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Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

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03 de dic de 2014

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Lean Analytics
Lean Startup Conference
December, 2015
@acroll

Some housekeeping.

Kevin Costner is a lousy entrepreneur.
Don’t sell what you can make. Make what you can sell.

The core of Lean
is iteration.

Most startups don’t know what they’ll
be when they grow up.
Hotmail
was a
database
company
Flickr
was going to
be ...

Waterfall, agile, and lean
(Why the old ways don’t work.)

Waterfall approach
You know the problem and the solution.

Known set of
requirements
Known ways to satisfy
them
Spec Build Test Launch

Agile methodologies
Know the problem, find the solution

Known set of
requirements
Unclear how to satisfy
them
Problem Build Test Viable? Launch
statement
Sprints
Adjust
U...

Lean approach
First, know that you don’t know.

Product/market
hypothesis Trial startup
Possible problem
space
Product/
market
hypothesis
Trial startup
Product/
...

Why now?
First: High rate of change of digital
technologies & channels.

Arbitron and radio data

Times a song in “heavy
rotation” is played daily
30
15
0
6 26
2007 2012

For modern media this means
cycle time shock.
Circulation, annually Clicks, instantaneously
Letters to the editor, week...

Why now?
Second: It’s no longer about whether
you can build it—it’s about whether
anyone will care.

The Attention Economy
“What information consumes
is rather obvious: it consumes
the attention of its recipients.
Hence...

Lit motors tests the risky part

Unfortunately,
we’re all liars.

Everyone’s idea is
the best right?
People love
this part!
(but that’s not always
a good thing)
No data, no
learning...

Analytics can help.

Analytics is the measurement of
movement towards your business
goals.

In a startup, the purpose of analytics is
to iterate to product/market fit
before the money runs out.

I have two kids.
At least one of them is a girl.

What are the chances
the other is a boy?

BB BG
GB GG

2 of 3 (66%) are boys.
GB GG BG

Some fundamentals.
Analytics, performance, aggregation, and the right metrics

Fundamental:
Web analytics and the long funnel.
(This is not a web analytics workshop.)

A simplistic view of web analytics
ATTENTION ENGAGEMENT CONVERSION
NEW
VISITORS
GROWTH
LOSS
BOUNCE
RATE
CONVERSION...

Visits
Shopping cart
Payment options
Conversions

Visits
Shopping cart
Payment options
Conversions
KPIs
Bounce
Conversion

Unpaid search Community mentions
Visits
Shopping cart
Payment options
Conversions
Email campaign Banner ad
•Google P...

Repurposing
(spread to other
communities)
Amplification
(virality and
message spread)
Seed (starting
community)
Re...

Viral message spread
Reach
(impressions)
Visits
Shopping cart
Payment options
Conversions
Emphasis on getting
vira...

Megablogger proponents
Seed (starting
community)
Reach
(impressions)
Visits
Shopping cart
Payment options
Conversi...

A call to action
Reach
(impressions)
Visits
Shopping cart
Payment options
Conversions
Emphasis on
maximizing
impr...

Long funnel: Beers for Canada
700,000s
1,642
150
RT
32
7
10
15
x $100
x $20
x $7
Seed ratio: 20
35,000:1
Fol...

Fundamental:
You should care about performance.

Downtime costs
Amazon offline ($1M/h)
Amazon loses nearly $1M/hour if down (NYT, 2008)
1 hour of network downtime costs...

Availability % Downtime/year Loss @$50K/h
90% 36.5 days $43,800,000
95% 18.25 days $21,900,000
98% 7.30 days $8,760,000...

You really don’t want web users to call
you.
US$12
US$10
US$7
US$5
US$2
US$0
$5.50
$3.00
$0.24 $0.45
Web self-s...

The login page Function
will have a total latency Metric
of under 4 seconds Target
with a cached browser copy User situ...

10%
visitors
7.5%
of 5%
Percent 2.5%
0%
0-2s 2-4s 4-6s 6-8s 8s +
Average page load time across visit that commented...

Fundamental:
What makes a good metric?

