Resolve to be Lean in 2014, Lean Startup that is…

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Daxko will play host this coming Monday, December 9th to Birmingham’s startup scene during the livestream of The Lean Startup Conference. We are the official streaming partner for Birmingham and invite anyone interested in Lean Startup to come out and view the conference at our offices. Registration is required.

I recently had a chance to talk more about Lean Startup with Austin Merritt, Daxko’s Director of Market Strategy. Austin is currently involved with Well, a new software offering for employee wellness and engagement.

  • Austin, I hear that Lean Startup methodology really came out of some failed startup attempts by Eric Ries (author of The Lean Startup). How did you first come into contact with The Lean Startup?
  • I actually first came across the methodology when a coworker at Daxko introduced me to an eBook by Steve Blank called The Four Steps to the Epiphany. We were talking about some past projects at Daxko that had gone really well when they were early and we were experimenting and prototyping rapidly. From there, I stumbled onto Ash Maurya’s blog, “Practice Trumps Theory” and his book Running Lean. The concepts really resonated with me because it reminded me of how we did things in the early days at Daxko.
  • At its core, Lean Startup purports to eliminate wasteful practices and increase productivity so that startups can move from idea, to development to finished product without elaborate planning, or massive amounts of capital. Is this pretty on mark? Do you have anything to add?
  • Essentially yes. The core idea is that an initial idea is nothing but a bunch of guesses, or hypotheses about the market, their problems, what the solution should be, etc. The quicker and more systematically we can go about proving or disproving our assumptions, the better the likelihood that we’ll deliver a product that really addresses a need and that there is a market who will be ready for that product. The other approach is to spend tons of money building a product and marketing it before you actually validate any of the assumptions…sometimes you get lucky but sometimes you fail massively. With Lean Startup, we may learn that our idea wasn’t valid, but we learn it much quicker so failure isn’t so bad.
  • Daxko doesn’t exactly fit the profile of a startup, so how do we utilize the Lean Startup methods here at Daxko?
  • We utilize Lean Startup concepts at Daxko to validate ideas for new products and new markets. We put a heavy emphases on validating business models, so we’re using tools like the business model canvas, we’re building minimum viable products (MVPs), and working hard to get products into the hands of real users as quickly as possible to validate assumptions early. With Well for example, we had caught onto the fact that engagement in corporate wellness programs was a challenge and we had some ideas on how we could fix that. We built out our initial hypotheses around what we thought the business would need to look like. For example, what kind of businesses we’d target, what their problems are, what we should build, how much we’d charge, etc. We then spent about a month talking with people in the market and refining our ideas based on the new things we were learning. We then built our MVP and went from idea to product with three signed customers in a little under three months. We’re still experimenting and testing around how we reach prospects, how we sell to them, what the future of the product should be, etc.
  • Do you see any correlation to our customer base? How could any or all of the principles in Ries’s book help our YMCA, Well or other clients?
  • I think at its core, the concepts could easily be applied to anyone who is delivering a new product or service to a customer. When YMCAs are trying to plan a new program, they no doubt have to make assumptions about what all to offer in the program, who to target, how much to charge, what times to offer, etc. The quicker and more efficiently they can go about validating or invalidating those assumptions, the better off they’ll be.

To learn more about The Lean Startup, register to attend our livestream of the conference here. To learn more about Well, visit their website.

TMD: Lean Start Up and Legos!

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At Daxko, we get to play with Legos at work!  I love it when that happens!  You may remember a post from earlier in the year about Learning Lean Startup Principals using Legos.  At today’s Team Member Development (TMD) lunch and learn, Will S. and his group of volunteers helped many of us team members learn about the principals of Lean Startup and ways we can use the principals no matter what kind of team we are on.

