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Lean Startup and Entrepreneurship. Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics California State University Channel Islands [email protected] Jan. 15, 2014. Clairvoyance. 屯卦屯名的說文解字. 《 說文 》 曰 : 「屯 , 難也。象艸木之初生 , 屯然而難。」 序卦曰 : 「屯者 , 物之始生也。」.

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Lean startup and entrepreneurship

Lean Startup and Entrepreneurship

Minder Chen, Ph.D.

Professor of MIS

Martin V. Smith School of Business and Economics

California State University Channel Islands

[email protected]

Jan. 15, 2014


Clairvoyance

Clairvoyance


Lean startup and entrepreneurship

屯卦屯名的說文解字

  • 《說文》曰:「屯,難也。象艸木之初生,屯然而難。」

  • 序卦曰:「屯者,物之始生也。」

往上發芽,破土而出。

地表

種子,幼芽破殻而出

種子往下生出的根

根和芽都有屈曲之象,有能屈能伸的涵意


Lean startup and entrepreneurship

屯卦


Lean startup and entrepreneurship

創業 vs. 守成

貞觀十年,太宗謂侍臣曰:「帝王之業,草創與守成孰難?」尚書左僕射房玄齡對曰:「天地草昧,群雄競起,攻破乃降,戰勝乃克。由此言之,草創為難。」魏徵對曰:「帝王之起,必承衰亂,覆彼昏狡,百姓樂推,四海歸命,天授人與,乃不為難。然既得之後,志趣驕逸,百姓欲靜而徭役不休,百姓凋殘而侈務不息,國之衰弊,恆由此起。以斯而言,守成則難。」太宗曰:「玄齡昔從我定天下,備嘗艱苦,出萬死而遇一生,所以見草創之難也。魏徵與我安天下,慮生驕逸之端,必踐危亡之地,所以見守成之難也。今草創之難既已往矣,守成之難者,當思與公等慎之。」

  • 唐、吳兢,《貞觀政要》〈君道第一〉


Lean startup and entrepreneurship

徽商之家訓

  • 讀書好,營商好,學好便好;

  • 創業難,守成難,知難不難。

來源:安徽省徽州古民居(黟縣西遞村)中有康熙年間造的「履福堂」,廳堂上的對聯。


Lean startup and entrepreneurship

屯卦總論

創業維艱,勇於冒險;

鍾其所愛,義無反顧。

結合人才,建立團隊;

抓緊技術,掌握市場。

權衡時機,或進或退;

成敗得失,盡其在我。


Mind and hand

Mind and Hand

http://www.mensetmanus.net/mit-motto/motto.shtml

MIT's motto is "Mens et Manus," which translates from the Latin to "Mind and Hand." 


The startup owner s manual

The Startup Owner’s Manual

Steve Blank video at http://www.youtube.com/watch?v=6t0t-CXPpyM

  • A startup is a temporary organization designed to search for a repeatable and scalable business model (under extreme uncertainty).

    - Steve Blank, The Startup Owner’s Manual


Resources

Resources

  • http://theleanstartup.com/

  • http://steveblank.com/

  • http://steveblank.com/2012/11/27/open-source-entrepreneurship/

  • http://www.slideshare.net/sblank/lean-launchpad-educators-handbook-sept-2013


10 top ten mistakes of entrepreneurs

10 Top Ten Mistakes of Entrepreneurs

Guy Kawasaki, The Top 10 Mistakes of Entrepreneurs

https://www.youtube.com/watch?v=HHjgK6p4nrw

  • Multiplying big numbers by 1percent

  • Scaling too soon

  • Partnering

  • Pitching instead of prototyping

  • Using too many slides and too small a font

  • Doing things serially

  • Believing 51% = control

  • Believing patents =defensibility

  • Hiring in your own image

  • Befriending your VCs

  • Thinking VCs can add value


Lean startup and entrepreneurship

  • Describe

  • Design

  • Invent

  • Validate

  • Pivot

  • Discuss

Source: http://businessmodelgeneration.com/canvas

Video


Lean startup and entrepreneurship

What

How

Who

Cash Flow

Source: Alexander Osterwalder & Yves Pigneur, Business Model Generation (Preview version), 2009.


