Lean Startup: the Build Measure Learn Cycle | Inge De Dreu | Skillshare

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Lean Startup: the Build Measure Learn Cycle

teacher avatar Inge De Dreu, Playground for Entrepreneurs

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

8 Lessons (31m)
    • 1. Introduction to the Course

      2:45
    • 2. Lean Startup

      5:41
    • 3. The Build Measure Learn Cycle

      1:22
    • 4. The Minimum Viable Product MVP

      3:45
    • 5. The Law of Diffusion of Innovation and Early Adopters

      2:34
    • 6. Hypothesis, Test Cards and Measuring True Enthusiasm

      8:06
    • 7. Metrics - the Net Promoter Score and the Sean Ellis Test

      4:46
    • 8. Conclusion, Project and Wrap Up

      1:40
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About This Class

This course explains and elaborates on the Build Measure Learn Cycle developed by Eric Ries, an essential part of the Lean Startup Movement. 

This is an agile/lean model that is very often used in entrepreneurship and innovation projects, it allows you to learn from your customer very quickly and move on with your project. The Minimum Viable Product is an essential part of the model; it allows you to test out your ideas in a very fast and flexible way.

In this course you will learn how to apply the Build Measure Learn Cycle, whether you are working on your own entrepreneurial project or on an internal innovation project. Through the process that is presented in this course you will get useful insights very quickly!

No prior experience is required. 

