MGMT 340 - **Lean Start-Up**
worse, better
The author finds that when switching to validated learning, it feels ________ before it feels ___________.
which activities create value and which are a form of waste?
The critical first question for any lean transformation is:
plan
The first problem for startups failure is the allure of a good _______.
What four questions should you ask when determining what to build?
1. Do consumers recognize that they have a problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution to their problem?
The goal of a startup is to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible.
True
Runway
True measure of startup's runway is how many pivots they can make prior to running out of money. Pivoting faster can extend the runway.
This approach leases to chaos more often than it does success.
a "just do it" attitude
The decision to privot requires a ___________________.
a clear-eyed and objective mind-set
One form of primary research is _____
a focus group
Validated Learning
3rd principle of Lean Startups. Startups exist to LEARN how to build a SUSTAINABLE business which can be validated scientifically by running frequent experiments. Unit of progress for a business.
conditions of extreme uncertainty.
A startup is a human institution designed to create a new product or service under ____________________.
uncertainty
A startup is a human institution designed to create a new product or service under conditions of extreme __________.
Lean Startup
Application of lean thinking to the process of innovation
The author Eric Ries explains "hard work and perserverance does lead to success.
False
Early Adopters
Customers who feel the need for the product most acutely, tend to forgive mistakes and eager to give feedback.
Learning Milestone
Data collected from MVP experiments that provide baseline data on customer reaction to product or service. Examples include conversion rate, sign-up or trial rate, customer lifetime value, etc.
Describe product/market fit.
Describes the moment when a startup finally finds a widespread set of customers that resonate with its product.
The focus of which of the following step in the creative process is to transform the idea into reality?
Implementation
All innovations need to be ____________?
Quantifiable
Leap of Faith Questions
Questions that can validate either your Value Hypothesis or your Growth Hypothesis.
All businesses exist to do what?
Solve a problem.
Which of the following is not one of the three types of systems?
Starter System
True
T/F Companies are able to design, develop, and ship out new features one at a time, taking advantage of the power of small batches.
False
T/F If you are building the wrong thing, optimizing the product or its marketing will yield significant results.
False
T/F If you are causing (or missing) quality problems now, the resulting defects won't slow you down later.
True
T/F Lean Startup is a principled approach to new product development.
False
T/F Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.
Harvard's Ted Levitt says that creativity is ________ new things, and innovation is ________ new things
thinking; doing
Everyone who goes into business is actually ________ people in one?
three
Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:
to pivot or persevere
The higher-quality of the existing playbook is, the easier it will be for it to evolve over time.
true
The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.
true
The innovation accounting framework makes it clear when the company is stuck and needs to change direction.
true
Using focus groups is an example of primary research.
true
We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.
true
The imperative for new startups to innovate is ______________.
unrelenting
Startups have to focus on the big experiments that lead to _________________.
validated learning
The critical first question for any lean transformation is:
which activities create value and which are a form of waste?
Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.
whole process
"It's not your business you have to fear losing. It's something much bigger than that. It's _______?
your self
Genchi Gembutsu
"Go and see for yourself." Most important part of lean manufacturing vocabulary, critical part of the Toyota Way. Do not rely on anything other than what you see firsthand.
4 Questions for Product Development
1) Do customers recognize they have the problem you are trying to solve? 2) If there was a solution, would they buy it? 3) Would they buy it from us? 4) Can we build a solution for that problem?
Define "startup"
A human institution designed to create a new product or service in conditions of extreme uncertainty
What is a startup according to Eric Ries?
A human institution designed to create a new product or service under conditions of extreme uncertainty.
Every ____________ business reaches a point where it pushes beyond its owner's comfort zone?
Adolescent
pivot or persevere
After the startup has made all the micro changes and product optimizations it can to move its baseline toward the ideal, the company reaches a decision point. At this point they _________________.
All of these are ways past customers drive sustainable growth. Through repeat purchase or use. Word of mouth. As a side effect of product design. Through funded advertising.
All of the following are primary ways past customers drive sustainable growth EXCEPT
Which of the following question(s) should you consider before entering a lawsuit to protect intellectual property?
All of these
Customer Archetype
Brief document describing the proposed target customer.
Pivot
Change in strategy when tests prove that Growth or Value Engine cannot maintain a viable business under current strategy.
Which personality did Sarah say that she did not have?
Entrepreneurial
most extreme position
The best way to influence the boss and get what you want is to take the ___________ possible.
Which of the following is not a question to ask to evaluate an industry?
How sparse is the industry?
Sandbox
Part of existing product or service that teams are allowed to experiment on (while remainder of product or service is "off limits" for experimentation). Primarily for established businesses and products.
A startup is a human institution designed to create a new product or service under ____________________.
conditions of extreme uncertainty.
The Build-Measure-Learn feedback loop is a __________ process.
continuous
A ________ is an exclusive right that protects the creators of original works such as literary, dramatic, musical, and artistic works
copyright
Melinda and John Perez, both corporate attorneys in New York City, have grown tired of their lengthy daily commute, the stress of their jobs, and the overbearing policies of their employers. They have decided to leave their six-figure jobs and together open a guide service in Wyoming. Melinda and John are examples of ________.
corporate dropouts and copreneurs
Entrepreneurship requires a ______________ to harness an entrepreneurial opportunity.
managerial discipline
Who was lean startup first proposed by in 2008?
Eric Ries.
___________________ defines value as providing benefit to the customer; anything else is waste.
Lean thinking
What is a leap-of-faith assumption?
