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Part 1: Roadmap Part 1 provides an overall roadmap of the Running Lean process. Specifi- cally, it describes the three core meta-principles that capture the essence of Running Lean and ends with a short case study that helps illustrate these principles in action. The rest of the book covers each of the following meta-principles in detail in three parts.
Part 3: Identify the Riskiest Parts of Your Plan Part 3 helps you identify which aspects of your plan to focus on first. It lays some groundwork on the different types of risks startups face, shows you how to prioritize them, and prepares you to start the process of testing and experimentation. Part 4: Systematically Test Your Plan Part 4 outlines the four-stage process for systematically stress testing your initial plan and shows you how to iterate from your Plan A to a Plan That Works.
There is a fear, especially common among first-time entrepreneurs, that their great idea will be stolen by someone else. The second realization was that startups can consume years of your life. I started WiredReach with just a spark of an idea, and before I knew it, years had passed. And finally, I learned that while listening to customers is important, you have to know how to do it.
After we launched, we got covered by a few prominent blogs and dumped some serious cash into advertising on the DECK network primar- ily targeted at designers and developers. We started getting a lot of feedback from users, but it was all over the place. We started listening to the most popular vocal requests and ended up with a bloated application and lots of one- time-use features. I had dreamt the big vision, rationalized it in my head, and built it and refined it the long, hard way.
I was sold. I was determined to test these techniques on my next product CloudFire but ran into many early challenges when trying to take these concepts to practice. I had more questions than answers, which prompted my two-year journey in search of a better methodology for building successful products.
I am thankful to the thousands of readers who subscribed to my blog, left comments week after week, sent me notes of encouragement to keep on writing, and subjected their products to my testing. Field-Tested As a way to test the content for this book, I started speaking and teaching Running Lean workshops. I have shared this methodology with hundreds of startups and worked closely with many of them to test and refine it.
Whereas my blog is a near-real-time account of my lessons learned, this book benefits from retrospective learning and from reordering and refining steps for a more optimal workflow. I am applying this new workflow to my next startup, which is also a by- product of my blogging and learning over the past year. As of this writing, I have sold WiredReach and am in the process of building and launching a new startup, Spark One of the things that particularly drew me to the Lean Startup method- ology is that it is a meta-process from which more specific processes and practices can be formulated.
The same principles used to test your product can and should be applied to test your tactics when taking these principles to practice. I encourage you to rigorously test and adapt these principles for yourself. The legal, financial, and account- ing aspects of launching a company are outside the scope of the book. When the time comes, it is important to get competent professional advice about financing and structuring your company and its intellectual property assets.
But a good methodology can pro- vide a feedback loop for continuous improvement and learning. That is the promise of this book. Principles guide what you do. Tactics show you how. The essence of Running Lean can be distilled into three steps: 1. Document your Plan A. Identify the riskiest parts of your plan.
Systematically test your plan. The rest of the book will focus on the reduction of these meta-principles to practice. Those that dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.
Most people ignore them. Entrepreneurs choose to act on them. Reasonably smart people can rationalize anything, but entrepreneurs are especially gifted at this. Most entrepreneurs start with a strong initial vision and a Plan A for real- izing that vision. While a strong vision is required to create a mantra and make meaning, a Lean Startup strives to uphold a strong vision with facts, not faith. It is important to accept that your initial vision is built largely on untested assumptions or hypotheses.
Running Lean helps you systematically test and refine that initial vision. Traditionally, business plans have been used for this purpose. But, while writing a business plan is a good exercise for the entrepreneur, it falls short of its true purpose: Facilitating conversations with people other than yourself.
Additionally, since most Plan As are likely to be proven wrong anyway, you need something less static and rigid than a business plan. Taking several weeks or months to write a page business plan largely built on untested hypotheses is a form of waste. Waste is any human activity which absorbs resources but creates no value. Womak and Daniel T. Figure Because creating these one-page business models takes so little time, I recommend spending a little additional time up front, brainstorming possible variations to your model and then prioritizing where to start.
Concise The canvas forces you to pick your words carefully and get to the point. This is great practice for distilling the essence of your prod- uct. During these ses- sions, he has repeatedly called out entrepreneurs for spending a dispropor- tionate amount of time talking about their solution and not enough time talking about the other components of the business model.
They care about their problems. Entrepreneurs, on the other hand, are naturally wired to look for solutions. But chasing after solutions to prob- lems no one cares enough about is a form of waste. Recognizing your business model as a product is empowering. Not only does it let you own your business model, but it also allows you to apply well- known techniques from product development to building your company.
Lean Canvas helps deconstruct your business model into nine distinct sub- parts that are then systematically tested, in order of highest to lowest risk. Step 2: Identify the Riskiest Parts of Your Plan Building a successful product is fundamentally about risk mitigation. Customers buy from you when they trust you can solve their problems.
Investors bet on you when they trust you can build a scalable business model. Startups are a risky business, and our real job as entrepreneurs is to system- atically de-risk our startups over time. Unless you are trying to solve a particularly hard technical problem like finding a cure for cancer, building the next big search algorithm, or split- ting isotopes , chances are you will be able to build your product given enough time, money, and effort.
