tech talk: measuring innovation
TRANSCRIPT
Measuring Innovation
Ash Maurya - Founder of LEANSTACK, Author of “Scaling Lean”
IET11T
CA ACCELERATOR ZONE
Solution
Awesome
The Innovator’s Bias
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?
Anyone up for some excel magic?
Traditional metrics like revenue and ROI all track zero or negative at the earliest stages.
Build velocity, validated
learning, etc.
Build velocity, validated
learning, etc.
Execution of an untested plan isn’t any better.
Things get even murkier after launch
In God we trust, all others bring data. -W. Edwards Deming
Drowning in a sea of data
WTF?
Build velocity, validated
learning, etc.
The Dichotomy of the Progress Story
Whatever demonstrates growth
We need a different measure of progress.
01 Defining Progress
OU
TLIN
E02 Prioritizing Waste
03 Achieving Breakthrough
What do both stakeholders and innovators want?
The hockey-stick curve
TRACTION matters above everything else
Yay!
Same data plotted differently
What is TRACTION exactly?
Traction is the output of your business model.
A business model describes how you create, deliver, and capture value.
-Saul Kaplan
The hockey-stick curve
Track Customer behavior
Create Value Capture Value Cost (Deliver Value)
Create Value Capture Value Cost (Deliver Value)>1
VALUE EQUATION
Create Value Capture Value Cost (Deliver Value)>1
VALUE EQUATION
>=2
MONETIZATION EQUATION
Create Value Capture Value Cost (Deliver Value)> >=
TRACTION
The rate at which a business model captures monetizable value from its customers.
Monetizable value is NOT current revenue but a leading indicator of future revenue.
Saas
Freemium
Trial
E-commerce
Ad-based
Marketplace
Big Data
User Generated Content
Retail
Media
Community
Membership site
Platform
Open Source
Enterprise
Non-profit
Social
Saas
Freemium
Trial
E-commerce
Ad-based
Marketplace
Big Data
User Generated Content
Retail
Media
Community
Membership site
Platform
Open Source
Enterprise
Non-profit
Social
3 business model archetypes
DIRECT MULTI-SIDED MARKETPLACE
$
DIRECT
Unaware visitors Happy customers
Direct models
Unaware visitors Happy customers
Direct models
TRACTION IN A DIRECT MODEL:
The rate at which you create customers.
What customer behaviors lead to traction?
Unaware visitors Happy customers
Direct models
Unaware visitors Happy customers
Direct models
Time spent in store correlated with money spent
MULTI-SIDED
Unaware visitors Happy users
Multi-sided models
Unaware visitors Happy users
Multi-sided models
Derivative asset
Unaware visitors Happy users
Multi-sided models
Happy customers
Derivative asset
Unaware visitors Happy users
Multi-sided models
Happy customers
Derivative asset
Advertisers
TRACTION IN A MULTISIDED MODEL:
Derivative asset to revenue exchange rate
MARKETPLACE
$
Marketplaces
Happy buyer
Happy seller
Marketplaces
Happy buyer
Happy seller
$
Marketplaces
Transaction
Unaware buyers Happy buyer
Unaware sellers Happy seller
$Transaction
Marketplaces
TRACTION IN A MARKETPLACE MODEL:
The rate of transactions.
01 Defining Progress
OU
TLIN
E02 Prioritizing Waste
03 Achieving Breakthrough
Before you can prioritize waste, you have to be able to see the factory floor.
Unaware visitors Happy customers
Goal Observe &Orient
Leverage
ExperimentAnalyze
Next ActionLeverage
ExperimentAnalyze
Next Action
Observe &OrientGoal
G O L E A N
30-90 day iterations
1-4 week iterations
ASH MAURYA @ashmaurya
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