ENT301 Lean Business Start-Up
WEEK 3
Lean Start-Up Principles
The first 4 classes will not be live but will be recorded
and posted in Blackboard Collaborate
ü Week 1: no live class – access recording in Blackboard Collaborate
ü Week 2: no live class – access recording in Blackboard Collaborate
• Week 3: no live class – access recording in Blackboard Collaborate
• Week 4: no live class – access recording in Blackboard Collaborate
• Week 5: 27 June, 11:30m AEDT:
our first live class – please attend!
• Build…Measure…..Learn
• The Lean Startup is a scientific
approach which creates and
manages Startups.
• The goal: how to get a desired
product or service in customer’s
hands faster?
• Empathizes speed &
adaptability…..competitors are
everywhere……..Eat or Be Eaten!
3
The Methodology
• Our inspiration should come from Toyota’s
lean manufacturing system which
emphasises Just-in-Time, continuous
customer-focus and continuous
adjustment to product during development.
• The Build-Measure-Learn feedback loop is
used to understand customer feedback and
make adjustments accordingly to product or
service strategy.
• Products and Services should be developed,
tested, adjusted, while measuring and
validating value to customers.
4
START..
• What problem are you trying to solve?
• Can you identify and define an unmet need?
• How is your product or service differentiated from competition?
• Are you navigating in the red or blue ocean?
• The Lean Startup seeks to identify, define, build, test, measure, validate ideas based
on unmet needs and customer-centric focus.
5
DEFINE..
• Entrepreneurs should primarily ask that if a product or service “should” be built.
• How do you know?
• Lean principles suggest running validated learning experiments to confirm customer
requirements and value creation.
• Lean demands customer feedback from early users/adopters to validate design and
usability and to measure value creation and commercialization opportunities.
6
LEARN..
• All innovative and new ideas need to be
tested for “proof of concept.”
• Experiments need to be run to test the
hypothesis with customer feedback.
• Experimentation = validated learning.
• Customer feedback will illuminate
changes and modifications needed in
your concept.
• Adjust and run new experiments to
continually improve the process.
7
EXPERIMENT..
• Entrepreneurs talk about “leap-of-faith
assumptions” based on well defined
unmet needs.
• Assumptions are then tested and
validated with customer-centric data.
• Risk taking is critical to avoid inaction
of analysis paralysis.
• Managing risk is equally important as
you need to recognize when you are
“failing fast.”
8
LEAP..
• A minimum viable product (MVP) needs to be established which has all the
features of validated learning.
• A MVP is used to test the business hypothesis within the Build-Measure-Learn
loop as early in the product development cycle as possible.
• Development of an MVP save time and resources by testing early if the product
or service you are building is what customers want.
9
TEST..
• Measure by using innovation accounting to capture progress.
• Innovation accounting establishes metrics that is actionable, accessible and
auditable to measure the progress.
• If you can not measure, you can not manage.
• Only when you have good metrics can you make a go/no go decision on
commercialization.
10
MEASURE..
• Pivot is a strategic decision that tests a new direction.
• Pivots can be minor product or service changes or complete major re-builds.
• The “heart’ of the Lean Startup method demands a Build-Measure-Learn
feedback loop that might result in a total rethink of your idea.
• Only be validating your hypothesis with users will you be able to create value.
11
PIVOT or PERSEVERE..
• Batches are small, minimal groups of features which could be quickly tested
with Build-Measure-Learn feedback loop.
• Problems could be identified faster through small batches and thus saving us at
the right early time from the waste of valuable resources.
12
BATCH..
• Product growth is dependent on how a Startup is able to “commercialise
customers.”
• Is your business model on track?
• Are you generating cash flow to enable you business to scale?
• What type of capabilities do you need to grow?
• Can you attract sufficient investment to fund your growth?
13
GROW..
• Eat or be Eaten……. any business needs to ‘adapt’ to survive.
• Well funded competitors will watch your progress, copy your idea and out execute if
you are not one step ahead……
• The key to effective adaptability is asking the “Five Whys” whenever a technical
problem arises.
• The Five Whys system seeks to solve the root causes of the problem before it grows
larger.
14
ADAPT
• A sustained ‘culture of innovation’ where the
Lean Startup grows from an idea to a longterm sustainable business.
• Adapting through innovation involves a
culture of risk taking, experimentation,
learning, pivoting, where failing fast is
expected and used to continually improve.
• Successful entrepreneurs seek to foster a
culture of creativity and innovation.
15
INNOVATE..
16
Sustories. (2011, May 18). Eric Ries on Lean Start-up Methodology [Video file]. Retrieved from https://youtu.be/y-ozPfRHFt8
Entrepreneur Eric Ries explains why lean start-up matters for entrepreneurs starting up a new venture. He explains his entrepreneurial background including
failures, and how he developed the principles and methodology.
• This engaging video provides an animated
explanation of the lean start-up process
based on Ries book The Lean Startup.
• Watching this video will provide you with a
general overview of the process.
17
Productivity Game. (2017, April 19). Validate your business idea: THE LEAN
STARTUP by Eric Ries [Video file]. Retrieved
from https://www.youtube.com/watch?v=QaoVWtLX038
• Eliminate Uncertainty by taking a tailored management process with
all the tools to test a vision continuously.
• Work smarter not harder by asking not “Can this?” but “Should this
product be built?”
• Develop a minimum-viable-product (MVP) in order to attract early
customers and quickly begin the process of learning. Remember Lean
thinking sits on continuous and actionable learning which MVP initiates.
• Validate Learning by continuously measuring the progress of your
product in terms of ‘quality’ and ‘value’ it delivers.