Using Legos and a few rules, we broke into teams and sold Lego cars.  Sounds easy but these weren’t just any cars.  These were cars for very specific types of buyers, including a hunter (played by Butch M.) , an executive (Jason Q.), a mom (Saranda W.), a realtor (Matt Cook), a teenager (Adam A.), a commuter (Patrick D.), and a trucker (Justin C.), all with limited budgets and many needs.  Each volunteer acted in the roles of our potential car buyers and negotiated deals for their Lego cars.  In the end, the goal was for your team to make the most money from car sales within a 30 minute time frame.  Along the way, we were watched by the volunteers and awarded various Achievement “awards” such as:

  • “Double Down”,
  • “Transformer” and
  • “Chatterbox”.

Each of these awards corresponded to a lean start up principal, as we were to later discover.  For instance, being given an Achievement “award” called “To the Scrapyard” meant that team was quick to end any unsuccessful ideas and move on to the next idea.  As Will put it, they “put a bullet in” an idea that would not deliver the desired results and moved forward.

Some of the Lean Startup principals we learned were:

  • Question your assumptions.
  • Eliminate waste.
  • Build. Measure. Learn. Repeat.
  • “Valuable today” is greater than “Perfect tomorrow”.

There’s nothing like hands on playing (er, learning)!

Kim B. is a Talent Sherpa who thinks sleeping is an underrated activity and tops every sandwich with potato chips.

Teaching Lean Startup Principles With Legos

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As I’ve mentioned previously, Daxko is starting to adopt Lean Startup principles to help drive innovation and new product ideas. As we started planning for our annual Daxko Kickoff meeting, I thought it would be interesting to do some sort of group activity that reinforced some of the ideas and principles that we want team members to embrace as we move into 2013. Particularly, those around customer development, experimentation and learning. I was inspired by Chad Holdorf (an Agile Coach at John Deere) to try and do something with Legos. He teaches Enterprise Scrum using small teams building a city through multiple iterations using Legos.

I bounced the idea off of Will S and he liked it, so together we set out to design a game that mixed Legos with Lean Startup principles. After several late nights, long lunches, play testing, and multiple trips to the Lego store, we felt like we were on to something and this might just actually work. I thought about the game a lot over the holidays and made a few minor tweaks right before we traveled to Birmingham for Kickoff 2013. Here’s how things went…

We split up our entire software products organization into 10 teams of 6-7 people. We intentionally mixed the teams up so that they represented a good mix across the organization. We also tried to put people together who don’t normally work together on the same team, product, or job function. Next, I introduced the game – Lego Motors!

Congratulations! You’ve been busy pitching a business idea for a new car company and a venture capitol firm has been crazy enough to give you some funding. Now it’s time to get to work!

Each team has a goal to make as much money as they can by building cars that these customers will buy. How they do this is up to the team. There is a time limit of 30 minutes to build and attempt to sell to the customers.

We convinced a few people on the leadership team to act as customers and encouraged them to get creative and use props to help “sell” their character. We met with these customer actors the day before and talked through the game mechanics and the principles we were trying to reinforce. This turned out to be a critical factor in making this exercise a success. Each customer had a script to work from. The script included their prioritized list of needs and the associated value for each. Customers were coached on how to talk about their needs without listing specific features. We wanted the teams to be forced to meet with the customer multiple times in order to learn enough about what they really need and value. The customers were also given a list of achievements to award. We created achievements to help reward behaviors that we wanted to reinforce.

After the game was over, we went around to each team and asked them for what achievements they had unlocked, and which customers they targeted. The results were pretty mixed. Most teams sold at least 2 vehicles and earned at least one achievement.

Next, Will went through the achievements and tied them back to the Lean Startup principles that we were trying to reinforce.

We received a ton of positive feedback after the exercise. A lot of people commented that the hands-on nature of Legos combined with the mechanics of the game itself really helped drive home the concepts we had been talking about all morning around being more innovative and experimental. Everyone we talked to had fun and they got to interact with people that they don’t normally see or talk to on a daily basis. Plus, we now have almost 10,000 Legos to play with at the office.

