Lean Startup

Get Started. It's Free
or sign up with your email address
Rocket clouds
Lean Startup by Mind Map: Lean Startup

1. 3. Accelerate

1.1. Batch

1.1.1. Working in small batches

1.1.1.1. The goal of a lean startup is not to produce more stuff efficiently

1.1.1.2. The goal of lean startup is nstead to learn how to build a sustainable business as quickly and cheaply as possible

1.1.1.3. The startup works in small batches to validate it's learning and then scales it up in order to become profitable

1.1.2. What do you need to learn

1.1.2.1. Although the feedback loop is build -> measure -> Learn The planning for it starts from the end

1.1.2.1.1. We first figure out what do we need to learn and then figure out what metrics we need to put in place in order to learn that and then we go about planning to build the product that can lead us to that learning

1.1.2.2. Is not the customer but rather our hypothesis about the customer that pulls work away from product development

1.2. Grow

1.2.1. Where does growth come from

1.2.1.1. Sustainable growth is characterized by one simple rule new customers come from actions of past customers

1.2.1.1.1. Word-of-mouth

1.2.1.1.2. As a side effect of product use

1.2.1.1.3. Through funded advertising

1.2.1.1.4. Through repeat purchase or use

1.2.2. The three engines of growth

1.2.2.1. The sticky engine of growth

1.2.2.1.1. Word-of-mouth growth

1.2.2.2. The viral engine of growth

1.2.2.2.1. Person-to-person transmission is a necessary consequence of normal product use

1.2.2.2.2. Growth happens automatically as a side effect of the customer using the product

1.2.2.2.3. The viral coefficient

1.2.2.3. Paid engine of growth

1.2.2.3.1. Lifetime value of a customer

1.2.2.3.2. Cost per acquisition of a customer

1.2.2.3.3. The engine will grow if lifetime value is greater than the cost per acquisition of a customer

1.2.2.4. Caveats

1.2.2.4.1. Do not try all engines of growth of the same time. Pick one and focus on it exclusively

1.2.3. Engines of growth determine your product and market fits

1.2.3.1. Startup can figure out whether it is making progress towards it's product or market fit by evaluating each trip through the build measure learn feedback loop

1.2.4. When engines run out

1.2.4.1. Any engine of growth will at some point run its course and start to slow down or stop

1.2.4.2. Companies need to be able to adapt do these changes and have a structure that supports adoption of changes

1.3. Adapt

1.3.1. Can you go too fast

1.3.1.1. Startups are in a life or death struggle to learn how to build a sustainable business before they run out of resources and die

1.3.1.2. However you cannot trade quality for time

1.3.1.2.1. Having a low quality product can inhibit learning when the defects prevent customers from experiencing the products benefits

1.3.2. The five WHYs

1.3.2.1. When confronted with the problem you ask why after every answer.

1.3.2.1.1. You ask the why five times

1.3.2.2. To get to the root cause of a problem's which is often hidden behind the obvious symptoms

1.3.2.3. Automatic speed regulator

1.3.2.3.1. The five whys approach acts as the automatic speed regulator

1.3.3. Two simple rules

1.3.3.1. Be tolerant of all mistakes the first time

1.3.3.2. Never allow the same mistake to be made twice

1.4. Innovate

1.4.1. Creating an innovation sandbox

1.4.1.1. Create a mechanism for empowering innovation teams out in the open

1.4.1.2. Rules

1.4.1.2.1. Every experiment has to be evaluated on the basis of a single standard report of 5 to 10 actionable metrics

1.4.1.2.2. Any team can create a true split test experiment that affects only the sandbox parts of the product or service or only certain customer segment or territories

1.4.1.3. By making the batch size small the sandbox method allows teams to make cheap mistakes quickly and start learning

1.5. Speed

1.5.1. It does not matter how fast we can build

1.5.2. It does not matter how fast we can measure

1.5.3. It only matters how fast we can get through the entire loop

1.5.3.1. In other words it only matters how fast we can learn

1.5.3.1.1. Switching to validated learning feels worse before it starts to feel better

2. 1. Vision

2.1. Start

2.1.1. Roots of Lean Startup

2.1.1.1. The goal of a startup is to figure out the right thing to BUILD (which customers want and will pay for) as quickly as possible