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Inge De Dreu

Playground for Entrepreneurs

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Transcripts

1. Introduction to the Course: Welcome to this course about the Lean Startup and the build measure learn cycle that was developed by Eric Reese in his book, The Lean Startup. And in this course we're going to take a look at this model and how it's going to help you to build up your product or your service, or your company and really validated in the market. So Eric Reese developed this model in order to validate and develop products in an agile way. And that's what we're going to discuss in this course. So in this course we're going to start with a little bit of a history. Why The Lean Startup? What actually is Lean Startup mean? Well, it's a, a global movements. We're going to discuss the minimum viable product or MVP. And we're also going to discuss how to set up experiments in hypothesis in order to do that, build, measure, learn, cycle, and actually have metrics that you can develop a niche you can grow in order to build up and improve your company and your product or service. We're also going to discuss what metrics to choose with, which is a very important part of this build measure learn cycle. Now who am I to take it from? Well, my name is inverted row. I'm an entrepreneurship and innovation coach, also a university teacher on these topics. And her really believe in a combination of playfulness and being an entrepreneur. So to use playfulness to get to better experiments, to have more fun while you're doing this. And in the end, it will get you to more success as well because you're all persist longer and you will come up with more original ideas and you'll just have fun with it and be happier in general as well. So I have been coaching over 500 early phase entrepreneurial teams, mostly with Lean Startup methodologies and using customer discovery techniques in order to get them to product market fit and really facilitate the first part of learning and getting the right insights in order to get to build a company. And that's what I really specializing as well. Now I have a website which is playground for entrepreneurs.com. So please do take a look. There's a lot of interesting materials there. There's games and there's videos, and there's other interesting things. So please do take a look, and I'm looking forward to meeting all your products and projects in this course as well. So please do share what you're working on right now. 2. Lean Startup: So why Lean Startup in the first place? Well, lean startup really comes from a technology-based entrepreneurship environment. And things really move faster there. So before using Lean Startup, there was this methodology called waterfall development, which is what you see on screen right now. And basically they would have requirements. They would do an analysis, a brainstorming. They will develop the product and as soon as they would have the complete, perfect product developed and they would do like tonight. And they would show it to the market and show to the customer. And the customer would have a lot of comments. But this is not really what I was expecting, but that was not really what I needed at that point. Or there would be a lot of different things that the customer would perceive compared to what the products would actually bring. So this is where agile methodologies come in. Methodologies that really take the customer as a basis and the problems that the customer experiences. And that doesn't mean that the customer answers all the questions of an entrepreneur right away. But a contact where the customer is really an unavoidable, indispensable in order to get to the right insights that you need as an entrepreneur to build your business and to really validate your product and its right to exist basically in the market. So after waterfall methodology and the failure of the waterfall methodology, other systems came up. Other systems that were more agile, more flexible. They need so much budget in an early phase of the development and had a lot more contact with the customers so that incites could be gained in order to develop really in lovable, a great product. So basic leaders, There's two books here, The Lean Startup and also the startup owners manual that in the early phase of the entrepreneurship, of the Lean Startup Entrepreneurship movements were present. So basically there's air crease with the Lean Startup and nurses startup owners manual written by Steve Blank and Bob Dorf, which are really the founding fathers of this movement. And Eric Reese was, is a lot younger and he used to be Steve Blank students. And they just wrote a kind of different approach to these methodologies. So the startup owners manual really focuses on customer development, early phase insights that you need in order to get to a better product. Products, to get to really build up the product that's going to be the base of your, of your project, of your startup. And that's what the startup owners manual is about. It's a really complete book. I wouldn't recommend reading every word of it, but using it more like a, an encyclopedia you should wish. Now the lean startup is a lot easier to read. And it's about this, this build measure, learn. This build measure learn cycle that you could use throughout the whole process in order to validate what you're doing. First in order to get to the right development insights and then after that, in order to build your company and really gained momentum. So basically what Steve Blank and book Dorf are presenting is the whole of the process. It's a lot more detailed planning. For example, read the book. I have a lot of other courses on this as well. So you can check them out about the business model, which is a vase for what Steve Blank and Bob Dorf are presenting and also about validation techniques which you using customer discovery and customer validation. And then afterwards you go towards building the company. So there's no more customer discovery and validation, which is about learning. But then you just start building. There's customer creation and company building. Now the build, measure and learn cycle. You'd use them throughout the process because it's, it's about having the right process progress and having the right metrics. At first, your metrics should be focused on learning. So you should, your metrics, but you're measuring should be focused on customer insights, development insights. And after that, you could get like growth metrics. So the amount of revenue, retention rates and those kind of metrics in order to really build your company up. Now, as I mentioned in this course, we're going to focus on Eric resus work. So to build, measure, learn cycle. So as I mentioned, the work of Steve Blank and Bob Dorf is really complete. There's a lot of different techniques and a lot of different things there that you could use and are very useful to build up your company. And then would refer you to my other courses in order to complement what you're learning in this course in order to get the right progress for your company and your product development. 3. The Build Measure Learn Cycle: So this build measure learn cycle is really about first building the product, building the MVP. So the outcome of the build part would be the MVP or the product that you're going to test, then measuring. So the outcome of that would be the data that you get. And then learning in order to get to the right insights are the right metrics or to see what you need to adjust and how you can improve your product. And then you go and build again so you adjust your product, your MVP to whatever you've learned in the previous phase. So this is a cycle you can do again and again and again. So I think it's very helpful to take a look at the left side of this image as well, because at the breeding has the activities that you should do. So planning is just before the building phase and you're doing, which is the building face. So you're operating it, you're checking it, which is about measuring. And then afterwards you learn. So adjust and plant and all do it again. And that wave planning, doing, checking, and just think, you can really get to a continuous improvement of your product, of your project and your company that you're built. 