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BMC-LEAN-EFFECTUATION

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Sachidananda Benegal
Sachidananda Benegal

This is the presentation I used for the boot-camp organized by NSRCEL for aspiring and pre-revenue stage entrepreneurs on 21st December 2019

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WHAT HOW 12/27/2019 息 Sachidananda 1
WHAT HOW Venture Idea Venture Plan of action! Coherent Consistent 12/27/2019 息 Sachidananda 2
12/27/2019 息 Sachidananda 3 CANVAS VISUAL TOOL FOR COMMUNICATION SELF TEAM OTHER STAKEHOLDERS QUICK SUMMARY TYPES
12/27/2019 息 Sachidananda 4 TYPES PLATFORM SOCIAL COMMERCIAL PRODUCT SUB PROB SUB PROB
12/27/2019 息 Sachidananda 5 BUSINES S PURPOSE COMMERCIA L SOCIAL NATURE PIPELINE PLATFORM THE ENTITY THE ACTIVITIES OPERATES IN A CONTEXT INTERACTS WITH THE CONTEXT DESIGN!
12/27/2019 息 Sachidananda 6 PRODUCT MARKET YOUR PRODUCT Your product is NOT the product Your Business Model is the product Remember FACTOR MARKET
So, Lets use the Business Model Canvas? 12/27/2019 7息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 8息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 9息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 10息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 11息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 12息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 13息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 14息 Sachidananda
So, Lets use the Business Model Canvas? 12/27/2019 15息 Sachidananda
ACTIVITY 12/27/2019 16息 Sachidananda
12/27/2019 17息 Sachidananda
12/27/2019 18息 Sachidananda
Interpreting the outcomes... 12/27/2019 息 Sachidananda 19 Scenario 1 Scenario 2 Scenario 3 Knightian UncertaintyRiskPredictable You know the distribution and can clearly predict the scenarios you could get into very little risk if at all to operate in such a state The distribution is unknown to begin with, but one could follow the draws to understand what could come next. You could then prepare for the outcomes You do not know what is going to come next in spite of multiple attempts at the same thing. Outcome is highly uncertain! It is this sort of uncertainty that we deal with as entrepreneurs
LEAN START-UP 12/27/2019 息 Sachidananda 20
The Principles 12/27/2019 息 Sachidananda 21 1 Entrepreneurs are Eeverywhere 2 Entrepreneurshi p is Management 3 Validated Learning 4 Build Measure- Learn 5 Innovation Accounting
Identify the Riskiest Parts of your business 12/27/2019 息 Sachidananda 22 Building a successful product is fundamentally about risk mitigation For most parts, the solution is not whats riskiest! Problem/Solution Fit 1 Key Question: Do I have a problem worth solving? Is it something customers want? (must-have) Will they pay for it? If not, who will? (viable) Can it be solved? (feasible Product/Market Fit 2 Key Question: Have I built something people want? Scale 3 Key Question: How do I accelerate growth?
The Process 12/27/2019 息 Sachidananda 23 01 IDEA ! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 PIVOT OR PERSEVERE? 6.b PERSEVERE Do I have real evidence from my buyer that this is compelling? What are the key assumptions required to make this business work? How do I definitely prove or disprove the assumption with minimum time or effort? Am I reacting or am I focused on validating my pivotal assumptions? Pivot or Persevere Experiment proves hypothesis 6.a PIVOT Experiment s disprove hypothesis
The MVP 12/27/2019 息 Sachidananda 24
The Iteration Meta-Pattern 12/27/2019 息 Sachidananda 25 Understanding Problem Defining Solution Validating Qualitatively Verifying Quantitatively Problem Solution Fit Product Market Fit
Pivoting - Optimize 12/27/2019 息 Sachidananda 26 Focus: Experiments: Growth Optimizations Focus: Experiments: Validated Learning Pivots Finding a plan that works Accelerating that plan Validate Refine Course Correction Efficiency Your Goal: Investors Goal: Growth Growth Your Goal: Investors Goal: Learning Growth Pick bold outcomes instead of chasing incremental improvements Ideal time to raise funding Problem/Solution Fit Product/Market Fit Scale
12/27/2019 息 Sachidananda 27 Pre-set goals and opportunities Expected returns! Competition analysis Avoiding surprises Inevitable trends
What is learnable in entrepreneurship? 12/27/2019 息 Sachidananda 28 Study the Expert Entrepreneurs helped identify 5 principles Bird in Hand Principle - Start with your means. Don't wait for the perfect opportunity. Start taking action, based on what you have readily available: who you are, what you know, and who you know. Affordable Loss Principle - Set affordable loss Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside. Lemonade Principle - Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals. Crazy-Quilt Principle - Form partnerships Form partnerships with people and organizations willing to make a real commitment to jointly creating the future--product, firm, market--with you. Don't worry so much about competitive analyses and strategic planning. Pilot in the Plane Control vs Prediction If you can control something, you dont need to predict what the future would look like.