Leap-of-faith assumptions - The two most important assumptions a business makes are: Value hypothesis Growth hypothesis Leap of faith assumptions make or break your business, and it is the startups job to tune these assumptions as quickly as possible.
__________ is the oldest excuse in the book for failure of execution.
Learning
Which hemisphere of the brain is responsible for language, logic, and symbols?
Left hemisphere
After Infancy most _______ lock the door?
Technicians
An engine of growth can be defined quantitatively.
True
New start-up organizations should be committed to making mistakes.
True
Prototype MVP
Type of Minimum Viable Product. This is an actual prototype of the product or service with minimum number of features to conduct one turn of the Build-Measure-Learn loop.
time
Under pressure, teams may feel that they don't have _______ to waste on analyzing root causes even though it would give them more time in the long term.
rocket
Unfortunately, too many startup business plans look more like they are planning to launch a _______ ship than drive a car.
The imperative for new startups to innovate is ______________.
Unrelenting
faster than anyone else can
The reason to build a new team to pursue an idea is that you believe you can accelerate through the Build-Measure-Learn feedback loop __________.
What is a startup's strategy?
The strategy is to figure out the right questions to ask First challenge: Build an organization that can systematically test these assumptions. Second challenge: Perform rigorous testing without losing sight of the company's overall vision.
Lean Startup is a principled approach to new product development.
True
pivot
The more money, time, and creative energy that has been sunk into an idea, the harder it is to _________.
easier
The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.
small batches
The one envelop at a time approach is called "single-piece flow" in lean manufacturing. It works because of the surprising power of _______________.
early adopters
The point is not to find the average customer but to find ___________: the customers who feel the need for the product most acutely.
_____________ prevents many startups from getting the feedback they need.
delay
Lean Startup is a scientific approach to manage ------ ------
disruptive innovation.
The point is not to find the average customer but to find ___________: the customers who feel the need for the product most acutely.
early adopters
One of the most important lessons of the scientific method: if you cannot ____, you cannot learn.
fail
________________ defines value as providing benefit to the customer; anything else is waste.
lean thinking
The _______________ about how to build a sustainable business is the outcome of experiments.
learning
Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.
false
Startups are different - too much budget is as harmful as too little.
false
Structure is a prerequisite - it does guarantee success.
false
The author Eric Ries explains "hard work and perserverance does lead to success.
false
A(n) ________ group involves enlisting a small number of potential customers to get feedback on specific issues about the company's product or service.
focus
Without a ____________ many companies get caught in the trap of being satisfied with a small profitable business when a pivot might lead to more significant growth.
formal growth model
Having a low-quality product can _____________ learning when the defects prevent customers from experience (and giving feedback on) the product's benefits.
inhibit
The ability to apply creative solutions to problems and opportunities to enhance or to enrich people's lives is called ________.
innovation
With all pivots, we have to get back to the basics and start the ________________ over.
innovation accounting cycle
____________ enables startups to prove objectively that they are learning how to grow a sustainable business.
innovation accouting
__________ is the oldest excuse in the book for failure of execution.
learning
"Your business and your ______ are two totally separate things"?
life
the majority of small companies are concentrated in the ________ and ________ industries.
retail; service
The one envelop at a time approach is called "single-piece flow" in lean manufacturing. It works because of the surprising power of _______________.
small batches
The "growth hypothesis" _______ how new customers will discover a product or service.
tests
Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:
the pivot or persevere
Startup organizations must attempt to tune the engine from the baseline toward the ideal.
true
Startups have a true north, a destination in mind: creating a thriving and world-changing business. This is called a startup's _____.
vision
Taiichi Ohno and Shigeo Shingo
Developed Lean Manufacturing revolution at Toyota
What is the root cause of most small business failure?
Fatal Assumption
The ______________ is the mechanism that startups use to achieve sustainable growth.
Engine of growth
What are the natural dispositions of every business?
Grow or Contract
___________ enables startups to prove objectively that they are learning how to grow a sustainable business.
Innovation accounting
The "growth hypothesis" _______ how new customers will discover a product or service.
Tests
Growth Hypothesis
Tests how new customers will discover a product or service.
continuous
The Build-Measure-Learn feedback loop is a __________ process.
Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.
True
The decision to pivot requires a clear-eyed and objective mind-st.
True
Small companies ________
are the leaders in offering training and advancement opportunities to workers
Entrepreneurs may find benefit from the Internet due to its potential ________.
as a relatively low-cost solution to expand its revenue-generating abilities
the primary purpose of the five forces matrix is to ___
assign values to each of the five elements
A head start is usually large enought to matter, and tyime spent in stealth mode - away from customers -is likely to provide a head start.
false
The first step in understanding a new product or service is to figure out if it is fundamentally value-creating or value-destroying.
true
The goal of a minimum viable product is to begin the process of learning, not end it.
true
Minimum Viable Product Design Principle
"Remove any feature, process or effort that does not contribute directly to the learning you seek."
What are the 5 why's and why are they used?
At the root of every seemingly technical problem is a human problem. The 5 why's provides an opportunity to discover what that human problem might be.
The more _________ a system is, the more effective your Franchise Prototype will be?
Automatic
economies of scale
Because the Japanese car market after the war was so small and capital was not available, they were unable to do mass production and take advantage of ______________.
How do we search?
Begin with an educated guess, Change guesses into facts using experiments, Move through the loop quickly.
Most tools from general management are designed to flourish in the harsh soil of extreme uncertainty in which startups thrive.
False
The author agrees that a good plan, a solid strategy, and thorough market research works for startups.
