How large organizations can leverage the principles and concepts of lean startup

1. EMPLOYEE ProposalMichael S. McCalla
AgileTour 2016 - AgilePhilly
“Lean Startup in the Enterprise”

2. About Me
• Agile Coach and Owner of Achieving Agility
▫ We provide agile and lean coaching, training, and transformation services
• 15 Years in Software Product Management in the Financial Domain
▫ Grew up in a number of vendor start-ups
▫ Played many different roles along the way
• Claim to Fame: I Never Worked on a Waterfall Project
• “Formal” Agile Practitioner for 8 years
• Agile fits me like a glove and I am very passionate about it
• Spent last 4 years assisting organizations in adopting agile principles
and practices
▫ Coached on the Portfolio, Program, and Team Level
▫ Led Transformation Efforts
▫ Helped Teams Build Great Quality Products

3. Learning Objectives
• What is “Lean Startup”
• Why it is Important to Today’s Enterprise
• Lean Startup Principles
• Case Study
• Exercise: Lean Startup Principles in Practice using the Innovation
Canvas

4. What is “The Lean Startup?”
Methodology
Evolved as a result of
Eric’s two failed
startups and studying
under Steve Blank,
serial Silicon Valley
entrepreneur, while at
IMVU
Created by Eric Reis
in 2008
as an alternative
approach to develop
business and
products based off
customer feedback
Focuses on working
backwards from
desired business
results instead of
forward from the
technology stack
Based off of the
philosophy behind
Lean Manufacturing
focus on customer
value producing
practices, elimination
of waste, and people
Book/Movement
Adopted by Intuit,
Dropbox, and the
United States
Government
2011 #2 New York
Times best seller by
Eric Reis
Meet-ups and
Conferences are
forming all over the
world
Principles are taught in
Harvard Business
School

5. Why Lean Startup in the Enterprise?
Digital Disruption: No Industry is Safe
“If the rate of change on
the outside exceeds the
rate of change on the
inside, the end is near.”
- Jack Welch
Digital disruption is the change that occurs when companies leverage new digital technologies
to disrupt usual ways of doing business and offer products and services at a lower cost.
“The barriers to entry in
your market have just
vanished, the only way to
survive is to evolve and
innovate”
-Forester
“The average life span of
an S&P 500 company was
about 65 years in the
1960s; now it’s closer to
15.”
-Forbes
All Companies, both big and small, need to invest in innovation to protect from disruption and
adapt to changing markets

6. Case Study: Just Do It Financial Advisors
Background
Just Do It Financial Advisors is a relatively small (500 people) Asset Management firm,
managing 50B in assets, who prides themselves on establishing personal relationships
with their clients and utilizing an active money management approach. This strategy has
enabled them to charge higher fees for its services with successful results.
Over the past 4 years, Just Do It has suffered a decline in market share.
Factors contributing to the decline include:
a) Popularity of Online DIY Brokerage Firms
b) Evolution of Index Funds
c) Access to More Information
d) Rise of Robo-Advisors

7. Traditional IT Department Perception
Another Problem
• Main responsibility it to keep the lights on
• Seen as a cost center
• Never leveraged for innovation purposes

8. The Realization
• IT is engaged by leadership to work on technology
driven initiatives to help the firm compete in the
digital age.
• IT forms a cross functional innovation team of 7
people, and empowers them to prototype solutions
that can help the business survive. And me, as their
Agile Coach!

9. So Many Opportunities…..
1. Offer a homegrown Robo-Advisor as a cheaper alternative for clients
2. Provide mobile capabilities to advisors so they can access client
information and sales leads from their mobile device
3. Create a client portal that provides client’s access to the market for
trading on their own account
4. Build out a data warehouse complimented with a business
intelligence front end that marries multiple data sources enabling
data analytics of customers and market trends

10. The Dilemma
• How do we know which opportunity to pursue first?
• How do we know which one will add the most value?
• The team was only allocated 3 months of funding to build and
test their product.
• How to test these ideas in the market given such a short time
frame?

11. Lean Startup
Our Answer
• Leverage the Lean Startup Principles and Practices to formulate
a cost effective strategy that enables us to quickly identify if we
are building the right thing.

12. Exercise: Lean Startup Principles in Practice
• We are going to simulate this experience right here
and now
• Form Teams that represent the innovation team!

