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Why Lean Startup Practices Work and How to Scale Them

Silicon Flatirons is pleased to host Rally Software Chief Technology Officer, Zach Nies, for a Crash Course about some of the surprising science behind building successful startups. Even though building a startup is hard work with high failure risk, entrepreneurs Steve Blank and Eric Ries have popularized practices that can increase the odds of success. Following the Customer Development or Lean Startup practices will show you what to do. This talk will give you an understanding of why these techniques work, which will allow you to better apply them to your startup or scale them into your enterprise. The event will focus on high growth business based on the deep experience of a CTO from one of the Front Range's leading companies. Entrepreneurs are by nature execution-oriented and you will walk away from the talk with concrete, actionable ideas that will help you make better decisions tomorrow. The subject matter should be relevant to both entrepreneurs creating new companies and entrepreneurs reinventing existing enterprises.

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Why Lean Startup Practices Work and How to Scale Them

  1. 1. Why Lean Startup Practices Work & How to Scale Them
  2. 2. Zach Nies
  3. 3. @zachnies
  4. 4. First, something to think about
  5. 5. h"p://www.flickr.com/photos/oregondot/4132135156  
  6. 6. Entrepreneurs have a chance to create the world they want
  7. 7. There is proven science that can improve your odds of success
  8. 8. What world do you want to create?
  9. 9. What does that feel like?
  10. 10. Success allows you to create the world you want and live your dreams
  11. 11. Why am I here tonight?
  12. 12. Success, but they weren’t living any dream
  13. 13. Discover & promote the tools that enable success while living the dream
  14. 14. How I got here
  15. 15. Font Sampler http://media.kelbymediagroup.com/layersmagazine/images/columns/artoftype/may06/glyph-set.jpg http://en.wikipedia.org/wiki/File:Caslon-schriftmusterblatt.jpeg
  16. 16. 2,500,000 customers
  17. 17. Vision: Civil rights and equality for all
  18. 18. Vision: Reinvent collaboration
  19. 19. Amazing team, exactly the culture I dreamed of creating
  20. 20. Great product
  21. 21. One problem: bad business
  22. 22. Why am I doing this?
  23. 23. Live inside the Internet
  24. 24. Vision: Solve the world’s hardest problems as citizen engineers
  25. 25. 14 minutes in pairs, 7 minutes interviews of each person:
  26. 26. You have created a computer game of entrepreneurship. You believe you can combine this game with some educational material and profiles of successful entrepreneurs to make an excellent teaching tool for entrepreneurship. Your inspiration for the product came from several reports in the newspapers and magazines about increasing demand for entrepreneurship education.
  27. 27. What information would you seek about potential customers and competitors? List questions you would want answered. How will you find out this information - what kind of market research would you do?
  28. 28. h"p://www.flickr.com/photos/oregondot/4132135156  
  29. 29. Who would first do market research to determine how to position the product, calculate addressable market size, and expected financial returns?
  30. 30. Who is focused on identifying possible competitors?
  31. 31. Who would first figure out your passion for the idea, what you know about the market, and who you know? Then talk to a few people to see if you can sell a prototype?
  32. 32. Who is focused on identifying possible partners?
  33. 33. Remember your answers, we will come back to this later.
  34. 34. Books that informed this talk
  35. 35. People who informed this talk David Max Cynthia Kent Snowden Boisot Kurtz Beck Frank H. Mark Eric Knight Newman Ries Steve Blank
  36. 36. Why care about the underling principles? Aren’t there proven practices?
  37. 37. Following Being the a Recipe Chef VS
  38. 38. We have recipes
  39. 39. For complex problems, the recipes won’t always work
  40. 40. h"p://www.flickr.com/photos/usarmyafrica/4456180555  
  41. 41. What’s unique about hard problems? h"p://www.flickr.com/photos/horiavarlan/4298997922/  
  42. 42. What you don’t know is unknown
  43. 43. What you predict, doesn’t come true
  44. 44. What worked yesterday, doesn’t seem to be working today
  45. 45. How do we make sense of environments like this?
  46. 46. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  47. 47. Some background (and a little math)
  48. 48. Gaussian distributions h"p://arxiv.org/abs/cond-­‐mat/0412004  
  49. 49. Ratio of smallest to largest values?
  50. 50. 4.8
  51. 51. Power laws and Pareto distributions h"p://arxiv.org/abs/cond-­‐mat/0412004  
  52. 52. Ratio of smallest to largest values?
  53. 53. 150,000
  54. 54. Other Pareto distributions h"p://arxiv.org/abs/cond-­‐mat/0412004  
  55. 55. High impact, low probability events
  56. 56. An example
  57. 57. h"p://en.wikipedia.org/wiki/File:Sultan_Kosen_Tallest_Man_in_the_World.jpg  
  58. 58. h"p://www.flickr.com/photos/jurvetson/4368494308  