False
quality problems can be identified much sooner
The biggest advantage of working in small batches is that ___________________.
a "just do it" attitude
This approach leases to chaos more often than it does success.
The author finds that when switching to validated learning, it feels ________ before it feels ___________.
Worse; better
Describe innovation accounting.
a disciplined, systematic framework that makes it clear when the company is stuck and needs to change direction. 1. Use MVP to establish real data on where the company is right now 2. Startups must attempt to tune the engine from the baseline through product development, marketing, or other initiative toward improving one of the drivers of its growth model. 3. After the startup tunes optimizations through its MVP, the company decides whether to pivot or persevere. If tuning the MVP doesn't lead to growth, it is probably time to pivot.
What is a customer archetype?
a document that seeks to humanize your proposed target customer, and that is iterated through as assumptions are.
One of the most important things to note about MVP is its ____________
acceleration
the financial feasibility analysis takes these aspects into consideration ______
capital requirements, estimated earnings, and return on investment
The __________________ is defined as the fraction of customers in any period who fail to remain engaged with the company's product.
chum rate
Many viral products do not charge customers directly but rely on indirect sources of revenue such as _________________.
advertising
_______ thinking is the ability to see similarities and ________ thinking is the ability to see differences among various data and events.
. Convergent; divergent
We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.
True
We must learn the truth about which elements of our strategy are working to realize our vision and which are just crazy.
True
Concierge MVP
Type of Minimum Viable Product. One-on-one product or service you can offer to first customers (often delivered by entrepreneur personally) to get real-time feedback on experiments before scaling.
Smoke Test MVP
Type of Minimum Viable Product. Signup page for "wait list" but no product. Could be a video describing product (Dropbox example).
to pivot or persevere
Upon completing the Build-Measure-Learn loop, startups confront the most difficult question any entrepreneur faces:
Startups have to focus on the big experiments that lead to _________________.
Validated learning
__________________ is the process of demonstrating empirically that a team has discovered valuable truths about a startup's present and future business prospects.
Validated learning
Minimum Viable Product
Version of the product that allows a full turn of the Build-Measure-Learn loop with minimum effort and least development time.
Startups have a true north, a destination in mind: creating a thriving and world-changing business. This is called a startup's _____.
Vision
The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.
Vision
Vision-Strategy-Product Triangle
Vision at base, followed by Strategy, with Product at the top. Products change constantly. Strategy changes sometimes (called a Pivot). Vision rarely changes.
numbers
We could have tried marketing gimmicks, bought a Super Bowl ad, or tried flamboyant public relations as a way to juice up our gross ________. That would have given investors the illusion of traction, but only for a short time.
When an organization starts making cuts that result in a slowdown of the ___________, all they have accomplished is to help the startup go out of business more slowly.
feedback loop
The Lean Startup methodology reconceives a startup's efforts as experiments that _______ its strategy to see which parts are brilliant and which are crazy.
test
Define "validated learning"
the process of empirically demonstrating that a team has discovered valuable truths about a team's present and future business prospects. It is more concrete, more accurate, and faster than market forecasting or classical business planning.
______________ prevents many startups from getting the feedback they need.
delay
Prototypes usually point out potential problems in a product's ___
design
Mainstream customers have ________ requirements and are much more demanding.
different
Women in business still experience ________ as they attempt to break the "glass ceiling.
discrimination
Because the Japanese car market after the war was so small and capital was not available, they were unable to do mass production and take advantage of ______________.
economies of scale
One hallmark of successful entrepreneurs is the ability to ________.
fail intelligently
Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.
true
The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.
true
The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."
true
All of the following are characteristics of the typical entrepreneur except ________.
value of money over achievement
_________ can allow entrepreneurs to form false conclusions and live in their own private reality.
vanity metrics
The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.
vision
The Lean Startup model offers a way to test an organization's hypotheses __________.
All of these are correct
The author strongly recommend that startup teams be _____________.
Completely cross-functional
A startup is a human institution designed to create a new product or service under ____________________.
Conditions of extreme uncertainty
waste
Consider all the ______ caused by our incorrect strategic assumptions.
Think of your company as a _________ instead of a partnership?
Corporation
W. Edwards Deming View of Customer
Customer is the most important part of the production process - should focus all energy on producing outcomes the customer finds valuable.
There are formulas available to decide exactly how complex you want to make your mvp.
False
There is a way to remove the human element - vision, intuition, judgment - from the practice of entrepreneurship.
False
What is the secret behind the success of the Business Format Franchise?
Franchise Prototype
Most companies organize around personalities rather than around ________
Functions
Vision
Goal of lean startup is to find a synthesis between the vision and what customers will accept.
The _________ hypothesis tests how new customers will discover a product or service.
Growth
Why did Sarah start selling pies?
Her best friend said she should because she was so good at making pies
At the root of every seemingly technical problem is a ___________ problem.
Human
Startup Defined
Human institution designed to create a new product or service under conditions of extreme uncertainty.
strategy
If the numbers for early experiments don't look promising, there is clearly a problem with the _________.
mentors
If the performance of the mentor and mentee are linked, it will ensure that the ___________ take education seriously.
Quality Principle
If we do not know who the customer is, we do not know what quality is.
Scientific Method Lesson
If you cannot fail, you cannot learn
a crisis
If you reach the limits for new customer growth (they are exhausted) and the growth suddenly slows, it provokes ______________.
sustainable
In modern economy, almost any product that can be imagined can be built. The more pertinent question is "Can we build a __________ business around this set of products and services?"
built
In modern economy, almost any product that can be imagined can be built. The more pertinent question is "Should this product be _____?"