4. The Minimum Viable Product MVP: So first let's discuss the MVP. So there's a couple of common mistakes, very common mistakes that people make with the MVP. Minimum viable products. And this is that sometimes it's not minimum or not viable. Which sounds very logical, but it's very common. Mistake is made. So first should be minimum. So this is not a complete product yet, but it still provides a value. And it should provide an important value that people are willing to pay for or do some sort of effort or give you their time or their personal contact information or something like that. So you could ask something in return for this. So it's really adding a value to your customer. So it should be minimum and viable. And I think this image is really very illustrating because if your final product is a car, then your MVP is not a real. So your final product is a car. What's the benefit of a car? The benefit of a car is that you are able to transport yourself. So that's what your MVP should also do. Give you the opportunity to transport yourself. So your MVP or the car is not a wheel, is not two wheels or something like that. It's not like half a card at them work yet because it doesn't have a motor. Your MVP of a car could be a skateboard. It could be a bicycle, because this still works in order to transport yourselves, yourself. So this still adds the value of transportation. So maybe it doesn't do it perfectly. Maybe it's not a complete car, but it's still provides the main value, which is in this case transportation. So you can still transport yourself. Now every time moving through your MVPs towards the vinyl final product, every time you get a little bit closer towards the end value. But the first MVP is still a product that people are willing, willing to hand over money or time or effort or personal information for in order to achieve that benefit that you're providing. So in terms of an MVP, it's very good to think about what's the earliest testable, what's the earliest value that we can actually test? In order to get an idea of this is working or not working. Or we need to adjust. And what it is that we need to adjust for a 100 and if we need to adjust something, so think about the earliest testable, the earliest usable, and the earliest lovable. So what would people really love? So this is something that you can use first to get all these insights, but you can also use it in order to further define your customer segment. Preferably your early adopter. Adopters. So look for your biggest fans. So maybe your product isn't perfect yet and it has a lot of bugs and it doesn't work as well as it should. And maybe it doesn't provide the whole value of a car with the roof and the shiny things and everything. But still there will be a couple of fans, a couple of very early adopters. And it's very important to identify those because then you can go out and find more. 5. The Law of Diffusion of Innovation and Early Adopters: Now let's talk a bit more about that. Early adopters kind of concepts. So this is probably something you've seen before, the law of diffusion of innovation. It's really quite famous. So as you introduce a product into the market, there's different people come in at different times of this curve. So first there's the innovators and the early adopters and the early majority, late majority laggards. Laggards who don't pay attention to lay majority will only come after early majority and early majority only are to buy your product if they know somebody else who has it as well, who has bought it as well. And if they can see the value of it, if somebody recommends it to them. So what you want at this stage is really to identify those early adopters and innovators. Those people who show up before the doors even open those and to share some people who go and tell all of their friends and who are really, really animated and really enthusiastic about using your products and really happy with the benefits that it brings to them. So the earlier you can identify those, the better it will be because you know where to aim your marketing efforts. And once these people come in, then you can crossover to the early majority and they're still like a tipping point there and calcium to cross, as they say. But you need to get to those early adopters first, you need to make sure that your biggest fans are on board. Whenever, when you're still in these, these early phases of testing out your products. Now this is about finding the right customer segment. This is about really getting to know that very deep characteristics of your customer segments. Being able to identify them. So that in an 80 or 70 percent of the people that you find will, that will fall into your customer segments, will actually be very enthusiastic about this product and we would really love it. So this is about true enthusiast. And it's very important. I will get to the kind of metrics to use a bit later on. It's very important to get to this. True and Tuesday ASM. 6. Hypothesis, Test Cards and Measuring True Enthusiasm : Now how do you get to the right hypothesis? Show these hypothesis should be about expecting people to respond in a certain way, or expecting people to understand your user interface. Or expecting people to show a certain reaction to something, to buy your product or to use it, or something like that. So what's very helpful is this test cards. This is a test card by strategize her to company of Alexander Osterwalder, who developed the business model canvas, which is a very useful elements in this very useful model in this phase of your project as well. So I would recommend you to check it out. And basically what you're doing this test card is you set out your hypothesis. So we are expecting that four out of five people will grab our flyer and download our application or something like that. We are expecting that four out of five people who use our application are smiling when they do this, something like that. And you could really focus this also true and 200 ASM. So what people do, actions always speak louder than words. You can also really read their body language and look for really enthusiastic reaction. So open their eyes wider or show a smile or ask about the products and when it will be available or something like that. Or sometimes you can use even a metric as sharing on Instagram, like four out of five users will share a picture of our product on Instagram without us asking for it. That would be a good metric as well. So that's your hypothesis that goes into the first box. And then you can also define how critical this experiment is. So how much do you need a success in this and how critical it is for your product development. Then to verify that we will. So here comes your experiment, what you're going to do. So you will show it to, you know, maybe 10 or 20 people and you're expecting a certain percentage to react to it. And then you will measure it. And we are right, if four out of five people share their picture to Instagram without us asking or something like that. So you can also define here the cost of the test and the reliability, the data reliability, and also the time it will take. And these are just indications for you to organize your time and to organize how important that is. Experiment is, how much priority it should have or how much budget you should take for it. Now, as I mentioned before, it's very important to choose the right metric. Goes. There's a couple of metrics that are really tricky, like the amount of followers on Instagram or the amount of followers on Twitter or Facebook. Or the amount of people who like flyer or something like that, or the amount of people who say they are going to buy our product or like the design of our product. Those are really tricky because there are vanity metrics. So if you measure users, followers on Instagram or on Twitter, it doesn't tell you anything about these people being willing to buy your product. Actually. Maybe they just like your pictures or something like that. Maybe they will go away within two weeks. It doesn't really tell you anything about. So it's very good to build up your Twitter account