A good metric is:
Understandable
If you’re busy
explaining the
data, you won’t
be busy acting
on it.
Comparative
C...

The
simplest
rule
If a metric won’t change how
you behave, it’s a
bad
metric.
h"p://www.flickr.com/photos/circasass...

Metrics help you know yourself.
Acquisition
Hybrid
Loyalty
You are
just like
70%
of retailers
20%
of retailers
1...

Qualitative
Unstructured, anecdotal,
revealing, hard to
aggregate, often too
positive & reassuring.
Warm and fuzzy.
...

Exploratory
Speculative. Tries to find
unexpected or
interesting insights.
Source of unfair
advantages.
Cool.
Repor...

Rumsfeld on Analytics
Things we
know
don’t
know
(Or rather, Avinash Kaushik channeling Rumsfeld)
we know Are facts w...

Slicing and dicing data
Feb Mar Apr May
5,000
Active users
0
Jan
Cohort:
Comparison of
similar groups
along a tim...

Which of these two companies
is doing better?

January February March April May
Is this company Rev/customer $5.00 $4.50 $4.33 $4.25 $4.50
growing or stagnating?
Coho...

Cohort 1 2 3 4 5
January $5 $3 $2 $1 $0.5
February $6 $4 $2 $1
March $7 $6 $5
April $8 $7
May $9
Averages $7 $5 $3 $...

Lagging
Historical. Shows you
how you’re doing;
reports the news.
Example: sales.
Explaining the
past.
Leading
For...

Some examples
A Facebook user reaching 7 friends within 10 days of signing up
(Chamath Palihapitiya)
If someone comes b...

Which means it’s time to talk
about correlation.

10000
1000
100
10
1
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Ice cream consumption Drownings

Correlated
Two variables that are
related (but may be
dependent on
something else.)
Ice cream &
drowning.
Causal
A...

A leading, causal metric
is a superpower.
h"p://www.flickr.com/photos/bloke_with_camera/401812833/sizes/o/in/photostream...

Why is Nigerian spam so badly
written?

Experienced scammers expect a “strike rate” of 1 or 2 replies per 1,000 messages
emailed; they expect to land 2 or 3 “Mug...

Turns out the word “Nigeria” is the best
way to identify promising prospects.

Nigerian spammers
really understand their target market.
They see past vanity metrics.

Fundamental:
Be careful rolling things up.

http://upload.wikimedia.org/wikipedia/commons/0/0e/Count-von-count.jpg

0 10 20 30 40 50 60 70 80 90
Age
20
Count
0
Average age = 10

200
0 2 4 6 8 10 12 14 16 18
Page load time (in seconds)
# of requests
0
20
Average latency = 5s
95th percentile la...

KISS

“It can scarcely be denied
that the supreme goal of all theory is
to make the irreducible basic elements
as simple and ...

“As simple as possible,
but no simpler.”
*(FYI, this is irony.)

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

Login
Checkout
Invite
Aggregate?
Average
95%
Mode
4s
8s
2s
Average
95%
Mode
6s
10s
5s
Average
95%
Mode
...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
To...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
Lo...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
We...

1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
1s 2s 3s 4s 5s 6s 7s 8s 9s 10s 11s 12s
To...

Total requests
inside target
Login page 740/1000
Checkout page 148/400
Invite process 366/600
Weight
1
52
Weighted...

Total requests
inside target
Login page 740/1000
Checkout page 148/400
Invite process 366/600
Weight
1
52
Weighted...

The Lean Analytics framework.

Eric’s three engines of growth
Virality
Make people
invite friends.
How many they
tell, how fast they
tell them.
Pr...

Dave’s Pirate Metrics
AARRR Acquisition
How do your users become aware of you?
SEO, SEM, widgets, email, PR, campaigns,...

Gate
Stage
EMPATHY I’ve found a real, poorly-met need that a
reachable market faces.
STICKINESS I’ve figured out how t...

Empathy stage:
Localmind hacks Twitter
Needed to find out if a core assumption—strangers answering
questions—was valid....

LikeBright’s mechanical turk
Used Mechanical Turk, Google Voice to speak w/
100 single women; paid $2. The interviews
l...

