Comparison between lean and traditional product development approaches

1. Brisbane Lean Start-Up Meetup
29 Mar 2012
Contact: christopher_tia@yahoo.com

2. Lean Product Development Focus
• Traditional Product Development Model
• Why it doesn’t work for start ups
• Lean Product Development Model
• Where, how and when can the lean model be
applied?
• World’s Biggest Lean Startup Meetup @ SXSW 2012
• OPEN DISCUSSION: Michael Holmstrom
– Product Development and Innovation
– GroundProbe Pty Ltd and Makelab
– Highlights, lowlights, thoughts and advice
29 March, 2012 Brisbane Lean Start-Up Meetup 2

3. Traditional Product Development Model
Ideation Crystallisation of Passion & Vision
Product Definition, Market Research
Business Case (Product, Pricing, Promotion, Distribution)
Development Engineering builds product,
Marketing develops strategy & resources
Testing Engineering/Sales engage users,
Marketing support sales, CEO raises money
Launch Sales builds capacity, marketing plan deployed, board
measures performance and looks to scale-up
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4. Technology Adoption Curve
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
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5. Technology Adoption Curve
Start Up
Land
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
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6. Technology Adoption Curve
Not really a
Not happening until smooth curve
Start Up
you first understand
the market
Supposes linear
Land
progression with
focus on execution
and adoption
Rarely actually
‘buy’ anything
Source: http://thelearningexplosion.blogspot.com.au/2012/01/crossing-online-learning-chasm.html
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7. Why it doesn’t work for start-ups …
• High risk environment, where assumptions are not
tested until the end
• Real customers only engaged late in the process
• Sole focus on getting to market, not understanding
the market
• Metrics typically about speed of execution, not about
whether outcomes are sustainable
• Marketing, Sales and Engineering work in silos
• High Risk of premature scaling
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8. The Lean Start-Up Alternative
• Company has to first
– Prove market actually exists
– Verify someone will pay ‘real’ money for
product/service
– Create the market
• Learning and discovering customers/markets
requires separate process
– Should be done as early as possible
– Funding not going to help accelerate greatly
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9. Customer Development Model
• Scientific Approach
– Observe and describe
– Develop hypothesis to explain
– Predict results
– Measure success rate of predictions using experiments
• Used to discover and validate
– Product solves a problem for defined group of users (Customer
Discovery)
– Market is viable for business (Customer Validation)
– Business is scalable (Company Creation)
– Company processes can support growth (Company Building)
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10. Customer Development Model
Source: Cooper B. & Vlaskovits P, The Entrepreneur’s Guide to Customer Development
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11. Types of Start Up Markets
Existing Markets Re-segmented New markets
Markets
Customers Existing Existing New/New Usage
Customer Needs Performance 1. Cost Simplicity &
2. Perceived Need convenience
Performance Better/Faster 1. Good enough at Based on new
low end customer metrics
2. Good enough for
new niche
Competition Existing Incumbents Existing Incumbents Non-Use / Other
Startups
Risks Existing Incumbents 1. Existing Market adoption
Incumbents
2. Niche strategy
fails
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12. Types of Start-Up Markets
Market Share Cost of Entry Entry Strategy
(vs Leader’s Sales /
Marketing Budget)
Monopoly >75% 3x Re-segment/New
Duopoly >75% 3x Re-segment/New
Market Leader >41% 3x Re-segment/New
Unstable Market >26% 1.7x Existing/Re-segment
Open Market >26% 1.7x Existing/Re-segment
Market Type – Cost of Entry
(Based on Military Operations Research)
Source: Blank S. & Dorf B., The Startup Owner’s Manual
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13. OPEN DISCUSSION
• Topic
– Product Development and Innovation
– GroundProbe Pty Ltd and Makelab
– Highlights, lowlights and advice
• Led by Michael Holmstrom (B.E Electrical
Engineering, M.SC Digital Design)
– 10+ Years experience in Innovation & Commercialisation
– Co-Founder of GroundProbe Pty Ltd & Previous GM for
Product Innovation
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14. To Learn More
• Reading Materials
– The Lean Startup, Eric Ries
– The Entrepreneur’s Guide to Customer Development, Brant
Cooper and Patrick Vlaskovits
– The Four Steps to Epiphany, Steve Blank
– The Startup Owner’s Manual, Steve Blank
• Online
– Lean Startup Wiki: http://leanstartup.pbworks.com
– Mailing List: http://leanstartupcircle.com
• Forums
– Startup Lessons Learnt: http://sllconf.com
– Local Meetups – Silicon Beach, BarCamp
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