Having a low-quality product can _____________ learning when the defects prevent customers from experience (and giving feedback on) the product's benefits.
Increase
"__________ is the signature of a bold, imaginative hand"?
Innovation
What step is after Organizational Strategy in the business Development Program?
Management Strategy
advertising
Many viral products do not charge customers directly but rely on indirect sources of revenue such as _________________.
product/market fit
Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.
A __________ business knows how it got to be where it is, and what it must do to get where it wants to go?
Mature
Turn-Key Revolution started in what fast food restaurant?
McDonalds
Actionable Metric (3 A's)
Measuring based on cohorts, split tests, and reaction to MVP tests. Each metric must be Actionable, Accessible, and Auditable.
Kanban
Method of limiting work until it is validated, which forces priority on validation throughout the work process. 4 buckets (backlog, in progress, built, validated) with rule limiting each bucket to set number of items (i.e. Only 4 things can be in the progress bucket at one time - to begin work on something new it must either be validated or abandoned).
Which of the following statements is not true regarding the diversity of entrepreneurs?
Minority-owned businesses now account for approximately 22 percent of all businesses in the U.S
4 Methods of Sustainable Growth
New customers come from the actions of past customers. Happens 4 ways: 1. Word of mouth; 2. Side effect of product usage (other see it being used and want it); 3. Self-Funded advertising (ads paid for completely out of revenue); 4. Repeat purchase or use.
Who said "Creativity thinks up new things"?
Professor Levitt
Value
Providing benefit to the customer; anything else is waste.
True
T/F Startups need to conduct experiments that help determine what techniques will work in their unique circumstances.
False
T/F Strategic planning takes months to complete and experiments should not begin until it is completed.
True
T/F The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.
pivot
When a company _______, it starts the process all over again, reestablishing a new baseline and then tuning the engine from there.
classic startup trap
When an organization is successful in their early efforts and ignore the principles behind their success, they have fallen into the ______________.
feedback loop
When an organization starts making cuts that result in a slowdown of the ___________, all they have accomplished is to help the startup go out of business more slowly.
False
T/F The author Eric Ries explains "hard work and perserverance does lead to success.
False
T/F The author agrees that a good plan, a solid strategy, and thorough market research works for startups.
True
T/F The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."
True
T/F The challenge of entrepreneurs is to find ways to achieve the same amount of validated learning at lower cost or in a shorter time.
True
T/F The goal of a startup is to figure out the right thing to build - the thing customers want and will pay for - as quickly as possible.
True
T/F The higher-quality of the existing playbook is, the easier it will be for it to evolve over time.
True
T/F The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.
True
T/F We must be willing to set aside our traditional professional standards to start the process of validated learning as soon as possible.
True
T/F We must learn the truth about which elements of our strategy are working to realize our vision and which are just crazy.
False
T/F With proper managerial structure innovation is a top-down, centralized, and predictable thing that can be managed.
The "theory of inventive problem solving" is a left-brained, scientific, systematic process based on innovative patents and is referred to as ________.
TRIZ
Value Hypothesis
Tests whether product or service really delivers value to customers once they use it.
tests
The "growth hypothesis" _______ how new customers will discover a product or service.
tests
The "value hypothesis" __________ whether a product or service really delivers value to customers once they are using it.
customers often don't know what they want.
The Lean Startup Model often works because _______________.
thoroughly immediately rigorously
The Lean Startup model offers a way to test an organization's hypotheses __________.
the challenges it faces
The Lean Startup works only if we are able to build an organization as adaptable and fast as ____________.
to test fundamental business hypothesis
The MVP's ultimate goal is to ________________.
value
The __________ hypothesis tests whether a product or service really delivers value to customers once they are using it.
engine of growth
The ______________ is the mechanism that startups use to achieve sustainable growth.
churn rate
The __________________ is defined as the fraction of customers in any period who fail to remain engaged with the company's product.
At its heart what is lean startup methodology?
The application of the scientific method to building a business.
synthesis
The author adopted the view that their job was to find ________________ between their vision and what customers would accept.
a clear-eyed and objective mind-set
The decision to privot requires a ___________________.
larger
The focus of each team is iterating with customers as rapidly as possible, running experiments, and then using validated learning to make real-time investment decisions about what to work on. No team is _________ than five people.
delaying the decision to pivot
The following are all examples of ______________: 1. Vanity metrics 2. Unclear hypothesis 3. Fear
vision
The goal of every startup experiment is to discover how to build a sustainable business around the entrepreneur's ______________.
unrelenting
The imperative for new startups to innovate is ______________.
smaller and larger
The investment shoud be _________ when the symptom is minor and ______ when the symptom is more painful.
you have zero revenue, zero customers, and zero traction
The irony is that it is often easier to raise money or acquire other resources when you have _________________.
waste
The lesson of the minimum viable product is that any additional work beyond what was required to start learning is ___________, no matter how important it might have seemed at the time.
What is an engine of growth?
The mechanism that startups use to achieve sustainable growth. Sustainable growth is characterized by one simple rule: New customers come from the actions of past customers.
Entrepreneurs need a personal stake in the outcome of their creations.
True
Entrepreneurs should humbly test their theories and approach to see what the market thinks. Listen to the feedback honestly. And continue to innovate in the directions they think will create meaning in the world.
True
If we do not know who the customer is, we do not know what quality is.