How to avoid leading the witness
Avoid biased wording, preconceptions, or
a giveaway appearance. Word your
surveys care...

Stickiness stage:
qidiq streamlines invites
Survey owner adds recipient to group
Survey owner asks question
Recipient ...

1200
1000
800
600
400
200
0
January February
1 2 3 4 5 6 7 8 9
Days since last engagement
25000
20000
15000
1...

Virality stage: Timehop focuses
on content sharing
Focused on percent of daily active users that share their content
Ai...

------------------------------------------------------
Get your free private email at http://www.hotmail.com
-----------...

v ≠ 1, pt = δp0 (1 – vt+1) / (1 – v) + p0
http://robert.zubek.net/blog/2008/01/30/viral-coefficient-calculation/
Viral c...

Or simpler
x - > 1
Users Viral
coefficient
Churn &
abandonment

How to calculate it
First calculate the invitation rate,
which is the number of invites
sent divided by the number of
...

Revenue stage: Backupify’s
Customer Acquisition Payback
Initially focused on site visitors
Then focused on trials
Then...

Scale stage:
Incremental order cost
Marginal costs
Fixed costs

Six business model archetypes.
E-commerce SaaS Mobile Media
app
User-gen
content
2-sided
market
The business you’re...

(Which means eye
charts like these.)
Customer Acquisition Cost
paid direct search wom inherent
virality
VISITOR
Free...

Model + Stage = One Metric That Matters.
The business you’re in
E-Com SaaS Mobile 2-Sided Media UCG
One Metric
That Ma...

Really? Just one?

Yes, one.

In a startup, focus is hard to achieve.

Having only one metric
addresses this problem.

www.theeastsiderla.com

Moz cuts down on metrics
SaaS-based SEO toolkit in the scale stage. Focused on net adds.
Was a marketing campaign succes...

Metrics are like squeeze toys.
http://www.flickr.com/photos/connortarter/4791605202/

Empathy
Stickiness
Virality
Revenue
Scale
E-commerce
Mobile
app
User-gen
content
SaaS Media
2-sided
market
In...

Better: bit.ly/BigLeanTable

Drawing some lines in the sand.

A company loses a quarter of its
customers every year.
Is this good or bad?

Not knowing what normal is
makes you do stupid things.

Baseline:
5-7% growth a week
“A good growth rate during YC
is 5-7% a week,” he says. “If
you can hit 10% a week you're...

Baseline:
10% visitor engagement/day
30% of users/month use web or mobile app
10% of users/day use web or mobile app
1...

Baseline:
2-5% monthly churn
• The best SaaS get 1.5% - 3% a month. They have multiple Ph.D’s
on the job.
• Get below ...

Baseline:
Calculating customer lifetime
25%
5%
monthly churn
monthly churn
100/25=4
100/5=20
The average
The aver...

Baseline:
CAC under 1/3 of CLV
• CLV is wrong. CAC Is probably wrong, too.
• Time kills all plans: It’ll take a long ti...

Who is worth more?
A Lifetime:
B Lifetime:
Today
$200
$200
Roberto Medri, Etsy
Visits

Baseline:
35% of mobile users engaged by day 90
Day one
Day 30
Day 60
100%
54%
43%
Day 90
35%
October, 2012 stud...

(Varies widely by
product category)

Etsy
• Online store for creative types, founded 2005
• $525M Gross Merchandise Sales in 2011, with
19,000,000 members a...

DuProprio/Comfree
• Large for-sale-by-owner marketplace
• Founded in 1997, 17,000 properties and 5M visits a month
• $9...

YPG
• Large directory publishing & local marketing w/420K customers,
2,500 employees, and $1,2B/y in revenue
• Focus on...

The Lean Analytics cycle

Pick a KPI Draw a line
Draw a new line
Pivot or
give up
Try again
Success!
Did we move the
needle?
Measure
the re...

Do AirBnB hosts
get more business
if their property is
professionally
photographed?

Gut instinct (hypothesis)
Professional photography helps AirBnB’s business
Candidate solution (MVP)
20 field photograph...

