The document provides an overview of lean startup methodology and effectuation principles. It begins with an agenda that lists topics like lean startup, a game, and effectuation. It then discusses lean canvas templates, comparing them to traditional business model canvases. Key aspects of lean startup like identifying risks, systematically testing plans through build-measure-learn cycles, and pivoting versus optimizing are explained. Effectuation principles for entrepreneurship derived from expert entrepreneurs are outlined, like leveraging means rather than predicting an uncertain future.

1. Welcome
Sachidananda B S
NSRCEL, IIM Bangalore
Sachidananda.bs14@iimb.ernet.in
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2. Agenda
Lean Start up
A Game
effectuation
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3. LEAN START-UP
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4. FROM
BUSINESS MODEL CANVAS
TO THE LEAN CANVAS
ITERATE FROM PLAN A TO A PLAN THAT WORKS
-before you run out of resources...
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6. Lean Business Canvas
Model Canvas
Key Partners Value
Proposition
Customer
Segments
Customer
Relationships
Problems Solutions
Key Activities
Unfair
Advantage
Key Key Resources Metrics
Channel
Cost Structure Revenue Streams
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7. A comparison
BM Canvas
• Target: New and Existing Businesses
• Focus: Customers, Investors, Entrepreneurs,
Consultants, Advisors
• Customers: Lays emphasis on customer
segments, channels and customer relationships
for all businesses
• Approach: It lays down the infrastructure, lists
the nature and sources of financing and the
anticipated revenue streams of the business
• Competition: It focuses on value proposition in
quantitative and qualitative terms as way to stay
smart in the market
• Application: It fosters candid understanding,
creativity, discussion and constructive analysis
L Canvas
• Target: Purely Start up businesses
• Focus: Purely Entrepreneurs
• Customers: Does not lay much emphasis on
customer segments because start-ups have no
known or tested products to sell.
• Approach: It begins with the problem, a
proposed solution, the channels to achieving
the solution, costs involved and the anticipated
revenue streams
• Competition: It assesses whether the business
has an unfair advantage over the others and
how to capitalize on it for better grounding
• Application: It is a simple problem-solution
oriented approach which enables the
entrepreneur to develop step-by-step
Src: https://canvanizer.com/how-to-use/business-model-canvas-vs-lean-canvas
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8. Meta-Principles
Principles guide what you do, Tactics show you how
Essential 3 Steps:
1. Document your Plan A
2. Identify the riskiest parts of your plan
3. Systematically test your plan
Share it with at least one other person
One page is quick!
Most Importantly
Your product is NOT “The Product”
Your “business model” is the Product
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9. Identify the Riskiest Parts of your business
Building a successful product is fundamentally about risk mitigation
For most parts, the solution is not what’s 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
Problem/Market Fit
2
Key Question: Have I built something people want?
Scale
3
Key Question: How do I accelerate growth?
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10. Vision – Strategy - Product
Product
Strategy
Vision
Product: Is the end result of the strategy
Change in Product is Optimization
Strategy: Employed by the start up to achieve
its vision & includes – business model, product
road map, partners, competitors, who is a
customer etc.
Change in Strategy is a Pivot
Vision: The true north! The destination the
start up intends to reach
Entrepreneurs are committed to seeing what
the start up to its destination
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11. Pivoting - Optimize
Finding a plan that works Accelerating that plan
Pick bold outcomes instead
Validate Refine
of chasing incremental
improvements
Course Correction Efficiency
Focus:
Experiments:
Growth
Optimizations
Focus:
Experiments:
Validated Learning
Pivots
Problem/Solution Fit Problem/Market Fit Scale
Your Goal:
Investor’s Goal:
Growth
Growth
Your Goal:
Investor’s Goal:
Learning
Growth
Ideal time to raise funding
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12. Systematically testing your plan
Idea
BUILD
Product
Minimize
TOTAL time
through the
loop
MEASURE
LEARN
Data
Build Faster
Unit Tests
Usability Tests
Continuous Integration
Incremental Deployment
Free & Open-Source
Cloud Computing
Cluster Immune System
Just-in-time Scalability
Refactoring
Developer Sandbox
Minimum Viable Product
Measure Faster
Funnel Analysis
Cohort Analysis
Net Promoter Score
Search Engine Marketing
Predictive Monitoring
Experiment is a cycle
around the validated
Measure Faster
Split Tests
Continuous Deployment
Usability Tests
Real-time Monitoring & Alerting
Customer Liaison
learning loop
Learn Faster
Split Tests
Customer Development
Five Whys
Customer Advisory Board
Falsifiable Hypotheses
Product Owner
Accountability
Customer Archetypes
Cross-functional Teams
Semi-autonomous Teams
Smoke Tests
B
U
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D
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M
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A
S
U
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L
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A
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13. The Iteration Meta-Pattern
Understanding
Problem
Defining
Solution
Validating
Qualitatively
Verifying
Qualitatively
Problem Solution Fit Problem Market Fit
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14. The Process
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
Experiments
disprove
hypothesis
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15. Lets get to your business!