The first stage is about determining whether you have a problem worth solving before investing months or years of effort into building a solution. While ideas are cheap, acting on them is quite expensive. If not, who will? Once you have a problem worth solving and your MVP has been built, you then test how well your solution solves the problem. In other words, you measure whether you have built something people want.
At this stage, you have a plan that is starting to work—you are signing up customers, retaining them, and getting paid. Stage 3: Scale Key question: How do I accelerate growth? Your focus at this stage shifts toward growth, or scaling your business model. See Figure The best way to differentiate pivots from optimizations is that pivots are about finding a plan that works, while optimizations are about accelerating that plan.
In a pivot experiment, you attempt to validate parts of the business model hypotheses in order to find a plan that works. In an optimization experi- ment, you attempt to refine parts of the business model hypotheses in order to accelerate a working plan. The goal of the first is a course correction or a pivot.
The goal of the second is efficiency or scale. In order to maximize learning, you have to pick bold outcomes instead of chasing incremental improvements. So, rather than changing the color of your call-to-action button, change your entire landing page. Rather than tweaking your unique value proposition UVP for a single customer seg- ment, experiment with different UVPs for different customer segments. Investors care about traction over everything else. Taking several months to write and pitch a business plan to investors is not the best use of time for a startup; especially since all you have at that point is a vision and a set of untested hypotheses.
Selling this to investors without any level of validation is a form of waste. Instead, your first goal should be to establish just enough of a runway to allow you to start testing and validating your business model with customers. While not the same thing, bootstrapping and Lean Startups are quite complementary. Both cover techniques for building low-burn startups by eliminating waste through the maximization of existing resources before expending effort on the acquisition of new or external resources.
Step 3: Systematically Test Your Plan With your Plan A documented and your starting risks prioritized, you are now ready to systematically test your plan. In a Lean Startup, this is done by running a series of experiments. The Lean Startup methodology is strongly rooted in the scientific method, and running experiments is a key activity.
What Is an Experiment? A cycle around the validated learning loop shown in Figure is called an experiment. Build-Measure-Learn loop The validated learning loop, or Build-Measure-Learn loop, was codified by Eric Ries and describes the customer feedback loop that drives learning in a Lean Startup. It begins in the Build stage with a set of ideas or hypotheses that are used to create some artifact mock-ups, code, landing page, etc.
I wanted to pick a simple example that would be readily understood. So, rather than picking a software or hardware product, I decided to outline the process I used to write this book. I was too busy running my company. I started my blog in October because I had more questions about Lean Startups than answers. Along the way, a few of my blog readers started suggesting that I turn my blog posts into a book.
I knew writing a book even from blog posts would be a massive undertaking, so while I was flattered by the requests, I did nothing at first. After about a dozen such requests, I decided to explore further. What follows is how I applied the Running Lean process to writing this book. Specifically, I asked what would be different about this book from what was already on my blog, or in other blogs and books that are already out there.
Many of them were also technical founders like me who were building web-based products early adopters. Define the Solution With that knowledge, I spent a day building a demo. It was a teaser land- ing page with a table of contents, a title, and a stock book-cover image see Figure Running Lean teaser page I knew the riskiest part about writing this book was nailing down the table of contents—not the title, book cover, or even price since most business books have fairly established pricing.
My readers helped spread the message channel testing. Then I went back to running my company. By June, I had collected 1, emails potential prospects , which made writing the book a problem worth solving for me. My rationale for this was at least covering my costs using a simple back-of-the-envelope calculation. Validate Qualitatively Writing a whole book was still a massive undertaking. I needed to build something even smaller that allowed me to start learning from customers a minimum viable product.
I took the table of contents and turned it into a slide deck with the same outline and a few bullet points under each topic. I announced a free Run- ning Lean workshop in Austin, Texas and got 30 people interested. A local incubator, Tech Ranch, was gracious enough to provide a venue but only had room for 10 people.
This was perfect, as it meant I could run at least two more workshops with the others iterate in small batches. Based on the success of the first workshop, not only did I run more work- shops, but I also started charging for them getting paid is the first form of validation. With each workshop, I continually tweaked the slide deck content for better flow and doubled pricing until I hit some resistance. By the end of the summer, I understood the solution well enough and started writing.
Here again, instead of writing the whole book in isolation, I contacted my potential prospects from the teaser page, many of whom were growing impatient as my initial launch date had come and gone. Rather than waiting six more months to get the book, if they preordered the book, now they would get two chapters of the book every two weeks in PDF format.
About half of the people agreed to this arrangement. This further helped me distinguish early adopt- ers from latter-stage customers. The content for me was still the riskiest part of the product to test. Customer feedback during this two-week iteration cycle was immensely valuable. Entire chapters were rewritten for better flow, illustrations were improved,1 and little typos and grammatical errors were nipped in the bud.
Not only was I able to write a better book using this process, but I did so faster. I was contacted by a major publisher in December that got wind of the fact that I was writing this book. Not only had they already reviewed the latest version out at the time, but they were interested in publishing the book as-is.