5,000 shoots per month
by February 2012

Hang on a second.

SRSLY?
Gut instinct (hypothesis)
Professional photography helps AirBnB’s business

Pick a KPI Draw a line
Draw a new line
Pivot or
give up
Try again
Success!
Did we move the
needle?
Measure
the re...

“Gee, those
houses that do
well look really
nice.”
Maybe it’s the
camera.
With data:
find a commonality
“Computer:...

Circle of Moms: Not enough engagement
• Too few people were
actually using the
product
• Less than 20% of any
circles...

Landing page design A/B testing
Cohort analysis General analytics
URL shortening
Funnel analytics
Influencer Marketing...

Consider a media company

Valuable, hard
Paid revenue
sources
Word of mouth;
public support
Why clickbait is
on its way out
Simple to count
...

The tools media can use
Editorial decisions
Pagerank/reputation
Followers/subscribers
Topic chosen
Format (quiz, stor...

Modern media’s
new gauntlet
Click
See
Stay
Explore
Interact
Respond
Share
Endorse
Create
Subscribe
Renew
Upgr...

Some non-tech examples.

I lied. Everyone is a tech company.

Cost of experiments: down. Cost of attention: way up.
http://www.flickr.com/photos/puuikibeach/4789015423 http://www.flic...

Let’s pick on restaurants
for a while.

Empathy: find the need
Before opening, the owner first learns about the diners in her
area, their desires, what foods ar...

Stickiness: confirm the need is met.
She develops a menu and tests it out with consumers,
making frequent adjustments un...

Virality: will it spread?
She starts loyalty programs to bring frequent diners back, or
to encourage people to share wit...

Revenue: prove the business viability
With virality kicked off, she works on margins—fewer free
meals, tighter controls ...

Scale: prove it’s a market
Knowing she can run a profitable business, she funnels
revenues into marketing and promotion....

A line in the sand
Labor costs
Gross revenue
30%
24%
20%
Too costly?
Just right
Understaffed?
=

A leading indicator
50 reservations
at 5PM
250 covers
that night
(Varies by
restaurant.
McDonalds
≠ Fat Duck.)
ht...

http://www.flickr.com/photos/southbeachcars/6892880699
Restaurant MVP

Is tip amount a leading indicator of long-term
revenue?

Why does every table get the same
menu?

Is tipping even a good idea?
Customers like
Servers like tipping
tipping because it puts
because it means their
them ...

The truth about tips
Customers don’t vary tips much according to service.
Tipped servers are rewarded for maximizing the...

The truth about tips
Sharp increase in business over the first two months of the
new system:
Servers’ total pay rose to...

Is purple ink better?
http://tippingresearch.com/uploads/managing_tips.pdf

Stalking
customers
is pretty
easy.
http://targetmycustomers.appspot.com http://tippingresearch.com/uploads/managing_ti...

Growth hacking
(is a word you should hate but will hear a lot about.)

Growth hacking, demystified.
Find
correlation
Test
causality
Optimize the
causal factor
Pick a metric
to change

http://blog.justgiving.com/nine-reasons-why-social-and-mobile-are-the-future-of-fundraising/
Is social action a leading
...

http://blog.justgiving.com/nine-reasons-why-social-and-mobile-are-the-future-of-fundraising/
Is mobile use?

Guerrilla
marketing
Data-driven
learning
GROWTH
HACKING
Subversiveness

The growth hack
•Growth hacking is simply what marketing should have been
doing, but it fell in love with Don Draper and...

AirBnB and Craigslist

What if you’re an Intrapreneur?

Business model vs.
company stage
Early stage Big/incumbent
Company size/age
B2B
Target
market
B2C
More formal deci...

When you’re a startup
your goal is to find a sustainable,
repeatable business model.
When you’re a big company
your go...

Intrapreneur:
Someone working to produce
disruptive change in an organization
that has already found a sustainable,
re...

In a startup, the purpose of analytics is
to iterate to product/market fit
before the money runs out.

In a big company,
analytics replaces opinion with fact.

