This is the slide deck from my keynote talk at the first Serbian ICT conference on Technology and Entrepreneurship, held Thursday November 22, 2012 in Belgrade. For more notes, please see my corresponding Blog entry at http://systemagility.com/2012/11/22/lean-startup-and-lives/ I would love to hear your thoughts and feedback.

1. Lean Startup:
It’s Not Just Technology,
Lives are at Stake
Ken Power

2. About me
! My day job
! Co-Founder, Agile Office at Cisco
! Internal Agile & Lean Consultant
! Extra-curricular activities
! Fellow of the Lean Systems Society (http://LeanSystemsSociety.org/)
! Award-winning publications in Agile and Lean product development
! Frequent speaker at major international Agile and Lean conferences
! Involved in organizing international Agile and Lean conferences
! Industry/academic collaborative research on Agile and Lean software
development
! Blog: http://SystemAgility.com/
! Twitter: @ken_power

3. Evolution of a Lean Organization
January 2008! December 2009! August 2010! June 2011! May 2012!
Formal Agile Portfolio
Transition Agile Office Culture and Management Ongoing
Pilot Projects Program Established Mindset across the continuous
Launched Business Unit improvement
2008 2009 2010 2011 2012 2012+
• First agile pilots • More Teams • Commitment to • Support teams in • Synchronize all • Create Flow
• Agile Projects • Agile Program sustainable and innovating and products across through the
• Organic Growth Management sustained agility developing the the BU Organization
across the BU • System Wide • Broad processes that • Problem solving • Continue to Lead
through ground- Focus Organization are right for them and obstacle through
up pilot projects • Formal Training Focus • Expand adoption removal at an Innovation
Plan • Focused across product org level • Focus on Teams
Stakeholder areas • Organization and Culture
• Formal Exec
Support Engagement • Lean Startup Learning • Refine and
• Closer Customer principles • Quantify and Improve
• Broader
Stakeholder Engagement • Improve reduce Technical • Build on
Engagement • Investigate Lean capability of Debt Organization
• Lean Thinking Startup organization • Agile Learning
approaches • Develop Portfolio Architecture • Sustainable
• Lean Principals
Management • Eliminate Waste Organization
Concepts

4. Don’t let this be an excuse:
“there were macroeconomic forces
outside of our control”

6. What could possibly go wrong?

14. 6 Myths of
Product The fallacies that
Development cause delays,
undermine quality,
and raise costs
D.#G.#Reinertsen,#“The$principles$of$product$development$flow$:$second$genera8on$lean$
product$development”.#Redondo#Beach,#Calif.:#Celeritas,#2009.#
#
#
S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
Review,#vol.#90,#pp.#84G94,#May#2012#

15. Myth 1 High utilization of resources and people will
improve performance.
Myth 2 Processing work in large batches improves the
economics of the process.
Myth 3 Our plan is great; we just need to stick to it.
Myth 4 The sooner the project is started, the sooner it will
be finished.
Myth 5 The more features we put into a product, the more
customers will like it.
Myth 6 We will be more successful if we get it right the
first time.
D.#G.#Reinertsen,#“The$principles$of$product$development$flow$:$second$genera8on$lean$
product$development”.#Redondo#Beach,#Calif.:#Celeritas,#2009.#
#
#
S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
Review,#vol.#90,#pp.#84G94,#May#2012#

17. What is Lean Startup?
!

18. Agile Software Development

21. Minimum Viable Product

22. Ideas
Learn Build
Data Products
Measure
The Fastest Learner Wins

23. Customer Development

24. Understand your customers
Here is some data about you as a
group

25. Roles
CEO
Other Exec
Product Manager
Engineer
Consultant

26. Organization Profile
Startup
Established
Company

27. Primary Activity
Products
Srvices
Non Profit

28. Company Size
2 to 50
101 to 1000

29. Areas of Interest
Innovation
Customer
Development
Short Releases
Managing
Change
Strategy

30. Entrepreuner or Intrapreuner?
Entrepreneur
Intrapreneur
Neither
Both

31. Experience with Agile, Lean, Lean Startup
Lean Startup
Lean
Agile
0 1 2 3 4 5

33. Business Model Canvas

35. Day Month Year
No.
Who are our Key Partners? What Key Activities do our Value Propositions require? What value do we deliver to the customer? What type of relationship does each of our Customer For whom are we creating value?
Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems are we helping to solve? Segments expect us to establish and maintain with them? Who are our most important customers?
Which Key Resources are we acquiring from partners? Customer Relationships? What bundles of products and services are we offering to each Customer Segment? Which ones have we established?
Which Key Activities do partners perform? Revenue streams? Which customer needs are we satisfying? How are they integrated with the rest of our business model?
How costly are they?
What Key Resources do our Value Propositions require? Through which Channels do our Customer Segments
Our Distribution Channels? Customer Relationships? want to be reached?
Revenue Streams? How are we reaching them now?
How are our Channels integrated?
Which ones work best?
Which ones are most cost-efficient?
How are we integrating them with customer routines?
What are the most important costs inherent in our business model? For what value are our customers really willing to pay?
Which Key Resources are most expensive? For what do they currently pay?
Which Key Activities are most expensive? How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to overall revenues?
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36. http://glennas.wordpress.com/2010/07/31/business-
model-innovation-alexander-osterwalder/

37. Lean Canvas

39. “This is not the kind of
entrepreneurial question you can
ask or expect an answer to in a
focus group. Customers often don't
know what they want.”

40. Different Perspectives on
Organization Structure

41. The Hierarchical Perspective
! Is your organization is a
reflection of what it says in
the Organization Chart?
! A collection of titles and
functional areas?