13. Where To Start?
• Take a moment to review and discuss amongst yourselves the different
proposed initiatives and select the one that you are going to pursue first.
The Problem
We are experiencing
declining market share
because companies are
providing the same quality
services of personal client
relationships and active
money management at a
cheaper cost by leveraging
new technologies.
Our Customers
Internal:
• Firm’s Financial
Advisors
• Leadership
• Internal Operations
• Marketing
External:
• Investors
• Potential Investors
Our Opportunity Options
1. Offer a homegrown Robo-Advisor as
a cheaper alternative for clients
2. Provide mobile capabilities to
advisors to access client info and
sales leads
3. Create a client portal so client’s can
access the market for trading on
their own account
4. Build out a data warehouse &
business intelligence platform
enabling data analytics of customers
and market trends

14. Intro to the “Canvas”
A canvas is a strategic management tool that acts as a one page business plan which is
actionable and entrepreneur focused
We are going to come up with a strategy to test your product using a canvas
Popular Examples of a Canvas
1. Business Canvas - Created by Alexander Osterwal: Focuses on the value proposition of
a product
2. Lean Canvas - Created by Ash Maurya: Focused more on the problem, testing a
hypothesis, and the metrics used to determine success or failure
I created a mashup of the two which I found valuable for doing experiments in the enterprise
and called it the innovation canvas. At its core is the principles of lean startup.

15. Innovation Canvas
• I have got you started by filling out the “Problem” and “Users/Customers”
• Write Out The Opportunity That You Chose to Pursue First in the “Title”

16. First Principle of Lean Startup
Entrepreneurs are Everywhere
“The Lean Startup defines the startup as a
human institution designed to create new
products and services under conditions of
extreme uncertainty.”
“The goal of a startup is to figure out the right
thing to build - the thing customers want
and will pay for - as quickly as possible”

17. Second Principle of Lean Startup
Entrepreneurship is Management
“Innovation is a bottoms-
up, decentralized, and
unpredictable thing, but
that doesn’t mean it cannot
be managed.”
“In other words,
cultivating
entrepreneurship is the
responsibility of senior
management.”
“Managing Innovation
requires a new
management discipline,
one that needs to be
mastered not just by
practicing entrepreneurs
but also by the people who
support them, and hold
them accountable.”

18. Third Principle of Lean Startup
Validated Learning
“A true experiment
follows the scientific
method. It begins
with a clear
hypothesis.“
“Startups exist to learn
how to build a
sustainable business.
This learning can be
validated scientifically
by running frequent
experiments.”
“Just as scientific
experimentation is
informed by theory,
startup
experimentation is
guided by the
startup’s vision.”
“One of the most
important lessons of
the scientific method: if
you cannot fail, you
cannot learn.”
http://www.alexandercowan.com/

19. What’s Your Vision?
“The goal of every startup experiment is to discover how to build a
sustainable business around your Vision”

20. What’s Your Hypothesis?
“The value hypothesis tests whether a
product or service really delivers value to
customers once they are using it.”
“The first step would be to break down the grand vision into its component parts.”
“The growth hypothesis tests how new
customers will discover a product or
service.”

21. Fourth Principle of Lean Startup
Build-Measure-Learn
“Through this process
of steering, we can
learn if it’s time to
make a sharp turn
called a pivot or
whether we should
persevere along our
current path.”
“Instead of making
complex plans that are
based on assumptions,
you can make constant
adjustments with a
steering wheel called
the Build-Measure-
Learn feedback loop.”
“The fundamental
activity of a startup is
to turn ideas into
products, measure how
customers respond and
then learn whether to
pivot or persevere.”
“A minimum viable
product (MVP) is the
fastest way to get
through the Build-
Measure-Learn loop
with the minimum
amount of effort. Its
tests a fundamental
business hypotheses.”

22. What’s Your Minimum Viable Product (MVP)?
“The MVP begins the process of learning.”

23. Fifth Principle of Lean Startup
“ Innovation Accounting”
“Innovation
accounting, is a
quantitative
approach that allows us
to see whether our
engine-tuning efforts
are bearing fruit.”
“To improve
entrepreneurial
outcomes, and to hold
entrepreneurs
accountable, we need
to focus on measuring
progress, and learning.”
“The goal of a Lean
Startup is to inform our
riskiest business model
assumptions through
empirical testing with
customers.”
“Innovation Accounting
effectively helps startups
to define, measure, and
communicate
progress.”
Dave McClure Pirate Metrics

24. What Are You Going to Measure?
Metrics
“Cohort-based reports are the gold standard of learning
metrics: They tell us: among the people who used our
product, here’s how many of them exhibited each of the
behaviors we care about.”
“The three A’s of metrics:
actionable, accessible, and
auditable.”

25. Pivot or Persevere?
Persevere
“If the company is making good
progress toward the ideal, that means
it’s learning appropriately, in which
case it makes sense to continue.”
Pivot
“If not, the company must pivot,
and start the process all over again,
reestablishing a new baseline and
then tuning the engine from there.”
“Every company should have a regular Pivot/Persevere Meeting”

26. What Happen in the Real World?
The first initiative that was pursued was building a homegrown
Robo-Advisor.
Ultimately resulting in a pivot
We then turned our attention to building out a Data Warehouse that
would enable us to target the right customers. We persevered through
three different checkpoints and were rolling out different solutions to
the financial advisors.