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Why the lean startup changes everything even for business schools and social enterprises

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The document discusses how the Lean Startup methodology can change everything about how new products, services and enterprises are developed. It explains key aspects of the Lean Startup approach including building minimum viable products to test assumptions, launching early, and failing fast. The document argues that applying Lean Startup principles can improve success rates of startups from 20-30% to 60-70%. It also discusses implications for social enterprises and business schools, predicting that more schools will transform into "Social Business Schools" that teach Lean Startup and support students in creating social businesses.

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Why the Lean Startup Changes Everything – even for Business Schools and Social Enterprises Presented by K K Tse Founder and Chief Education Officer Education for Good CIC Ltd. at the Baptist University School of Business Postgraduate Programs Welcome Banquet cum Conferment of Honorary Professorship September 18, 2014
An intriguing article in Harvard Business Review May, 2013 “Why the Lean Startup Changes Everything?” By Steve Blank Stanford University Free download: http://steveblank.com/2013/05/06/free-reprints-of-why-the-lean-startup-changes-
You might ask…  What is the ‘everything’ being changed?  Why does it matter that ‘everything is changed’?  How is it possible that the Lean Startup could change everything?  What is Lean Startup anyway?
What is the ‘everything’ being changed?  Startups of various sorts.  New product/service/enterprise development in any organization large or small, for-profits, non-profits, social enterprises, public sector organizations, etc.
Why does it matter that ‘everything is changed’? “The Lean Startup could do more to boost global economic growth than any management books written in years.” Tom Eisenmann, Harvard Business School “The ideas in The Lean Startup will help create the next industrial revolution.” Steve Blank, Stanford University
How is it possible that Lean Startup could change everything? It is a new methodology that could be taught and mastered so that ordinary people would have a much greater chance in successful startup. Insights from Patrick Cheung’s 黑暗中對話
What is Lean Startup anyway?  The global Lean Startup movement is about three years old.  It started with the publication of the book Lean Startup by Eric Ries in 2011.
A book with a mission: To improve the chances of success for startups worldwide
Who is Eric Ries?
Eric Ries  Entrepreneur-turned writer and consultant  Co-founder and CTO of IMVU  Blogger of the widely read Startup Lessons Learned  Thought leader of the global Lean Startup movement  Entrepreneur-in-residence at Harvard Business School
Eric’s definition of ‘startup’ A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.
Two other influential books The Startup Owners Manual by Steve Blank and Bob Dorf, 2012 Running Lean by Ash Maurya, 2012
Two Lean Startup examples
 Zappos is the world’s largest online shoe store.  When it first started, founder Nick Swinmurn envisioned a new and superior retail experience for customers buying shoes.
The Zappos startup approach  He DID NOT start with state-of-the-art website, payment and delivery systems, warehouses, logistics support, distribution partners, etc.  Instead, he started by running an experiment to test the hypothesis that customers were ready and willing to buy shoes online.
 He asked local shoe stores to allow him to take pictures of their inventory and undertook to buy the shoes at full price if a customer brought them online.  Only when this had proven the demand did he go on to build the other parts of the business model.
Why the lean startup changes everything even for business schools and social enterprises
Dialogue in the Dark HK  Dialogue in the Dark is a social franchise headquartered in Germany  It had taken root in 22 cities before coming to Hong Kong
The core products are centered around dialogue experience in the dark, including an Experiential Exhibition which costs millions of dollars to build
A lean startup approach Founders K K Tse and Patrick Cheung each put in HK$50,000 to organize a series of fee-charging ‘Dialogue in the Dark’ Executive Workshops
It generated close to HK$1 million of revenue in the first 12 months before raising HK$5.6 million of capital from 20 shareholders to rent a 10,000 sq.ft space and spent close to HK$4 million to build the Exhibition Hall
IDEAS Build Measure Validated learning Learn PRODUCT DATA MVP Test assumptions Innovation accounting Lean startup approach in a nutshell Leap-of-faith assumptions
10 crucial ideas underlying the lean startup approach
1. Design a Business Model, not just products
The 9-block Business Model
 Your ‘solution’ is not your product.  Your Business Model is your product. Solution
2. Use a Lean Canvas, not business plan
3. Create validated learning, not after-the-fact learning
Validated Learning 有的學習 Vs 無的學習
4. Systematically test assumptions, before they become too costly
All business models contain multiple assumptions, many of them will be proved to be invalid.
5. Get out of the building, there are no facts inside. 不要<閉門造車>
6. Create ‘Minimum Viable Product’ (MVP) <最低成本可行產品> By far the most important concept to master.
7. Launch early and fail fast
“If you’re not embarrassed by the first version of the product you’ve launched, you’ve launched too late.” Randall Stross, The Launch Pad
8. Use innovation accounting, don’t focus on money “Count what counts.”
9. Persevere or Pivot 堅持 抑或 轉策
10. Build a lean startup team, not just any team The whole team must master the lean startup methodology
IDEAS Build Measure Validated learning Learn PRODUCT DATA MVP Test assumptions Innovation accounting Minimize TOTAL time through the loop Leap-of-faith assumptions
The bottom line for using lean startup approach From failure rate of 80-90% to success rate of 60-70%
What are the implications for Social Enterprises and Business Schools?
For Social Enterprises, it is a Godsend! Success rate will be greatly improved.
Lean for social good: a brand new website Lean Impact LEAN IMPACT is turning Lean Startup into a road map for social good organizations.
Why the lean startup changes everything even for business schools and social enterprises
What about Business Schools?
Business Schools traditionally teach things relevant to ‘Business as Usual’.
But nowadays ‘Business as Usual’ is no longer an option.
“It's time to turn capitalism upside down - to shift our values from an exclusive focus on profit to also caring for people, communities and the planet.”
The way forward…. From Business School to Social Business School
My prediction Within the next ten years, there will be more and more Business Schools in different parts of the world transforming themselves into Social Business Schools.
Social Business Schools Educating students to create social businesses which are profit-making and solving social and environmental problems at the same time.
Dual challenges for Business Schools  Enable the students to master the lean startup methodology  Inspire the students to create social businesses that change the world for the better
Social Business is fundamentally different from Corporate Social Responsibility (CSR)
Typically, CSR budget is less than 0.01% of corporate turnover A social business is 100% turnover directed at solving social or environmental problems
A good example is B Corporation – a US-based movement to inspire and support mainstream business to become social business
Are social business and social enterprise the same? Yes and No
They are the SAME Both attempt to solve social and environmental problems
They are DIFFERENT in profit distribution practice Social enterprise: 0% to 35% of profit allowed to be distributed to shareholders Social business: no limits, could be 100%, such as most B Corps
Summing up… A Social Business School inspires, educates, and supports its students and graduates to create social business and social enterprise
Will the Baptist University School of Business be the first Social Business School in Hong Kong and Asia?
Thank you.