Reverse engineering facebook s business model with ballpark figures

Reverse Engineering Facebook’s Business Model with Ballpark Figures

http://www.businessmodelalchemist.com/


Questioning business model components

Questioning Business Model Components


Validate your business model

Validate Your Business Model

No startup business plan survived first contact with customers.

“Get out of the building approach” – It is not a business plan.

Most startups lack a structured process for testing their business model hypotheses.


A starting point of innovation

A Starting Point of Innovation

A customer friction is a (re)discovered of relevant and often unmet needs in a recognizable situation from a target group.

  • Adapted form http://www.innovationexcellence.com/blog/2011/07/08/solve-customer-frictions/


Three attributes of user experiences

Three Attributes of User Experiences

Experience, Expectancy, Envy

Excitement, Enjoyment, Enforcement

Entertainment, Esthetic, Escape, Education


Product experience

Product Experience


Hypotheses testing and insight

Hypotheses Testing and Insight

Business Model

Hypotheses

Facts


Learning and assumptions testing

Learning and Assumptions Testing


Persona

Persona

  • Name

  • Age

  • Photo

  • Candid quotes

  • Personal information

  • Work environment

  • Computer proficiency

  • Motivation for using the product

  • Information-seeking habits

  • Personal and professional goals

  • Evokes a strong sense of empathy in the project team

  • Eliminates the need to design for an abstract, elastic “user group” whose goals and needs are not fully understood

  • Facilitates user-centered design – the focus is now on the goals of your typical customer rather than the project team

A persona is an archetype of an organization’s typical customer, and is defined primarily by a customer’s goals when interacting with the products. They are not real people, but are used to represent real users during the design process.

Products generally have a “cast” of personas, ranging from 3 to 8, one of which is considered the primary persona. These are best presented as narratives. Providing a persona with real characteristics:

Source: The ABCs of Personas: Design for People, Design for Success


The customer development process

The Customer Development Process

More startups fail from a lack of customers than

from a failure of product development

Try many times before you get it right.

It is OK to fail so plan to learn from it.

Only move to the next stage when you learn enough and reach the “escape velocity”

http://www.ctinnovations.com/images/resources/Startup%20Owners%20Manual%20-%20BlankDorf.pdf


Bioiq com case study

BioIQ.Com Case Study


The lean start up

The Lean Start-Up

Steve Blank, "Why The Lean Start-up Change Everything," HBR, May 2013. (link)


What is pivot

What Is Pivot?

  • Pivot: A change to business model component based on customer feedbacks. A pivot is not a failure.

  • Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, engine of growth, etc.

    • Eric Ries, The Lean Startup, 2013.

  • Pivots are vision driven.


Lean startup and entrepreneurship

MVP

In product development, the Minimum Viable Product (MVP) is a strategy used for fast and quantitative market testing of a product or product features. It is an iterative process of idea generation, prototyping, presentation, data collection, analysis and learning.


An mvp example

An MVP Example

Source: http://michaelrwolfe.com/2013/10/19/why-is-dropbox-more-popular-than-other-programs-with-similar-functionality/

Why is Dropbox more popular than other programs with similar functionality?

  • Well, let’s take a step back and think about the sync problem and what the ideal solution for it would do:

    • There would be a folder.

    • You’d put your stuff in it.

    • It would sync.