I asked them if my model for writing and selling the book so far would be a deal breaker. On the contrary, they wished more authors wrote their books this way. At first I was confused, but then it all made sense. The fact that I was able to sell 1, copies of the book on my own demonstrated early traction, which helped mitigate market risk for the publisher. This is not unlike how a latter-stage investor views a startup. As of September , I had sold just over 10, copies of Running Lean on my own and was writing a new and updated edition the book you hold in your hands.
This version was even further refined through count- less interviews and workshops with entrepreneurs that spanned a wide 1 A reader and fellow Austin entrepreneur, Emiliano Villarreal, redid my illustrations and sent me the updated files.
We started collaborating on other visuals and he now works with me at Spark The goal was to synthesize my learning over the past year and broaden the audience beyond my initial prototypical early adopters of web-based entrepreneurs. The timeline shown in Figure summarizes the process I used to write the first edition of Running Lean. Running Lean timeline Is the Book Finished?
A book, like large software, is never finished—only released. Because I wrote this book iteratively about a topic that is still evolving, the book was just the beginning See Figure While I love teaching these workshops, my true passion still lies in building products. Immersing myself in the world of hundreds of startups helped me identify a number of problems worth solving. Lean Canvas is a business model validation tool.
USERcycle is customer lifecycle management software that helps compa- nies convert their users into passionate customers. Passionate customers come back and use your product, tell others about your product, and pay for your product or get you paid. The Lean Canvas is the perfect format for brainstorming possible business models, prioritizing where to start, and tracking ongoing learning.
The best way to illustrate the use of the canvas is through an example. Brainstorm Possible Customers When you first start out, all you have is an inkling of a problem, a solu- tion, and maybe a customer segment.
Just as rushing to build a solution can lead to waste, so can prematurely picking a customer segment or business model. It is an iterative algorithm that starts with an arbitrary solution to a problem, then attempts to find a better solution by incrementally changing a single element of the solution.
If the change produces a better solution, an incremental change is made to the new solution, and the process is repeated until no further improvements can be found. Hill climbing is good for finding a local optimum a solution that cannot be im- proved by considering a neighboring configuration , but it is not guaranteed to find the best possible solution the global optimum out of all possible solutions the search space.
Start by brainstorming the list of possible customers for your product: Distinguish between customers and users. If you have multiple user roles in your product, identify your customers. A customer is someone who pays for your product. A user does not. Split broad customer segments into smaller ones. While you might be aiming to build a mainstream product, you need to start with a specific customer in mind.
Put everyone on the same canvas at first. If you are building a multisided business, you might find it necessary to outline different problems, channels, and value propositions for each side of the market. I recommend starting with a single canvas first and using a different color or tag to identify each customer seg- ment. This helps you visualize everything on a single page.
Then split if needed. I recommend starting with the top two or three customer segments you feel you understand the best or find most promising. BoxCloud was primarily targeted at business users and was in use by graphic design- ers, attorneys, accountants, and other small-business owners.
I was interested in exploring other uses of the p2web framework, especially around media sharing photos, videos, and music , which is how CloudFire came about. Really broad category: Anyone that shares lots of media content. That is the segment I decided to model first. Sketch a canvas in one sitting. The canvas is meant to be an organic document that evolves with time.
Be concise. The space constraints on the canvas are a great way to dis- till your business model down to its essence. Aim to fit your canvas on a single page. Think in the present. Business plans try too hard to predict the future, which is impossi- ble. Based on your current stage and what you know right now, what are the next sets of hypotheses you need to test to move your product forward?
Use a customer-centric approach. Alex Osterwalder describes several techniques for approaching an ini- tial business model canvas in his book. Since Running Lean is heavily customer-driven, I find it sufficient to start with just a customer-centric approach.
When creating my canvases, I follow the prescribed order shown in Figure , which is the order the rest of the sections will follow. List the top one to three problems. For the customer segment you are working with, describe the top one to three problems they need solved.
Another way to think about prob- lems is in terms of the jobs customers need done: When people need to get a job done, they hire a product or service to do it for them. Christensen List existing alternatives. Document how you think your early adopters address these problems today. Unless you are solving a brand new problem unlikely , most problems have existing solutions. Many times these solutions may not be from an obvious competitor.
As an example, the biggest alternative to most online collaboration tools is not another collaboration tool, but email. Doing nothing could also be a viable alternative for a customer if the pain is not acute enough. Identify any other user roles that will interact with this customer. Examples: — In a blogging platform, the customer is the blog author while the user is a reader. Home in on possible early adopters.
With these problems in mind, get more specific on the customer seg- ment. Narrow down the characteristics of your prototypical customer. Your objective is to define an early adopter, not a mainstream customer. Family and friends viewers Parents have no free time. This is one of the most important boxes on the canvas and also the hardest to get right.
NOTE First-time visitors spend eight seconds on average on a landing page. Your UVP is their first interaction with your product. Craft a good UVP and they might stay and view the rest of your site. Even with this revised definition, the UVP is still hard to get right because you have to distill the essence of your product in a few words that can fit in the headline of your landing page.