How differently do entrepreneurs think? 1. Bird in Hand Principle Start with who you are, what you know and whom you know, and not necessarily with a predetermined goal or a pre-envisioned opportunity 2. Affordable Loss Invest only what you can afford to loose 3. Crazy Quilt Create an expanding network of self-selected stakeholders, each of whom commits only what he or she can afford to loose. Focus on partnerships rather than on competitors. 4. Lemonade Be open to surprises and leverage them. Treat them as useful inputs rather than hindrances to be avoided. 5. Pilot in the Plane Co-create the future with things within your control and with self-selected partners If you use these principles you can shape your future and transform your environment in ways that matter to you and your stakeholders. 12/27/2019 息 Sachidananda 29
How is this different from how Managers think? Effectual Causal Start with your means Focus on your downside risk Leverage Contingencie s Form Partnerships Control Vs Predict Pre-set goals and opportunities Expected Returns Avoiding Surprises Competitive analysis Inevitable trends 12/27/2019 息 Sachidananda 30
Classic Causation Model from Marketing Textbooks Process of Effectuation Used by Expert Entrepreneurs SINGLE CUSTOMER Segment Definition Market Definition Segmentation Targeting Positioning Understand Customer Adding Segments/Partners Def of one of many possible markets Marketing Process Inversion 12/27/2019 息 Sachidananda 31
Who I am? What I know? Whom I know? What Can I Do? Interaction with others Effectual Stakeholder Commitments Who we are? What we know? Whom we know? New mean s Expanding cycle of resources What can we do? (Affordable loss) New Goals Actual course of action possible Converging cycle of constraints New Markets and New Firms The process! 12/27/2019 息 Sachidananda 32
Firm Life-Cycle and Entrepreneurs Career 12/27/2019 息 Sachidananda 33 Causal Tethered to goals and predictive Effectual Tethered to means and non-predictive Time Expert entrepreneurs do not always manage to bridge this gap Expert Entrepreneur Startup Firm Large Firm NoviceEntrepreneur R e s o u r c e s Low High
QUESTIONS 12/27/2019 息 Sachidananda 34 THANK YOU
12/27/2019 息 Sachidananda 35 References: 1. Business Model Canvas: https://www.strategyzer.com/canvas/business- model-canvas 2. Lean Canvas: https://railsware.com/downloads/Lean%20Canvas%20Template.pdf 3. Customer Forces Canvas: https://leanstack.com/customer-forces-canvas.pdf 4. Value Proposition Canvas: https://www.strategyzer.com/canvas/value- proposition-canvas 5. Product Canvas (Roman): http://www.romanpichler.com/wp- content/uploads/2013/07/The_Product_Canvas.pdf 6. Product Canvas (Shardul): http://streetsmartproductmanager.com/product- canvas/ 7. Platform Value Canvas: http://platforminnovationkit.com/kit/ 8. Platform Canvas: http://icsb.nl/artikelen/new-business-model-canvas-for- digital-platforms/ 9. Social Business Model Canvas (Tandemic): http://www.socialbusinessmodelcanvas.com/ or https://bmtoolbox.net/tools/social-business-model-canvas/

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BMC-LEAN-EFFECTUATION

  • 1. WHAT HOW 12/27/2019 息 Sachidananda 1
  • 2. WHAT HOW Venture Idea Venture Plan of action! Coherent Consistent 12/27/2019 息 Sachidananda 2
  • 3. 12/27/2019 息 Sachidananda 3 CANVAS VISUAL TOOL FOR COMMUNICATION SELF TEAM OTHER STAKEHOLDERS QUICK SUMMARY TYPES
  • 4. 12/27/2019 息 Sachidananda 4 TYPES PLATFORM SOCIAL COMMERCIAL PRODUCT SUB PROB SUB PROB
  • 5. 12/27/2019 息 Sachidananda 5 BUSINES S PURPOSE COMMERCIA L SOCIAL NATURE PIPELINE PLATFORM THE ENTITY THE ACTIVITIES OPERATES IN A CONTEXT INTERACTS WITH THE CONTEXT DESIGN!