Startup vs large company

Startup vs. Large Company

http://steveblank.com/2012/03/05/search-versus-execute/


Lessons learning

Lessons Learning

http://steveblank.com/2012/03/05/search-versus-execute/

The search for the business model is the front end of the startup process

The goal is to find a repeatable/scalable model, and then execute

Customer and Agile Development are the processes to search and build the model

Execution requires operating plans and financial forecasts

Product management is the process for executing the model

This is true in the smallest startup or largest company


From startup to large company sustaining

From Startup to Large Company Sustaining

Sustaining

Innovation

Innovate or Evaporate

Goal is to solve for:

unknown customer and unknown features

Build

Search

Execute

Scalable

Startup

Transition

/Buyout

Large Company

  • Existing Market / Known customer

  • Known product feature needs

Disruptive Innovation

  • New Market

  • New tech, customers, channels

  • Exit Criteria

  • Business model found

  • Total Available Market > $500m

  • Can grow to >$100m/year

  • Can be Venture capital funded


The lean startup method

The Lean Startup Method

  • Entrepreneurs are everywhere.

  • Entrepreneurship is management.

  • Validated learning.

  • Build-Measure-Learn.

  • Innovation accounting.

    • Eric Ries, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, 2011.


Scrum process

SCRUM Process

Source: https://www.youtube.com/watch?v=WxiuE-1ujCM


Lean startup customer development agile method

Lean Startup = Customer Development + Agile Method


Investment readiness levels 1 2

Investment Readiness: Levels 1 & 2

  • Hypotheses

  • Value Proposition summarized

  • Canvas hypotheses articulated

Hypotheses


Investment readiness levels 3 4

Investment Readiness: Levels 3 & 4

  • Problem / Solution Fit

  • Problem Solution fit

  • Low fidelity MVP

Problem/Solution

Hypotheses


Investment readiness levels 5 6

Investment Readiness: Levels 5 & 6

  • Validate

  • Product/Market fit

  • Right side of canvas

Product/Market fit

Problem/Solution

Hypotheses


Investment readiness levels 7 8

Investment Readiness: Levels 7 & 8

  • Validate

  • Left side of canvas

Product/Market fit

Problem/Solution

Hypotheses


Investment readiness levels 9

Investment Readiness: Levels 9

Metrics That Matter

Left side of the canvas

Product/Market fit

Problem/Solution

Hypotheses


Lean startup and entrepreneurship

Technology

Readiness Level

Investment

Readiness Level

Metrics that Matter

Validate

Left side of Canvas

Validate

Right side of Canvas

Product/Market Fit

Problem/Solution

Hypotheses


Lean startup and entrepreneurship

Source: Link


Innovator s dnas

Innovator’s DNAs

http://strategicorganizationdesign.com/the-innovator%E2%80%99s-dna-disruptive-research-disruptive-writing


Finding the sweet spot

Finding the Sweet Spot


Lean startup and entrepreneurship

http://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf


Inspiration

Inspiration


Empathy map

Empathy Map

Customer (user)

what really counts

major preoccupations, worries & aspirations

Empathy

Map

environment

friends

what the markets offers

what friends say

what boss says

what influences say

GAIN

“wants”/needs,

measures of success,

obstacles

PAIN

fears, frustrations, obstacles

attitude in public

appearance

behavior towards others

http://www.gogamestorm.com/?p=42

http://www.slideshare.net/AdilsonJardim/empathy-map-poster-3201288


Inspiration1

Inspiration


Ideation

Ideation


Implementation

Implementation


Quick prototyping

Quick Prototyping

IDEO


Bagless vacuum cleaner

Bagless Vacuum Cleaner

Slogan "say goodbye to the bag"

Inventor James Dyson built 5,127 prototypes before completing his first bagless vacuum.

“Failures are interesting.”

http://www.sciencefriday.com/playlist/#play/program/1716


Design thinking process by stanford d school ideo

Design Thinking Process by Stanford d.school / IDEO

“To create meaningful innovations,

you need to know your users.

Empathize and care about their lives.”

“It’s not about coming up with the ‘right’ idea, it’s about generating the broadest range of possibilities.”

“Build to think and test to learn.”

“Framing the right problem is the only way to create the right solution.”