True
Once IMVU's efforts were aligned with what customers really wanted, their experiments were much more likely to change their behavior for the better.
True
One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.
True
Small batches normally allow new versions of products to be released to customers on a monthly, quarterly, or yearly cycle.
True
The amount of time a company can count on holding on to market leadership to exploit its earlier innovations is shrinking.
True
The author felt he had committed the biggest waste of all - "building a product that our customers refused to use."
True
The first step in understanding a new product or service is to figure out if it is fundamentally value-creating or value-destroying.
True
The importance of small-batch approach produces a finished product every few seconds, whereas the large-batch approach must deliver all the products at once, at the end.
True
The young, job-creating small companies are known as ________
"gazelles"
Within five years, ________ percent of new businesses will fail.
51
What percent of startups fail?
90 percent.
The author agrees that a good plan, a solid strategy, and thorough market research works for startups.
false
With proper managerial structure innovation is a top-down, centralized, and predictable thing that can be managed.
false
Pivots are a permanent fact of life for any growing business. Unless they achieve initial success.
fasle
The process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business is known as a ______
feasibility analysis
Time out of cash is relevant to ________ analysis.
financial feasibility
It is important to focus on establishing the _________ under which autonomous startup teams operate.
ground rules
Once an organization entered a period of rapid hiring, repeated Five Whys sessions revealed that problems caused by lack of ___________ were slowing down product development.
training
True
T/F If we do not know who the customer is, we do not know what quality is.
A venture must produce an attractive rate of return relative to the level of risk it requires.
true
As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.
true
Companies are able to design, develop, and ship out new features one at a time, taking advantage of the power of small batches.
true
Early adopters use their imagination to fill in what a product is missing.
true
Entrepreneurs should humbly test their theories and approach to see what the market thinks. Listen to the feedback honestly. And continue to innovate in the directions they think will create meaning in the world.
true
In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.
true
More than one engine of growth can operate in a business at a time.
true
New start-up organizations should be committed to making mistakes.
true
One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.
true
"Verification" refers to ________.
All of these
_______ percent of all U.S. businesses are family-owned and managed.
Ninety
Research shows that anyone can learn to be creative. The problem is ________
All of these
Steps in the patent process include ____
All of these
The nation's small businesses ________.
All of these
The Franchise model uses workers with the ________ level of skill?
lowest
Successful startups usually focus on ______ engine(s) of growth, specializing in everything that is required to make it work.
one
The lesson of the minimum viable product is that any additional work beyond what was required to start learning is ___________, no matter how important it might have seemed at the time.
waste
the author finds that when switching to validated learning, it feels ________ before it feels ___________.
worse, better
What does the author say to the question "How do I get my people to do what I want"?
you can't
The irony is that it is often easier to raise money or acquire other resources when you have _________________.
you have zero revenue, zero customers, and traction
The irony is that it is often easier to raise money or acquire other resources when you have _________________
you have zero revenue, zero customers, and zero traction
2 Dangers of Market Research and the Solution
1) Just-do-it types who start building after only cursory customer conversations; 2) Analysis paralysis types. Answer is to keep researching until you can conceive of a Minimum Viable Product to test, but to stop researching at that point and test the MVP.
3 Steps of Innovation Accounting
1) Minimum Viable Product establishes real data to set baseline; 2) Attempt to tune engine from baseline to ideal; 3) If no more experiments can move closer to the ideal decision point: pivot or persevere.
3 Advantages of Validation
1) More accurate data about customer demand (real customer behavior vs. hypothetical; 2) Interaction with real customers to learn about needs; 3) Allows you to be surprised when customer acts unexpectedly
What are the qualities of a good metric?
1. Actionable - You understand a clear cause and effect 2. Accessible - They can be easily understood 3. Auditable - We must ensure the data is correct
7 Sandbox Rules
1. Any team can create a split tests that only effects "sandboxes" parts of product or service; 2. One team must see experiment through to end; 3. Experiment must have specified end; 4. Experiment can only impact certain number of customers; 5. Experiment evaluated based on standard report of 5-10 actionable metrics; 6. Every team that works inside sandbox and every product built must use same metrics; 7. Team must monitor metrics and customer reactions while experiment is in progress, or end experiment if there is major problem.
2 Rules for Root Cause Analysis
1. Be tolerant of all mistakes the first time; 2. Never allow the same mistake twice.
5 Principles of Lean Startup
1. Entrepreneurs are everywhere 2. Entrepreneurship is management 3. Validated learning 4. Build-Measure-Learn 5. Innovation Accounting
4 Phases of Business
1. Scale (building product or service, getting into hands of customers); 2. Product Focus (product becomes public face, attracts competitors and copycats); 3. Operational Excellence (focus on increase margins, lower costs, differentiation, optimization); 4. Legacy (focus on reducing operating costs, maintaining market for product as long as possible).
Describe the core principles of the Lean Startup Methodology
1. Startups require management geared towards extreme uncertainty. 2. Startups exist to learn how to build a sustainable business. This learning should be validated scientifically by running frequent experiments. 3. BML (Build-Measure-Learn) is the process of turning ideas into products, measuring how customers respond, and learning whether to pivot or persevere. 4. Innovation Accounting. To improve entrepreneurial outcomes, we must measure progress, set up milestones, and prioritize work, i.e, focus on the boring stuff.
3 Engines of Growth
1. Sticky engine of growth - focus on attracting and retaining customers over long term (rate of acquiring customers must exceed churn rate); 2. Viral engine of growth - customers do majority of marketing like Tupperware, network marketing (viral coefficient must be greater than 1 to succeed); 3. Paid engine of growth - each customer brings in enough revenue to advertise and bring in additional customers (lifetime value of customer must exceed cost per acquisition).
