Lean Innovation for Enterprises - informing-arts. · PDF file| 2 Table of Contents 3 What can larger enterprises or mature organizations learn from startups when it comes to lean innovation

LEAN INNOVATION For Established Businesses

 Best practices that enterprises can adapt from “lean startup” movement

 Customer-centered value creation

 Business model innovation

 March&15,&2015&

 Prepared&by:&Christine&Thompson&

Informing&Arts&

© 2015 Informing Arts. All rights reserved.

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Table of Contents

3

 What can larger enterprises or mature organizations learn from startups when it comes to lean innovation methods? What are some of the key frameworks that enterprises can use to generate viable new business concepts? How can innovators find unsatisfied consumer needs? What are some options for learning how to apply these methods to your own organization?

8 9 17 24 page% page% page% page% page%

Painful%climate%for%firms%

that%don’t%innovate%

What%can%we%learn%from%

entrepreneurs%

The%entrepreneur’s%

toolkit%(lean%startups)%

Value%creation:%from%

theory%to%action%

Some%workshop%options%

for%your%organization%


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Wall Street punishes brands & businesses that it perceives as stagnant

 Are%your%shareholders%pleased%with%your%performance?%

 Are%customers%loyal%to%your%

brand?%

 Do%you%still%attract%the%most%

desirable%talent?%


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How do you reinvigorate your business, or generate value from innovations

 Investors,%customers,%partners%

get%tired%of%uninspiring%or%

incremental%improvements,%

the%results%of%asking%people%

“to%do%more%with%less…”%


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Generating viable new business opportunities

 “Today%countless%innovative%business%models%are%emerging.%

Entirely%new%industries%are%forming%as%old%ones%crumble.%

Upstarts%are%challenging%the%old%guard,%some%of%whom%are%

struggling%feverishly%to%reinvent%themselves.”%

 —%Business%Model%Generation%©�� 010�

 How does your organization generate new business ideas?

 How do you explore the ideas that have the best potential to create value for your business?


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Sadly, few new ventures ever reach $1 billion in revenues

826$achieved$≥$100$million$in$revenues$

96$earned$≥$1$billion$in$revenues$

2952$companies$launched$1980;2012$

“Breaking"through"the"start� up"stall"zone,”"McKinsey%Quarterly,"February"2014.� Study"of"the"competitive"dynamics"in"the"software"and"Internet"sectors,"where"it"has"been"comparatively"easy"to"create"new"businesses."


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Why do so many businesses fail?

 Disconnects%within%“the%logic%

of%the%business”%%

 Mismatch%between%value%

propositions%and%evolving%

customer%needs%

 Value%gaps:%consumer%needs%

or%wants%versus%price%

 Unsustainable%cost%structures%

 Disruption%from%lowerTcost%

rivals%that%satisfy%underT

served%or%unmet%needs%

 Tired,%obsolete%products%or%services%

 Channels%that%fail%to%meet%

new%expectations%for%speed%or%

quality%of%fulfillment%

 Changes%in%shopping%or%buyer%behaviors%

 Fixed,%outmoded%habits%of%

thought%or%business%practices%

A business model describes the rationale of how an organization creates, delivers and captures value


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What can we learn from entrepreneurs and lean startup practitioners?

 Lean� methods� to� invent,�validate,"refine"and"scale"new�� usiness�� odels.�

 Lean� methods� to� design�and� validate� appealing�value"propositions."

 Do"small"tests,"learn"by"doing,"react"quickly.��

 Fail"fast,"learn"faster.�Test,"iterate,"refine.""

 At"lower"costs"than"with"traditional"methods."

 Agile"discovery"and"opportunity"spotting"


Entrepreneurs’ Toolkit

Business%Model%Canvas%

Customer%Value%Canvas%

Customer%Development%

Agile%learning:%

hypothesize,%validate%—%

test,%learn,%refine.%

“Fast%fail”:%celebrate,%don’t%

punish%the%innovators%

Smart%small,%iterate;%get%it%

right%before%you%scale%

“Pivots”%

Design%thinking%


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Lean innovators start with two “canvases” when thinking through new opportunities

Two leading tools for inventing new business opportunities: the Business Model Canvas and the Customer Value Canvas.




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Business Model Canvas

 An%innovation%framework%that%

focuses%on%the%9%key%building%

blocks%of%a%business.%%

 Business%schools%like%Stanford%promote%its%use%as%a%tool%to%

define%the%key%drivers%of%a%

business%model%and%the%logical%

relationships%among%them.%

Use of the Business Model Canvas is permitted under Creative Commons licensing. Its use is described in Business Model Generation by Alexander Osterwalder & Yves Pigneur © 2010.

