Entrepreneurship (MGT-272)

BBA Program, Session 2k21

Spring’23

Lecture # 09
Lean Startup

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 Annoucement

Interviews
• Email me a 4-5days before your scheduled session to book the KAIEL.
• If your speaker is from outside NUST, Please send an email at least 2
days before the event to DD Admin (Mr Nadeem Shahid;
ddadmin.coord@nbs.nust.edu.pk) with me in CC;
(fizza.khalid@nbs.nust.edu.pk) for clearance at the gate.
• You’ll need the guests name, NIC no., Company name and purpose of
visit.
Tuesday Class; April 18, 2023
• Combined class (A&B) from 9-11:15am, NBS Seminar Hall.
 Resources

Article: Why the lean startup changes everything

https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Article: Hypothesis-driven entrepreneurship

The Lean Startup Summary

https://www.youtube.com/watch?v=RSaIOCHbuYw
https://www.youtube.com/watch?v=5SMxtZhCxus
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 Lean Startup

The Lean startup method is about how to drive a startup, how to steer,
when to turn, and when to persevere and grow a business with maximum
acceleration.”

Lean Startup Methodology

A method for developing businesses and products, first proposed in 2008
by Eric Ries. It shortens the product development cycle by adopting a
combination of business hypothesis-driven experimentation, iterative
product releases and validated learning in order to develop a MVP to meet
early needs of customers and strategize pivoting to reduce market risk by
avoiding spending money where the outcome is uncertain.
 Minimum Viable Product (MVP)

MVP: The minimum set of features needed to learn from early vangelists-
visionary early adopters. Used for fast market testing of a product or
product features.
• Avoid building products that nobody wants
• Maximize the learning per dollar spent

• Visionary customers can fill in the gaps on mission feature, if the

product solves a real problem
• Allows us to achieve a big vision in small increments without going in
circles.
• Requires a commitment to iteration in idea, prototyping, presentation
data collection, analysis and learning.
• MVP is only for Big vision products; unnecessary for minimal products.
 Pivoting

Pivot : A change in business model components based on customer

feedbacks. It’s a change directions but staying grounded in what we’ve
learned.
• A pivot is not a failure
• Pivot is a structured course correction designed to test a new
fundamental hypothesis about the product, strategy , engine of growth
etc.
• If we can reduce time between pivots, we can increase our odds of
success before we run out of money.
 Lean Startup Principles

Principle 1: Entrepreneurs are everywhere (even in well-established firms)

• You don’t have to work for or launch a startup venture to be an entrepreneur.
• Anyone who works for a company that creates new products and services under conditions
of extreme uncertainty is an entrepreneur.
• Entrepreneurship is the context in which you operate. Nothing to do with size of company,
sector, economy or industry.
 Lean Startup Principles

Principle 2: Entrepreneurship is management (but different from managing

traditional firms)
• Goal is to create an institution, not just a product.
• Launching a new product or service is inherently risky and full of uncertainty.
• Entrepreneurs need practices and principles geared to the startup context of extreme
uncertainty.
 Lean Startup Principles

Principle 3: Validated learning (about customers and markets)

• Startup exist to learn how to build a sustainable business.
• Learning is the unit of progress. Learning can only be done by experimentation.
• Validated learning is the process of testing every element of the vision, to determine
whether the vision is sustainable.

For details on alternate ways of

launching a startup read through
the article: Hypothesis-driven
entrepreneurship
 Lean Startup Principles

Principle 4: Build-Measure-Learn (Feedback loop for improvement)

The fundamental activity of a startup is to turn ideas into products or services, measure how
customers respond, and then learn whether to pivot or persevere. All successful startup
processes should be geared towards accelerating this feedback loop i.e. Minimizing total time
through the loop.
Ideas

Learn Build

Data Product
For complete process
flow cycle read through
Measure the article: Hypothesis-
driven entrepreneurship
 Accelerating Build-Measure-Learn

Ideas

Learn faster Build faster

Unmet needs
Split tests Learn Build Competition
Customer Development
Value of ideas
Five Whys
Unit test
Customer Advisory Board
Usability test
Falsifiable Hypotheses
Continuous integration
Accountability
Incremental deployment
Customer Archetypes
Cluster Immune system
Cross-functional teams Data Product Refactoring
Semi-autonomous team
Minimum Viable Product
(MVP)
Measure
Measure faster Measure faster
Continuous Deployment Funnel Analysis
Split test Cohort Analysis
Usability tests Net Promoter Score
Real-time monitoring & Alerting Search engine marketing
Customer satisfaction Predictive monitoring
Customer liasion
 Lean Startup Principles

Principle 5: Innovation Accounting (using actionable metrics-mostly about customer

behaviours)
• Focused on defining, measuring and communicating progress, so that assumptions can be
validated, and the products or services moves closer towards sustainability.
• It differs from traditional accounting which is focused on measuring established products
for sustainability.
• Three Learning Milestones
1. Establish the baseline. (Build MVP, measure how customers behave right now)
2. Tune the engine. (experiment to see if we can improve metrics from the baseline towards
the ideal)
3. Pivot or Presevere. (When experiments reach diminishing returns, its time to pivot)
 Myths about Lean Startup

Myth 1:
Lean means cheap/. Lean startup try to spend as little money as possible.
Truth:
Lean startup method is not about cost. Its about speed.
Myth 2:
It won’t work for my business. Its only for tech/web companies.
Truth:
Any company regardless of industry, can use lean methods to reduce uncertainty about what
their customers really want.
Myth 3:
It only works for small, bootstrapped companies.
Truth:
Lean startups are ambitious and are able to deploy large amounts of capital. They are used in
Fortune 500 companies and in capital intensive large scale projects.
Myth 4:
Lean stratups replace vision with data or customer feedback.
Truth:
Lean startups are driven by compelling vision and are rigorous about testing each element of
this vision.
Article: Why the lean startup changes everything
https://hbr.org/2013/05/why-the-lean-start-up-changes-everything 14
Lean Canvas Model
https://litslink.com/blog/5-lean-canvas-examples-of-multi-billion-startups 16
 1. Have you developed a Minimum Viable
Product (MVP)?
2. Did you require any pivoting? Why and
how did you pivot?
3. How are you building a company or just a
product?
Startup Checkpoint: 4. How will you validate learning in your
How will you apply lean startup?
methods to your startup 5. Which tools are you using to close the
venture? Build-Measure-Learn loop?
6. How do you define, measure and
communicate progress?

Develop a basic Lean Canvas for your startup.

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