The Startup Genome Project is an initiative launched to identify what makes Silicon Valley startups successful as well as to share the findings with entrepreneurs in other parts of the world.
In their first step, the Startup Genome Report – the organisation analysed the data from 650+ web startups and developed a framework which is believed to shed more light on the factors behind startups’ success. One of the key findings of the research project is that founders that have supportive mentors, track metrics, and learn from startup thought leaders raise 7x more capital and have 3.5x better user growth. In short, startups that learn are more successful.
Assuming a tech entrepreneur or an enterprise intrapreneur would like to increase their odds of success through learning from thought leaders, who should they turn to? In the section Learning As The Key To Successful Startups’, the report makes a specific references to Steve Blank, Eric Ries, Dave McClure, and Paul Graham. We can add a few more to this fine company. Who are these thought leaders then and what are their key contributions? How can you benefit from them?
OSTERWALDER AND THE BUSINESS MODEL CANVAS
Back in 2009, A. Osterwalder @business_design, Y. Pigneur and a crowd of 470 practitioners co-created and self-published the book Business Model Generation – a handbook – or rather, a practical guidebook on how to design tomorrow’s businesses. The key tool they provide you with is the Business Model Canvas, which is a 9-building-block template with which to describe, analyze and (re-)design the business model of your venture. On top of that, the book explores emerging business model patterns and the techniques to build business models and also offers insights on how to re-interpret strategy using the business model.
The Business Model Canvas not only helps to create and explore a business model; equally importantly, it enables you to easily share you ideas with the other stakeholders involved, such as, for example, your business partners, investors or a technically-oriented product development team. As such the BMC helps to ensure that everybody involved is, literally, in the same picture and, as a result, has a strong foothold from where to make meaningful contributions. Watch the video to find out how the tool works. You may as well visit the Business Model Hub to share your insights with the community gathered around the concept.
An afterthought. Though the Business Model Canvas has most typically been applied to new ventures, there is no inherent reason why it should not be used by established enterprises to better manage their new product initiatives. I think the tool can even be modified into a Product Model Canvas with which to address the issues in new product reasearch, development and launch. Just as it may help to bring a startup’s stakeholders together, it may be a tool with which to empower a cross-functional team working on a new product in an established company.
S.G. BLANK AND THE CUSTOMER DEVELOPMENT FRAMEWORK
Let’s assume for a while you have developed a Business Model for your venture, you have even produced the requirements and tech specs for you product or platform. Should you now go on to implement it in a waterfall kind of way and launch it when it is ready? Many entrepreneurs and enterprises have done so only to find out – painfully – that their state-of-the-art feature-rich products do not resonate with the market – they have failed despite having a great product. Luckily, there is Blank @sgblank with his Customer Development framework which helps to mitigate such risks, at least to some extent. The term “Customer Development” refers to the practicies and processes involved in setting up and building startups into viable businesses. In his lectures, the book The Four Steps to the Eppithany and blog posts, Blank describes and advocates an actionable framework which guides you on how to build a scalable business rather than merely a product. To put it in a nutshell, product development by itself is insufficient to ensure success; it needs to run in parallel with the market / customer development process – the process of hypothesizing, testing your market and product assumptions and learning in successive iterations. What you start with are merely assumptions that have to be verified and very often changed while developing your product / venture. It is worth mentioning that Blank’s framework may be applied to new product development in a variety of business contexts and is not limited to web startups. It is an approach which enables product developers to greatly reduce the market risk their products or product-based ventures are confronted with.
TAKING IT FURTHER TO ADVANCE WEB STARTUPS
A number of people have decided to build upon the Customer Development framework and, in particular, adjust it creatively to fit the web startup context. Some exemplary representatives of the movement are:
Eric Ries @ericries – the creator of the Lean Startup methodology and the author of The Lean Startup book as well as the blog Startup Lessons Learned. The Lean Startup approach combines Customer Development practicies, Agile / iterative development methodologies and the use of low cost open source development platforms. The combination allows a substantially reduction in waste and market risks in web venture development.