Additionally, your UVP also needs to be different, and that difference needs to matter. Like everything on the canvas, you start with a best guess and iterate from there. Ries and Trout are considered the fathers of modern adver- tising. Here are some of my tips on how to craft a UVP: Be different, but make sure your difference matters. Your product is not ready for mainstream customers yet. Your sole job should be to find and target early adopters, which requires bold, clear, and specific messaging.
Focus on finished story benefits. But benefits still require your customers to translate them to their worldview. A good UVP gets inside the head of your customers and focuses on the benefits your customers derive after using your product.
Pick your words carefully and own them. Words are key to any great marketing and branding campaign. A good UVP needs to clearly answer the first two questions—what is your product and who is your customer. The faster, more effective way to communicate your business model USERcycle Turn your users into passionate customers. Visit their landing pages and deconstruct how and why their messaging works.
Some of my best teachers have been Apple, 37signals, and FreshBooks. Create a high-concept pitch. Another useful exercise is creating a high-concept pitch. High-concept pitches are used heavily by Hollywood producers to distill the general plot of a movie to a memorable sound bite. The high-concept pitch was also popularized as an effective pitching tool by Venture Hacks in its ebook, Pitching Hacks.
There is a danger that the concepts the pitch is based on might be unfamiliar to your audience. For this reason, the high-concept pitch is more effective when used to quickly get your idea across and make it easy to spread, such as after a customer interview. Because all you have are untested problems, it is fairly common for them to get reprioritized or completely replaced with new ones after just a few customer interviews.
For this reason, I recommend not getting carried away with fully defining your solution just yet. Rather, simply sketch out the sim- plest thing you could possibly build to address each problem. Bind a solution to your problem as late as possible. Better notification There is lots of tools external demand on this content. CloudFire: solution Channels Failing to build a significant path to customers is among the top reasons why startups fail.
The initial goal of a startup is to learn, not to scale. While there are a plethora of channel options available, some channels may be outright inapplicable to your startup, while others may be more viable during later stages of your startup.
I typically look for the following characteristics in my early channels. Freer versus paid First, there is no such thing as a free channel. Channels we normally asso- ciate as being free, like SEO, social media, and blogging, have a nonzero human capital cost associated with them. Calculating their ROI is compli- cated because, unlike a paid channel that is used up after you pay for it, these channels keep working for you over time. A commonly cited paid channel is search engine marketing SEM.
If you can pull this off today, by all means use it, but unfortunately those days are long gone for most products. Keyword competition is so fierce now that you need to either outspend or outwit your competition. Direct versus automated As a scalable channel, direct sales only make sense in businesses where the aggregate lifetime value of the customers exceeds the total compensation of your direct sales people, such as in certain B2B and enterprise products.
But as a learning channel, direct selling is one of the most effective, since you interact face to face with the customer. First sell manually, then automate. Direct versus indirect Another area where startups waste energy is prematurely trying to estab- lish strategic partnerships.
The idea is to partner with a larger company to leverage its channels and credibility. Imagine you are a sales rep at the bigger company. Given the choice of selling what you know or selling an unproven product to make your quota, which would you choose? The same principle applies to hiring external salespeople. You have to first sell your product yourself, before letting others do it.
While referral programs can be very effective in spreading the word about your product, you need to have a product worth spreading first. Build a remark-able product. Rather than thinking in terms of three- or five-year forecasts, take a more ground-up approach. First, model the runway you will need to define, build, and launch your MVP. Then, revise after you get there.
Something I hear a lot is that an MVP is, by definition, embarrassingly minimal. How can you possibly charge for it? Your MVP should address not only the top problems customers have iden- tified as being important to them, but also the problems that are worth solving. By that definition, you should plan to deliver enough value to justify charging. But there is another line of reasoning that is frequently cited for deferring pricing: to accelerate initial learning. The argument goes that pricing cre- ates unnecessary friction that should be avoided early on.
We want to make it as easy as possible for the customer to say yes and agree to take a chance on our product, hoping the value we deliver over time will earn us the privilege of his business. I believe that if you intend to charge for your product, you should charge from day one. Suppose I place two bottles of water in front of you and tell you that one costs 50 cents and the other costs 2 dollars.
Here, price has the power to change your perception of the product. More interesting is the fact that the bottled water you pick determines your customer segment. From the existing market for bottled water, we know there is a viable business for bottled water at both price seg- ments. What you charge signals your positioning on which customers you want to attract. Getting paid is the first form of validation. Getting a customer to give you money is one of the hardest actions you can ask them to take and is an early form of product validation.
Although there is a lot of science around pricing, pricing is more art than science. One technique for setting initial pricing is pricing against the list of exist- ing alternatives from the Problem box. These alternatives provide reference price anchors against which your offering will be measured. Cost structure List the operational costs you will incur while taking your product to mar- ket. Use the revenue streams and cost structure inputs to calculate a break-even point and estimate how much time, money, and effort you need to get there.