  59. 59. Business involves many Pareto distributions
  60. 60. But wait, there’s more…
  61. 61. 4 Dots
  62. 62. 6 Connections
  63. 63. 64 Patterns
  64. 64. 10 Dots
  65. 65. 45 Connections
  66. 66. ? Patterns
  67. 67. Patterns 35,184,372,088,832
  68. 68. In business a few patterns are more valuable than all the rest
  69. 69. but which ones?
  70. 70. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  71. 71. How do we make sense of this?
  72. 72. Plausible Probable Unordered Ordered
  73. 73. Plausible Probable Unordered Ordered
  74. 74. Plausible Probable Chaotic Complex Complicated Simple Unordered Ordered
  75. 75. An example Plausible Probable Chaotic Complex Complicated Simple Unordered h"p://www.flickr.com/photos/ksionic/383240468   Ordered
  76. 76. Plausible Probable Complex Complicated Chaotic Simple Unordered Ordered
  77. 77. Plausible Probable Complex Complicated Chaotic Simple Unordered Ordered
  78. 78. Plausible Probable Complex Complicated Chaotic Simple Unordered Ordered
  79. 79. Plausible Probable Complex Complicated Cause & Effect is obvious to all and is repeatable Chaotic Simple Unordered Ordered
  80. 80. Plausible Probable Complex Complicated Cause & Effect is not obvious and requires analysis or expertise Chaotic Simple Unordered Ordered
  81. 81. Plausible Probable Complex Complicated Cause & Effect is only coherent in retrospect, and not repeatable Chaotic Simple Unordered Ordered
  82. 82. Plausible Probable Complex Complicated Cause & Effect not perceivable Chaotic Simple Unordered Ordered
  83. 83. The Cynefin Framework Complex Complicated Cause & Effect is only Cause & Effect is not coherent in obvious and requires retrospect, and not analysis or expertise repeatable Disorder Cause & Effect is Cause & Effect not obvious to all and is perceivable repeatable Chaotic Simple Unordered Ordered
  84. 84. How about an example?
  85. 85. Music Industry in 2000 - Napster Complex Complicated Independent Managing a large tour musicians self publishing online Disorder Managing a NIN tour Major label online distribution CD distribution Chaotic Simple Unordered Ordered
  86. 86. What does this imply about taking action?
  87. 87. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated Disorder Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  88. 88. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated Disorder Standard procedures Process re-engineering Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  89. 89. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated Analysis Planning Many expert opinions Disorder Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  90. 90. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated Frequent experiments Pattern matching Exploring hunches Disorder Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  91. 91. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated Disorder Crisis management Innovation management Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  92. 92. Probe, Sense, Respond Sense, Analyze, Respond Complex Complicated 15 - 30 < 150 Disorder 5 > 150 Chaotic Simple Act, Sense, Respond Sense, Categorize, Respond
  93. 93. An example
  94. 94. Entrepreneurship Complex Complicated Disorder   Chaotic Simple
  95. 95. Complex Domain Probe, Sense, Respond Cause & Effect is only Frequent experiments apparent in Pattern matching retrospect, and not Exploring hunches repeatable 15 – 30 people
  96. 96. What is our boundary?
  97. 97. Vision & Empathy  
  98. 98. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  99. 99. The journey starts with vision and empathy
  100. 100. “He knows the ‘why’ for his existence, will be able to bear almost any ‘how.’ Viktor Frankl
  101. 101. In pairs for 2 minutes: Think about the world you want to create. Describe it. Also, what does it feel like?
  102. 102. Manage the emergence of beneficial coherence
  103. 103. Coevolution
  104. 104. Probe, Sense, Respond
  105. 105. Probe, Sense, Respond A $40 example
  106. 106. Successful MBA Serial Students Entrepreneurs
  107. 107. You have created a computer game of entrepreneurship. You believe you can combine this game with some educational material and profiles of successful entrepreneurs to make an excellent teaching tool for entrepreneurship. Your inspiration for the product came from several reports in the newspapers and magazines about increasing demand for entrepreneurship education.
  108. 108. 1.  Who could be your potential customers for this product? 2.  Who could be your potential competitors for this product? 3.  What information would you seek about potential customers and competitors - list questions you would want answered. 4.  How will you find out this information - what kind of market research would you do? 5.  What do you think are the growth possibilities for this company?
  109. 109. Probe, Sense, Respond
  110. 110. Validated Learning Eric Ries
  111. 111. Design Thinking
  112. 112. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  113. 113. How do you manage complex systems?
  114. 114. “The only valid model of a complex system is the system itself. Murray Gell-Mann
