HARVARD BUSINESS REVIEW MAY 2013 PDF

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Harvard Business Review, May magazine issue. Harvard Business Review . Save; Share. Save; Share. According to the decades-old formula, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start From the May Issue. Blank, a consulting associate professor at Stanford, is one of the architects of the lean start-up movement and has seen this approach help businesses get off the.


Harvard Business Review May 2013 Pdf

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Harvard. Business Review. TUFN A. G E. E. G. INTORA. EA. BUSIN biosamnewbcropdic.ga res: á. A n. May 1 0 MÁYÜ 2ü _.:)-tOTFCA. C t. -,- •. .,_. _ '1. biosamnewbcropdic.ga May reprinT rC SPOTLIGHT ON ENTREPRENEURSHIP Why the Lean Start-Up Changes Everything by Steve Blank This article is made. Why the Lean Start-Up Changes Everything - Harvard Business Review ALSO AVAILABLE. download PDF. May Why the Lean Start-Up Changes Everything.

The ones that ultimately succeed go quickly Perfect Business Plan from failure to failure, all the while adapting, iterat- According to conventional wisdom, the first thing ing on, and improving their initial ideas as they con- every founder must do is create a business plan—a tinually learn from customers. Typically it includes a look for one. This distinction is at the heart of the ive-year forecast for income, proits, and cash low. It shapes the lean deinition A business plan is essentially a research exercise writ- of a start-up: The assumption is The lean method has three key principles: So instead of writing an intricate plan obtains money from investors, he or she begins business plan, founders summarize their hypotheses developing the product in a similarly insular fashion.

Es- Developers invest thousands of man-hours to get it sentially, this is a diagram of how a company creates ready for launch, with little if any customer input. The emphasis is on least three things: New ventures rapidly assem- 1.

Business plans rarely survive irst contact with ble minimum viable products and immediately elicit customers. As the boxer Mike Tyson once said about customer feedback. See complete unknowns. Start-ups are not smaller versions of large com- industry.

Agile development works hand-in-hand panies. They do not unfold in accordance with mas- with customer development. The team needs, agile development eliminates wasted time expected to have a commercial product ready just and resources by developing the product iteratively nine months after that. They had a vision of building ro- to avoid alerting potential competitors to a market botic lawn mowers for commercial spaces. But then they began to obsolete because it holds that in most industries talk to farmers and found a huge demand for an customer feedback matters more than secrecy and automated way to kill weeds without chemicals.

When I shifted into Listen to Customers teaching, a decade ago, I came up with the formula for customer development described earlier.

By during customer development, a start-up searches for a busi- I was outlining this process in a course at the ness model that works. Each stage of vestment, insisted that they take my course. Eric customer development is iterative: A start-up will probably fail quickly recognized that waterfall development, the several times before inding the right approach.

In , I wrote The Four Steps to the 1 2 3 4 Epiphany, articulating for the first time that start- Founders translate Start-up continues the product is Business transi- ups were not smaller versions of large companies company ideas to test all other reined enough tions from start- into business hypotheses and to sell.

Business model Business Plan Hypothesis-driven Implementation-driven At such gatherings a roomful of start-up teams can cycle through half a dozen potential product ideas in a matter of hours. Engineering Creating an Entrepreneurial, Agile development Agile or Waterfall development Innovation-Based Economy Build the product iteratively and Build the product iteratively, or fully While some adherents claim that the lean process incrementally specify the product before building it can make individual start-ups more successful, I believe that claim is too grandiose.

Success is predi- Organization cated on too many factors for one methodology to Customer and Agile development Teams departments by Function Hire for learning, nimbleness, and speed Hire for experience and ability to execute guarantee that any single start-up will be a winner.

Using lean methods customer value, churn, viralness low statement across a portfolio of start-ups will result in fewer fail- ures than using traditional methods.

Failure A lower start-up failure rate could have profound Expected Exception economic consequences. Established industries are rapidly shedding jobs, many of which will never Speed return.

Employment growth in the 21st century will Rapid measured have to come from new ventures, so we all have a operates on good-enough data operates on complete data vested interest in fostering an environment that helps them succeed, grow, and hire more workers. The concentration of real expertise in how more imperative. The high cost of getting the irst customer and preneurial hot spots.

The lean approach reduces the first two con- 2. Long technology development cycles.

The limited number of people with an appe- that customers actually want, far more quickly and tite for the risks inherent in founding or working at cheaply than traditional methods, and the third by a start-up.

And it has emerged at 4. The structure of the venture capital industry, in a time when other business and technology trends which a small number of irms each needed to invest are likewise breaking down the barriers to start-up big sums in a handful of start-ups to have a chance at formation. The combination of all these forces is al- signiicant returns.

If the entire universe of small business slashed the cost of software development from mil- embraced them, I strongly suspect it would increase lions of dollars to thousands. Hardware start-ups no growth and eiciency, and have a direct and imme- longer have to build their own factories, since off- diate impact on GDP and employment.

Indeed, There are signs that this may in fact happen.

Once its founders had finished testing and too. Large companies, such as GE and Intuit, have begun to implement them. Three weeks later the irst products arrived.