IDEO: Inspiration  Ideation  Implementation

“Testing is an opportunity to learn about your solution and your user.”

http://dschool.stanford.edu/dgift/

https://dschool.stanford.edu/groups/designresources/wiki/36873/attachments/8a846/ModeGuideBOOTCAMP2010.pdf


Design thinking

Design Thinking

Process


Design for growth d4g process and tools

Design for Growth (D4G) Process and Tools


Design brief

Design Brief


Concept pitch

Concept Pitch


Suitcases on wheels

Suitcases on Wheels

Macy’s ads began promoting “the Luggage That Glides.”

http://www.cnn.com/2010/TRAVEL/10/04/wheeled.luggage.anniversary/

Wheels on a suitcase? So convenient, they're an unremarkable essential for today's traveler. But in 1970, Bernard Sadow had trouble selling his rolling suitcase idea.

"I showed it to every department store in New York City and a lot of buying offices, and everybody said I was crazy. 'Nobody's going to pull a piece of luggage with wheels on it.' People just didn't think in those terms," Sadow said.


Rollerboard

Rollerboard

But it was also a time of huge change in the culture of travel, as a growing number of people flew, airports became bigger and far more women began traveling alone, especially on business trips. It had taken a long time, but common sense and the quest for convenience prevailed. The suitcase acquired wheels; travelers no longer routinely needed porters and bellhops.

The Rollaboard was invented in 1987 by Robert Plath, a Northwest Airlines 747 pilot and avid home workshop tinkerer, who affixed two wheels and a long handle to suitcases that rolled upright, rather than being towed flat like Mr. Sadow’s four-wheeled models.

http://www.nytimes.com/2010/10/05/business/05road.html?_r=0


Pitstop

Pitstop

Pitstop underway for Fernando Alonso at 2008 Chinese Grand Prix

Source: http://en.wikipedia.org/wiki/File:Alonso_Renault_Pitstop_Chinese_GP_2008.jpg


The trick to inventing a better ice cream scoop

The Trick to Inventing a Better Ice Cream Scoop

The award-winning design for this "mouth-friendly" ice cream scoop came from observing that people tend to lick the utensil after use (you cannot learn about this by asking people only). by Zyliss, Swiss housewares company

Link

No sharp edges and no moving parts


Pnc virtual money

PNC Virtual Money

Design for Generation Y

Video


Tools in the toolbox

Tools in the Toolbox


Customer journey mots netflix vs blockbuster

Customer Journey MOTs : Netflix vs. Blockbuster


Meyouhealth com

MeYouHealth.com


Personal journal

Personal Journal


Qualitative data

Qualitative Data

  • Healthways Well-Being Index based on quantitative data

    • Emotional, physical, behavioral, work environmental, access to health resources, overall life outlook.


Persona1

Persona

  • Name

  • Age

  • Photo

  • Candid quotes

  • Personal information

  • Work environment

  • Computer proficiency

  • Motivation for using the product

  • Information-seeking habits

  • Personal and professional goals

  • Evokes a strong sense of empathy in the project team

  • Eliminates the need to design for an abstract, elastic “user group” whose goals and needs are not fully understood

  • Facilitates user-centered design – the focus is now on the goals of your typical customer rather than the project team

A persona is an archetype of an organization’s typical customer, and is defined primarily by a customer’s goals when interacting with the products. They are not real people, but are used to represent real users during the design process.

Products generally have a “cast” of personas, ranging from 3 to 8, one of which is considered the primary persona. These are best presented as narratives. Providing a persona with real characteristics:

Source: The ABCs of Personas: Design for People, Design for Success


7 different personas and what motivates them

7 Different Personas and What Motivates Them

Aware & Achieving, Me-Time Impoverished, Validation Seeker, Enlightened and Discovering, Idle, Excuse Maker, Enabled

Monumental mobile app with gaming feature  Daily Challenge


Http www mynetdiary com

http://www.mynetdiary.com/


Design for extreme affordability

Design for Extreme Affordability

  • http://www.creativeconfidence.com/chapters/chapter-3

  • Problem: 15 M premature and underweight babies and many died.

  • Reasons:

    • Babies are so tiny they don’t have enough fat to regulate their own body temperature.

