Category Archives: Startup Methodology

General about Startup Methodology

What’s in a Startup Methodology?

Back when I did the transition from studying software engineering to entrepreneurship, one question kept coming to me – while methodologies are inevitable for successfully building software products, why isn’t there an integrated methodology for launching and taking that product to market?

Take for an example the Perpetual Beta and Spotify, a successful online peer-to-peer music streaming service. Spotify did not only use beta versions to test engineering requirements with early users – using beta-invites enabled Spotify to create demand for their service at the same time. Software developers have been embracing practices such as Continuous Deployment for years, but merely from a technical viewpoint. I believe that the Perpetual Beta represents a new line of ambidextrous practices that not only enables a startup to plan, test and build – but also serve, distribute and market their product at a lower cost.

Astonishingly, methodologies that help entrepreneurs facilitate software product development alongside commercialization are still scarce. At the one hand there exist a variety of methodologies to manage risk in agile software product development, including Scrum, Extreme Programming and Adaptive Software Development. However, none or few of these methods, to my best knowledge, encapsulate risk in commercialization. To simplify, think of it as Scrum + marketing (Scrumm). At the other hand traditional management practices have been argued not to fit the extreme uncertainty in startups, and often comes to short in terms of aligning with disruption driven by Internet technologies.

At that time I was also more than inspired by Crossing the Chasm that addresses the specifics of marketing disruptive high-tech products. However, I still find the Pre-chasm phase left unintended. In my last post I wrote about diagramming the product-market fit, in which I have aligned with the Technology Adoption Life Cycle below.

Pre-Chasm Startup Methodology

In many ways I think that new-product introduction is about ramping the Pre-chasm, where building and taking new products to market are not two separate activities. Obviously a startup needs ambidextrous qualities, and working engineering and marketing in parallel will enable a startup to discover the holy grail of product-market fit – a key tenet with Customer Development and Lean Startup thinking. Together with elaboration on 37signals’ Getting Real and Rework, I look forward to seeing what this emerging school of startup methodologies brings.

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6 Essential Startup Decks

Among the great many startup 101s’ that are out there, it can be hard to separate the wheat from the chaff. Here is an overview of the most essential startup decks that I have taken notes of. The list is merely a snapshot of hands-on startup methods and tools but a complete list of entrepreneurship literature.

Mint.com Pre-Launch Pitch Deck makes a great example of a startup pitch. For more on pitching  it is definitively worth looking into Pitching Hacks: How to pitch investors from Nivi and Naval at VentureHacks (PDF and free sample) to be used in companion with Dave McClure’s Startup Viagra: How to Pitch a VC.

Mint Founder Institute Accounting, this time by Mint founder Aaron Patzer, is a must read on how to draw your business case together and getting the numbers right.

Startup Metrics for Pirates by Dave McClure is the nuts and bolts of how to formalize traction and accountable metrics for your startup, including methods from the Lean Startup.

No One Cares About Your Stupid Little Startup by Xobni founder Matt Brezina takes us through its phases and tactics for building critical mass.

The Lean Startup methodology by Eric Ries combines the best from the agile development paradigm with Steven Blank’s Customer Development methodology (which might as well have been included) into a low-burn startup methodology.

Drop the business plan?! The Business Model Canvas by Alex Osterwalder, is an one-slide template and systematic approach to analyze, brainstorm and sketch out your business model. If you are not familiar with the framework you might want to start with the Business Model Generation book, the lean startup business model pattern and Steve Blank’s post on how to process it.

There sure are several interesting startup decks, and no such list goes without mentioning Guy Kawasaki’s The Art of the Start and Garage‘s Perfecting your Pitch. I will read SEO Moz’s Venture Capital Process again. Not to forget Getting Real and Rework – the business, design, programming, and marketing philosophies of 37signals’ (see aslo Eric Santos’ summary). Neverthless, keep up to date with Lean Startup news.

Do you know of other essential startup decks, we would love to know about them.

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What you want to read about Startup Methodologies?

While talking about user generated content and customer development in general, and in order to learn about my readers, I figured that I would walk the talk. Having some new ideas on the subject of startup methodologies, I would ask of your opinion on what should be my next post. For those of you who would consider the case studies, EasyPeasy is an open source operating system for netbooks. It has 1M downloads with users in over 142 countries, and currently attempts to pivot into the Social OS space.

How to design your Business Model as a Lean Startup

If you spend time exploring innovation methodologies and models, you know that configuration of such frameworks largely apply new ideas, assembly and build upon previous work (hat off to science). I have come to explore conformity of two emerging frameworks; the Business Model Ontology by Alex Osterwalder and the Lean Startup methodology by Eric Ries. The result, the Lean Startup and Business Model Canvas mashup is illustrated below.

