Lean Innovation for Investors

Norbert
Zeller
Schaan,
2.
November
2017
Lean Innovation
How to increase the Success Rate of Startups
Introduction for

Lean Startup Investor
Nur
1
von
10
Startups
ist
erfolgreich?!
Warum
Lean
Innovation
– Warum
Lean
Startup
Investor?
Der
Vorteil
von
“Lean
Innovation”
zeigt
sich
bereits,
bevor
ein

Produkt
fertig
entwickelt
ist.
So
werden
Learnings schneller

umgesetzt
und
dadurch
der
Erfolg
massiv
gesteigert.
Investoren
können
damit
das
Risiko
und
das
Potenzial
eines

Investments
früher
und
kontinuierlich
einschätzen.
2.
November
2017

Norbert Zeller
•Electrical
&
Computer
Science
Engineer,
FH
Winterthur
•Master
of
Management,
MZSG
•Partner
at
Trivadis AG
•Member
of
StartAngels
Network
(startangels.ch)
•Agile
executive
coach
at
pragmatic-‐solutions.ch
•Board
Member
equitypitcher.com
•Board
Member
of
a
Lean
Startups
32.
November
2017 www.pragmatic-‐solutions.ch

agility
accelerates
...
AGENDA
www.pragmatic-‐solutions.ch 4

Content
•Part
1:
•Introduction to the
Lean
Innovation
Framework
•Part
2:
•Lean
Governance

agility
accelerates
...
INTRODUCTION
TO LEAN INNOVATION
FRAMEWORK

Goal: To improve the success rate
Source:
Ash
Maurya
«Running
Lean»
7
•66%
of
successful
products/companies
significantly
change

original
business
idea
•Develop
products
in
half
the
time
and
at
half
the
cost
(GE)
•Reduce
failure:
“wrong”
product
and
“premature”
scaling
•"Using
lean
methods
across
a
portfolio
of
start-‐ups
will
result

in
fewer
failures
than
using
traditional
methods“.
•Steve
Blank:
https://hbr.org/2013/05/why-‐the-‐lean-‐start-‐up-‐changes-‐everything
www.pragmatic-‐solutions.ch

8
Why do startups fail?
The
vast
majority
of
startups
do
NOT
fail

because
they
could
not
build
a
great

product,
but
because no
one
wanted
the

product. Steve
Blank
The
majority
of
successful
startups

abandoned
their
initial
plans
and
learned

what
would
and
would
not
work
in
the

market. Clayton
Christensen

Traditional versus lean approach
Source:
Ash
Maurya:
Running
Lean
9www.pragmatic-‐solutions.ch

Core Lean Principle
Get out of
the building
1 2 3 4 5 6 7 8 9

Lean Innovation is …
11
a
company
culture
touching
all
aspects:
Values,
Leadership,
Incentives,
Empowerment,

Organization,
Accountability,

…
not
a
collection
of
tools
A
culture
can
not
be
copied
easily
!


Lean Innovation Framework

Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation
13
Each
assumption
is
validated
via
an

experiment
with
BML
feedback
loop
Is
problem
worth
solving,
are
people

willing
to
pay,
is
business
model

profitable,
repeatable
and
scalable
Assumption
of
plan
A,
…

agility
accelerates
...
LEAN CANVAS

Lean Canvas (by Ash Maurya / adapted from Osterwalder)

Source:
Ash
Maurya:
Running
Lean

agility
accelerates
...
BUILD – MEASURE - LEARN
FEEDBACK LOOP

Feedback loop
Design

experiment
Minimum
Viable
ProductResults

Analyze
results:
-‐ persevere,
-‐ pivot
or
-‐ quit?
weeks

not

years
Assumption/
Hypothesis
Run

experiment
Source:
Eric
Ries:
The
Lean
Startup

BUILD: Design Experiment
We
will
know
we
have
succeeded
when

[quantitative/measurable
outcome]
or

[qualitative/observable
outcome]
Janice
Fraser
We
believe
that
[customer
type]
have
a
need

for
[need/action/behavior]
The
smallest
thing
we
can
do
to
prove
that

need
is
[experiment]

agility
accelerates
...
LEAN GOVERNANCE

Content - Agenda
• Risk Management
• Validation
of Business
Model
• Reporting
progress
• Governing Startups

• Lean
Investor
• Lean
Investment
Process

agility
accelerates
...
RISK MANAGEMENT

Lean Canvas: Where is the risk?

Lean Canvas: Prioritise risks and …
30
Source:
Running
Lean
was
developed
by
Ash
Maurya.
The
card
deck
was
created
by
Miles
Galliford.