A business model at a glance—one piece of paper.

If there are any gaps or logical disconnects across the 9 boxes, the business cannot succeed.


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An early Facebook Business Model Canvas

9%boxes%—%the%key%

drivers%of%a%business%

Show%just%the%critical%

elements%in%each%box%

Colors%or%arrows%reveal%

relationships%


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Customer Value Canvas

 Start by identifying a set of customers — people who share common needs, wants or behaviors.

 Focus on high priority “jobs-to-be-done,” and then identify customers’ unmet or under-served needs/wants.

 Define/prioritize requirements for meeting those needs.

 Identify customers’ desired outcomes (how they will assess how well the “job” has been done).

Refer to “outcome-driven innovation” models (Strategyn) and Harvard Business Review articles for more on “jobs to be done” and desired outcomes. See Value Proposition Design by Osterwalder & Pigneur, ©2014. See Strategyzer.com.

Value proposition that satisfies those needs


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Example of analyzing a “job to be done” for a customer value canvas

Segment Women who practice yoga on a regular basis

Job-to-be-done

Practice yoga at home on days when they cannot take a class at their studio or gym

“Pains” Time and space for practice at home Access to teacher-led classes

No training in how to sequence the right set of poses for today’s situation and energy levels

Motivation triggers may be weak

“Gains” Stay strong and fit, learn to quiet the mind, improve mindfulness, manage stress, build self-esteem

Obstacles Technology options at home ill suited to practice How to control playback while practicing

Time, motivation, distractions at home

Desired outcomes

Achieve wellness goals (health, weight, fitness, etc.) Enjoy today’s practice experience; get refreshed

Avoid injury


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Hypothesize, test, iterate, learn and refine à la lean innovation

 Lean%startups%do%not%hire%lots%of%employees,%build%a%sales–

force%or%scale%a%business%until%

they%are%confident%that%the%

value%proposition%appeals%to%

buyers,%at%prices%they%will%pay.%

The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company, Steve Blank & Bob Dorf, © 2012.

 Start with mindful value proposition design, shaped by insights into customers’ unmet jobs-to-be-done.

 Use customer-based learning to validate assumptions, drive pivots in how you create/deliver value propositions, market your products, engage customers, etc.

 Key success factors = Searching for fit: problem-solution fit, product-market fit, business model fit


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Customer development for “evidence-based learning”

 A%process%for%discovering%and%validating%the%pains%and%gains%

that%customers%care%about%

 Supported%by%a%process%for%discovering%how%customers%

want%to%buy%(and%therefore%

how%you%go%to%market)%

 Plus%agile%processes%to%test%and%iterate%the%offers%(value%

proposition)%

The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company, Steve Blank & Bob Dorf, © 2012.


From theory to action



Customer%Development%

Agile%learning:%ideate,%

hypothesize,%validate%—%

test,%measure,%refine%

“Fast%fail”:%celebrate,%don’t%

punish%the%innovators%

Smart%small,%iterate;%get%it%

right%before%you%scale%

“Pivots”%

Design%thinking%


18�|

Sample outputs from a business model workshop

Photo from a business model canvas workshop, Osterwalder.


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Visualize today’s business model before creating new models

Develop a shared set of concepts and vocabulary across team members

Hands-on expertise in how to apply the methods

New perspectives on today’s business

70%%of%businesses%discover%

opportunities%to%improve%

their%existing%business%model%

while%working%through%this%

learning%exercise%

%

“Ten Tips for Business Model Innovation,” BusinessModel Inc.

Practice%using%some–

thing%you%already%know%

Then%invent%new%models%

for%new%opportunities%


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Use sticky notes to sketch key ideas for each of the 9 boxes in the model; discuss the logic that makes this model coherent

Photo from a representative workshop in Europe


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Profile customer segments based on insights that motivate customers to take action to satisfy their needs or wants

The Value Proposition Canvas

Customer (Segment) Profile:

strategyzer.comThe makers of Business Model Generation and StrategyzerCopyright Business Model Foundry AG

Pains

Gains

CustomerJob(s)

Best practices: “jobs to be done,” design thinking, value proposition design. Often requires qualitative research to identify or prioritize consumers’ unsatisfied jobs-to-be-done.


