2015 Lean Startup Conference - Leaders' Guide Workshop

The Official Workshop (Iteration Zero)

The Leaders’ Guide by Eric Ries

Janice Fraser Director, Innovation Practice

November 2015

Keep in touch!

@clevergirl

3 Pivotal points in time…and a fourth

Let’s take a moment to remember 1987.

“To meet the demands of the fast-changing competitive scene, we must simply learn to love change as much as we have hated it in the past.”

–Tom Peters, 1987

Now let’s take a moment to consider today.

Software is disrupting entire industries

$6B Valuation Financial Services

$50B Valuation Transportation

$3.2B Acquisition by Google Home Automation

$25B Valuation Travel & Hospitality

$42B Valuation Entertainment

S&P 500 churn since 2002ADDED TO the index LEFT the index

The greatest risk for any business today is the pace of change.

For 100 years, the business world has emphasized planning and control as a means of ensuring predictable outcomes.

When change is your greatest threat, plans and predictions are (literally) unbelievable.

Tom Peters saw the problem coming in 1987, but nobody really figured out what to do about it, until now.

Lean Startup is a management approach that mitigates the risk of change, turning it into an asset that can be leveraged, by supporting entrepreneurship throughout any company.

Lean Startup is not religion. These are not rigid rules set in stone. I don’t care if you use the jargon.

It’s the thought behind your action that counts.

How do you retool for entrepreneurship when your planning and accountability processes look like this?

Analyze

Plan

Stakeholders

Feedback

Revise

Budget (staged-gate system)

Approve

Execute

Measure

Level 1: Project processes Start prioritizing assumptions, running experiments, measuring outcomes, and making learnings-based decisions.

Level 2: Broad company culture Share the experience and value with leadership. Share the know-how with teams. Emphasize experiential learning and corporate storytelling.

Level 3: Deep operating systems Yes, You Can. Retool incentive, budget allocations, and other management mechanisms.

To change your company, target three levels:

Session 1: Culture

TODAY’S PROGRAM

• Introductory Talk & Setup • How to Refocus on What Matters • How to Set Up Entrepreneurial Teams

(Each bullet is a 30min hands-on segment)

• Lean Startup Experimentation Basics • How to Get Better Results • How to Be Efficient

• How to Monitor Progress • How to Manage Risk • Retro

Session 2: Project Process

Session 3: Deep Systems

Session 1: Culture

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Session 1: Culture

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Pair Up

November 2015

Find the Acute Problem (Molecule)

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Session 1: Culture

TODAY’S PROGRAM







VisionYour vision is your destination, and provides a navigational beacon for your internal entrepreneurs.

Work to open up any process, assumption, or person that gets in the way.

LEADER’S GUIDE

Gaining Focus

Why is your company here?

What are you trying to accomplish?

How might you measure progress?

Removing Barriers To Your Vision

Which company beliefs and values support entrepreneurship?

Which beliefs and values hinder entrepreneurship?

Culture > Focus on What Matters > Vision

Leadership Getting leaders behind the change is essential. Look for understanding, belief, advocacy, and decision-making.

Storytelling is a powerful tool in creating support for the Lean Startup mindset.

LEADER’S GUIDE

Storytelling

• How do we talk about success and failure? • What stories exemplify the change? • What are the key messages you want to

convey?

Advocacy and Decision-Making

• How can you help fellow leaders understand how their actions support innovation?

• Which employees have proven themselves to be effective change agents?

• How are they rewarded for entrepreneurial behavior?

Culture > Focus on What Matters > Leadership

Sharpen Your Vision (Vision Pyramid & 5 Whys)

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Session 1: Culture

TODAY’S PROGRAM







LEADER’S GUIDE

Cross-Functional What are the barriers to cross-functional teaming? Which other leaders need to allocate their workers to this team? Who manages the cross-functional team?

Fully Dedicated What are the barriers to allocating the core team 100% to the project?

Collaborative What does collaboration mean? How can you share ideation and decision-making?

Team Structure Entrepreneurial teams are cross-functional, collaborative, and fully dedicated.

Recognize the systems that are creating drag on your startup teams and begin devising strategies to change them.

Culture > Focus on What Matters > Team Structure

Team Mapping Activity

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Leader-Entrepreneur Contract

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November 2015

Session 1: Culture

TODAY’S PROGRAM







LEADER’S GUIDE

Leap of Faith Assumptions What beliefs do you hold that must be true in order for the project to be successful? Which LOFAs represent the most risk?

Learning Metric What metric would convince you that your assumption is true?

MVP What is the smallest thing that you can build or do to get that learning metric?