  • 6. 12/27/2019 息 Sachidananda 6 PRODUCT MARKET YOUR PRODUCT Your product is NOT the product Your Business Model is the product Remember FACTOR MARKET
  • 7. So, Lets use the Business Model Canvas? 12/27/2019 7息 Sachidananda
  • 8. So, Lets use the Business Model Canvas? 12/27/2019 8息 Sachidananda
  • 9. So, Lets use the Business Model Canvas? 12/27/2019 9息 Sachidananda
  • 10. So, Lets use the Business Model Canvas? 12/27/2019 10息 Sachidananda
  • 11. So, Lets use the Business Model Canvas? 12/27/2019 11息 Sachidananda
  • 12. So, Lets use the Business Model Canvas? 12/27/2019 12息 Sachidananda
  • 13. So, Lets use the Business Model Canvas? 12/27/2019 13息 Sachidananda
  • 14. So, Lets use the Business Model Canvas? 12/27/2019 14息 Sachidananda
  • 15. So, Lets use the Business Model Canvas? 12/27/2019 15息 Sachidananda
  • 19. Interpreting the outcomes... 12/27/2019 息 Sachidananda 19 Scenario 1 Scenario 2 Scenario 3 Knightian UncertaintyRiskPredictable You know the distribution and can clearly predict the scenarios you could get into very little risk if at all to operate in such a state The distribution is unknown to begin with, but one could follow the draws to understand what could come next. You could then prepare for the outcomes You do not know what is going to come next in spite of multiple attempts at the same thing. Outcome is highly uncertain! It is this sort of uncertainty that we deal with as entrepreneurs
  • 20. LEAN START-UP 12/27/2019 息 Sachidananda 20
  • 21. The Principles 12/27/2019 息 Sachidananda 21 1 Entrepreneurs are Eeverywhere 2 Entrepreneurshi p is Management 3 Validated Learning 4 Build Measure- Learn 5 Innovation Accounting
  • 22. Identify the Riskiest Parts of your business 12/27/2019 息 Sachidananda 22 Building a successful product is fundamentally about risk mitigation For most parts, the solution is not whats riskiest! Problem/Solution Fit 1 Key Question: Do I have a problem worth solving? Is it something customers want? (must-have) Will they pay for it? If not, who will? (viable) Can it be solved? (feasible Product/Market Fit 2 Key Question: Have I built something people want? Scale 3 Key Question: How do I accelerate growth?
  • 23. The Process 12/27/2019 息 Sachidananda 23 01 IDEA ! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 PIVOT OR PERSEVERE? 6.b PERSEVERE Do I have real evidence from my buyer that this is compelling? What are the key assumptions required to make this business work? How do I definitely prove or disprove the assumption with minimum time or effort? Am I reacting or am I focused on validating my pivotal assumptions? Pivot or Persevere Experiment proves hypothesis 6.a PIVOT Experiment s disprove hypothesis
  • 24. The MVP 12/27/2019 息 Sachidananda 24
  • 25. The Iteration Meta-Pattern 12/27/2019 息 Sachidananda 25 Understanding Problem Defining Solution Validating Qualitatively Verifying Quantitatively Problem Solution Fit Product Market Fit
  • 26. Pivoting - Optimize 12/27/2019 息 Sachidananda 26 Focus: Experiments: Growth Optimizations Focus: Experiments: Validated Learning Pivots Finding a plan that works Accelerating that plan Validate Refine Course Correction Efficiency Your Goal: Investors Goal: Growth Growth Your Goal: Investors Goal: Learning Growth Pick bold outcomes instead of chasing incremental improvements Ideal time to raise funding Problem/Solution Fit Product/Market Fit Scale
  • 27. 12/27/2019 息 Sachidananda 27 Pre-set goals and opportunities Expected returns! Competition analysis Avoiding surprises Inevitable trends
  • 28. What is learnable in entrepreneurship? 12/27/2019 息 Sachidananda 28 Study the Expert Entrepreneurs helped identify 5 principles Bird in Hand Principle - Start with your means. Don't wait for the perfect opportunity. Start taking action, based on what you have readily available: who you are, what you know, and who you know. Affordable Loss Principle - Set affordable loss Evaluate opportunities based on whether the downside is acceptable, rather than on the attractiveness of the predicted upside. Lemonade Principle - Leverage contingencies Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals. Crazy-Quilt Principle - Form partnerships Form partnerships with people and organizations willing to make a real commitment to jointly creating the future--product, firm, market--with you. Don't worry so much about competitive analyses and strategic planning. Pilot in the Plane Control vs Prediction If you can control something, you dont need to predict what the future would look like.