(Before we get into Lean Analytics, 2 key lessons.)
Lesson one:
Companies die because they fail to
move to new business...

Cost per MB
$1
$10
$100
$1000
Clay Christensen, The Innovator’s Dilemma
Time
14”
Mainframe
8”
Minicomputer
5.25...

Technologies
outstrip what
the market
needs, driven
by feedback
from the
“best”
current
customer.
$1
$10
$100
...

The new
market has
different criteria
for success,
which are
uninteresting to
incumbents.
$1
$10
$100
$1000
Cla...

Sometimes
this has
unintended
consequences
$1
$10
$100
$1000
Clay Christensen, The Innovator’s Dilemma
Smaller di...

Three kinds of innovation
Sustain/core
(optimizing for more of the same)
Innovate/adjacent
(introduce nearby product, ...

Lesson two:
The difference between a rogue agent
and a special operative is permission.

It’s different when you’re big.

If big firms
can’t innovate,
it’s this guy’s
fault.

When product and market are known,
companies compete on how they do
things.

To get the incremental cost to zero,
companies competed on scale.
(Literally, an economy of scale)

Scale comes from process, IP, org
chart, capitalization.
All of these assume the future will be
like the past, only mor...

If a startup is an organization designed
to search for a sustainable, repeatable
business model, then an established
co...

Technology has radically changed the
incremental cost of businesses.

Software is eating the world.
http://www.flickr.com/photos/ebolasmallpox/3733059220/

An economic order quantity
of one.
Crafted Mass-produced
Automated Digital
Quantity Few Many Some One
Cost High Low M...

Sustainable competitive advantage allows for
inertia and power to build up along the lines of
an existing business model...

Scale is now a liability. Compete on
cycle time.

CW&T make a pen

http://www.flickr.com/photos/art_es_anna/288880795/

Optimizing the probable means
discounting the possible.

This isn’t about a lack of resources.

http://www.flickr.com/photos/maladjusted/5207565912

Blockbuster had a lot going for it.

Plenty of inventory, of course.
But that matters less than...

...market intelligence,
customers, existing
payment approval,
and customer
history.

The problem was framing:
Blockbuster thought it was in the video
store management business. Netflix
realized it was in ...

YOU ARE
HERE

LOCAL
MAXIMUM
YOU ARE
HERE
OPTIMIZATION
OF CURRENT
METRICS

YOU ARE
HERE
GLOBAL
INNOVATION MAXIMUM
WITH NEW
RULES

YOU ARE
HERE
SHORT-TERM INVESTORS
HATE GOING DOWNHILL

First mover advantage happens
long before the market emerges.
• $1B invested in Nook
• $475M operating loss
in April 2...

Constraints slow things down
vs.

Capital cycles don’t fit the short, iterative
nature of startup uncertainty
12 month budgeting cycle; annual plan. Futur...

Everything to lose:
Why big companies need innovation.

F500 Life
Expectancy
(http://csinvesting.org/2012/01/06/fortune-500-extinction/)
75
years 15
years
1950 ... 2010
Gr...

mikemace.com
The slow
death of
a market
leader.
“Time to enter
the mainstream.
Cut prices.”
“Let’s cut
prices to ...

In other words, if your job is change you
have your work cut out for you.

A dose of pragmatism

Many models for enterprise innovation
Core Adjacent Transformative
Do the same
Nearby product,
Start something
thing ...

Another way to look at it
Core Adjacent Transformative
Know the problem
(customers tell you it)
Know the solution
(cu...

The Three Horizons
Core Adjacent Transformative
Those core businesses most
readily identified with the company
name an...

Lean applies. Startup may not.
Core Adjacent Transformative
Lean methodologies.
Lean
startup

Experiment with product, market,
and method.

Method
(new “how”) 3 kinds of
innovation
Product
(new “what”)
Market
(new “who”)

Product
(new “what”)
Market
(new “who”)
Method
(new “how”)
Startup
Distribution
innovation
Market
diversificatio...

Engine as a service

Engine as a service
http://www.nasa.gov/images/content/365835main_airplane_noise_qtd2_3024x2016.jpg

“Efficiency is tied to
analytics. We’ll still look
for new materials, or for
the physics of devices,
but the analytics...