42. The Social Network Perspective
! Is your organization the set
of diverse relationships that
cross functional
boundaries?

43. The Information Flow Perspective
! Is your organization
represented by the currents
of information that flow
through the network?

44. Remember:
(1) All models
are wrong,
but some are
useful
(2) More than
one thing can
be true

45. Technical Debt

46. Investment Strategy
Technical Debt
Quality Debt
Features
Spike Tests
Research
Planning

47. Pay your debts, or else…
Technical Debt
Quality Debt
Features
Spike Tests
Research
Planning

48. Consequences beyond Release 1
12
10
8
6 Features
Technical Debt
4
Quality Debt
2
0
Release Release Release Release
1 2 3 4

49. Management Debt

50. Value Stream Map

52. Value Streams
! Whole products or systems
! Product lines
! Portfolios
! Cross-cutting portfolio or product line elements

53. Manage WIP
D.#G.#Reinertsen,#“The$principles$of$product$development$flow$:$second$genera8on$lean$
product$development”.#Redondo#Beach,#Calif.:#Celeritas,#2009.#
#
#
S.#Thomke#and#D.#Reinertsen,#"Six$Myths$of$Product$Development,"#Harvard#Business#
Review,#vol.#90,#pp.#84G94,#May#2012#

54. Planned Ready In Progress Done
(3)
This is our Planned policy. We will This is our Ready policy. We will start work on something when Work Items are declared ‘Done’
plan something when …. Thanks for reading. …. when ….
Request Queue
(Backlog)

55. Understanding Lead Time and
Cycle Time
http://stefanroock.wordpress.com/2010/03/02/kanban-definition-of-lead-time-and-cycle-time/

56. Cumulative Flow Diagrams

57. Wastes in Software Development
The Seven Wastes of The Seven Wastes of
Manufacturing Software Development
! Inventory ! Partially Done Work
! Extra Processing ! Extra Processes
! Overproduction ! Extra Features
! Transportation ! Task Switching
! Waiting ! Waiting
! Motion ! Motion
! Defects ! Defects

58. Waste elimination and continuous
improvement applies even more to
high-performing teams and
organizations

60. PDSA
• Follows the steps of the
Scientific Method Act Plan
• Plan: develop a hypothesis or
experiment
• Do: conduct the experiment
• Study: collect measurements
• Act: interpret the results and
take appropriate action
• Also known as Study Do
• PDCA
• The Deming Cycle
• The Shewart Cycle

61. Lean Thinking with A3
Focus Problem Solving Proposal Writing Project Status Review
Thematic content or Improvements related to Policies, decisions, or Summary of changes
focus quality, cost, delivery, projects with significant and results as an
safety, productivity, etc. investment or outcome of either
implementation problem solving or
proposal implementation
Tenure of person Novice, but continuing Experienced personnel; Both novice and more
conducting the work throughout career managers experienced managers
Analysis Strong root-cause Improvement based on Less analysis and more
emphasis; quantitative/ considering current focus on verification of
analytical state; mix of quantitative hypothesis and action
and qualitative items
PDCA cycle Document full PDCA Heavy focus on the Plan Heavy focus on the
cycle involved in making step, with Check and Act Check and Act steps,
an improvement and steps embedded in the including confirmation of
verifying the result implementation plan results and follow-up to
complete the learning
loop
From Table 5.1 from “Understanding A3 Thinking”

62. John Clifford, Construx
http://forums.construx.com/blogs/johnclif/archive/2009/09/30/if-you-want-to-improve-stop-managing-your-problems.aspx

64. Applications of A3 Proposal Writing
! Create a Value Stream Manager role to help with Portfolio
Backlog Management
! Align all products and components on a quarterly commit
cadence
! Ensure architecture consistency across multiple product lines

65. Applications of A3 Problem Solving
! Reduce Cycle Time for Portfolio Architecture Analysis
! Reduce Product delivery cadence from 6+ months to 3
months
! Reduce the Lead Time for high priority customer requests

66. Use Lean Management Thinking
! Use A3 Problem Solving reports to help people develop as
Value Stream Managers
! Improve their Problem Solving skills
! Help people learn how to navigate the organization

67. Creativity needs space to develop

68. Creativity needs space to develop

69. “Chance favors the connected mind”
Where do good ideas come from?
YouTube Video

70. Do try this at home (and work)
5 Ways to Foster Innovation and
Learning Now

71. Give yourself and
your team space
to think

72. Absorb ideas
from many
influences

73. Play time

74. Conduct safe-to-
fail experiments

75. Be prepared to
pivot

76. “Creativity and Improvisation in Jazz and Organizations: Implications for Organizational Learning” - Frank J. Barrett
"Organization Science" / Vol 9, No.5. September-October 1998
Jazz Improvisation
! Provocative competence: Deliberate efforts to interrupt
habit patterns
! Embracing errors as a source of learning
! Shared orientation toward minimal structures that allow
maximum flexibility
! Distributed task: continual negotiation and dialogue
toward dynamic synchronization
! Reliance on retrospective sense-making
! "Hanging out": Membership in a community of practice
! Taking turns soloing and supporting

77. The companies
that are starting up
now have the
potential to save
the world.
Someone has to; why not you?

78. For all our vaunted efficiency in the making
of things, our economy is still incredibly
wasteful. This waste comes not from the
inefficient organization of work but rather
from working on the wrong things – and on
an industrial scale. … It is hard to come by a
solid estimate of just how wasteful modern
work is.
“The criminal waste of human
creativity and potential”

79. Create Awesome Products

80. Create Awesome Service

81. Create Awesome Places to Work

82. Our Lives are at Stake
Life is Short, Time is Precious

83. Thank You!