2.1.1.1.1. Every new iteration of product, feature or marketing is an attempt to improve this engine of growth

2.1.1.2. Make constant adjustments with a steering wheel called the Build-Measure-Learn feedback loop

2.1.1.2.1. BUILD

2.1.1.2.2. We can learn, when to PIVOT and when to PERSEVERE

2.1.1.3. The Big Picture

2.1.1.3.1. VISION

2.1.1.3.2. STRATEGY

2.1.1.3.3. PRODUCT

2.2. Define

2.2.1. A startup is designed to confront situations of extreme uncertainity

2.2.1.1. Most tools of general management are not designed to flourish in the harsh soil of extreme uncertainty in which start ups thrive

2.3. Learn

2.3.1. if the fundamental goal of entrepreneurship is to thrive under conditions of extreme uncertainty it's most vital function is learning

2.3.2. Validated LEarning

2.3.2.1. it is a rigorous method for demonstrating progress in periods of extreme uncertainty

2.3.2.2. it is more concrete more accurate and faster than market forecasting or classic business planning

2.3.2.3. it is the principal antidote to the lethal problem of achieving failure- successfully executing a plan that leads to nowhere

2.3.2.4. it is called validated learning because it is always demonstrated by positive improvements in the start up's core metrics

2.3.2.5. it is always backed up by empirical data collected from real customers

2.3.2.6. it is the right way to think about productivity in a start up

2.3.2.6.1. not in terms of how much stuff we are building

2.3.2.6.2. But in terms of how much validated learning we are getting from our efforts

2.3.2.7. true startup productivity

2.3.2.7.1. systematically figuring out the right things to build

2.3.3. Validated learning is the essential unit of progress for startups

2.3.4. we have to see every start up as a grand experiment

2.3.4.1. every product every feature every marketing campaign everything a start up does is an experiment designed to achieve validated learning

2.4. Experiment

2.4.1. one of the most important lessons of the scientific method is that if you cannot fail you cannot learn

2.4.2. break it down

2.4.2.1. the first step would be to break down the grand vision into component parts

2.4.3. success is not delivering a feature; success is learning how to solve the customers problem

3. 2. STEER

3.1. Test

3.1.1. A minimum viable products helps entrepreneurs start the process of learning as quickly as possible

3.1.1.1. it is not necessarily the smallest product imaginable

3.1.1.2. It is simply the fastest way to get through the build-measure-learn feedback loop with the minimum amount of effort

3.1.1.3. the MVPs goal is to test hypothesis as set out in the leap

3.1.2. first products are not meant to be perfect

3.1.2.1. the first products need to be sold to the early adopters

3.1.2.1.1. they accept the 80% solution

3.1.2.1.2. They use their imagination to fill in what a product is missing

3.1.2.2. when in doubt simplify and cut out features

3.1.2.2.1. every extra feature is a form of waste and adds to learning time iteration.

3.1.3. quality and design of MVP

3.1.3.1. even the low-quality MVP can help build a great high quality product

3.1.3.2. remove any feature process or effort that does not contribute directly to the learning your after

3.1.4. innovation accounting

3.1.4.1. if the initial results on MVP are not favorable a team could give up hope and abandon the project

3.1.4.1.1. however in order to avoid that, we need a commitment to iteration ahead of time

3.1.4.1.2. we need to figure out if we are making progress towards validated learning

3.2. Measure

3.2.1. innovation accounting

3.2.1.1. first use the MVP to get data on where the company is right now

3.2.1.1.1. establishing baseline

3.2.1.2. Second the start up must tune the engine of growth from baseline to ideal

3.2.1.2.1. tuning the engine

3.2.1.3. Third depending on the data the startup must pivot or persevere

3.2.1.3.1. cohort analysis

3.2.2. optimization versus learning

3.2.2.1. it is no use optimizing something or executing with discipline on a plan that cannot yield the desired results

3.2.2.2. learning milestones prevent this negative possibility through innovation accounting

3.2.3. actionable metrics versus vanity metrics

3.2.3.1. cohorts and split test

3.2.3.1.1. a split test is where different versions of the product are offered to different customers in the same time.