You will use this later to prioritize which model you start with. More important, prints represent- ed a potential secondary revenue stream that could only be realized once customers derived a core UVP. The only initial costs to getting an MVP out were people costs, which I list in the next section. CloudFire: revenue streams and cost structure Key Metrics Find the key number that tells you how your business is doing in real time, before you get the sales report.
These numbers are key for both measuring progress and identifying hot spots in your customer lifecycle. CloudFire: Pirate Metrics Even though Pirate Metrics was built with software companies in mind, the model is applicable to many different types of businesses. Acquisition Acquisition describes the point when you turn an unaware visitor into an interested prospect. In the case of the flower shop, getting someone walking by your window to stop and come in to your shop is an acquisition event.
On a product website, getting someone to do anything other than leave your website abandon is a measure of acquisition. I specifically measure successful acquisition as getting my visitors to view my signup page. Activation Activation describes the point when the interested customer has his first gratifying user experience. On the product site, once the prospect signs up, you have to make sure you get the customer to a point where he can connect the promise you made on your landing page your UVP with your product.
So, in the case of the flower shop, the action of coming back to the store— and in the case of the product website, the act of logging back in to use the product again—would count toward retention. Revenue Revenue measures the events that get you paid. These could be buying flowers or buying a subscription for your product. These events may or may not occur on the first visit. Referral Referral is a more advanced form of a user acquisition channel where your happy customers refer or drive potential prospects into your conversion funnel.
In the case of the flower shop, this could be as simple as telling another friend about the store. For the software product, this could range from implicit viral or social sharing features like Share with a friend , to explicit affiliate referral pro- grams or Net Promoter Score. Better notification tools Parents have no free time. There is lots of external demand on this content.
CloudFire: key metrics Unfair Advantage This is usually the hardest section to fill, which is why I leave it for last. An interesting perspective via Jason Cohen to keep in mind is that any- thing worth copying will be copied, especially once you start to demon- strate a viable business model.
Do you still have a business? You have to be able to build a successful business in spite of that, which led Jason Cohen to offer the following definition:3 A real unfair advantage is something that cannot be easily copied or bought. So I decide to base my unfair advantage on something harder to replicate. In this case, community see Figure Too many found- ers carry their hypotheses in their heads alone, which makes it hard to sys- tematically build and test a business.
You have to draw a line in the sand. How you create your Lean Canvas is up to you. The important thing is to share your Lean Canvas with at least one other person when you are done. Incorrect prioritization of risk is one of the top contributors of waste. What Is Risk? Before moving on, it helps to define what I mean by risk.
Douglas Hubbard makes a clear distinction between the two in his book, How to Measure Anything Wiley : Uncertainty: The lack of compete certainty, that is, the existence of more than one possibility. Risk: A state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome. The good news is that the Lean Canvas automatically captures uncertain- ties that also are risks—the loss here can be quantified both in terms of opportunity costs and real costs.
But not all these risks are equal. Risks Tackling all these risks at once can be overwhelming, which is why you need to prioritize them based on the stage of your product, and tackle them systematically. There is a whole science to quantifying and measuring risks using prob- abilities and statistical modeling techniques.
I am not recommending using a statistical model to measure risks on your Lean Canvas, but even a basic understanding of how to ballpark relative risks on your canvas goes a long way toward prioritizing where to start. Your objective is to find a model with a big enough market you can reach with customers who need your product that you can build a business around.
Here is the weighting order I use from highest to lowest : 1. Customer pain level Problem Prioritize customer segments that you believe will need your product the most. The goal is to have one or more of your top three problems as must-haves for them.
Ease of reach Channels Building a path to customers is one of the harder aspects of building a successful product. If you have an easier path to one segment of cus- tomers over others, take that into consideration. Pick a customer segment that allows you to maximize on your margins.
The more money you get to keep, the fewer customers you need to reach to break even. Market size Customer Segments Pick a customer segment that represents a big enough market given the goals for your business. Technical feasibility Solution Visit your Solution box to ensure that your planned solution not only is feasible, but also represents the minimum feature set to put in front of customers. Videographers files is sharing Share Your Video Files creators time-consuming and error prone.
Progressive streaming Clients viewers Most proofing sites only support low-res thumbnails. Consumers are spread across devices your media content many devices. Instant, no-upload sharing Sharing lots of photos Always-on network and videos is difficult. The Consumer segment represented the weakest value proposition and was a hard monetization model to pull off. Based on these rankings, I decide to prioritize starting with the Parents and Photographers customer segments. I used to advocate jumping right into customer interviews after document- ing my initial models, but now I prefer to first spend a little additional time prioritizing risks and brainstorming alternative models with people other than customers—e.
The main reason I do this is to maximize speed and learning. Customers cannot directly give you all the answers, and due to the iterative and quali- tative nature of early learning, validating hypotheses takes time. Further- more, you might still be targeting too broad a customer segment, too small a customer segment, or the wrong customer segment altogether. I use the term advisor rather loosely.
An early advisor might be a proto- typical customer, a potential investor, or another entrepreneur with specific expertise, domain knowledge, or experiential knowledge that applies to you. I estimate that my advice and specific tactics have saved them somewhere in the ballpark of three to four months, which is hugely valuable, especially in the earliest stages.