4 Tips for Using 5 Whys
1. Use a 5 Why's Master to facilitate; 2. Only apply to new problems that arise; 3. Everyone involved in issue must be involved in the meeting; 4. Remind everyone the purpose of 5 Why's each time you use it.
What are the two most important assumptions an entrepreneur must make?
1. Value Hypothesis - does the product or service deliver value to customers? 2. Growth Hypothesis - how well does the product grow among customers?
What are the primary ways of driving sustainable growth?
1. Word of mouth 2. A side effect of product usage (i.e., someone seeing a fashion, etc.) 3. Through funded advertising (as long as cost of acquiring a customer is less than the revenue the customer generates) 4. Through repeat purchase or use
9 Pivots
1. Zoom In Pivot - Single feature becomes whole product or service. 2. Zoom Out Pivot - Whole product becomes single feature of bigger product. 3. Customer Segment Pivot - Product solves problem for different customers than originally thought. 4. Customer Need Pivot - Customers have different problem than originally thought. 5. Platform Pivot - Change from platform to application or vice versa. 6. Business Architecture Pivot - Switch from high margin/low volume to high volume/low margin or vice versa. 7. Value Capture Pivot - Change to the way the company captures value (monetization, revenue model, subscription, etc.) 8. Channel Pivot - Change in way product or service is delivered to customer (direct sale, network, affiliate, etc.) 9. Technology Pivot - Use of different technology to deliver same product or service.
What are 10 different types of pivots?
1. Zoom-in pivot: What was considered a single feature in a product becomes the whole product 2. Zoom-out pivot: What was considered the whole product becomes a single feature in a much larger product. 3. Customer segment pivot: The product hypothesis is partially confirmed, solving the right problem, but for a different customer than originally anticipated. 4. Customer need pivot: The product hypothesis is partially confirmed. The target customer has a problem worth solving, just not the one you anticipated 5. Platform pivot: A change from an application to a platform or vice versa 6. Business architecture pivot: example, when a startup goes from a high margin/low volume to mass market or vice versa. 7. Value capture pivot: How do companies capture value? 8. Engine of growth pivot: A company changes its growth strategy to seek faster or more profitable growth 9. Channel pivot: The same basic solution could be delivered through a different channel with greater effectiveness. 10. Technology pivot: When discovering a technology to achieve the same solution by using a completely different technology.
It is estimated that ________ percent of new businesses fail within two years, while ________ percent fail within five years.
21,51
Build-Measure-Learn
4th principle of Lean Startups. The fundamental activity of startups is to 1) turn ideas into products, 2) measure customer response, 3) then pivot or persevere. All successful startup processes exist to accelerate feedback.
In a survey of members of Generation Z, ________ percent said they would rather save money than spend it.
57
Ideally, a focus group should have ________ members.
8-12
Of the 28 million businesses in the United States, more than ________ percent are considered small.
99
adaptive
A ___________ organization is one that automatically adjusts its process and performance to current conditions.
minimum viable product
A ______________ is the fastest way for entrepreneurs to learn.
Which of the following is not a characteristic of a successful working relationship between copreneurs?
A clear definition of one partner as "boss" and the other as "subordinate"
analysis paralysis
A common problem entrepreneurs can fall victim to is _______, endlessly refining their plans.
What is lean startup?
A method for developing business and products.
What is the MVP?
A product with the least amount of work required to test fundamental business hypotheses. Remove all features that do not contribute directly to the learning you seek.
What is a startup according to Steve Blank?
A temporary organization in search of a scalable, repeatable, profitable business model.
___________ begins at the point in the life of your business when you decide to get some help?
Adolescence
the Lean Startup model offers a way to test an organization's hypotheses __________.
All of these are correct.
What is the second standard of a Strategic Objective?
An Opportunity Worth Pursuing
A common problem entrepreneurs can fall victim to is _______, endlessly refining their plans.
Analysis paralysis
at the same time
As startups grow, entrepreneurs can build organizations that learn how to balance the needs of existing customers with the challenges of dinding new customers to serve, managing existing lines of business, and exploring new business models - all ____________.
What is the key question a startup should revolve around answering?
Can we build a sustainable business around this set of products and services? Approach this question as a science experiment
What did lean startup do?
Combined Ford's principles.
Vanity Metric
Common metrics used to evaluate startups (gross revenue, number of customers, etc.) These do not prove Value or Growth Engines are working.
During the incubation phase of the creative process, the entrepreneur might do all of the following except which of the following to let ideas "marinate" in his mind?
Don't allow one's self to daydream.
The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.
Easier
Why are small batches important?
Ensures that a startup can minimize the expenditure of time, money, and effort that ultimately turns out to have been wasted. Lets people discover the truth faster.
The _________ is the dreamer in us?
Entrepreneurial personality
Entrepreneurship
Entrepreneurs are everywhere (anyone creating product or service under extreme uncertainty). "Entrepreneur" should be a job title in all companies. (Principles 1 and 2 of Lean Startup).
managerial discipline
Entrepreneurship requires a ______________ to harness an entrepreneurial opportunity.
The truth is every engine of growth __________________.
Eventually runs out of gas
If you are building the wrong thing, optimizing the product or its marketing will yield significant results.
False
Which stage of the creative process requires one to develop a solid understanding of the problem or decision?