and to build up your Instagram accounts. Just don't take any decisions on that. Because for critical data for product development, you want something more solid. Now, if you ask people if they like your product, so you show your prototype or your MVP and you ask them to like your, if they like your product, and then you're inducing basically their answers. So be very careful about the reactions and actions. Always speak louder than words. So it's very good to take an observation metric over a response metric that's induced basically. So take it as objective as you can. And of course sometimes you will need answers and you will leave comments and you will need feedback. But let's look at insights and that's very, very good and very important. But try not to induce these answers because then you will get like a false validation and nurse nothing worse than a false validation because you're building your company upon this. So you need it to be as reliable as you can possibly get it. So built your company on the right metrics. So there's a couple of examples here. For example, in an early phase, you can use the number of customers talk to, but more even like the customer feedback and insights that you get from that conversion rates. How many people are converting out of all the people that you're getting. Two. For a customer or revenue, the amount that the customer is willing to pay. And then afterwards when you're growing and you're building your company, then you get to retention rates, repeat purchase, sales referral rates. We'll get into referral rates in a moment, the number of transaction, and also the revenue per transaction. So as you see, every time this metric becomes more precise, also more reliable. So think about observation rather than the answers that people like your product or something like that. And get to as precise and objective, objective metrics as you could do. You could possibly get. Now, you really want to be measuring true enthusiasm here. So think about micro-expressions. Think about body language. If you see people opening their eyes a little bit more, if there were amazed by something. If they are smiling and True smiles with wrinkles and everything. If they're really happy about it, if they, they talk to their friends about your product. If they use it automatically without thinking how much they get back to your product. There's a lot of things that you can measure and a lot of things that you can observe in order to get to measure true enthusiasm. So now we will discuss two particular ways of doing that. Too. Particular measures that are very useful and they're also useful in very, very early stage when your product is not on the market yet. And sometimes if you have a smaller test group or your test group is going growing, then you can measure these things in order to get an idea about true enthusiasm and how much people actually care. So this is about measuring true and enthusiasm. No social desirable, socially desirable responses, and really authentic, true enthusiasm. 7. Metrics - the Net Promoter Score and the Sean Ellis Test : Now the first of the two metrics that I want to discuss with you is the Net Promoter Score. So the net promoter score is about how much are you willing to recommend some, something, a product or a service to your friends? So this is something that's really quite often used nowadays and customer surveys, it's really quite common. And it is because sometimes if you ask people how much they like your product, if they would buy it or if they would buy it again, or if they want to keep using it. Sometimes they give socially desirable answers. Sometimes it's not even about social desirability, but more about changing a habit. And that's something that's not very conscious for many people, but it's very hard to develop that habit in a sustainable way for new product, it's very hard to change that behavior. So sometimes when you ask that question, you don't get the answer that you actually need to build your company upon. So that's why they come up, they came up with the Net Promoter Score because it turns out that if you're willing to recommend it to other people, then you really, truly enthusiasts about it. So the net promoter score, usually you take a one to ten scale and you ask people how much they would be willing to recommend it. And from nine to ten are the actual promoters. So people who answer nine to ten on the 10 point scale, our actual promoters who are actually going to recommend it to other people and who are actually really enthusiastic about what you're offering. Now seven to eight are passive, so they're really happy with it. Really quite happy, but they're not actively promoting it because there's no true enthusiasm. There was there was no surprise factor. There's no over delivery on your side that there were surprised by. So there happy but they're quite passive. And then six and under are dissatisfied who are just not happy about your product. So obviously, you should go for the promoters. Now, one strategy that you could use is to increase that score to improve your product. But if you find that your scores are really mixed, There's a lot of people who are dissatisfied and other people who are really happy and promoting. Then you might also investigate how to get to a better market segment. So you might need to segment your market a little bit more. Get to know your ideal customer and get to know the common characteristics of the people who are the promoters actually, in order to define your market segments a lot better. And you will find that once you get that segment right there. And it's also easier to find more early adopters and to get to the bigger market faster as well. Just by making your product better for that specific group who was really enthusiastic about it. So the other metric is these Sean Alice test. And we've shown that Alice test is really all about a group that's already using it. So this is a metric that you use when you already have a test group and you're actively applying this, this products to your caste group. And then you're asking people, how much would you miss this, how disappointed would you be if you wouldn't be able to use it again? So you might give them like a one to ten scale as well. You might give them some feedback opportunity or something like that. Just in order to find out how much people will miss it. And again, you could opt for improving your product based on the feedback that you get. You could also opt for segmenting your market better in order to serve your ideal customers better. So define common characteristics of the customer segment. That's your ideal client, and then get the product better for them in order to get like, the best product for them. Instead of a mediocre product for everybody. And that's usually this strategy that works. And afterwards you can expand. 8. Conclusion, Project and Wrap Up: Now of course for you the invitation to join in on the fun and to set up your experiment. So to build your MVP, to set up your hypothesis, what do you think you can measure with this MVP? And then to learn from the data, to actually apply your experiments, to learn from the data, and to adjust your MVP. So go through the whole of the build measure learn cycle. And the test cart is really helpful in order to set up that experiment that you want. So to set up your hypothesis, to set up your experiment and to measure and to learn from it. So that's the invitation and also the project for this course. Now, as I mentioned, this course is really complimentary to a couple of, couple of other courses that I have, the business model courses, but also the validation technique courses. And maybe if you want to add some more innovation also the ideation course in order to get more original and more enriched ideas. So these are all resources that you can really use in your process of setting up a successful products, being an entrepreneur or an intrapreneur and really setting up your company building up Cure initiative. So please do check out also the website for fun resources, playground for entrepreneurs.com. And I'm really looking forward to seeing all your projects in the gallery and to really find out what you've been working on.