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16. The Key Metrics
Acquisition
Activation
Retention
Revenue
Referral
How do users find you?
Do users have a great first experience?
Do users come back ?
How do you make money?
Do users tell others?
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17. Share your canvas with at least one!
Lets have at least 2 teams volunteering for a
presentation
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18. A SIMPLE GAME...
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19. Interpreting the outcomes...
It is this sort of uncertainty
that we deal with as
entrepreneurs
Scenario 1 Scenario 2 Scenario 3
Predictable Risk Knightian Uncertainty
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!
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20. Ready to Start?
Incorrect prioritization is the top contributor to waste!
PRODUCT RISK
CUSTOMER RISK
MARKET RISK
Getting the product right
Building a path to customers
Building a viable business
So much for risk mitigation! Can we abstract to
handle uncertainty itself?
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21. But before we start
Src: http://www.geek.com/news/biochemist-creates-co2-eating-light-that-runs-on-algae-1487699/
Our atmosphere is filling up with CO2 and we seem to be the major cause of that. The generally
accepted solution seems to be cutting back on emissions as quickly as possible, but implementing
such cuts is problematic because everyone has to agree to do more, which essentially ends up
costing a lot of time and money.
There is an alternative to such measures, though. Instead of relying entirely on cutting emissions,
why don’t we start taking CO2 out of the atmosphere? That’s exactly what biochemist Pierre Calleja is
trying to do, and his solution almost sounds too good to be true.
Calleja has developed a lighting system that requires no electricity for power. Instead it draws CO2
from the atmosphere and uses it to produce light as well as oxygen as a byproduct. The key
ingredient to this eco-friendly light? Algae.
Certain types of algae can feed off of organic carbon as well as sunlight, and in the process produce
carbohydrate energy for themselves as well as oxygen as a waste product.
Cajella’s lamps consist of algae-filled water along with a light and battery system. During the day the
algae produce energy from sunlight that is then stored in the batteries. Then at night the energy is
used to power the light. However, as the algae can also produce energy from carbon, sunlight isn’t
required for the process to work. That means such lights can be placed where there is no natural light
and the air will effectively be cleaned on a daily basis.
What isn’t discussed in the video is how much maintenance such a light needs. However, the good
news is algae can also act as a biofuel once separated from the water, so even if the lights need a
water change out every so often, the waste algae just forms another type of fuel where as the water
can be recycled.
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22. EFFECTUATION
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23. What is learnable in entrepreneurship?
Study the Expert Entrepreneurs helped identify 5 principles
Affordable Bird Lemonade in Hand Principle Loss Principle Principle - Leverage - Start - Set with affordable contingencies your means. loss Embrace Evaluate Don't wait surprises opportunities for the that perfect arise based opportunity. from on whether uncertain
Start
the
situations, taking downside action, is remaining acceptable, based on flexible what rather rather you than have than on readily the tethered attractiveness available: to existing who of the you goals.
predicted are, what upside.
you know, and who you
know.
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 don’t need
to predict what the future would look like.
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24. Causal and Effectual Logic
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25. Effectuation Cycle
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26. Thank You
Questions References
• Effectuation.org
• The Lean Start up – Eric Ries
• Presentations by Eric Ries
• Presentation by Prof K Kumar
• Presentation by Alex Cowan
• Running Lean – Ash Mourya
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