Pivot – Firing the Plan Not the People. 2 Minutes to See Why.

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At times more is less and less is more. 2 minutes to see why


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Innovating Municipal Government Culture

D.R. Widder is the Vice President of Innovation and holds the Steve Blank Innovation Chair at Philadelphia University. He’s helping city government in Philadelphia become more innovative by applying Lean startup methods and Philadelphia University’s innovation curriculum. I asked him to share an update on his work on teaching lean techniques to local governments.

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This February Philadelphia University and the City of Philadelphia founded the Academy for Municipal Innovation (AMI). Our goal is to foster innovation principles and practice in local government by changing the way government employees think about innovation and act on their ideas. We just graduated the inaugural class.  Here’s the story of our journey.

Inaugural Class Academy of Innovation Management

The Academy for Municipal Innovation has come out of collaboration between Philadelphia University and the City of Philadelphia. Soon after I came to PhilaU as the chief innovation officer, I met Adel Ebeid, who was newly appointed as Chief Innovation Officer for the City of Philadelphia. We bonded over our similar challenges, as Adel was only the second chief innovation officer in city government and I was one of the first chief innovation officers in higher education.

Building a Government Innovation Curriculum
The Academy for Municipal Innovation curriculum is built on Philadelphia University’s distinctive approach to innovation education – it’s collaborative, multidisciplinary, and engaged in the real world. The curriculum draws from Philadelphia University’s design, engineering, and business disciplines, as all are needed to make innovation relevant in the government.

Philadelphia University Undergraduate Curriculum

Philadelphia University Undergraduate Curriculum

The program is built around five core innovation practices that we teach:

  1. Integrated Design Processes – The process of opportunity finding, innovation and problem solving
  2. Business and Operations Models – How to describe, design, challenge, and evaluate innovation
  3. Systems Thinking – Methods for gathering and mapping out all stakeholders and influences surrounding an issue and solution
  4. Research Methods – How to find actionable insights and ask the right questions.
  5. Innovation Leadership – How to develop innovative teams and culture.

We took this these core innovation practices in the form that has worked at the undergraduate level, and adapted the processes and content for the working professional in the government.

The Academy for Municipal Innovation (AMI) curriculum
We deliver the class to government employees in an Executive Ed format comprised of seven 4-hour sessions.

Each class is a mix of theory and practice. A key design principle is that each session includes at least one tool that participants can use the very next day at work, so they can make it real immediately. For example, simple brainstorming techniques like “Yes, And” and “Silent Brainstorming” were put to use the same week they learned them.

We select one common theme that runs through all the classes for continuity, and they build upon it as they go. The theme for the pilot class was “How can the city better communicate and advance innovative ideas”. We built on this theme teaching the students opportunity finding, concept development, stakeholder mapping, systems dynamics, research, and business models perspective, culminating with a capstone workshop where they bring it all together.

The strategy is to take participants from across the full range of city organization chart to seed the culture change. The pilot class (we call them the Pioneers) learned innovation principles and tools, and will bring them back to their groups and spread the word. For example, a subset of the class self organized around how to better service businesses starting and operating in the city. They used the capstone to pilot a process that they plan to take back to their organizations and implement at scale.

Scaling the Academy for Municipal Innovation
We see the Academy for Municipal Innovation scaling in three dimensions:

  1. Culture – graduates become change agents in their home groups, and change their group culture locally, amplifying the impact of each graduate
  2. Depth – The certificate program can be expanded into courses for credit, and ultimate a master’s degree in innovation in government.
  3. Reach – As we move out of pilot, we will offer this program to other city governments (and other levels of government). Success in Philadelphia will make us a flagship for innovation at the city level.

Academy for Innovation Management scaling strategy

Lessons Learned

  • The bar is low but the need, and receptiveness is high for government innovation. The students in the Pioneer class have actively challenged ideas and assumptions, and are already applying what they have learned in their work. Today.
  • Creativity, collaboration, and critical thinking skills transcend context, age, and pre-existing knowledge. These skills are teachable/learnable and no matter how good you are, you can get better.
  • Leadership buy-in to innovation is that much more critical to success in government contexts.
  • Government doesn’t get to ‘opt-in’ to problem solving or choose which problems it will tackle. The government innovates with the hand it is dealt to a greater extent than the private sector.
  • The scale of a city as a building block is compelling for change and social impact. It is less complicated and with less inertia than the state and federal level, making the prospect of change more manageable.
  • “Municipal Innovation” might be an oxymoron to the cynic, but cities have scope, and levers of influence, that industry does not. Changes in policy, regulations, civic engagement, unique partnerships, social programs, and different funding mechanisms are all tools available for the municipal innovator.
  • The ‘boot camp’ experience creates a new communication network. Our pioneer class formed strong bonds learning new things together, in a new and intense environment. In addition to traditional communication, the closely bonded students can reach across the silos directly to each other, built on the relationships formed in class.

