For the Lean (And Lost) Startup…
This is a short-form post. Go here for the extended version (with examples, extra tips, and more detail).
These are the three most common questions I hear in my work interfacing with Lean Startup followers at Stanford and accelerators in the Bay Area:
1. Which experiments should we run right now?
2. Is our user feedback positive ‘enough’?
3. Are we actually making progress in creating a viable venture?
There is an answer to all of these questions! It’s a framework called “The Checkpoints of Validated Learning”, developed to help entrepreneurs and corporate innovators get “unstuck” in their venture development process.
Introducing The Checkpoints
At each Checkpoint shown below, if your feedback is negative, you’ll need to conduct Creative Problem-Solving to iterate until you can clear the Checkpoint and move onto the next one. (In a future post, I’ll cover how teams can boost their Creative Problem-Solving ability, so follow me to get notified about that post)
Disclaimer: Entrepreneurship is an Art, Not a Science
You might be thinking “but Keegan, entrepreneurship is an art, not a science or a process diagram!”. I agree with this 100%. Let me explain:
People associate “science” with formulas, process diagrams, and step-by-step instructions because that is how people learn about science. But after you’ve learned these things, you use them as tools to actually practice science.
Practicing science is an extremely creative endeavor; an exploration into the unknown involving continuous problem solving, late-night brainstorms, operating cooperatively and competitively with others in the face of high uncertainty, and constantly worrying about fundraising (sound familiar?).
It is in this light that I present the framework here. Think of this framework not as rigid binary rules to be bound by, but rather a tool to help you focus your energy on the right activities at any given time — i.e. on the art of entrepreneurship which requires continuous creative problem-solving.
OK, cool…so now I have a viable venture, right?
Not quite! The framework ends with an open-ended task of identifying the next key risks to the business and conducting experiments to mitigate those risks. These risks vary wildly from venture to venture (regulation, technology, market shifts, etc.) so I don’t attempt to capture them in this framework.
You may be thinking “Wait a second! Aren’t I supposed to identify my key risks at the beginning of the process, and tackle the biggest risks first?” The reason this framework places these activities after Checkpoint #5 is that for most ventures (at least for the hundreds of entrepreneurs that I’ve worked with), validating that their solution idea can solve a real user-need in a way that can be profitable is the biggest risk to their venture!
The reality is most ventures won’t ever have the luxury of tackling other risks beyond this. (Of course, if you’re dealing with anything medical or with sensitive data for example, you’ll want to address regulatory and security risks throughout the process.)
Why THIS order?
The order of the Checkpoints spawned from 2 guidelines: 1) It prioritizes what I’ve seen to be the areas of highest risk of time-wasting and missteps among entrepreneurs, and 2) it creates what I call “Safety Nets of Value” at each Checkpoint, which help to de-risk the venture creation process overall.
By “Safety Nets of Value”, I mean that at each checkpoint, the entrepreneur is accumulating a set of knowledge, data, and/or assets that are valuable and can serve as new jumping-off points.
For example, let’s say an entrepreneur has gotten through the first 4 Checkpoints in the framework. She has validated a user need (check!), she has validated a value hypothesis (check!), she has created an MVP that delivers that value (check!), she has validated a revenue stream with a viable CAC (check!), but she’s unable to get her LTV/CAC ratio to be profitable with current solution (thus not yet clearing Checkpoint #5).
In this case, she has created a ton of value along her journey; value that she can leverage now (e.g. to get acqui-hired by a larger company that could help her clear Checkpoint #5, or by creating new tech or channels that don’t yet exist) or later (e.g. waiting for a new tech or new channel to appear in the market).
These Safety Nets of Value are particularly valuable in a corporate innovation context, where projects are impacted by other corporate activity. For example, support for a venture idea can come and go at the whim of the current focus of the CEO, projects can be delayed or cancelled for corporate branding reasons, etc.
Creating value throughout the journey greatly increases the chances that the journey will lead to a fruitful outcome!
About the Author: Keegan Cooke serves as Associate Director for the Center for Entrepreneurial Studies (CES) at the Stanford Graduate School of Business (GSB). The thoughts expressed here are his own and not the GSB’s. Prior to the GSB, Keegan has served as a founder coach and innovation consultant, founded a STEM education startup, Magical Microbes (acquired) and served as Principal Research Scientist for a cleantech startup, Trophos Energy (acquired).