Ash Maurya @ashmaurya – an entrepreneur who has developed a variation of the Business Model Canvas, i.e., the Lean Canvas, and built on Blank’s ideas to develop a web startup version of the Customer Development process. Ash started off with the Blank’s framework and early Ries’ ideas on Lean Startup. He did not adopt them passively though; he has applied the ideas on a number of his own product development projects and subsequently modified the frameworks and tools so that they fit the web startup context better. You can read Maurya’s book – Running Lean or turn to his blog to find out more about his methodology as well as his experiences connected with product development projects he has worked on. As a founder and CEO of Spark59, Ash is now on a mission of helping other startups raise their odds of success.You may find some of their resources to be of help for you too.
Dave McClure @davemcclure – a venture capitalist and a seed fund founding partner who developed the concept of AARRR Metrics – a set of lean startup metrics, and thus offered a method to measure progress throughout the Customer Development process for web startups. To go deeper into the topic of web startup marketing and metrics, you may as well explore the blogs of Sean Ellis @9SeanEllis and Andrew Chen @andrewchen.
Paul Graham When on a hunt for advice on how to build new software solutions and launch web ventures, you may also choose to follow the insights offered by Paul Graham @paulg – an essayist, programmer and investor who has been in the business for quite some time already. Many of his essays contain useful tips which may help tech entrepreneurs and startup founders to avoid the pitfalls and exploit the opportunities they are presented with on their entrepreneurial quest. Go over a few of his most popular essays to get the feel of Graham’s contribiutions. The Hardest Lessons For Startups To Learn, Startups In 13 Sentences, The 18 Mistakes That Kill Startups, What Startups Are Really Like.
D.G. REINERTSEN AND THE PRODUCT DEVELOPMENT FLOW
Now that you are quite well equipped with Customer Development tools and frameworks, which enable you to increase the odds of building the right thing, you can turn to D.G. Reinertsen @DReinertsen for more practical principles with which to better manage the economic and technical aspects of the product development process. If you are into product development, be it as an entrepreneur or an R&D department employee, you can enrich your perspective and strengthen your workshop by exploring Reinertsen’s valuable contributions. They have been presented in Reinertsen’s three books.Like the other contributors featured in the article, Reinertsen has been relentlessly questioning the product development orthodoxy and offering pragmatic principles you may apply to increase the odds of success on your product development projects. His insights on project economics, the impact of queues, variability and batch size, Work-In-Progress constraints, cadence, feedback, flow, decentralized control, etc., may guide you to properly manage you product development efforts. I have seen his principles applied in practice to improve a few misaligned development projects; they worked.
If you, for instance, still believe that * the life-cycle profit is not the best measure to drive your product development decisions * you do not need a product-specific implementation strategy and can optimize for scope, time and cost simultaneously, without economic trade-offs * there is no costly inventory in the product development process * it is desirable to load your resources to high levels of utilization to increase the efficiency of your processes * you should eliminate variability in product development AND still be able to innovate * you should insist on conformance to the original plan * large batch sizes have scale economies and thus increase efficiency * you strive to control timelines rather than queues * you do not need WIP (work-in-process) constraints
it’s a good idea to centralize control for efficiency’s sake then you may come to realize that your beliefs can be more of a hindrance than a help in your product development efforts. To catch a glimpse of Reinertsen’s ideas, watch the video presentation on Second Generation Lean Product Development recorded at the 2009 Lean and Kanban Conference in London.
The thought leaders are working towards the same goal – to support tech entrepreneurs in their product / venture development efforts. Not surprisingly, their contributions often complement rather than contradict each other and their concepts, tools and advice may be combined to create much more valuable frameworks. One good example presented above is the approach drawing on Osterwalder’s Business Model, Blank’s Customer Development and Agile Development practices. Browse through the presentation or visit Blank’s blog for more details on the combined tool stack. This is by no means the only possible hybrid. If you are looking for tools and advice with which to build profitable products or foster you product-based startup, you may as well choose to refer to the sources cited above. Good luck on your knowledge quest! Good luck on your professional / business journey!