Finals - Entrepreneurship

Lean Innovation, Lean Startup, Business Model Canvas, Entrepreneurial Mastery, 7-P's of Marketing

What is the traditional start-up formula?

Write a business plan → pitch to investors → assemble a team → introduce a product → sell as hard as possible.

What percentage of start-ups fail according to research by Shikhar Ghosh?

75% of all start-ups fail.

What is a major flaw in traditional business plans?

They are written in isolation before any product development and often do not survive first contact with customers.

What does the Lean Start-Up emphasize over traditional planning?

Experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional development.

What is the Lean Start-Up definition?

A temporary organization designed to search for a repeatable and scalable business model.

What is the Business Model Canvas?

A diagram summarizing a company's hypotheses on how it creates value for itself and its customers.

What is the purpose of Customer Development?

To gather feedback from potential users on all elements of the business model, including product features and pricing.

What is Agile Development?

A method that develops products iteratively and incrementally, eliminating wasted time and resources.

What are the four stages of the Customer Development Process?

1. Customer Discovery, 2. Customer Validation, 3. Customer Creation, 4. Company Building.

What happens during Customer Discovery?

Founders translate ideas into business model hypotheses and create a minimum viable product to test on customers.

What is the goal of Customer Validation?

To test hypotheses and validate customer interest through early orders or product usage.

What occurs during Customer Creation?

The product is refined enough to sell, and the start-up builds demand by ramping up marketing and sales.

What is the focus of Company Building?

Transitioning from a start-up mode to functional departments executing the proven business model.

How does Agile Development differ from traditional product development?

Agile Development uses short, repeated cycles instead of linear stages lasting months.

What is a Minimum Viable Product (MVP)?

A product with only critical features, used to gather customer feedback for further development.

What is the key distinction between start-ups and large companies?

Start-ups look for a business model, while existing companies execute a known business model.

What is the Lean Start-Up's approach to failure?

Failure is expected, and the focus is on iterating on ideas and pivoting away from those that don't work.

What metrics matter in the Lean Start-Up approach?

Customer acquisition cost, lifetime customer value, churn, and viralness.

What is the impact of Lean Start-Ups on the economy?

A lower start-up failure rate can lead to significant employment growth from new ventures.

What does the Lean Start-Up say about stealth mode?

Stealth mode is obsolete; customer feedback is prioritized over secrecy.

What is the significance of 'get out of the building' in Customer Development?

It encourages founders to engage with potential users for direct feedback on their business model.

What does Mike Tyson's quote about plans imply for start-ups?

Plans often fail when faced with real-world challenges; adaptation is crucial.

What is the role of iteration in the Lean Start-Up methodology?

Start-ups continuously iterate on their products based on customer feedback to improve and adapt.

What does the Lean Start-Up prioritize over intuition?

Customer feedback.

What is the outcome of successful Customer Validation?

The start-up can proceed to Customer Creation, where the product is ready for market.

What is the goal of the Lean Start-Up's agile development?

To develop products quickly and responsively, minimizing wasted resources.

How does the Lean Start-Up approach new product processes?

By emphasizing customer development and hypothesis testing rather than linear planning.

What is the core thesis of lean innovation?

Lean innovation is a more efficient learning process rather than a better innovation process.

What does the Pareto Principle (80/20 Rule) imply in lean innovation?

20% of a product's features will likely deliver 80% of the benefits sought by customers.

What are the five historic constraints on start-up growth that lean methods address?

1. High customer acquisition costs, 2. Long technology development cycles, 3. Limited risk-takers, 4. Venture capital structure, 5. Concentration of expertise.

Name one technology trend that reduces barriers for start-ups.

Open source software (e.g., GitHub).

Which large companies have implemented lean start-up methodology?

GE, Qualcomm, and Intuit.

What is the purpose of mandatory formal debriefs after new product launches?

To capture learnings that can lead to ~100% more revenue.

What is the impact of having debriefs led by an outside third party?

It increases revenue impact substantially beyond the 100% baseline.

How does capturing learnings in a knowledge management system affect revenue?

It results in ~130% more revenue from new products.

What is the risk associated with lean teams moving quickly?

Learnings are less likely to be captured compared to traditional approaches.

What is the first step in the Lean Innovation Step-by-Step Methodology?

Identify the Minimum Viable Product (MVP).

What does the second step in lean innovation involve?

Develop a version rapidly and test it with customers in a real-world situation.

What should teams do if the current approach isn't working in lean innovation?

Pivot to explore a new approach.

What was Facebook's MVP in 2003?

Facemash, a tool for comparing student photos and voting on attractiveness.

What was the primary feature of TheFacebook when it launched in 2004?

A social directory for Harvard students.

What was Uber's MVP feature when it launched in 2010?

Ride sharing with only 3 cars in New York for testing.

What enhancements were added to Uber after validating the MVP?

GPS tracking, rating system, and dynamic pricing.

What was the MVP for KCO — Kangkong Chips?

Fried kangkong in plain rice box containers without branding.

What was the initial capital for KCO — Kangkong Chips?

₱3,500.

What is the significance of learning in new product revenue according to Nielsen's research?

Learning has the greatest impact on new product revenue compared to process, investment, or structure.

What is a common practice that can multiply new product revenue?

Strictly following decision-making criteria for evaluating potential new products.

What cultural aspect does lean innovation align well with?

Engineering cultures and organizations focused on process-improvement programs like Six Sigma.

What is the main goal of lean innovation?

To efficiently learn and adapt products based on customer feedback.

What is the importance of capturing lessons learned in lean innovation?

To ensure valuable insights are available across the organization, not just within lean teams.

Why are business schools replacing business plan competitions with business model competitions?

