Javier A. Tabush

PART 1: VISION

 

 

CHAPTER 1: START

 

The myth of the loss of manufacturing capabilities: The huge productivity increases made possible by modern mismanagement and technology have created more productivity capacity than firms know what to do with. More output, less jobs.

 

Lean thinking: drawing on the knowledge and creativity of individual workers, shrinking batch sizes, just-in-time production and inventory control, acceleration of cycle times.

 

Progress measure: Instead of measuring progress in manufacturing by the production of high-quality physical goods, the lean startup measure progress through validated learning.

 

Productivity: When people are used to evaluating their productivity locally, they feel that a good day is one in which they did their job well all day. The lean startup asks people to figure out the right thing to build – the thing customers want and will pay for – as quickly as possible.

 

Build-measure-learn feedback loop: instead of making a lot of assumptions, you can make constant adjustments with a steering wheel called build-measure-learn. Through this process we can learn if and when to make a sharp turn – a pivot. 

 

 

CHAPTER 2: DEFINE

 

Innovation factory: A company ́s only sustainable path to long-term economic growth is to build an “innovation factory” that uses lean startup techniques to create disruptive innovations on a continuous basis.

 

Culture and systems: It’s moving leaders from playing Caesar with their thumbs up and down on every idea to – instead – putting in a culture and the systems so that teams can move and innovate at the speed of the experimentation system. 

 

 

CHAPTER 3: LEARN

 

Validated learning:  the process of demonstrating empirically that a team has discovered valuable truths about a startups present and future business prospects.  

 

Learning is the essential unit of progress for startups. The effort that is not absolutely necessary for learning what customers want can be eliminated. This is validated learning, because it is always demonstrated by positive improvements in the startups core metrics.

 

Lean thinking: Lean thinking defines value as providing benefit to the customer, anything else is waste. In a manufacturing business, customers don’t care how the product is assembled, only that it works correctly. But in a startup, who the customer is and what the customer might find valuable are unknown, part of the very uncertainty that is an essential part of the definition of a startup. 

 

 

CHAPTER 4: EXPERIMENT

 

The two most important assumptions entrepreneurs make are:

•   The value hypothesis – test whether a product or service really delivers value to customers once using it.

•   The growth hypothesis – test how new customers will discover a product or service. 

 

 

4 KEY QUESTIONS FOR EXPERIMENTING

 

• Do consumers recognize that they have the problem you are trying to solve?

• If there was a solution, would they buy it?

• Would they buy it from us?

• Can we build a solution for that problem? 

 

 

PART 2: STEER

 

The feedback loop:

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 5: LEAP

 

Startup strategy: For startups, the role of strategy is to help figure out the right questions to

ask. 

 

Leap-of-faith assumptions: The riskiest elements of a startup plan are the leap-of-faith assumptions. The two most important assumptions are the value hypothesis and the growth hypothesis. 

 

Customer archetype: Early contact with the customer clarifies a basic level that we can use to craft a customer archetype.

 

External customer data: The facts that we need to gather about customer exist only outside the building. 

 

 

CHAPTER 6: TEST

 

MVP: A minimum Viable Product helps entrepreneurs start the process of learning as quickly as possible. It is not necessarily the smallest product imaginable, though; it is simply the fastest way to get feedback

 

MVP rule: When building your MVP, remove any feature, process or effort that does not contribute directly to the learning you seek. Even a low quality MVP can act in service of building a great high-quality product. 

 

Wizard of Oz testing: customers believe they are interacting with the actual product, but behind the scenes human beings are doing the work. Very inefficient, but easy to build on micro scale. 

 

 

CHAPTER 7: MEASURE

 

Innovation accounting: a disciplined, systematic approach to figuring out if we are making progress and discovering if we are actually achieving validated learning. 

 

3 STEPS FOR THIS: 

 

• Use a MVP to establish real data on where the company is right now

• Startups must attempt to tune the engine from the baseline toward the ideal.

• After the startup has made all the micro changes and product optimizations it can

  move its baseline toward the ideal, the company reaches a decision point: pivot or preserve. 

 

Pivot: When a company pivots, it starts the process all over again, reestablishing a new baseline and then tuning the engine from there. 

 

 

CHAPTER 8: PIVOT or PRESERVE

 

A pivot requires that we keep one foot rooted in what we have learned so far, while making a fundamental change in strategy in order to seek even greater validated learning. 

 

The Runaway: The true measure of runaway is how many pivots a startup has left: the number of opportunities it has to make a fundamental change to its business strategy. 

 

"A pivot is not just an exhortation to change. It is a special kind of structured change designed to test a new fundamental hypothesis about the product, business model and engine of growth. It is the heart of the lean startup method."

 

TYPES OF PIVOT:

 

• Zoom-in pivot: What preciously was considered a single feature in a product becomes the whole product.

•  Zoom-out pivot: What was considered as the whole product becomes a single feature of a much larger product.

• Customer segment pivot: The product hypothesis is partially confirmed, solving the right problem, but for a different customer than originally anticipated.

• Customer need pivot: The product hypothesis is partially confirmed: the target customer has a problem worth solving, just not the one that was originally anticipated.

• Platform pivot: Refers to a change from an application to a platform or vice versa.

• Business architecture pivot: For example when a startup goes from high margin/low

  volume to mass market or vice versa.

• Value capture pivot: how do companies capture value?

• Engine of growth pivot: A company changes its growth strategy to seek faster or

  more profitable growth.

• Channel pivot: Is the recognition that the same basic solution could be delivered

  through a different channel with greater effectiveness.

• Technology pivot: When discovering a technology to achieve the same solution by

  using a completely different technology. 

 

PART 3: ACCELERATE

 

CHAPTER 9: BATCH 

 

Experiment early: As soon as we can formulate a hypothesis we want to test, the product development team should be engineered to design and run this experiment as quickly as possible, using the smallest batch size that will get the job don 

 

Structures: Startups need organizational structures that combat the extreme uncertainty that

is a startups chief enemy. 

 

 

CHAPTER 10: GROW

 

How to grow?

 

1. Word of mouth: Embedded in most products is a natural level of growth that is caused by satisfied customer’s enthusiasm for the products.

 

2. As a side effect of products usage. Fashion or status, such as luxury goods products, drive awareness of themselves whenever they are used.

 

3. Through funded advertising. As long as the cost of acquiring a new customer (marginal cost) is less than he revenue that customers generates (marginal revenue), the excess (marginal profit) can be used to acquire more customers. The more marginal profit, the faster the growth.

 

4. Through repeat purchase or use. Like subscriptions or voluntary repurchases. 

 

 

CHAPTER 11: ADAPT

 

Example of the 5 WHY's

 

• Why did the machine stop? (There was an overload and the fuse blew)

• Why was there an overload? (the bearing was not sufficiently lubricated)

• Why was it not lubricated sufficiently? ( the lubrication pump was not pumping

  sufficiently)

• Why was it not pumping sufficiently? (the shaft of the pump was worn and rattling)

• Why was the shaft worn out? ( there was no strainer attached and metal scrap got in) 

 

 

CHAPTER 12: INNOVATE (THE BEST ONE!!!!!!!!!!!!!)

 

 

Three structural attributes: Startup requires three structural attributes: scarce but secure resources, independent authority to develop their business, and a personal stake in the outcome. 

 

Startup budgets: Too much budget is as harmful as too little – startups are extremely sensitive to midcourse budgetary changes. 

 

Speed: It does not matter how fast we can build. It does not matter how fast we can measure. What matters is how fast we can get through the entire loop.