Business
optimization
(five mores)
Current
state
Product,
market,
method
innovation
Business
model
innovation
...

Improvement Adjacency Remodeling
Do the same,
Explore what’s
only better.
nearby quickly
Try out new
business models...

Sustaining Adjacent Disruptive
Next year’s car Electric car,
same dealer
On-demand, app-based
car service

Sustaining
innovation
is about
more of
the same.
(says Sergio Zyman)
More things
To more people
For more money
Mo...

Blizzard extends the
lifespan of WOW
Early
adopters
Rapid
growth
Market
saturation
The infamous S-curve
(Product ...

Blizzard extends the
lifespan of WOW

Blizzard extends the
lifespan of WOW
Fixing this: sustaining growth with novelty
Product & market innovation
(“New & i...

Blizzard extends the
lifespan of WOW
WOW
Wrath of
the Lich King
Burning
Crusade
Mists of
Cataclysm Pandaria

Most of your
innovation will
be adjacent or
sustaining.
Question marks!
(low market share,
high growth rate)
May be...

Software, experimentation, and
iterative cycles of learning help you
get to the local maximum better and
faster. That’s...

Adjacent innovation is about changing
one part of the model in a way that
alters the value network.

Amazon Web Services and the
server value network
Server computing
• Density
• GHz
• Heat
• MIPS
Cloud computing
• ...

Adjacent product
to the same
market in the
same way

Selling the same product to an
adjacent market in the same
way.
Of P&G’s 38 brands, only 19 were sold in Asia as of 201...

Selling the same product to the same
market in a new way.
The biggest innovation in
logistics of the 20th century.
htt...

Changing the method of
C2C classifieds
A blend of who, what, how
Classified C2C sales (same
“what”)
Strictly for Japa...

Selling the same product to the
same market in a new way.

(At this point, observant Intrapreneurs
should be asking, should P&G be in
the house cleaning business?
And that would ...

Transformative innovation is about
taking a leap, changing more than one
dimension simultaneously in search of
a new bu...

If sustaining, incremental innovation
produces linear growth, then
disruptive, transformative innovation
produces expon...

Transformative isolation:
Skunkworks

Transformative
incubation:
Metlife Infinity

Transformative incubation:
Taser evidence.com
Significant market
850K full-time law enforcement officers in the
US; 70...

When it’s you vs. the world.
(A bagful of tricks from agitators in companies of all sizes.)

The Lean Analytics lifecycle of an Intrapreneur
Beforehand Get buy-in Political fallout
Empathy Find problems; don’t tes...

The Zero Overhead principle
A central theme to this new wave of innovation is the
application of core product tenets fro...

The job of an intrapreneur is to
identify an adjacent market, product,
or method that conforms to
organizational filter...

Also: a pariah.
Successful innovators share certain attributes.
Bad listener: Wilfully ignore feedback from your best cu...

The six habits of highly unrealistic leaders
Bad leaders:
Filtered information
Selective hearing
Wishful thinking
Fea...

Know what
kind of
innovation
you’re
after.
New
Current
Market development:
Sell existing products
to new markets,...

Use outliers and missed searches to
hunt for good ideas & adjacencies
1/8 men have an incontinence issue. 1/3
women do....

Frame it like a study
Product creation is almost
accidental.
Unlike a VC or startup, when
the initiative fails the
or...

When in doubt, collect data
From tackling the FTA rate to
visualizing the criminal justice
supply chain.

Use data to create a taste for
data
Sitting on Billions of rows of
transactional data
David Boyle ran 1M online survey...

Smart Badge
4” e-ink display with
name and specialty.
Badge scans barcode and
gets specs; checks
inventory; enters da...

Don’t just collect data,
chase it.

Understand hidden
constraints
That pencil story is a myth.
Graphite is conductive and
explosive. The Minimum
Viable P...

Know what has to
be built in-house
SAP integration
Employment law

http://www.flickr.com/photos/bootbearwdc/1243690099/
Think subversively.