Here are some guidelines for running business model interviews: Avoid the slide deck. The other extreme, no slides, although most natural, requires practice and may not lead to as many actionable insights because it may be hard for the other person to retain everything you tell her. My tool of choice is an incremental build of the Lean Canvas deliv- ered on an iPad or paper. I start with a blank canvas and incremen- tally reveal parts of the business model as I walk through it.
The stacked flow allows me to pace the conversation and leave all the information on the screen. It usually takes me three to five minutes to walk through my model; then I shut up and listen. I have found that leaving the complete canvas open in front of peo- ple always evokes a reaction because people can visualize the entire model and they always have an opinion. Ask specific questions. I specifically want to know: — What do they consider to be the riskiest aspect of this plan?
It is still your job to own your business model. Recruit visionary advisors. Much like early adopters want to help when you nail their problems, visionary advisors will want to help when you present them with interesting problems that trigger their strengths and passion. If so, consider bringing them on as formal advisors.
Eric Ries instead recommends organizing around two teams, the Problem team and the Solution team. There are many arguments for building your Release 1. While it is possible to build a product by yourself, I highly recommend working with at least one other person who can, at a minimum, help to enforce periodic reality checks.
Ideally, this is a cofounder, but advisors, investors, and even an ad hoc board made up of other startup founders can fill this role. More important than the number of members is ensuring that you have the right talents within the team to iterate quickly. Sometimes you can find these talents across two people, and other times all you need is one person. I tend to look for people with some level of expertise in all three areas.
Having prior experience building stuff is key, along with expertise in the specific technology you are using. Also, a product is not just a collection of features but rather a collection of user flows. Marketing Everything else is marketing.
Marketing drives the external percep- tion of your product, and you need people that can put themselves in the shoes of your customer. Good copywriting and communication skills are key here, along with an understanding of metrics, pricing, and positioning.
The one thing you should never outsource is learning about customers. Maximize for Speed, Learning, and Focus Because the goal of a startup is to find a plan that works before running out of resources, we know that speed, as measured by cycle time around the Build-Measure-Learn loop shown in Figure , is important.
We also know that learning—specifically, learning about customers—is important. You need all three—speed, learning, and focus—to run an optimal experi- ment. Maximize for speed, learning, and focus Speed and focus When you are going fast and are focused but not learning, the image of a dog chasing its tail comes to mind.
You are expending a lot of energy but simply going around in circles. Speed and learning Finally, when you are going fast and learning but you are not focused, you can fall into the premature optimization trap. So you have to decide what that is and ignore everything else. This is an underappreciated skill. The video-plus-teaser landing page helped him attract tens of thousands of early adopters, find a cofounder, and get accepted into Y Com- binator.
At the time, Drew estimated his launch date at less than three months away. It took him 18 months to publicly launch Dropbox. Austin Food Trailers Food trailers have become quite hip and popular in Austin, Texas, but they started as an inexpensive way for aspiring restaurateurs to test concepts rapidly. After proving a new concept at a small scale, they typically graduate to a brick-and-mortar res- taurant.
But some have still kept their trailer counterparts going. To realize this vision, he needed to know where people shop, their food preferences, and what was on sale to tie into yet another recipe database from which consumers would generate a customized meal plan.
Instead of building a sophisticated automated system to do that, Manuel and his VP of product, Steve Sanderson, picked a single grocery store that was close to them and near a Starbucks coffee shop where they conducted numerous interviews with people who shopped there.
They started with a single customer and manually built these weekly plans to validate their riskiest assumptions first. Their objective was learning over efficiency. Formulate a Falsifiable Hypothesis What most people write down for their business model is really not yet in a form that is testable.
The Lean Startup methodology is heavily rooted in the scientific method and requires that you convert these assumptions into falsifiable hypotheses. A falsifiable hypothesis is a statement that can be clearly proven wrong. When you skip this step, you can easily fall into the trap of accumulating just enough evidence to convince yourself that your hypothesis is correct. This is best illustrated with an example. Specific and testable A blog post will drive signups. The first statement is a hypothesis that cannot be proven wrong because the expected outcome of driving early adopters is not measurable.
The second statement not only has a specific and measurable outcome, but it is also based on a specific and repeatable action that makes it testable. Even if you fail to hit the expected outcome, the mere action of declaring it up front is hugely valuable, not only for enforcing a reality check, but also for improving your judgment. When you have a lot of cer- tainty already, then you need a lot of data to reduce uncertainty significantly.
You might be able to do this with as few as five customer interviews. Make Sure You Can Correlate Results Back to Specific Actions One of the harder things to do is to correlate measured results back to spe- cific and repeatable actions, as your product is always changing.
For quantitative experiments, techniques like cohort analysis and split testing allow you to achieve this. Create Accessible Dashboards Testing hypotheses can be scary for founders. This is understandable, as startup founders pour their blood, sweat, and tears into their work. But without a level of transparency and objectivity, there is a danger of run- ning your startup primarily on faith. It is imperative to openly share your experiments company-wide.
