern

Understanding Problem

Defining Solution

Validating Qualitatively

Verifying Quantitativel

y

Problem Solution Fit Product Market Fit

05/01/2023 18

Pivoting - Optimize

© Sachidananda

Focus:

Experiments:

GrowthOptimizations

Focus:

Experiments:

Validated LearningPivots

Finding a plan that works Accelerating that planValidate Refine

Course Correction Efficiency

Your Goal:

Investor’s Goal:

GrowthGrowth

Your Goal:

Investor’s Goal:

LearningGrowth

Pick bold outcomes instead of chasing incremental

improvements

Ideal time to raise funding

Problem/Solution Fit Product/Market Fit Scale


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?

Systematically testing your plan


Idea

BUILD

Product

MEASURE

Data

LEARN

Minimize TOTAL time

through the loop

Build Faster

Unit TestsUsability Tests

Continuous IntegrationIncremental Deployment

Free & Open-SourceCloud Computing

Cluster Immune System

Just-in-time ScalabilityRefactoring

Developer SandboxMinimum Viable

Product

Measure FasterFunnel AnalysisCohort Analysis

Net Promoter ScoreSearch Engine

MarketingPredictive Monitoring

Measure Faster

Split TestsContinuous DeploymentUsability TestsReal-time Monitoring & AlertingCustomer Liaison

Learn Faster

Split TestsCustomer DevelopmentFive WhysCustomer Advisory BoardFalsifiable HypothesesProduct OwnerAccountabilityCustomer ArchetypesCross-functional TeamsSemi-autonomous TeamsSmoke Tests

Experiment is a cycle around the validated

learning loop

BUIL

D- M

EASU

RE- L

EARN


Recollect: Vision – Strategy - ProductProductStrategy

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


Pivots – Catalogue

Platform PivotBusiness

Architecture Pivot

Zoom-out Pivot

Engine of Growth Pivot

Customer Segment Pivot

Channel Pivot

Zoom-in Pivot

Value Capture Pivot

Customer Need Pivot

Technology Pivot

Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, business model and engine of growth

Companies that cannot bring themselves to pivot to a new direction on the basis of feedback from the marketplace can get stuck in the land of the living dead

Pivot is a special kind of change designed to test a new fundamental

hypothesis about the product, business model and engine of

growth

PIVOTS!

A pivot is better understood as a new strategic hypothesis that will require a new MVP (minimal viable product) to test. Successful pivot puts a company on a path toward growing a sustainable business


QUESTIONSTHANK YOU

References:1. Lean Startup – Eric Ries2. Running Lean – Ash Maurya

Image courtesy:Difference images thrown up by Google search... Thanks a ton!

Lean methodology

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