    • Traditional incubators can also cost as much as $20,000—each.

  • Goal: Design low-cost infant incubator for developing world

  • Field research:

    • Saw unused infant incubators in hospital in Nepal.  Changing design for hospitals and clinics to Rural mothers in their villages

    • Heard mother is going to reduce temperature from 38oc to 30oc  Changing the indicator to just OK


The embrace infant warmer is a product with a mission

The Embrace Infant Warmer Is A Product With A Mission

$200

ABC News 20/20 Video

Paraffin (石蠟)

Video from Embrace

http://embraceglobal.org/


Redesign mri for kids

Redesign MRI for Kids

  • GE 18 billion Heathcare Division

  • Multimillion-dollar magnetic resonance imaging (MRI) machines

  • Problem: Children are frighten by the MRI machine and 80% has to be sedated before scanning.

  • Action: Chief designer took “Human-Centered Design and Innovation” at Stanford d.school

  • Solution: Designing MRI machine  Redesign and humanize the experience for kids (getting young patients safely and willingly through an MRI scan)


Ge s adventure series mri for kids

GE’s “Adventure Series”MRI for Kids

Link

GE's Adventure Series redesigns imaging equipment including MRIs, X-ray machines and CT scanners like the pirate-themed machine pictured here to make the procedures less scary for kids.

(Link)


Swiffer p g and contiuum

Swiffer – P&G and Contiuum

Procter & Gamble’s 2nd most popular consumer product.

“There has got to be a better way to clean a floor. Current mops are the cleaning equivalent of the horse drawn carriage – where’s the car?”


Hire a milkshake

Hire a Milkshake

“Finding the Right Job for Your Product.” MIT Sloan Management Review, Spring 2007, pp. 38–47

They were winning out over doughnuts, bagels, bananas, and boredom.

If a company can discover a job-defined market, it will generally be much larger than one defined by product category.


Listerine pocketpaks

Listerine PocketPaks

Addressing the consumer need for an easy-to-use, portable product that delivers a cleaner, healthier mouth -- a real solution, not a mask for bad breath.

$150 Millions first year sales

Original idea came from Japan


3m masking tapes

3M Masking Tapes

Drew wanted to test a new batch of sandpaper, so he visited an auto body shop in St. Paul,

Minn. When he entered the shop, he heard a group of workers cursing vehemently. He asked about the problem. Two-tone cars were popular then, but the effect required workers to mask certain parts of the auto body using a combination of heavy adhesive tape and butcher paper. After the paint dried, workers removed the tape – and often peeled away part of the new paint. Their labor was undone, and costs mounted for the customer.

3M gives employees 15% of their time to work on their personal projects.


Frictions pains

Frictions & Pains

http://invention.smithsonian.org/centerpieces/iap/inventors_fry2.html

3M Post-it

“I keep losing my place in my music!”


Ptototypes

Ptototypes

Eric Ries, author of The Lean Startup, calls such a prototype a minimum viable product, or MVP—representing the least amount of effort needed to run an experiment and get feedback.

Creativity requires cycling lots of ideas. The more you invest in your prototype and the closer to “final” it is, the harder it is to let go of a concept that’s not working.

Prototyping quickly and cheaply also allows you to keep multiple concepts alive longer. 

Boyle’s Law (named after one of IDEO’s master prototypers, Dennis Boyle): never go to a meeting without a prototype.


Why designers should never go to a meeting without a prototype

Why Designers Should Never Go to a Meeting Without a Prototype

Link

a project with Sesame Workshop to develop Elmo’s Monster Maker—an iPhone app that leads young children through the process of designing their own monster friend. They had an idea for a new dance feature in which kids could guide Elmo through different dance moves in sync with a simple music track. 


Gui and mouse

GUI and Mouse

http://www.newyorker.com/reporting/2011/05/16/110516fa_fact_gladwell

Doug Engelbart of the Augmentation Research Center in Palo Alto developed the computer mouse and graphical user interfaces.