3.2.4. the three components of effective metrics

3.2.4.1. actionable

3.2.4.1.1. it must show real cause and effect or it is a vanity metrics

3.2.4.2. accessible

3.2.4.2.1. the metrics must be made accessible to the team that is working on the project so that they can look at the numbers from the past and the present and take action accordingly

3.2.4.3. auditable

3.2.4.3.1. we need to be able to test the data by hand in the messy real world

3.2.5. Pivot or persevere

3.2.5.1. while 5% off entrepreneurship is big idea the remaining 95% is the gritty work measured through innovation accounting

3.2.5.2. one of the biggest decisions that a start up must make is when to pivot and when to persevere

3.3. Pivot or Persevere

3.3.1. everything so far has led up to this point of decision

3.3.1.1. are we making progress to believe that our initial hypothesis is correct or do we need to make a course correction?

3.3.2. innovation accounting leads to faster pivots

3.3.2.1. the goal of creating learning milestones is not to make the decision easy. It is to make sure that there is a right data available at decision time.

3.3.2.2. Failure is a prerequisite to learning

3.3.3. what is a Pivot?

3.3.3.1. a course correction designed to test a new fundamental hypothesis

3.3.3.2. while keeping one foot rooted in what has been learned so far we make a fundamental change in strategy in order to seek even more validated learning

3.3.4. how many pivots can a start up afford

3.3.4.1. the runway is the amount of time remaining in which a startup must either launch successfully or fail

3.3.4.1.1. which effectively means the number of pivots remaining

3.3.4.1.2. If the runway is measured as a function of pivots remaining it is vital to maximize the number of pivots which implies that a startup needs to pivot faster

3.3.5. pivots require courage

3.3.5.1. most entrepreneurs who have pivoted wish they had done it sooner. why?

3.3.5.1.1. first vanity metrics can allow entrepreneurs to form wrong conclusions

3.3.5.1.2. second when there is an unclear hypothesis it's impossible to experience complete failure.

3.3.5.1.3. third many entrepreneurs are afraid. They're afraid to see their idea fail without even having the chance to prove itself

3.3.6. Types of pivots

3.3.6.1. zoom in

3.3.6.1.1. what was initially considered a feature in a product becomes the whole product

3.3.6.2. zoom out

3.3.6.2.1. what was initially considered the whole product becomes a single feature of a much larger product

3.3.6.3. customer segment

3.3.6.3.1. the product solves a real problem but for different set of customers than initially planned for

3.3.6.4. customer needs

3.3.6.4.1. the problem being solved is not the most important problem that the customer has. There is a related problem that is more important and can be solved by us

3.3.6.5. platform

3.3.6.5.1. changing from a platform to an application or application to a platform

3.3.6.6. business architecture

3.3.6.6.1. going from high-margin low-volume to low-margin high-volume

3.3.6.6.2. going from B2 B to B to C

3.3.6.7. value capture

3.3.6.7.1. changing the way the company captures value

3.3.6.8. engine of growth

3.3.6.8.1. changing the growth strategy - viral, sticky or paid growth

3.3.6.9. Channel

3.3.6.9.1. changing the sales channel or changing any other channel of the product delivery

3.3.6.10. technology

3.3.6.10.1. using a completely different technology

3.3.7. a pivot is a strategic hypothesis

3.3.7.1. think of it as a new hypothesis that will require a new MVP to test

3.4. Leap

3.4.1. We need to identify which hypothesis to test

3.4.1.1. the riskiest elements of a startup's plan on which everything depends

3.4.1.1.1. also known as leap of faith assumptions

3.4.2. strategy is based on assumptions

3.4.2.1. the goal of startup's early efforts should be to test the assumptions as soon as possible

3.4.2.1.1. the first challenge for an entrepreneur is to build an organization that can test these assumptions systematically

3.4.2.1.2. the second challenge is to perform that rigorous testing without losing sight of companies overall vision

3.4.3. Genchi Gembutsu

3.4.3.1. use in Toyota production systems it means "go and see for yourself"

3.4.3.2. it is unacceptable to take any assumptions for granted

3.4.4. design the customer avatar

3.4.4.1. the goal of early contact with customers is not to get definitive answers

3.4.4.2. The goal is that we understand our potential customers and what problems they have

3.4.4.3. with this understanding we can create a customer archetype