Everything’s an excuse to experiment

Find other ways
to collect data;
everything is an
experiment.

Run it as a consulting business first.
(Just don’t get addicted to it. Your goal is to
learn and overcome integration ch...

Convince your boss she asked for this
Draw a line
in the sand Pick a KPI
Draw a new line
Pivot or
give up
Try again ...

Focus on the desired behavior, not just
the information.
26% increase in towel
re-use with an appeal
to social norms; ...

Slaughter a sacred cow:
Prove a long-held assumption is
wrong and you’ve got people’s
attention.
Know what you’ll do w...

Take baby steps.

Netflix

Tesla
http://www.hdwallpapersinn.com/wp-content/uploads/2012/12/600-tesla.jpg

Twitter’s 140-character
limit isn’t arbitrary. It’s
constrained by the size
http://i.i.cbsi.com/cnwk.1d/i/tim/2011/11/1...

Figure out how to translate it back to a
simple model that fits the company’s
existing value model.
If your company die...

Intrapreneurs often have to use proxies
Stage Startup metrics Intrapreneur metrics
Empathy
Customers interviewed (needs...

When you have support.
(What companies like P&G, Cognizant, GE, and Motorola do with a
formal innovation program.)

Do you really have permission?
What resources do you have?
Staff, budget, unfettered access to customers?
What scope of...

2011 MIT study of 179 large publicly traded firms
Companies that use data-driven
analytics instead of intuition have
5%...

The fundamental shift
Ask
question
Define
schema
Collect
data
Answer
question
Refine
problem
Collect
data
Ask...

What kind of mandate do you have?

Step one: Develop a portfolio approach.

Innovation portfolios at big companies
Core Adjacent Transformative
70% 20% 10%
Investment
10% 20% 70%
Return

Organizations’ structures emerge as a way
to optimize the current business model.
Most innovations will come not from
p...

Tomorrow’s company: Running parallel businesses
Innovation Sustaining/core Adjacent Transformative/
disruptive
Core act...

Step one: Frame your problems.

(See also: Christensen’s Jobs to be done.)

Step two: Define your gates and filters.
These may lead to myopia.
They are also your unfair advantages.

The 3 stages of the
Emerging Business Office
Generation makes increasing
investments in companies
4 pillars: Capturing...

Step three: Secure funding, resources, and
executive backing.

Reinvesting
For every $100 they cut, Metlife reinvests $66 in new projects.

Step four: Generate new ideas.

Find non-obvious adjacencies
LIGH
T
ELECTRICAL
GENERATOR
SOFTWARE TO
CUT DOWN
TREES BETTER
MRI MACHINE
POWER GRID...

Build an ecosystem
Canada’s largest directory
publishing and local
marketing services company
1.5M listings from 420K ...

Three sources of innovation
Top-down: Areas where business heads see market trends but white spaces in our offerings. May...

Five common models for
transformative innovation
All employ different
models at different times.
Acquisition
Collabor...

Step five: Test by doing: Experimentation
beats projection.

Focus on
the model,
not the
plan
Demand
People per day on sidewalk
Percent that buy a glass
Daily customers
Revenu...

A business plan is just what happens
when you drag the business model to
the right.

Designing an experiment
Problem, solution, and result hypothesis
Test strategy (PoC, survey, interviews, kickstarter, pr...

Step six: Know what happens afterwards

Qualcomm’s initial
innovation model
http://blogs.berkeley.edu/2013/01/28/
designing-a-corporate-entrepreneurship-
prog...

Qualcomm’s updated model
Criteria
Fully open to all
employees
Ideas implemented
by existing
business/R&D units
Effi...

Qualcomm’s innovation model:
What was missing
Hypothesis Experiment Implement
POC
Idea generation
and selection
Boot...

Step seven: Rinse, repeat.

The Lean Analytics lifecycle of an Intrapreneur
Beforehand Get buy-in Political fallout
Empathy Find problems; don’t tes...

Metrics for innovation portfolios.

Core metrics
Metrics that matter
• Return on investment
• Total cost of ownership
• Trouble tickets/issues
• Training...