  • 29. How differently do entrepreneurs think? 1. Bird in Hand Principle Start with who you are, what you know and whom you know, and not necessarily with a predetermined goal or a pre-envisioned opportunity 2. Affordable Loss Invest only what you can afford to loose 3. Crazy Quilt Create an expanding network of self-selected stakeholders, each of whom commits only what he or she can afford to loose. Focus on partnerships rather than on competitors. 4. Lemonade Be open to surprises and leverage them. Treat them as useful inputs rather than hindrances to be avoided. 5. Pilot in the Plane Co-create the future with things within your control and with self-selected partners If you use these principles you can shape your future and transform your environment in ways that matter to you and your stakeholders. 12/27/2019 息 Sachidananda 29
  • 30. How is this different from how Managers think? Effectual Causal Start with your means Focus on your downside risk Leverage Contingencie s Form Partnerships Control Vs Predict Pre-set goals and opportunities Expected Returns Avoiding Surprises Competitive analysis Inevitable trends 12/27/2019 息 Sachidananda 30
  • 31. Classic Causation Model from Marketing Textbooks Process of Effectuation Used by Expert Entrepreneurs SINGLE CUSTOMER Segment Definition Market Definition Segmentation Targeting Positioning Understand Customer Adding Segments/Partners Def of one of many possible markets Marketing Process Inversion 12/27/2019 息 Sachidananda 31
  • 32. Who I am? What I know? Whom I know? What Can I Do? Interaction with others Effectual Stakeholder Commitments Who we are? What we know? Whom we know? New mean s Expanding cycle of resources What can we do? (Affordable loss) New Goals Actual course of action possible Converging cycle of constraints New Markets and New Firms The process! 12/27/2019 息 Sachidananda 32
  • 33. Firm Life-Cycle and Entrepreneurs Career 12/27/2019 息 Sachidananda 33 Causal Tethered to goals and predictive Effectual Tethered to means and non-predictive Time Expert entrepreneurs do not always manage to bridge this gap Expert Entrepreneur Startup Firm Large Firm NoviceEntrepreneur R e s o u r c e s Low High
  • 35. 12/27/2019 息 Sachidananda 35 References: 1. Business Model Canvas: https://www.strategyzer.com/canvas/business- model-canvas 2. Lean Canvas: https://railsware.com/downloads/Lean%20Canvas%20Template.pdf 3. Customer Forces Canvas: https://leanstack.com/customer-forces-canvas.pdf 4. Value Proposition Canvas: https://www.strategyzer.com/canvas/value- proposition-canvas 5. Product Canvas (Roman): http://www.romanpichler.com/wp- content/uploads/2013/07/The_Product_Canvas.pdf 6. Product Canvas (Shardul): http://streetsmartproductmanager.com/product- canvas/ 7. Platform Value Canvas: http://platforminnovationkit.com/kit/ 8. Platform Canvas: http://icsb.nl/artikelen/new-business-model-canvas-for- digital-platforms/ 9. Social Business Model Canvas (Tandemic): http://www.socialbusinessmodelcanvas.com/ or https://bmtoolbox.net/tools/social-business-model-canvas/