18
Steps of Methodology according to Ries
• Entrepreneurs are everywhere which means you are free to create and or
innovate; you don’t have to work in a garage to be in a startup.
• Entrepreneurship is management that means a startup has to work like an
institution and not a product.
• Validated learning by running experiments that would allow the startup to test
each element of its vision. This scientific process would actually then turn the
startup to a sustainable business.
• Innovation accounting in order to improve entrepreneurial outcomes and to
hold entrepreneurs accountable in a way that milestones are set, progress is
monitored and work is prioritised.
19
Principles of Methodology according to Ries
• Uber: first came out as a beta-version called Uber-App which made it grow
as the world-famous ride sharing app Uber is today. The MVP model really
worked for making Uber an established business.
• Airbnb: the founders in 2007 first set up mattresses in their living rooms and
created a very basic page Airbedandbreakfast to advertise their house for
weekend. The idea worked as three paying guests attractively arrived.
• This MVP thing actually let founders test/validate their product themselves in
order to make Airbnb what it is today, a haven for global travelers seeking
cheap accommodation.
20
Minimum-Viable-Product (MVP) Lean Startup Case
Studies of Uber and Airbnb
• It was a simple 3-minute video to demo Dropbox back in 2007.
• The video nicely explained the product’s core value proposition targeting those
who would want to share their files across devices.
• After the video, Dropbox beta sign-up list went from 5,000 to 75,000 overnight.
21
Case study of Dropbox
• In this video, the accelerators showcased
are all based on hardware products and
both large companies doing intrapreneurial
work on their product innovation ideas, and
entrepreneurs starting on their own ideas
are part of the accelerators.
• This is only one type of accelerator and all
ideas and equipment are normally high cost.
• In hardware accelerators, entrepreneurs
normally receive money from investors in
exchange for equity in their company.
• Lean start-up methods are the core of how
each individual or team becomes
successful.
22
State of electronics. (2018, March 31). Hardware accelerators [Video file]. Retrieved
from https://www.youtube.com/watch?v=WASEn52SVYo
• Janine Zappini has a raw food business. In this
video she talks about how the accelerator
program she attended has helped her in her
food business.
23
EO Accelerator Sydney. (2017, October 23). Janine Zappini – Founder
& CEO at Simply Raw [Video file]. Retrieved
from https://www.youtube.com/watch?v=A0d-dE3lsJE
• This video covers a range of start-ups
at an incubator using lean
methodology and provides several tips
around why entrepreneurs have
successful start-ups or fail.
• This video will help you consider the
dynamic environment of an incubator
and how it helps entrepreneurs.
24
WOWtechNOW. (2018, January 4). Do you need a startup incubator? [Video
file]. Retrieved from https://www.youtube.com/watch?v=WTMnzF3KtGE
• The Lean Startup. (n.d.). The lean startup methodology. Retrieved from
http://theleanstartup.com/principles
• Merick, L. (2016). How Uber, Airbnb & Dropbox Released MVPs to Achieve
Rapid Growth. Retrieved from https://medium.com/@LoganTjm/how-uberairbnb-dropbox-released-mvps-to-achieve-rapid-growth-d823ac6eaed5
• Ries, E. (2012). A Concise Summary of Eric Ries’ The Lean Startup– in 30
Minutes. Berkeley, Calif: Callisto Media.
25
References
26
So You Want To Be An Entrepreneur!?
Number
Type & Description
Assessment Due Date
Weighing
1
Presentation (3-5 minutes)
Module 2.1
(Week 3: 19 June)
15 %
2
Business Investment Proposal
(1,000 words)
Module 3.2
(Week 6: 10 July)
30%
3
Market Viability Analysis
(2,000 words)
Module 5.1
(Week 9: 31 July)
40%
4
Pitch (3-5 minutes)
Module 6.1
(Week 11: 14 August)
15%
Assessments: hands on learning!
For next class: Read Assessment 1 Brief
• Apply lean principles and techniques to develop a business idea.
• Prepare a 3-5-minute presentation pitch your business idea.
• Discuss how and why Lean Startup principles may be utilised to achieve success.
• For the video presentation, it is a good idea to try to convert your video to a link,
by uploading to YouTube. This will eliminate any upload size issues when
submitting your work to Blackboard.
• When uploading to YouTube, make sure to set the visibility to “Unlisted”. This
means only people with the URL will be able to see your video, ensuring your
privacy.
27
Assessment 1: due 19 June
Suggested approach for your pitch:
1. Introducing yourself. This may include information about your areas of business
experience or industry interest
2. Discuss the idea that you have chosen and why you chose it. This may include how it
fits with your values, type of entrepreneur and capabilities and why it is important to
you and/or the market
3. Discuss lean start-up principles and why and how you anticipate using the principles
to achieve success.
4. Summarize your key points on your understanding of lean start-up .
5. Convince me this is a good idea!
6. Look into the camera and be “natural.”
7. Have fun and show some energy!
28
Assessment 1: due 19 June
Your Goal:
• Communicate a clear understanding about why you have chosen the
idea and what the idea is about.
• Clearly demonstrate your knowledge and understanding about lean
start-up principles covered in the course materials so far.
• Demonstrate the same communication skills that you would use to pitch
to potential investors and stakeholders.
29
Assessment 1: due 19 June
Any Questions or Concerns?
Don’t forget!
I’m here to facilitate your journey, the rest is up to you!
• But, when in need, don’t hesitate to contact me through Blackboard class
messages or: doug.rosenberg@torrens.edu.au
• 1:1 appointments can be arranged by emailing me to set up a time.