Here’s a short video of the exercise:
Lean Startup Legos

To learn more about the Lego Motors game, connect with Jason B on twitter.

Jason B. is a software testing professional that loves a good challenge. When he’s not running waterfalls in his kayak, he’s working to make the world a more “agile” place.

Lean Startup 2012 Conference

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We are starting to embrace the concepts and principles of Lean Startup to help guide our efforts around new product development and innovation at Daxko. At its core, Lean Startup is a set of ideas and principles that help us quickly learn what customers want, and just as importantly, what they don’t. We’ve been using an Agile software development process to drive our software product development for a few years now. Agile is great at helping teams iterate to develop a solution to our customer’s needs. While Agile embraces the fact that we don’t know the solution to a problem when we begin development, Lean Startup embraces the notion that we don’t understand the problem either.

Daxko hosted a live stream of the 2012 Lean Startup conference on December 3rd, 2012. After reading Eric Ries bestseller, The Lean Startup, I was excited to attend this year’s 3rd annual event. The conference was hosted in San Francisco but was live streamed to many cities across the world. Many of my Daxko peers as well as a number of others from around the Birmingham technical and startup community attended the livestream that Daxko hosted. The day-long event included many speakers from across all types of software and hardware companies–and even a few surprising fields such as education and mushroom farming.

“People don’t want a 1/4 inch drill; they want a 1/4 inch hole.”

– Steve Blank

There were a lot of good take aways for me. I loved the diversity of the companies represented and getting so many different perspectives on how Lean Startup principles are helping them innovate. Here are a few of the highlights for me:

  1. Vanity metrics are success theater.

They blind you to a lack of product/market fit, commit you to your original vision without agility, and get you invested in appearance, not reality. If you’re looking through your metrics looking for one that makes you look good, then you’re searching for a vanity metric.

2. Focus on improving one thing at a time. Build, Measure, Learn!

Build an MVP that solves a simple business problem. Talk to your customers and find out if your solution solves a real problem for them. Take what you learn from talking to customers and make the product better. Rinse and repeat!

3. Get out of the building! 

The best insights come from watching your customers use your products.

4. Don’t underestimate the power of paper prototyping.

  • Everyone can draw
  • Sketching is a shorthand for thinking through ideas
  • Use team sketching
  • Aim for lowest responsible fidelity

5. “Vision guides experiments, experiments validate vision” – Andres Glusman

6. Important things to measure:

  • Revenue
  • Retention
  • Sales volume
  • Relevant growth

7. APIs are everything.

Think platform over product. Build internal and external APIs. Build the API and then build a product on top of the API. This makes it easier to build integrated products and solutions. It also makes it easier for others to build on top of your product. This is a win/win situation because it allows others to add to your product’s value proposition.

8. Put the right people on Lean Startup projects!

Who is better at iterating and learning? Who is better at building robust, scalable, solutions? These aren’t the same people. You need people that are great at quickly putting together something that will test your hypothesis and gather feedback but you also need people to build solid, scalable solutions once you have an established product. Put the right people on the right types of projects and watch them thrive.

9. Large organizations can operate as a network of Lean Startups

Scott Cook from Intuit talked about how all large companies “get stuck” and fail to innovate largely because they fail to change how and where decisions are made. Scott explained that he has instilled a culture of experimentation and created a “network of lean startups” that are free to experiment and learn in order to help drive innovation.

 10.   Four roles of the leader of the innovation age:

  • Set the grand challenge
  • Instill the right systems and culture to enable fast experiments
  • Live by the results of experiments
  • Operate using the same rules and discipline

Additional Links:

Lean Startup 2012 conference videos

Lean Startup 2012 conference notes

Lean Startup 2012 speakers

Lean Startup 2012 speaker slides

 Image Credit

Jason B. is a software testing professional that loves a good challenge. When he’s not running waterfalls in his kayak, he’s working to make the world a more “agile” place.