Lean innovationSOME COMMON MISCONCEPTIONS:

X lean innovation is not just synonymous with

new businesses

X a start up is not defined by the age of a

business or organisation; start ups also exist in large corporations, charities and other non profit organisations

X lean innovation does not apply solely to

technology based initiatives

DEFINITIONS:

A start up is a ‘human institution designed to create a new product or service under conditions of extreme uncertainty’

Lean innovation involves ‘the use of hypotheses testing processes, during conditions of extreme uncertainty, to determine what a market wants before fully investing in solutions’

Adopted from Eric Ries, Lean Start Up

Extreme uncertainty

CHARACTERISTICS OF EXTREME UNCERTAINTY INCLUDE:

Nothing goes to plan; strategy does not yield the desired results. This is because in times of uncertainty, results cannot be accurately timed. Additionally, there are multiple unknowns; do other people really have this problem? Is this solution the best alternative there is? Can my resources deliver the solution? Is it scalable?

EVERY solution or idea is a hypothesis until assumptions become fact and the market risk is reduced / eliminated

An innovator’s dilemma involves choosing 1 of two options:

Option One Option TwoTest one idea at a time Test multiple ideas in search of factsCreate one ideal product Create the outline of several productsInvest in traditional market research Invest in field research and changeIdentify and prevent risks Respond quickly to risks

10 steps to create products and services in times of

extreme uncertainty

1. Document all of the assumptions being made (eg. about the problem to be solved, the proposed solutions, what the market might pay etc)

2. Identify every market segment that might be aggravated by these problems (eg. individuals, organisations, companies) and create lists of where they are or how you might find and interact with them

3. Make some underlying assumptions about the documented solutions which could solve these problems within the next 3 months

4. Consider what version / fraction of these 3 month solutions could be implemented in just 3 weeks

5. Consider what other versions of these solutions could be implemented within just 3 days. This will be the

basis of your minimum

viable product (MVP)**Refer to the MVP slide text for more information

6. Create marketing messages to promote the 3 day version across a cross section of your customer segments in order to test

your assumptions

7. Identify individuals within the small group of respondees willing to give you detailed feedback about their experience. These will

be your early adopters**Refer to the early adopters slide for more information

8a. Build the 3 day version for use across a segment of your early adopters, figure out how you need to transform the solution based on their feedback

8b. Promote for sale the transformed solutions across the remaining customer segments

identified

9. Identify the processes to help you scale from the 3 day product / service to the 3 week and 3 month versions and document the

proven business model** Refer to the business model slide text for more information

10. Roll out the range of

products / services (your value proposition*) to the wider audience of identified segments

* Refer to the Value Proposition slide text for more information

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Alexander Bain is a pioneering management consultancy focused on solving the complex problems faced by small and medium sized businesses.

Every year approximately 80% of new businesses fail. The extreme uncertainties the market experiences mean that for those that survive rarely grow although billions is spent annually employing strategists and skilled executives to develop competitive strategies. Statistically less than 1% of all businesses actually achieve high grow.

What makes Alexander Bain unique is our in-depth knowledge of the business models used by high growth businesses together with our insight into the newest strategic and management methodologies used to scale.Learn more about us at www.alexanderbain.co.uk