  115. 115. Finely Grained Objects
  116. 116. Small teams 5 - 30
  117. 117. Small experiments
  118. 118. Meaning emerges through interaction
  119. 119. Get out of the building!
  120. 120. Learn through experiments that are safe to run
  121. 121. Hard for startups
  122. 122. Hard for companies
  123. 123. How do you make $600 Million in 2010?
  124. 124. Hundreds of A/B experiments at all times
  125. 125. Maximize learning – Don Reinertsen http://jchyip.blogspot.com/2010/05/lean-software-and-systems-conference.html
  126. 126. How small should experiments be?
  127. 127. Chip flip game
  128. 128. The power of small batches
  129. 129. The power of Agile
  130. 130. Waterfall “Managing the Development of Large Software Systems” Dr. Winston W. Royce – 1970
  131. 131. Waterfall All Features in Release “Managing the Development of Large Software Systems”
  132. 132. Waterfall All Features in Release “Managing the Development of Large Software Systems”
  133. 133. Waterfall All Features in Release “Managing the Development of Large Software Systems”
  134. 134. Iterative Feedback
  135. 135. Scrum Framework Backlog Standup Grooming Iteration Demo / Review Planning & Retrospective Iteration Product Iteration Product Backlog Backlog Increment
  136. 136. Focus on Stories Stor y Stor y Stor y 1 2 3 All Stories in Iteration All Stories in Iteration All Stories in Iteration
  137. 137. Flow of value Vision Design In Done Deployed What was Development learned?
  138. 138. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  139. 139. Distributed Cognition
  140. 140. Wise Crowd
  141. 141. Wise Crowd Diversity Independence Decentralization Aggregation
  142. 142. Wise Crowd Francis Galton
  143. 143. An experiment Count the passes the white team makes
  144. 144. An experiment How many passes?
  145. 145. An experiment What else did you notice?
  146. 146. Selective Attention Bias
  147. 147. Change Blindness
  148. 148. Disintermediation
  149. 149. Help everyone detect weak signals
  150. 150. Share raw data from experiments with everyone
  151. 151. Democratize information
  152. 152. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  153. 153. A case study
  154. 154. Jerome Breche, CEO
  155. 155. Scaling these concepts
  156. 156. What is Lean?
  157. 157. h"p://reallycoolthings.net/2010/06/10/lean-­‐and-­‐agile/  
  158. 158. Lean is … Organizational Learning System Operating People System System Frode  L.  Odegard,  Lean  SoTware  InsVtute  
  159. 159. Making sense at scale
  160. 160. At a startup Complex Complicated Disorder   Chaotic Simple Idea/Market Fit – Code Base – People/Org
  161. 161. New product inside big company Complex Complicated   Disorder Chaotic Simple Idea/Market Fit – Code Base – People/Org
  162. 162. Applying this with your team
  163. 163. Does everyone know why? h"p://www.flickr.com/photos/lejoe/2800660239  
  164. 164. No death marches h"p://www.flickr.com/photos/west_point/5566824566   h"p://www.flickr.com/photos/elcapitan/2387917709  
  165. 165. Cut debt days h"p://www.flickr.com/photos/consumerist/4406234952  
  166. 166. Learn from setbacks h"p://www.flickr.com/photos/cakesquared/3819067260  
  167. 167. Small experiments h"p://www.flickr.com/photos/denisecarbonell/5593039053  
  168. 168. Retrospectives What S What has What HYPOTHESE HELPED HIND has could we ERED us?! us?! draw about how we move forward?!
  169. 169. Publicize what you learn h"p://www.flickr.com/photos/lorenkerns/4114441322  
  170. 170. Every situation isn’t the same
  171. 171. h"p://www.flickr.com/photos/virtualeyesee/6107062655  
  172. 172. Entrepreneurs have a chance to create the world they want
  173. 173. There is proven science that can improve your odds of success
  174. 174. Pick 2 concepts from tonight
  175. 175. Take them back to your team
  176. 176. Create the world you want
  177. 177. h"p://www.flickr.com/photos/fla"op341/224597838  
  • henrikhedegaard

    Nov. 24, 2017
  • pyancy

    May. 5, 2014
  • ajit.alwe

    Oct. 27, 2011
  • wouterla

    Sep. 24, 2011
  • bencarey

    Sep. 23, 2011

Silicon Flatirons is pleased to host Rally Software Chief Technology Officer, Zach Nies, for a Crash Course about some of the surprising science behind building successful startups. Even though building a startup is hard work with high failure risk, entrepreneurs Steve Blank and Eric Ries have popularized practices that can increase the odds of success. Following the Customer Development or Lean Startup practices will show you what to do. This talk will give you an understanding of why these techniques work, which will allow you to better apply them to your startup or scale them into your enterprise. The event will focus on high growth business based on the deep experience of a CTO from one of the Front Range's leading companies. Entrepreneurs are by nature execution-oriented and you will walk away from the talk with concrete, actionable ideas that will help you make better decisions tomorrow. The subject matter should be relevant to both entrepreneurs creating new companies and entrepreneurs reinventing existing enterprises.

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