Yet Another important trend is the decentralization start-ups face completely diferent issues. Now busi- of access to financing. Venture capital used to be ness schools are realizing that new ventures need a tight club of formal firms clustered near Silicon their own management tools. Valley, Boston, and New York. World- plan as the template for entrepreneurial education. And crowdsourcing sites like Kickstarter pro- decade are being replaced by business model com- vide another, more democratic method of inancing petitions.

Harvard Business School became the lat- start-ups.

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Before the in- embracing the lean start-up curriculum. My Lean ternet, new company founders got advice only as LaunchPad course for educators is now training over often as they could have coffee with experienced college and university instructors a year.

Today the biggest chal- lenge is sorting through the overwhelming amount A New Strategy for the of start-up advice they get. Lean start-up techniques were initially designed Corporations have spent the past 20 years in- to create fast-growing tech ventures. But I believe creasing their eiciency by driving down costs.

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Which ones work best? Which ones are most cost-eicient? How are we integrating them with customer routines? For what value are our customers really willing to pay?

Which key resources are most expensive? For what do they currently pay? Which key activities are most expensive? What is the revenue model? What are the pricing tactics? This article is made available to you compliments of Mr. This new process Startup Weekend. The ones that ultimately succeed go quickly Perfect Business Plan from failure to failure, all the while adapting, iterat- According to conventional wisdom, the first thing ing on, and improving their initial ideas as they con- every founder must do is create a business plan—a tinually learn from customers.

Typically it includes a look for one. This distinction is at the heart of the ive-year forecast for income, proits, and cash low. It shapes the lean deinition A business plan is essentially a research exercise writ- of a start-up: a temporary organization designed to ten in isolation at a desk before an entrepreneur has search for a repeatable and scalable business model. So instead of writing an intricate plan obtains money from investors, he or she begins business plan, founders summarize their hypotheses developing the product in a similarly insular fashion.

Es- Developers invest thousands of man-hours to get it sentially, this is a diagram of how a company creates ready for launch, with little if any customer input. The emphasis is on least three things: nimbleness and speed: New ventures rapidly assem- 1.

Business plans rarely survive irst contact with ble minimum viable products and immediately elicit customers. As the boxer Mike Tyson once said about customer feedback. See complete unknowns. Start-ups are not smaller versions of large com- industry. Agile development works hand-in-hand panies.

They do not unfold in accordance with mas- with customer development. The team needs, agile development eliminates wasted time expected to have a commercial product ready just and resources by developing the product iteratively nine months after that. They had a vision of building ro- to avoid alerting potential competitors to a market botic lawn mowers for commercial spaces.

Why the Lean Start-Up Changes Everything

But then they began to obsolete because it holds that in most industries talk to farmers and found a huge demand for an customer feedback matters more than secrecy and automated way to kill weeds without chemicals.

When I shifted into Listen to Customers teaching, a decade ago, I came up with the formula for customer development described earlier.

By during customer development, a start-up searches for a busi- I was outlining this process in a course at the ness model that works.

Each stage of vestment, insisted that they take my course. Eric customer development is iterative: A start-up will probably fail quickly recognized that waterfall development, the several times before inding the right approach.

In , I wrote The Four Steps to the 1 2 3 4 Epiphany, articulating for the first time that start- Founders translate Start-up continues the product is Business transi- ups were not smaller versions of large companies company ideas to test all other reined enough tions from start- into business hypotheses and to sell.

Business model Business Plan Hypothesis-driven Implementation-driven At such gatherings a roomful of start-up teams can cycle through half a dozen potential product ideas in a matter of hours. Engineering Creating an Entrepreneurial, Agile development Agile or Waterfall development Innovation-Based Economy Build the product iteratively and Build the product iteratively, or fully While some adherents claim that the lean process incrementally specify the product before building it can make individual start-ups more successful, I believe that claim is too grandiose.

Success is predi- Organization cated on too many factors for one methodology to Customer and Agile development Teams departments by Function Hire for learning, nimbleness, and speed Hire for experience and ability to execute guarantee that any single start-up will be a winner.

Failure A lower start-up failure rate could have profound Expected Exception economic consequences.

Harvard Business Review, May 2014

Established industries are rapidly shedding jobs, many of which will never Speed return. Employment growth in the 21st century will Rapid measured have to come from new ventures, so we all have a operates on good-enough data operates on complete data vested interest in fostering an environment that helps them succeed, grow, and hire more workers. The concentration of real expertise in how more imperative. The high cost of getting the irst customer and preneurial hot spots.

The lean approach reduces the first two con- 2. Long technology development cycles. The limited number of people with an appe- that customers actually want, far more quickly and tite for the risks inherent in founding or working at cheaply than traditional methods, and the third by a start-up.

And it has emerged at 4. The structure of the venture capital industry, in a time when other business and technology trends which a small number of irms each needed to invest are likewise breaking down the barriers to start-up big sums in a handful of start-ups to have a chance at formation. The combination of all these forces is al- signiicant returns. If the entire universe of small business slashed the cost of software development from mil- embraced them, I strongly suspect it would increase lions of dollars to thousands.The model calls for meeting with prospects as soon as an idea is conceived to learn if it has broad appeal.

Almost every large searching for new business models as we launch company understands that it also needs to deal with start-up ventures. Format Magazine.

Only after quick rounds of experimentation and feedback reveal a model that works do lean founders focus on execution. Passwords must have at least 8 characters, one number, one lower and one upper case letter, and one special character.

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