De-risking with BML Feedback loop
Build

experiment
Measure
your
Metric
Hypothesis

+
Success
Metric
+
Goal
Compare
result

against
forecast.
Is
the
hypothesis
true
or
false?

Measure
Experiment Report
Why
is
it
relevant?
Quantify
your
goals
set
scope/timebox
Plan
how
to
execute

experiment
Results
=
Data
Document
the
learning
(validated,

invalidated
or
inconclusive)

Test
value
and
growth
hypothesis
first
Move
to
next
experiment
Build
Learn

Advantage of Validated Learning
Its
all
about
facts
and
not
opinions.

Build
a
culture
of

•generating
facts
instead
of
debating
opinions
•learning
instead
of
being
right
?
!

agility
accelerates
...
VALIDATION OF BUSINESS
MODEL

Measure progress without sales?
See:
http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/

How?
Scale
Product

Market

fit
Problem

Solution

fit
Qualitative

Validation
Quantitative

Validation
Is
Business
Model

profitable,
repeatable

and
scalable?
By
iterating
Lean
Canvas
Ideas
with
Build-‐Measure-‐Learn

Feedback
Loop
through
3
stages
until
we
reach:

agility
accelerates
...
REPORTING PROGRESS

Goal: Problem Solution Fit => Value
Problem
Solution
Fit
You
validated
with
MVP
and

prospects
that
a
specific
solution
will

solve
a
know
problem
to
such
a

degree
that
customer
will
buy
it.

Brant
Cooper
Value
assumption
– test
whether
a

product
or
service
really
delivers

value
to
specific
customers
once

using
it.

Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation
Is
the
identified
problem
real?

Will
the
target
customer
pay?

Can
the
problem
be
solved?


The
growth
assumption
– test
how
new
customers
will
discover

a
product
or
service.
Through
what
engine
will
you
acquire
new

customers
at
affordable
cost.
Goal: Product Market Fit => Growth
Product
Market
Fit
Customer
is
willing
to
pay.

Cost
of
acquiring
new
customers
is

smaller
than
profit.

Evidence
that
market
is
large
enough

Brant
Cooper
Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation

Measure
Experiment Report
Why
is
it
relevant?
Quantify
your
goals
set
scope/timebox
Plan
how
to
execute

experiment
Results
=
Data
Document
the
learning
(validated,

invalidated
or
inconclusive)

Test
value
and
growth
hypothesis
first
Move
to
next
experiment
Build
Learn

agility
accelerates
...
GOVERNING STARTUPS

Lean Dash Board (Lean Stack)
Flow

Lean Dash Board: Example
45
Customer
Example:
Insurance
Company

Source:
Ash
Maurya:
Running
Lean

agility
accelerates
...
THE LEAN INVESTOR:
MAKE LOTS OF LITTLE
BETS. EXPECT MOST TO
FAIL.

Dave Mc Clure @http://500.co
• Silicon
Valley
VC
fund +
startup accelerator
• 40
people /
15
investing partners
• 2000+
founders /
200+
mentors
• 900+
Portfolio
Co’s:
• Wildfire USD
350
• MakerBot USD
400
•

Lean Innovation Investment Process
Source:
Hans
Däpp,
StartAngels
Network
Assumption/Goal:
Halving
&
Slicing
of
Angel
Investments
FFFF
Lean
Canvas
V12,

Problem
Solution
fit

&
Product
Market
fit

&
Dash
Board
Results
&

Bus.Canv.
V
X
t
Milestone
1
Lean
Investment
when?
Investment
today
Business

Plan
V
1.0
Effort
Manpower
(%) 1 10 80
Elapsed
time
(month) 1
-‐ 3 2
-‐ 3 18
-‐…
Public
BP
course
machine

still
running
No/few
public

Lean
Innovation
Trainings
available
Lean
Innovation
is
part
of
BA
investment
(=
risk
insurance)
Goal:
On
portfolio
basis
to
Get
higher
Success

Rate
&
less
get
funds

&
more
quits

agility
accelerates
...
SUMMARY: BENEFITS

Savings Potentials with Lean
• Lean
Canvas instead of Business
Plan
• Identification &
priorisation of risks instead of
testing the whole Business
Model
• Solution
interviews instead of Market
Research
• Pretotype/MVP
instead of perfect Product
• Speed
has biggest impact on
profit

agility
accelerates
...
DISCUSSION

53
Feedback Door
1.
How likely is it that you would recommend this
introduction to a
friend or colleague?
Source:
NetPromoter
Score
2.
What
changes
would
we
have
to
make
for
you

to
give
us
one
point
more?

……………………………………………………………………………………………………………

agility
accelerates
...
THE END

Lean Innovation for Investors

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