A good way to do this is to periodically communicate the lessons learned from your last batch of experiments—weekly with your internal team and at least monthly with your external advisors and investors. This lets you pause, reflect on your findings as a team, and better plan the next set of activities i. Figure shows my implementation of an Innovation Accounting model I use, which combines ongoing learning with Lean Canvas and a cohort-based conversion dashboard.
Refined testing led to a UVP with a finished story benefit that got enough interest to want to learn more. Family and friends viewers consuming. Automatic video transcoding Parents have no free time There is lots of external into your business model assumptions. Adwords under the age of 3. Facebook R - Invited family and Mommy bloggers friends. Word of Mouth R - Paid after trial while constantly iterating toward a plan that works. There are two common fallouts of this.
One is that startups get discouraged from their initial lukewarm or negative learning and either pivot prema- turely or abandon further experiments. The other is the complete opposite. Here, startups get overly optimistic from their initial positive learning only to get potentially stuck later. The starting point is a completed Lean Canvas that lays out a plan that you believe should work.
You then methodically run staged experiments that visit every box on the canvas. Your business model is not a dartboard. While the top three starting risks serve as a quick diagnostic for prioritiz- ing your canvases, here is how you systematically tackle them in stages see Figure : Stage 1: Understand the problem Conduct formal customer interviews or use other customer observa- tional techniques to understand whether you have a problem worth solving.
Who has the problem, what is the top problem, and how is it solved today? Will the solution work? Who is the early adopter? Does the pricing model work? Do they realize the unique value proposition UVP? How will you find enough early adopters to support learning? Are you getting paid? Stage 4: Verify quantitatively Launch your refined product to a larger audience.
Have you built something people want? How will you reach customers at scale? Do you have a viable business? First make sure you have a problem worth solving. Then define the smallest possible solution MVP. Then verify it at large scale. Customer risk: Building a path to customers 1. First identify who has the pain. Then narrow this down to early adopters who really want your product now. Market risk: Building a viable business 1.
Identify competition through existing alternatives and pick a price for your solution. Test pricing first by measuring what customers say verbal commitments. Then test pricing by what customers do. Optimize your cost structure to make the business model work. What About Unfair Advantage?
The only box not tackled is the Unfair Advantage box. This is because your true unfair advantage can only be tested in the face of competition. Not releasing code, or col- lecting analytics, but talking to people.
This chapter lays some groundwork for conducting good interviews. While running surveys and focus groups may seem more efficient than interview- ing customers, starting there is usually a bad idea. During a customer interview, you can ask for clarification and explore areas outside your initial understanding.
In a survey, not only do you have to ask the right questions, but you also have to provide the customer with the right choice of answers. Focus groups are just plain wrong. Are Surveys Good for Anything? While surveys are bad at supporting initial learning, they can be quite effective at verifying what you learn from customer interviews.
I discussed the principle of two-phase validations earlier—first qualitative, then quantitative. Once you have preliminary validation on your hypotheses, you can then use what you have learned to craft a survey and verify your findings quan- titatively.
The goal is no longer learning, but demonstrating scalability or statistical significance of the results. People assume talking to customers came easy for me, which is simply not true. They also assume I live in Silicon Valley, which is also not true. Like most other technical founders, I too was a closeted geek. I used tools like email, discussion forums, and product blogs for years to avoid having to talk directly to customers.
I went from dreading direct customer interaction to wiring my mobile phone to a toll-free number. While customer development makes a compelling, albeit rational, argu- ment for talking to customers, getting our bodies to listen to our heads is nonetheless challenging at first. Here are some tactics for overcoming your initial mental blocks: Build a frame around learning, not pitching.
In a learning frame, the roles are reversed: you set the context, but then you let the customer do most of the talking. Plus, people are generally willing to help if you set the right expecta- tion of seeking their advice over trying to pitch to them.
Measure what they do. Ask him how he solves the problem today. If he is doing noth- ing and still getting by, the problem may not be as acute. Another tactic is to use strong calls to action. If a customer says he would pay for your product, instead of getting just a verbal commit- ment, ask for an advance payment or partial payment and provide him with a money-back guarantee. Stick to a script. While exploration is a critical aspect of talking to customers, you need to bind the conversation around specific learning goals.
Otherwise, you can easily blow off a lot of time and end up with an overwhelming amount of unactionable information. You need consistency and repeatability to instill some method to the process. Scripts help you do that.
Cast a wider net initially. Even though your first objective will be to home in on the defining attributes of early adopters, not all of your prospects will or should be early adopters. You will have ample opportunity to nar- row down your filter in the next round of interviews.
Recruit loosely and grade on a curve. Earlier, I stressed the importance of being able to see your interviewees. This is critical in customer relationship building. Start with people you know. Finding people to interview can be challenging at first. Start with peo- ple you know who fit your target customer profile. Then use them to get two or three degrees out to find other people to interview. Take someone along with you.
It always helps to have one other person in the room during the inter- view to make sure nothing slips through the cracks. But more impor- tant, it helps to keep the learning objective. I also asked her to tag along with me during subsequent interviews, which not only helped me connect better with other moms but also served as a constant reality check along the way. Pick a neutral location. I prefer to conduct the first interview in a coffee shop to create a more casual atmosphere.