To focus on practical application of lean start-up methodologies.

What is the role of accelerators like Y Combinator in reducing barriers for start-ups?

They provide support and resources for new ventures to grow.

What does the lean innovation methodology emphasize about perfection?

It embraces not letting perfection get in the way of progress.

What is the Pareto principle in the context of product development?

The Pareto principle, or 80/20 rule, suggests that 20% of a product's features will deliver 80% of the customer-desired benefits.

Who is Harold Denn Burgos?

Harold Denn Burgos is a senior high school student and inventor of the Go Clean Helmet Cleaning Vendo, who became a millionaire at age 18.

What is Market Validation?

Market Validation is the process of determining if there is a need for your product in your target market.

Why is early market validation important?

It helps avoid wasting time and resources creating a product that is not a good fit for the market.

What is Alpha Testing?

Alpha Testing is when internal employees test a product in a controlled setting to eliminate bugs and issues before external release.

What is Beta Testing?

Beta Testing involves a limited group of external users who identify problems in a product, often in an unfinished version.

What lesson can be learned from the Alaska Milk case?

Continuous market re-validation is essential throughout the entire development cycle, not just early validation.

What is the Business Model Canvas (BMC)?

The BMC is a strategic management tool that defines and communicates a business idea using nine building blocks.

What are the nine building blocks of the Business Model Canvas?

1. Customer Segments, 2. Value Propositions, 3. Channels, 4. Customer Relationships, 5. Revenue Streams, 6. Key Resources, 7. Key Activities, 8. Key Partners, 9. Cost Structure.

What does 'pivot' mean in a business context?

A pivot is a substantive course correction in one or more business model hypotheses based on validated learning from customers.

What is Customer Development?

Customer Development is an approach to testing business hypotheses with real potential customers, purchasers, and partners.

What is Waterfall Development?

Waterfall Development is a traditional linear product development process where each stage occurs in sequence and lasts for months.

What is Stealth Mode in product development?

Stealth Mode is a practice of keeping product development secret to avoid alerting competitors, now considered obsolete by lean principles.

What is Lean Innovation?

Lean Innovation is a philosophy that emphasizes not letting perfection block progress, using MVPs and rapid iteration to learn efficiently.

What is the significance of the Business Model Canvas in lean innovation?

The BMC integrates the lean mindset by asking for the MVP within the Value Propositions block and is updated as real feedback comes in.

What is the role of Key Resources in the Business Model Canvas?

Key Resources are the essential assets required to deliver value propositions, support distribution channels, customer relationships, and revenue streams.

What are Customer Relationships in the Business Model Canvas?

Customer Relationships describe how a business acquires, retains, and grows customers, including the costs associated with these relationships.

What are Revenue Streams in the Business Model Canvas?

Revenue Streams identify what customers are willing to pay for and the pricing tactics used to generate income.

What is the purpose of Key Activities in the Business Model Canvas?

Key Activities are the crucial actions a business must take to deliver its value propositions and maintain customer relationships.

What are Key Partners in the Business Model Canvas?

Key Partners are the external organizations or individuals that help a business perform its key activities and acquire key resources.

What does Cost Structure refer to in the Business Model Canvas?

Cost Structure outlines the most significant costs associated with operating a business model, including key resources and activities.

What is Six Sigma?

A process-improvement methodology widely used in engineering and manufacturing organizations, compatible with lean innovation cultures.

What is the purpose of the Innovation Corps (I-Corps)?

A 2011 U.S. National Science Foundation program using lean methods to commercialize basic science research, taught at 11 universities.

Why is marketing important?

Marketing creates demand for products and services; without it, other business functions have no purpose.

Who is known as the Father of Modern Marketing?

Philip Kotler

What are the main functions of a marketing department?

Consumer research, launching new products, promotion, selling, and advertisement.

What are the three types of offerings that can be marketed?

Goods, services, and ideas.

What is the difference between a product and a service?

A product is tangible and can be owned, while a service is intangible and involves access without ownership.

What are the 4 Ps of the Marketing Mix?

Product, Price, Place, Promotion.

What does 'Product' refer to in the Marketing Mix?

The good or service being offered that satisfies a consumer need.

What is market segmentation?

The process of gathering potential buyers into groups with common needs.

What is the first task of marketing?

To discover consumer needs.

What is the definition of product positioning?

The place a product occupies in the consumer's mind relative to competing products.

What are the three levels of a product?

Core Product, Actual Product, Augmented Product.

What is the core product?

The fundamental need or want the product satisfies.

What characterizes consumer goods?

Products purchased by end users for personal use.

What is the Product Life Cycle (PLC)?

The stages a product goes through from introduction to decline.

What happens during the introduction stage of the PLC?

Sales grow slowly, usually with no profit yet, and informative advertising is used.

What is a high-learning product?

A product that requires significant consumer education and has an extended introductory period.

What is a fad product?

Products that enter quickly, are adopted quickly, and decline very quickly.

What is the role of persuasive advertising in the growth stage of the PLC?

To encourage rapid sales growth and may involve price reductions as new competitors enter.

What is competitive pricing used for in the maturity stage of the PLC?

To sustain growth as sales increase slowly and profits may start to fall.

What is the significance of behavioral segmentation?

It focuses on knowledge, attitudes, uses, or responses to a product.

What is differentiation positioning?

Attracting consumers by offering features or capabilities distinctive from competition.

What does augmented product include?

Additional services and benefits beyond the product itself, such as warranties and after-sales service.

What are examples of business goods?

Products bought by organizations for operational use, such as iMac computers.

What is the marketing strategy during the decline stage of the PLC?

Advertising is reduced or stopped, and production may be discontinued.