Entrepreneurship and Lean Startup

Entrepreneurship & Lean Startup

Lean Startup and the Business Model Canvas

The Business Model Canvas

Key Principles

-- First, rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses—basically, good guesses. The foundation of the Lean Startup is evidence-based entrepreneurship. Instead of creating an intricate business plan, founders summarize their hypotheses in a framework called a Business Model Canvas. Essentially, this is a diagram of how a company will create value for itself and its customers.

-- Second, Lean Startups use a “get out of the building” approach called Customer Development to test their hypotheses and collect evidence about whether they are true or false. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. The emphasis is on nimbleness and speed; new ventures rapidly assemble minimum viable products (MVPs) and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, Lean Startups start the cycle over again, testing redesigned offerings and making further small adjustments (iterations) or more substantive ones (pivots) to ideas that aren’t working.

-- Third, Lean Startups practice something called agile development, which originated in the software industry. Agile development works hand-in-hand with Customer Development. Unlike typical yearlong product development cycles that presuppose knowledge of customers’ problems and product needs, agile development eliminates wasted time and resources by developing the product iteratively and incrementally. It’s the process by which startups create the minimum viable products they test.

Best Practices

“Evidence-Based Entrepreneurship”
- Hypothesis: Here’s what we thought
- Experiments: Here’s what we did
- Results: Here’s what we found
- Action: Here’s What We Are Going to Do Next
“Record and document everything”

Best Tools

The Business Model Canvas

The Value Proposition Canvas

Concepts
• 9 parts of a Business Model Canvas
• Hypotheses versus facts
• Getting out of the building
• Web/mobile versus physical
• Problem/solution
• Product-market fit
• Hypotheses/experiment, design/test/insight
• Iteration versus pivot...!!!

Relationships (between canvas components)
• Value Proposition/Customer Segments – product-market fit
• Customer relationships: get/keep/grow
• Revenue/costs – making money

 Some Techniques

“Pro tips” from Strategyzer AG... 
-- Use Sticky notes for each and every one of the building blocks of your business model canvas. Ideas need to be mobile.
-- Draw; Use words AND images to describe your business model canvas building blocks to enhance big picture understanding.
-- Use Colors, this increases the clarity of your business model canvas by color-coding all elements related to a specific customer/client segment.
-- Sketch Alternatives; don't fall in love with your first idea. Sketch out alternatives of the business model canvas for the same product, service, or technology.
-- Tell a Story.  Start from a blank Canvas when you explain your business model canvas. Tell your business model canvas story one sticky note at a time.
-- Learn from the Best. Map out every new and innovative business model you come across. Understand, learn and try to apply to your business model canvas.

 

 

 

 

 

 

 

 

 

 

Dr. O’Neal discusses working with the Business Model Canvas...

“Customer Discovery” - captures the founders’ vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts.

“Customer Validation”- tests whether the resulting business model is repeatable and scalable. If not, the team returns to Customer Discovery.

Only Winning Companies Count...!

Get out of the building…and hit the streets…!
“Go out and get the data, talk to people, many people...”

“Build a Great Company”