Ask for sufficient time. My interviews typically run between 20 and 30 minutes, without feel- ing rushed. Unlike usability testing, where it is acceptable to provide incentives for participation, your goal here is to find customers who will pay you, not the other way around. Avoid recording the interviewees. I tried recording interviewees early on with their permission , but found that it made some people self-aware during the interview— another example of observer bias.
That, coupled with the fact that I never really went back to listen to an interview, made it a nonstarter for me. Your mileage may vary. Document results immediately after the interview. I recommend spending five minutes immediately following an inter- view to document the results while your thoughts are fresh. Debrief with others later. Great podcast Scott! Thanks a lot for putting this all together - you rock! July 04, I find this podcast interesting from a corporate standpoint were developers are part of a business and there is a common mission because of the products or services the business provides.
I work for a company that rights custom software and we are trying to apply agile principals to customers who are not part of our business 3rd-party agile. In this role we have to be very good at learning the business of each of our customers and sometimes find that even our customer doens't know their own business as well as they should. This leads to us having to be very selective with whom we work. Anyway, if you have any thoughts on applying agile to outside customers I would live to hear them.
Thanks, Brian. Brian Behm. July 16, Great stuff, Scott. They came across as thoughtful and thought provoking. I did have something to add to your discussion of consultants, though, having lived in that world for several years now. The Poppendiecks asserted that organizations which rely heavily on consultants for their core business are either in trouble or asking for it. A business lives or dies on being able to do something better than its competition.
However, I think there are situations in IT where the consulting model makes sense. There are many companies that have periodic needs for applications. That is to say, they need to develop software to compliment their core business, after which they need to maintain and incrementally improve the software for many years. The nature of their IT environment changes — sometimes radically.
A company of this type is now faced with a choice. Does it use internal staff to develop applications and then maintain them? Or if it orients the staff towards maintenance, maybe the required development experience won't be there. Companies can bridge that gap by working with consultants who have relevant experience. When the IT environment changes, the consultants can be swept out the door.
There are other scenarios. Say that a company saw a great opportunity to develop an application with somewhat specialized technology -- say mobile. If that skill set is not on staff, it could be less risky to bring in a consulting company with relevant expertise From your own commentary in blogs and podcasts, I get the sense that your experience with consultants has been hit or miss.
BANDLER RICHARD DESIGN HUMAN ENGINEERING TORRENTDo you Mitchell Bradley. If you is in for login and select report that. Pros The main reason vice versa, address you as well. Port Triggering will open.
Gave really night background for what agile methodologies like xp and scrum are based on. She has led teams implementing solutions ranging from enterprise supply chain management to digital media, and built one of 3M's first Just-in-Time lean production systems. Mary is currently the President of Poppendieck LLC, a consulting firm specializing in bringing lean production techniques to software development.
Even then, the aerospace industry recognized that sequential development of product design, manufacturing process design and product support was costly and non-competitive. His subsequent experience in software product development, COTS implementation, and most recently as a coach, mentor, and enterprise architect support the same conclusion for software development.
He currently assists organizations that need to improve their software development capabilities apply the lean principles and tools described in this book. Labirint Ozon. Mary Poppendieck , Tom Poppendieck. Lean Software Development: An Agile Toolkit Adapting agile practices to your development organization Uncovering and eradicating waste throughout the software development lifecycle Practical techniques for every development manager, project manager, and technical leader Lean software development: applying agile principles to your organization In Lean Software Development , Mary and Tom Poppendieck identify seven fundamental "lean" principles, adapt them for the world of software development, and show how they can serve as the foundation for agile development approaches that work.
Iterating towards excellence: software development as an exercise in discovery Managing uncertainty: "decide as late as possible" by building change into the system. Compressing the value stream: rapid development, feedback, and improvement Empowering teams and individuals without compromising coordination Software with integrity : promoting coherence, usability, fitness, maintainability, and adaptability How to "see the whole"—even when your developers are scattered across multiple locations and contractors Simply put, Lean Software Development helps you refocus development on value, flow, and people —so you can achieve breakthrough quality, savings, speed, and business alignment.
Chapter 2 Amplify Learning. Chapter 3 Decide as Late as Possible. Save to Library Save. Create Alert Alert. Share This Paper. Background Citations. Methods Citations. Citation Type. Has PDF. Publication Type. More Filters. Lean Enterprise Software and Systems. Computer Science, Business. Lecture Notes in Business Information Processing. Highly Influenced.
View 8 excerpts, cites methods and background. Contemporary organizations dealing with software development are under immense pressure to deliver their software products quickly, within the prescribed time frame, and with the highest quality and … Expand.
View 1 excerpt, cites methods. Business, Computer Science. Combining lean thinking and agile software development : how do software-intensive companies use them in practice?
Poppendieck lean pdf torrent bandwidth controller personal como usar utorrentWhere do great architectures come from? Mary Poppendieck (Lean Software Development Series)
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