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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


  • 《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。」






創業 vs. 守成


  • 唐、吳兢,《貞觀政要》〈君道第一〉


  • 讀書好,營商好,學好便好;

  • 創業難,守成難,知難不難。









Mind and hand
Mind and Hand


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


  • 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


  • 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

  • Describe

  • Design

  • Invent

  • Validate

  • Pivot

  • Discuss

Source: http://businessmodelgeneration.com/canvas





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


Validate your business model
Validate Your Business Model Ballpark Figures

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 Ballpark Figures

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 Ballpark Figures

Experience, Expectancy, Envy

Excitement, Enjoyment, Enforcement

Entertainment, Esthetic, Escape, Education

Product experience
Product Experience Ballpark Figures

Hypotheses testing and insight
Hypotheses Ballpark FiguresTesting and Insight

Business Model



Persona Ballpark Figures

  • 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 Ballpark Figures

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”


Bioiq com case study
BioIQ.Com Case Study Ballpark Figures

The lean start up
The Lean Start-Up Ballpark Figures

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

What is pivot
What Is Pivot? Ballpark Figures

  • 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.

MVP Ballpark Figures

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 Ballpark Figures

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 Ballpark Figures


Lessons learning
Lessons Learning Ballpark Figures


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 Ballpark Figures



Innovate or Evaporate

Goal is to solve for:

unknown customer and unknown features








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 Ballpark Figures

  • 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 Ballpark Figures

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

Investment readiness levels 1 2
Investment Ballpark FiguresReadiness: Levels 1 & 2

  • Hypotheses

  • Value Proposition summarized

  • Canvas hypotheses articulated


Investment readiness levels 3 4
Investment Ballpark FiguresReadiness: Levels 3 & 4

  • Problem / Solution Fit

  • Problem Solution fit

  • Low fidelity MVP



Investment readiness levels 5 6
Investment Ballpark FiguresReadiness: Levels 5 & 6

  • Validate

  • Product/Market fit

  • Right side of canvas

Product/Market fit



Investment readiness levels 7 8
Investment Ballpark FiguresReadiness: Levels 7 & 8

  • Validate

  • Left side of canvas

Product/Market fit



Investment readiness levels 9
Investment Ballpark FiguresReadiness: Levels 9

Metrics That Matter

Left side of the canvas

Product/Market fit



Technology Ballpark Figures

Readiness Level


Readiness Level

Metrics that Matter


Left side of Canvas


Right side of Canvas

Product/Market Fit



Source: Ballpark FiguresLink

Innovator s dnas
Innovator’s DNAs Ballpark Figures


Finding the sweet spot
Finding the Sweet Spot Ballpark Figures



Empathy map
Empathy Maphttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Customer (user)

what really counts

major preoccupations, worries & aspirations





what the markets offers

what friends say

what boss says

what influences say



measures of success,



fears, frustrations, obstacles

attitude in public


behavior towards others






Quick prototyping
Quick Prototypinghttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf


Bagless vacuum cleaner
Bagless Vacuum Cleanerhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Slogan "say goodbye to the bag"

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

“Failures are interesting.”


Design thinking process by stanford d school ideo
Design Thinking Process by Stanford d.school / IDEOhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

“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.”



Design thinking
Design Thinkinghttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf


Design for growth d4g process and tools
Design for Growth (D4G) Process and Toolshttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Design brief
Design Briefhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Concept pitch
Concept Pitchhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Suitcases on wheels
Suitcases on Wheelshttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

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


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.


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.



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

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


No sharp edges and no moving parts

Pnc virtual money
PNC Virtual Money http://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Design for Generation Y


Tools in the toolbox
Tools in the Toolboxhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Customer journey mots netflix vs blockbuster
Customer Journey MOTs : Netflix vs. Blockbusterhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

Meyouhealth com

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

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

  • Healthways Well-Being Index based on quantitative data

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


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

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

Design for extreme affordability
Design for Extreme Affordability http://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

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


ABC News 20/20 Video

Paraffin (石蠟)

Video from Embrace


Redesign mri for kids
Redesign MRI for Kidshttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

  • 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 http://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf“Adventure Series”MRI for Kids


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.


Swiffer p g and contiuum
Swiffer – P&G and Contiuumhttp://www.ideo.com/images/uploads/news/pdfs/IDEO_HBR_Design_Thinking.pdf

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

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

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

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


3M Post-it

“I keep losing my place in my music!”


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


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 Prototype


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 Prototype

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 Prototype

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


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 Prototype

  • 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 Prototype

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


Construction play

Thinking with Your Hands

Low-resolution prototype

Who invented the mouse
Who Invented the Mouse? Prototype



  • 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 Prototype

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. 



Genius bar
Genius Bar Prototype

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.

Five guest enabling brand principles
Five Guest-enabling Brand Principles Prototype

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 Prototype


Four core principles of successful innovation
Four Core Principles of PrototypeSuccessful 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

Design driven innovation
Design-Driven Innovation Prototype








the Dots …



Design process
Design Process Prototype