Adjacent metrics
Metrics that matter
• Questions answered
• Virality & word of mouth
• Early adopter stickiness
• Reg...

Transformative metrics
Metrics that matter
• People I’ve talked to
• Prototype creation speed
• Assumptions validated ...

The Emerging Business
Accelerator
Three Horizons model
Horizon one is traditional services such
as app dev (SAP, Oracl...

Portfolio metrics
“Do we need to
meet more often?”
is a metric.”
Number in the pipeline; is it growing?
How many are ...

Key points to clarify in an
innovation program
Hypothesis Experimentation Implementation
• Articulate problems
• Defin...

Goals, constraints, context
Sourcing Filtering
Core Integration
Adjacent
Disruptive
(how to decide?)
Adoption by
ex...

Some tools and traps

Build a message map.
1. Understand the stages a buyer goes through 2. Create benefits; mitigate objections 3. Target the ...

Everyone in the world
A. I need a car
I should buy
B. a car
It should be
C. a hybrid
I should buy
D. a Honda Civic

Everyone in the world
A. I need a car
People who want to drive
I should buy
B. a car
Prospective car buyers
It shoul...

“Isn’t it time you got out of the
city?” campaign showing how cars
make nature accessible & ridiculing
urban hipsters. ...

Everyone in the world
People who want to drive
“I need a vehicle to get
around, be productive, and
enjoy my life.”
Pr...

Everyone in the world
People who want to drive
“I need a vehicle to get
around, be productive, and
enjoy my life.”
Pr...

“Isn’t it time you got out of the
city?” campaign showing how cars
make nature accessible & ridiculing
urban hipsters. ...

The good news:
The harsh light of data changes everything.

Big
Lots of information, in
flight and at rest.
Fast Reliable
Storage and retrieval
in short timeframes.
High availa...

Some tools and traps

The three threes
Three
assumptions
What big bets are you making?
•“People will answer questions”
•“Organizers are fru...

The three threes
Three
assumptions
Three actions
to take
Three experiments
to run
Monthly
Weekly
Daily
Board, in...

The three threes
Three
assumptions
Three actions
to take
Three experiments
to run
Get more
people
Increase
answe...

The problem-solution canvas
CURRENT STATUS
The Goal is to Learn
• List key metrics you’re
tracking, where they’re at, ...

The problem-solution canvas
HYPOTHESIZED SOLUTIONS
• List possible solutions that you’ll start
working on next week. Ra...

“The most important figures that one
needs for management are unknown
or unknowable, but successful
management must nev...

Pic by Twodolla on Flickr. http://www.flickr.com/photos/twodolla/3168857844

ARCHIMEDES
HAD TAKEN
BATHS BEFORE.

Once, a leader convinced others
in the absence of data.

Now, a leader knows
what questions to ask.

Ben Yoskovitz
byosko@gmail.com
@byosko
Alistair Croll
acroll@gmail.com
@acroll

Workshop: Systems diagrams
and NCARB’s business

The mobile app!
customer lifecycle!
Ratings
Reviews
Search
Leaderboards
Purchases
App store!
App sales
Downloads ...

Traction graphs
Your business model
The stage you’re at
Your one metric
... change often if
you’re doing it right.
S...

Traction graphs
Jan Feb Mar Apr May Jun
Signups
Conversion
Churn
per day
rate
rate
Viral
coefficient
This axis c...

Traction graphs
Jan Feb Mar Apr May Jun
Signups
Conversion
Churn
per day
rate
rate
Viral
coefficient
0%

Use vanity to get to
meaningful metrics
Your goal is to produce
outcomes
If the outcomes require
action, and vanity m...

Thinking Backwards:
The Solution/Problem approach
Mitigation &
execution Act & measure
Rob Van Haastrecht & Martin Sch...

Key points
Intrapreneurship is about adjacent or transformative innovation
Sustaining innovation focuses on the Five Mor...

Ben Yoskovitz
byosko@gmail.com
@byosko
Alistair Croll
acroll@gmail.com
@acroll

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

Slides for the day-long Lean Analytics workshop at the 2014 Lean Startup conference

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