Investigation
ground rules
It is important to focus on establishing the _________ under which autonomous startup teams operate.
whole process
Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.
What did lean startup emerge from?
Lean Manufacturing.
more
On an average each person who signs up will bring, on an average _______ than one other person with him or her.
The 5 Whys
Process of asking "why" 5 times to discover root cause of an identified problem. Tends to uncover human managerial or system issues versus surface issues.
Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.
Product/market fit
Which hemisphere of the brain is responsible for the body's emotional, intuitive, and spatial functions?
Right hemisphere
____ lateral thinking is somewhat unconventional and unstructured.
Right-brained
Who was the author of the book "Man's Search for Himself" that Michael Gerber read three times?
Rollo May
Startups are in a life-or-death struggle to learn how to build a sustainable business before they ______________________.
Run out of resources and die
Which of the following is NOT one of the forces driving the entrepreneurial trend in our country?
Shift away from a service economy.
What does MacDonald call its self "The most successful _____________ in the world"?
Small Business
run out of resources and die
Startups are in a life-or-death struggle to learn how to build a sustainable business before they ______________________.
one
Successful startups usually focus on ______ engine(s) of growth, specializing in everything that is required to make it work.
What are the engines of growth? What metrics are important for each?
Successful startups usually focus on just one, specializing in everything that makes it work. Engines of growth are designed to give startups a relatively small set of metrics on which to focus their energies. 1. Sticky engine of growth - track their attrition or churn rate a. Churn rate - fraction of customers in any period who fail to remain engaged in the company's product. b. If the rate of new customers exceeds the churn rate, the product will grow. 2. Viral engine of growth - depends on person-to-person transmission as a consequence of normal product use a. Viral coefficient - how many new customers will use the product as a consequence of each new customer signing up. b. A viral coefficient > 1 will lead to exponential growth 3. Paid engine of growth - each customer pays a certain amount of money for the product over his or her lifetime as a customer. a. Cost per Acquisition (CPA) b. Customer Lifetime Value (LTV) c. The margin between the LTV and the CPA will determine rate of growth. The company cannot grow if LTV isn't greater than the CPA
cost per acquisition (CPA)
Suppose and advertisement costs $100 and causes fifty new customers to sign up for the service. This ad has a ____________ of $2.00.
The author adopted the view that their job was to find ________________ between their vision and what customers would accept.
Synthesis
How would you define a startup success/startup productivity?
Systematically determining the correct things to build, or learning how to solve a customer's problem
False
T/F A head start is usually large enought to matter, and tyime spent in stealth mode - away from customers -is likely to provide a head start.
True
T/F A solid process lays the foundation for a healthy culture, one where ideas are evaluated by merit and not by job title.
True
T/F Entrepreneurs need a personal stake in the outcome of their creations.
True
T/F In the Lean Startup model, an experiment is more than just a theoretical inquiry; it is also a first product.
False
T/F Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.
True
T/F Most of the time customers don't know what they want in advance.
True
T/F New start-up organizations should be committed to making mistakes.
True
T/F Once IMVU's efforts were aligned with what customers really wanted, their experiments were much more likely to change their behavior for the better.
True
T/F One of the most vexing aspects of the minimum viable product is the challenge it poses to traditional notions of quality.
False
T/F Pivots are a permanent fact of life for any growing business. Unless they achieve initial success.
True
T/F Startup organizations must attempt to tune the engine from the baseline toward the ideal.
True
T/F Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.
False
T/F Startups are different - too much budget is as harmful as too little.
Who are early adopters and why are they important to validated learning?
The product must be sold to early adopters, a special breed of customer who prefer to be the first ones using a product, before it can be sold to the mass market. The lessons about what works and what doesn't come from these early adopters.
Engine of Growth
The profit making engine of the business; every new version or feature of product, every new marketing innovation, all experiments are designed to tune the engine of growth.
general management
The reason is that in _______________, a failure to deliver results is due to either a failure to plan adequately or failure to deliver results is due to either a failure to plan adequately or a failure to execute properly.
What is a minimum viable product?(according to Eric Ries)
The version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.
Why do startups fail?
They do not fail because they do not have a product, they fail because they lack customers and a profitable business model.
rocket
They prescribe the steps to take and the results to expect in excruciating detail, and as in planning to launch a ______, they are set up in such a way that even tiny errors in assumptions can lead to catastrophic outcomes.
the right things to build
This is true startup productivity: systematically figuring out _______________.
Explain why adaptive processes are important.
To accelerate, lean startups need a process that provides a natural feedback loop. Adaptive processes force you to slow down and invest in preventing the kinds of problems that are currently wasting time. As those preventative efforts pay off, naturally speed up again.
Goal of Startups
To figure out the right thing to build - the thing customers want and will pay for - as quickly as possible. Emphasis is 1) fast iteration, 2) customer insight, and 3) huge vision/ambition
The MVP's ultimate goal is to ________________.
To test fundamental business hypothesis
the early franchise businesses were called "___________" Franchises?
Trade Name
Most problems that at first appear to be individual mistakes can be traced back to problems in ____________.
Training
What is the TWI program?
Training With Industry program which was developed for the Japanese industry to help them quickly rebuild their industrial base.
Continuous Deployment / Andon Cord
When system detects a problem everything stops (like Andon Cord in Toyota Production System) until: 1. The defective change is removed immediately and automatically; 2. Everyone on team is notified of problem; 3. Team is blocked from introducing any other changes until... 4. The root cause of the problem is found and fixed.
Lean Management requires treating work as a system and then dealing with the batch size and cycle time of the ___________.