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Create value by targeting high-value, unsatisfied “jobs-to-be-done”

Collaborate online using value proposition design tools from Strategyzer.com


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Use low-cost prototyping tools to identify key assumptions to validate

Copyright Strategyzer A.G. The makers of Business Model Generation and Strategyzer www.strategyzer.com/vpd

Written by Alex Osterwalder, Yves Pigneur, Greg Bernarda, Alan SmithDesigned by Trish Papadakos

Pull: JobSelection

Imagine your customers are chief information officers (CIOs) and you have to understand which jobs matter most to them. Do this exercise to prioritize their jobs or apply it to one of your own customer profiles.

ob#ectiveIdentify high-value customer

jobs that you could focus on

outcomeRanking of customer jobs

from your perspective

Jobs Important

Does failing the job lead to extreme pains?Does failing the job lead to missing out on essential gains?

Are there unresolved pains?

Are there unrealized gains?

Can you feel the pain?

Can you see the gain?

Are there many with

this job, pain, or gain?

Are there few willing

to pay a lot?

Focus on the highest

value jobs and related

pains and gains.

Tangible Unsatisfied Lucrative High-Value jobs

Scoring Scale:

• (Low) to • • • • (High)

Test Card

We believe that

Test Name

Assigned to

Deadline

Duration

And measure

To verify that, we will

We are right if

The makers of Business Model Generation and StrategyzerCopyright Business Model Foundry AG

Test Cost: Data Reliability:

Critical:

Time Required:

Copyright Strategyzer A.G. The makers of Business Model Generation and Strategyzer www.strategyzer.com/vpd

Ad-Lib Value Proposition TemplateAd-libs are a great way to quickly shape al-ternative directions for your value proposition. They force you to pinpoint how exactly you are going to creating value. Prototype three to five different directions by filling out the blanks in the ad-lib below.

Our ______________ help(s) ___________ who want to _________________ by ______ ________ and_____ ________.

Products and Services

jobs to be done

verb (e.g., reducing, avoiding) and a customer pain

verb (e.g., increasing, enabling) and a customer gain

competing value proposition

Customer Segment

(unlike ___________ )

ob#ectiveQuickly shape potential value proposition directions

outcomeAlternative prototypes in the form of “pitchable”

sentences

Tools adapted from Value Proposition Design and Strategyzer.com.


Some Workshop Options

Learn%how%to%use%the%two%

essential%canvases%

Explore%ways%to%reTinvent%

today’s%business%model%

Generate%new%business%

model%opportunities%

OnTsite%or%offsite%meeting%

Professional%facilitator%

HalfT%or%allTday%versions%

PostTworkshop%coaching%

or%followTup%sessions%


25�|

Learn how to apply the two essential canvases to guide innovation

 Assigned%reading%materials,%

for%background%into%the%

frameworks%and%concepts%

 Optional%before%intro%session,%

required%for%the%workshop%

 2–4 hour intro session: Business Model Canvas & Customer Value Canvas

 Exec sponsor sets the stage (where to focus), outlines the process and expectations

Facilitation provided by Informing Arts. Agenda details and innovation focus area to be developed with input from the Executive Sponsor.

 Half- or all-day workshop

 Teams collaborate on BM and CV canvases (as directed)

 Participants discuss insights, ‘ah ha’ moments, implications

 Exec sponsor defines next steps


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How to launch your innovation journey discussion starters…

 Preliminary discovery session with exec sponsor

 Pre-workshop 1:1 briefing sessions with SMEs

 Decide where to focus the innovation quest

 Introductory session — learning the two canvases

 Facilitated workshop(s) to apply innovation to your opportunity areas

 Executive coaching

 Collaborate on research to inform customer profiles

 Exec sponsor’s time: 1-2 hours before each workshop to set the context, sharpen the focus; optional debriefs afterwards

 Meetings: 2-4 hours for the introductory session, plus 4-6 hours for the innovation workshop

 1:1 or small group coaching sessions over 30-45 days, to keep assigned work on target

 Qualitative research to validate key assumptions

Items in red are optional activities. The introductory session and workshop must be done in-person. Other interactions could be face-to-face or virtual, once initial relationship has been established.


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Contact info  Christine Thompson, Principal

 

Informing Arts www.informing-arts.com

 206 • 232 • 7919

 [email protected]


Documents

Lean Innovation for Enterprises - informing-arts. · PDF file| 2 Table of Contents 3 What can larger enterprises or mature organizations learn from startups when it comes to lean innovation