Xerox parc and apple macintosh

Xerox PARC and Apple Macintosh

Following PARC the first GUI-centric computer operating model was the Xerox 8010 Star Information System in 1981, followed by the Apple Lisa (which presented the concept of menu bar as well as window controls) in 1983, the Apple Macintosh 128K in 1984, and the Atari ST and Commodore Amiga in 1985.


A mighty mouse

A Mighty Mouse

SRI had licensed the mouse patent to Apple for something like $40,000."

http://www.stanfordalumni.org/news/magazine/2002/marapr/features/mouse.html

the Xerox mouse had three buttons, was complicated, cost $300/$400 apiece, and didn’t roll around smoothly

Jobs went to a local industrial design firm, Hovey-Kelley Design (i.e., IDEO now), and told one of its founders, Dean Hovey, that he wanted a simple single button model that cost $15, and he want to be able to use it on Formica and his blue jeans.

“take a piece of technology developed by some of Silicon Valley’s greatest minds, dramatically improve its reliability and cut its price by more than 90 percent.”


Design of the mouse ideo

Design of the Mouse: IDEO

  • The mouse, Hovey says, “had the right balance of

    • mechanical design,

    • ergonomic design,

    • software design

    • and electronic design

  • that really mapped well with the generalist, mini-da Vincis that Hovey-Kelley had. Even down to the tactile aspect of the click.”


Design via prototyping

Design via Prototyping

Hovey estimated their consulting fee at thirty-five dollars an hour; the whole project cost perhaps a hundred thousand dollars.

http://www.stanfordalumni.org/news/magazine/2002/marapr/features/mouse.html

Construction play

Thinking with Your Hands

Low-resolution prototype


Who invented the mouse

Who Invented the Mouse?

http://www.newyorker.com/reporting/2011/05/16/110516fa_fact_gladwell?printable=true

http://en.wikipedia.org/wiki/Douglas_Engelbart

  • Creative Visionary: Doug Engelbart at SRI

  • Inventor of New Products: Xerox PARC

    • A decentralized, bottom-up entrepreneurial culture

  • Innovator for Commercial Market: Apple

    • Organizations with resource constraint and constant threat


Design with intention

Design with Intention

Designers always act with intention. While others may unconsciously go with the default option, design thinkers make everything a conscious and original choice: from how they arrange their bookshelf to how they present their work.

Steve Jobs never took the path of least resistance. He never accepted the world “as is.” He did everything with intentionality. No detail was too small to escape his attention. 

(Link)

http://www.ideo.com/work/


Genius bar

Genius Bar

Best service experiences: Four Seasons or Ritz-Carlton Hotel.

Johnson sent his first five store managers through the Ritz-Carlton training program.

Genius Bar: Replicating something between a concierge desk and a bar in a hotel.


Courtyard by marriott bistro lobby concept

Courtyard by Marriott Bistro Lobby Concept

Link

Video


Five guest enabling brand principles

Five Guest-enabling Brand Principles

Focus on working smarter and anticipating needs

Instill pro-activity to let personality shine

Enable guests to feel comfortable in public spaces using subtle gestures

Provide options and a sense of control

Aim to help guests feel refreshed, refueled, and recharged


Courtyard by marriott check in counter goboard

Courtyard by Marriott Check-in Counter &GoBoard

http://www.ideo.com/work/redesigned-courtyard-lobby-experience


Four core principles of successful innovation

Four Core Principles ofSuccessful Innovation

PRINCIPLE 1: Build Innovations aroundExperiences

PRINCIPLE 2: Think of Innovations as Systems

PRINCIPLE 3: Cultivate an Innovation Culture

PRINCIPLE 4: Adopt a Disciplined Innovation Process


System in context

System in Context


Collaborative culture

Collaborative Culture


Design driven innovation

Design-Driven Innovation

Customer

Development

Desirability

(Human)

Viability

(Business)

Connecting

the Dots …

Feasibility

(Technology)


Design process

Design Process


Iterative process

Iterative Process


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