With the Business Model Ontology Osterwalder proposes a single reference model based on the similarities of a wide range of business model configurations. With the business model canvas (used as basis for the illustration above) Osterwalder describes nine building blocks that form a meta-business model.

On methodology, Eric Ries coins the Lean Startup, a practical approach for creating and managing startups using principles of Steven Blank‘s Customer Development  methodology alongside Agile Development methodologies.

The Lean Startup Business Model Pattern adopts principles of the Lean Startup (i.e. agile development and customer development) with the building blocks of the Business Model Canvas. In his recent book, Business Model Generation, Osterwalder uses the notion of Design Patters alongside the ideas of Christopher Alexander and Tim O’Reilly among others, to describe common configurations of business model components. Hence, it could be considered a Lean Startup Business Model Pattern.

The Lean Startup Business Model Pattern aligns with three main pillars that constitutes the Lean Startup methodology; Customer Development, Agile Software Development and Technology Commoditization.

Illustrated above the template using arrows, one key tenet with the Lean Startup methodology is the understanding of Product-Market fit, which optimally results from Agile Product Development, the solution offered, to match with Customer Development, the problem that is solved for a customer.

The Customer Offering or Value Proposition component of the template can be understood with the Minimum Viable Product concept used with Lean Startup method (see also whole product or doughnut diagram in Crossing the Chasm). The Customer Segments in which the Minimum Viable Product is offered, typically is characterized by early adopters or lead users in the social system.

With the Technology Commodity Stack, one of the main principles with the Lean Startup, Eric Ries speaks of how free and open source software (FOSS) availability and user generated content reduce startup costs. This is typically recognized with the Key Resources component. That is, knowledge of and access to open source software is a key resource to a Lean Startup. Similarly, open web hosting services are recognized with the Partner Network component, and convenient search engine marketing with the Distributions Channels component. Social media could as an example be a aligned with the Customer Relationship component enabling user generated content and interaction with customers.

Data-driven approaches based on customer-centric metrics applies to Distribution Channels, but may be considered a key activity as well. Among the Key Activities of the pattern are Agile Software Fevelopment methods and techniques, and the use of Metrics (e.g. Dave McClure‘s AARRR, Startup Metrics) for a startup to measure performance and adjust its directions accordingly. Although “listening to customers” would be recognized as a technique with the Agile Development methodologies, this is central not only to the Customer Development, Agile Development and the Lean Startup methodologies – it is also central to the Business Model Generation (Emphatic Design), Disruptive Innovation (Jobs-to-be-done), Lead User innovation and Voice of the Customer among other customer-centric innovation frameworks.

The conformity of the frameworks is not straightforward though. One such problem is that the level of abstraction differs. Think numerator and denominator. How do we distinguish between tactics, process, strategy and concepts herein? According to Steven Blank’s Customer Development methodology (slide #29 in this presentation), Product Development and Customer Development can be viewed through the tactical lens, while the business model view could be viewed through the strategic lens. Osterwalder understands business models as a facilitator between business processes and strategy. Myself, I would start from the premise that strategy or goals often comes as consequence of continuous learning in early stage ventures where resources are scarce and uncertainty is extreme.

One challenge to consider is how the pattern might express iterative development and internal feedback loops that are fundamental to Lean Startup methodology. It is in my understanding that when working with models and methodologies there is a general challenge in uniting behavior (process) and structure. That is, to what extent are the two frameworks integratable in terms of methodologies and notations. Borrowing from areas such as software engineering and system dynamics, future work would envision a tool that aid in entrepreneurial learning and aggregates key metrics in order mitigate risk in new-product introductions.

For starters a fruitful discussion would consider what are the principles with the Lean Startup methodology that should be included in the Business Model Pattern and where they belong. Later, I will address how a startup would use the pattern to validate their business model as a part of their lean methodology. Stay tuned.

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Disciplined Creativity: how to balance between creativity and focus?

Innovation and entrepreneurship is subject to a fundamental paradox – the trade-off between creativity and focus. Many entrepreneurs are by nature creative individuals that must balance between glazing new ideas, products or features at the one hand, and execution and determinism at the other.

DisciplinedCreativity-methodologist

The Disciplined Creativity idea is derived from the Flow concept by Mihály Csíkszentmihályi to help innovators reconcile creativity and discipline in parallel. The model will be elaborated in future posts. In the meantime, feedback on the idea is welcome. Iterative development, right?