Pivot or Persevere Meeting When will you make a decision based on experiment results?

ExperimentationInstead of making big, thoroughly vetted plans, entrepreneurial teams quickly sketch out a framework and then experiment to validate which parts of their framework are correct or incorrect.

The experimentation process is straightforward in theory, but nuanced in practice.

Project Process > Lean Startup Experimentation

It’s a blow to our egos when we discover that a lot of our beliefs about the future are wrong.

But when we get over that, it’s quite liberating. We realize that we don’t need to know everything.

We can put our ideas to the test and change course based on what we learn.

—Eric Ries, The Leader’s Guide

• Teams shift questioning from “can this be done” to “should this be done?”

• Seeing predictions falsified inspires exploration and fosters informed humility.

• Seeing customers actions creates confidence.

• Confidence creates a drive for definitive action.

• Experimentation discourages vagueness and ambiguity.

Impact of using Experiments rather than Plans

Assumptions & Experiments Activity

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Session 1: Culture

TODAY’S PROGRAM







LEADER’S GUIDE

No Surveys or Focus Groups The most likely outcome of these techniques in this context is unreliable results. What other options are there?

Customer Actions What could you ask the customer to DO that would be a gesture of commitment to prove your assumption?

Per Customer Learning Metrics Learning metrics are per customer. Any metric expressed as a per customer can be looked at the same way no matter the business size.

Better ExperimentsTo get better results, you will need to improve your experiment approach. It is common to find that each step causes you to refine the prior step.

Project Process > Better Results

“In this group, 5 of 7 hospitals built a room.”

“This quarter we had an average of 3.5 Sessions/user/week”

1. Actionable Metrics must demonstrate a clear cause and effect.

2. AccessibleMake reports simple and give everyone on the team access to them.

3. Auditable Metrics must be based on credible data.

The 3 As of Learning Metrics

Metrics to avoid: ROI, Margin, Market Share, and gross numbers of any kind.

Behavioral Experiment Activity

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Session 1: Culture

TODAY’S PROGRAM







LEADER’S GUIDE

Sequence Your Learning Priorities Which learning objectives (LOFAs) are most critical to the success of your business?

Smallification What can you NOT do and get learning sooner?

Reducing Complexity What are the components of your effort that cause complexity (eg, geography, scale, comprehensiveness)?

Can you isolate and eliminate most of them in order to gain urgent learnings sooner?

.

Being Efficient Moving quickly means learning quickly. You will not be able to learn everything at once.

Therefore, find ways to simplify and reduce the experiment and MVP.

Project Process > Being Efficient

“Smallification”

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Session 1: Culture

TODAY’S PROGRAM







1. At the Start: Set a baseline Create a simple dashboard of 3-5 metrics the team agrees are vital to the success of your project. Figure out where you are. Get some practice learning under your belt and make the model more complicated over time. What you measure here is necessary but not sufficient.

2. Upgrade to a dashboard of inputs to an eventual ROI case Build a dashboard that represents a complete set of “input” metrics that make up your business case.

• Conversion rates • selling price • average revenue per customer • A first stab at margin calculation • Cost to acquire a customer

3. Translate our learning into dollars by running a complete business case after your learning metrics have changed. This is where you run your ROI.

3 Levels of Innovation Accounting

Starter Dashboard LOFA

We can fund loans (value)

We can close more loans over time (growth)

Lenders will get paid back (value)

Avg. loan offers/request/week

Loans closed/week

% late payments/week

Learning Metric

Session 1: Culture

TODAY’S PROGRAM







1. Go Slow Being “buttoned up at every step”

2. Leverage Collective Institutional Wisdom Make decisions about future performance based on conclusions drawn from past experience

3. Measure Project OutcomesReward on-plan delivery

4. Staged Gate SystemsAccomplishing predefined milestones

How Risk Is Managed CurrentlyAnalyze

Plan

Stakeholders

Feedback

Revise

Budget

Approve

Execute

Measure

Technical or Compliance Risk

For example, a product will fail if you don't do your technical due diligence.

IMPACT: A mistake can put people's lives in danger.

ACTION: Avoid at all costs.

Rethinking Quality and Risk

Strategy Risk

For example, customers won't like our offering or we'll be embarrassed by showing them a prototype.

IMPACT: Insignificant.

ACTION: We change strategy

When looking for places to speed up learning, “Let’s look for things where we're not going to short up someone's pacemaker.”

—Cindy Alvarez

Session 1: Culture

TODAY’S PROGRAM







Thank you!

@clevergirl

Business

2015 Lean Startup Conference - Leaders' Guide Workshop