Whole process
pivot
Without a formal growth model, many companies get caught in the trap of being satisfied with a small profitable business when a ______ might lead to more significant growth.
Vanity metrics
_________ can allow entrepreneurs to form false conclusions and live in their own private reality.
learning
__________ is the oldest excuse in the book for failure of execution.
Innovation accounting
____________ enables startups to prove objectively that they are learning how to grow a sustainable business.
Innovation Accounting
______________ , a quantitative approach that allows us to see whether our engine-tuning efforts are bearing fruits.
Delay
______________ prevents many startups from getting the feedback they need.
Engines of growth
________________ are designed to give startups a relatively small set of metrics on which to focus their energies.
One of the most important things to note about MVP is its ____________.
acceleration
A ___________ organization is one that automatically adjusts its process and performance to current conditions.
adaptive
As startups grow, entrepreneurs can build organizations that learn how to balance the needs of existing customers with the challenges of dinding new customers to serve, managing existing lines of business, and exploring new business models - all ____________.
at the same time
Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ____
bargaining power of buyers
According to Porter's 5-forces model, a substitute for Coca-Cola, the carbonated cola drink, would be ___
bottled water
The essential lesson the be learned from small batch sizes is that by reducing batch sizes, organizations can get through the _____________ more quickly than competitors.
build-measure-learn feedback loop
the process in which entrepreneurs test their business models on a small scale before committing serious resources to launch a business that might not work is known as ________
business prototyping
What did the Boss offer the manager when he first started working for the hotel? This gesture was very surprising to the manager.
coffee
Suppose and advertisement costs $100 and causes fifty new customers to sign up for the service. This ad has a ____________ of $2.00.
cost per acquisition
An entrepreneur is one who ________.
creates a new business concept for the purpose of achieving profit and growth by assembling the necessary resources to capitalize on identified opportunities
Entrepreneurship is a constant process that relies on ______
creativity, innovation, and application in the marketplace
If you reach the limits for new customer growth (they are exhausted) and the growth suddenly slows, it provokes ______________.
crisis
The Lean Startup Model often works because _______________.
customers often don't know what they want.
To protect patent claims, an inventor should be able to verify and document the ____
date on which the idea was first conceived
The following are all examples of ______________: Vanity metrics Unclear hypothesis Fear
delaying the decision to pivot
The more specific the symptoms are, the _________ it will be for everyone to recognize when it's time to schedual a Five Whys meeting.
easier
The truth is every engine of growth __________________.
eventually runs out of gas
If you are building the wrong thing, optimizing the product or its marketing will yield significant results.
false
If you are causing (or missing) quality problems now, the resulting defects won't slow you down later.
false
Innovation accounting will still work even if a startup is being misled by vanity metrics such as gross number of customers and so on.
false
For Under Armour, its top 10 suppliers manufacture less than half of its products. To Under Armour, supplier power is likely to be ______
low
A ________________ helps entrepreneurs start the process of learning as quickly as possible.
minimum viable product
The majority of new business owners work ________.
more than 40 hours per week
To accelerate, Lean Startups need a process that provides a __________ feedback loop.
natural
Entrepreneurs who start businesses because they cannot find work any other way are _______
necessity entrepreneurs
When a company _______, it starts the process all over again, reestablishing a new baseline and then tuning the engine from there.
pivot
Without a formal growth model, many companies get caught in the trap of being satisfied with a small profitable business when a ______ might lead to more significant growth.
pivot
After the startup has made all the micro changes and product optimizations it can to move its baseline toward the ideal, the company reaches a decision point. At this point they _________________.
pivot or persevere
The enactment of the Affordable Health Care Act in 2010 is an example of a ________ change.
political and legal
Research into the operation of the human brain shows that each hemisphere of the brain ________.
processes information differently
Marc Andreessen coined the term ___________ to describe the moment when a startup finally finds a widespeard set of customers that resonate with its product.
product/market fit
Most entrepreneurs believe that ________ is what matters most, but ________ is the most important financial resource for a small business owner.
profit; cash
The biggest advantage of working in small batches is that ___________________.
quality problems can be identified much sooner
Zappos' initial experiment provided a clear, _______.
quantifiable outcome
Every game has to have _________ for people to be good at it?
rules
All of the following represent barriers to creativity that entrepreneurs impose upon themselves except _______
searching for more than one answer
The investment shoud be _________ when the symptom is minor and ______ when the symptom is more painful.
smaller and larger
A ________ experiment is one in which different versions of a product are offered to customers at the same time. By observing the changes in behavior between the two groups, one can make inferences about the impact of the different variations.
split-test
If the numbers for early experiments don't look promising, there is clearly a problem with the _________.
strategy
The author adopted the view that their job was to find ________________ between their vision and what customers would accept.
synthesis
The "value hypothesis" __________ whether a product or service really delivers value to customers once they are using it.
tests
This is true startup productivity: systematically figuring out _______________.
the right things to build
Low capital requirements, cost advantages that are not related to company size, and the lack of brand loyalty are considerations regarding the ___
threat of new entrants to the industry
Under pressure, teams may feel that they don't have _______ to waste on analyzing root causes even though it would give them more time in the long term.
time
Employees must be given the tools and resources they need to be creative. One of the most valuable set of resources is ________.
time, support and encouragement
The MVP's ultimate goal is to ________________.
to test fundamental business hypothesis
We need to focus our energies on minimizing the ___________ through the feedback loop.
total time
Most problems that at first appear to be individual mistakes can be traced back to problems in ____________.
training