More Related Content

Why the lean startup changes everything even for business schools and social enterprises

  • 1. Why the Lean Startup Changes Everything – even for Business Schools and Social Enterprises Presented by K K Tse Founder and Chief Education Officer Education for Good CIC Ltd. at the Baptist University School of Business Postgraduate Programs Welcome Banquet cum Conferment of Honorary Professorship September 18, 2014
  • 2. An intriguing article in Harvard Business Review May, 2013 “Why the Lean Startup Changes Everything?” By Steve Blank Stanford University Free download: http://steveblank.com/2013/05/06/free-reprints-of-why-the-lean-startup-changes-
  • 3. You might ask…  What is the ‘everything’ being changed?  Why does it matter that ‘everything is changed’?  How is it possible that the Lean Startup could change everything?  What is Lean Startup anyway?
  • 4. What is the ‘everything’ being changed?  Startups of various sorts.  New product/service/enterprise development in any organization large or small, for-profits, non-profits, social enterprises, public sector organizations, etc.
  • 5. Why does it matter that ‘everything is changed’? “The Lean Startup could do more to boost global economic growth than any management books written in years.” Tom Eisenmann, Harvard Business School “The ideas in The Lean Startup will help create the next industrial revolution.” Steve Blank, Stanford University
  • 6. How is it possible that Lean Startup could change everything? It is a new methodology that could be taught and mastered so that ordinary people would have a much greater chance in successful startup. Insights from Patrick Cheung’s 黑暗中對話
  • 7. What is Lean Startup anyway?  The global Lean Startup movement is about three years old.  It started with the publication of the book Lean Startup by Eric Ries in 2011.
  • 8. A book with a mission: To improve the chances of success for startups worldwide
  • 9. Who is Eric Ries?
  • 10. Eric Ries  Entrepreneur-turned writer and consultant  Co-founder and CTO of IMVU  Blogger of the widely read Startup Lessons Learned  Thought leader of the global Lean Startup movement  Entrepreneur-in-residence at Harvard Business School
  • 11. Eric’s definition of ‘startup’ A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.
  • 12. Two other influential books The Startup Owners Manual by Steve Blank and Bob Dorf, 2012 Running Lean by Ash Maurya, 2012
  • 13. Two Lean Startup examples
  • 14.  Zappos is the world’s largest online shoe store.  When it first started, founder Nick Swinmurn envisioned a new and superior retail experience for customers buying shoes.
  • 15. The Zappos startup approach  He DID NOT start with state-of-the-art website, payment and delivery systems, warehouses, logistics support, distribution partners, etc.  Instead, he started by running an experiment to test the hypothesis that customers were ready and willing to buy shoes online.
  • 16.  He asked local shoe stores to allow him to take pictures of their inventory and undertook to buy the shoes at full price if a customer brought them online.  Only when this had proven the demand did he go on to build the other parts of the business model.
  • 18. Dialogue in the Dark HK  Dialogue in the Dark is a social franchise headquartered in Germany  It had taken root in 22 cities before coming to Hong Kong
  • 19. The core products are centered around dialogue experience in the dark, including an Experiential Exhibition which costs millions of dollars to build
  • 20. A lean startup approach Founders K K Tse and Patrick Cheung each put in HK$50,000 to organize a series of fee-charging ‘Dialogue in the Dark’ Executive Workshops
  • 21. It generated close to HK$1 million of revenue in the first 12 months before raising HK$5.6 million of capital from 20 shareholders to rent a 10,000 sq.ft space and spent close to HK$4 million to build the Exhibition Hall
  • 22. IDEAS Build Measure Validated learning Learn PRODUCT DATA MVP Test assumptions Innovation accounting Lean startup approach in a nutshell Leap-of-faith assumptions
  • 23. 10 crucial ideas underlying the lean startup approach
  • 24. 1. Design a Business Model, not just products
  • 26.  Your ‘solution’ is not your product.  Your Business Model is your product. Solution
  • 27. 2. Use a Lean Canvas, not business plan
  • 28. 3. Create validated learning, not after-the-fact learning
  • 30. 4. Systematically test assumptions, before they become too costly
  • 31. All business models contain multiple assumptions, many of them will be proved to be invalid.
  • 32. 5. Get out of the building, there are no facts inside. 不要<閉門造車>
  • 33. 6. Create ‘Minimum Viable Product’ (MVP) <最低成本可行產品> By far the most important concept to master.
  • 34. 7. Launch early and fail fast
  • 35. “If you’re not embarrassed by the first version of the product you’ve launched, you’ve launched too late.” Randall Stross, The Launch Pad
  • 36. 8. Use innovation accounting, don’t focus on money “Count what counts.”
  • 37. 9. Persevere or Pivot 堅持 抑或 轉策
  • 38. 10. Build a lean startup team, not just any team The whole team must master the lean startup methodology
  • 39. IDEAS Build Measure Validated learning Learn PRODUCT DATA MVP Test assumptions Innovation accounting Minimize TOTAL time through the loop Leap-of-faith assumptions
  • 40. The bottom line for using lean startup approach From failure rate of 80-90% to success rate of 60-70%
  • 41. What are the implications for Social Enterprises and Business Schools?
  • 42. For Social Enterprises, it is a Godsend! Success rate will be greatly improved.
  • 43. Lean for social good: a brand new website Lean Impact LEAN IMPACT is turning Lean Startup into a road map for social good organizations.
  • 46. Business Schools traditionally teach things relevant to ‘Business as Usual’.
  • 47. But nowadays ‘Business as Usual’ is no longer an option.
  • 48. “It's time to turn capitalism upside down - to shift our values from an exclusive focus on profit to also caring for people, communities and the planet.”
  • 49. The way forward…. From Business School to Social Business School
  • 50. My prediction Within the next ten years, there will be more and more Business Schools in different parts of the world transforming themselves into Social Business Schools.
  • 51. Social Business Schools Educating students to create social businesses which are profit-making and solving social and environmental problems at the same time.
  • 52. Dual challenges for Business Schools  Enable the students to master the lean startup methodology  Inspire the students to create social businesses that change the world for the better
  • 53. Social Business is fundamentally different from Corporate Social Responsibility (CSR)
  • 54. Typically, CSR budget is less than 0.01% of corporate turnover A social business is 100% turnover directed at solving social or environmental problems
  • 55. A good example is B Corporation – a US-based movement to inspire and support mainstream business to become social business
  • 56. Are social business and social enterprise the same? Yes and No
  • 57. They are the SAME Both attempt to solve social and environmental problems
  • 58. They are DIFFERENT in profit distribution practice Social enterprise: 0% to 35% of profit allowed to be distributed to shareholders Social business: no limits, could be 100%, such as most B Corps
  • 59. Summing up… A Social Business School inspires, educates, and supports its students and graduates to create social business and social enterprise
  • 60. Will the Baptist University School of Business be the first Social Business School in Hong Kong and Asia?