Working with the City of Philadelphia on Academy for Municipal Innovation has left me exhilarated. The city leadership, and members of this pioneer class, are committed to real innovation in government. They are taking on systems highly resistant to change, with diverse stakeholders in intricate relationships, under public scrutiny and political complexities. The magnitude of the challenge and their commitment is inspiring.

If you would like to find out more, click here

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New Lessons Learned from Berkeley & Stanford Lean LaunchPad Classes

Our Stanford and Berkeley Lean LaunchPad classes are over for this year, and as usual we learned as much from teaching the teams as the teams did from us.

Here are a few of the Lessons Learned from these two classes.

Have each team talk to 10 customers before the class starts
Each year we learn how to move more of the Lean LaunchPad class logistics outside our classroom so teams have more time for in-class learning.

A few years ago, we moved the formation of teams’ to before the class started and in doing so, saved a week of what normally be an in-class time activity. To make this happen, we hold three “information sessions” two weeks apart before the class starts. In these “info sessions” we describe the purpose of the class, and then let students mix, meet and form teams. During this pre-class time we share a Google doc where students who have ideas can find other team members, and students without an idea can find a team that matches their skills and interests. Application and admission to the class is by interview with a fully formed team.

Info session announcement

Info session announcement

The next thing we learned is to make applying to the class an integral part of the learning process. Teams apply by filling out both a business model canvas and a “competitive petal slide.” Having the teams do this accomplishes three things.  First it forces the students to read and understand “what’s a business model canvasbefore they even come to class.

Freewire application

Team Application: Business Model Canvas

Second, the competitive slide enforces a modicum of due diligence on the product and market. (We got tired of knowing more about each team’s market by doing a Google search as they presented. Now it’s their job.)

Farmsense competive slide

Team Application: Competitive “Petal” Slide

Finally, having teams spend time on the canvas and competition as part of the application process saves weeks of what would normally be an in-class activity (and as a bonus gives the team a heads-up about the difficulty of the class and shows whether they’re serious about the class or just shopping.)

This year we learned to raise the bar once again.  Could we get the teams to come into class having already talked to 10 customers? Instead of using the first class to have teams just present their business model canvas, this time the team’s first presentation would be about what they learned outside the building about their value proposition. (We pointed them to our tutorials on customer discovery and how to conduct customer interviews but didn’t expect them to be experts on week 1.)

SignUP week 1

1st week team title slide – 11 interviews before class started

We did an A/B test by requiring our teams in one school do this while not requiring it for the teams in the other school. The result?  Teams that had to talk to customers before the class hit the ground running. There was a substantive difference in team trajectory and velocity that continued throughout the quarter. The amount of learning between the two felt quite different. While there may have been other factors (team selection bias, team make up, etc.), we’ll now make this an integral part of all the classes.

Have each team put the number of Mentor interactions on their weekly title slide
The second innovation this year involved mentors. Each team is assigned a mentor as a coach. We’ve been trying to figure out how to make mentor engagements with their teams a regular rather an adhoc activity. While we have required the teams to add a summary of any mentor interaction to their LaunchPad Central narrative, we felt we didn’t have sufficient high-level visibility for these essential interactions.

GiveModo Class 8

But this year, a seemingly minor change to the teams’ weekly cover slide had an important impact. As teams present each week, their cover slides show the number of customers interviewed for that week (>10) along with the cumulative customers interviewed. This year we added one more metric for their cover slides– the number of mentor interactions for that week (>1) along with the cumulative number of mentor interactions.

This enhanced the visibility of the teams interaction (or lack of) with their mentors and allowed us to proactively intervene early if there wasn’t sufficient interaction.

Here are a few of the Final Presentations (see here for all of them)

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If you can’t see the video above, click here

If you can’t see the presentation above, click here

If you can’t see the video above, click here

If you can’t see the presentation above, click here

If you can’t see the video above, click here

If you can’t see the presentation above, click here

If you can’t see the video above, click here

If you can’t see the presentation above, click here

Listen to the blog post here

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Get the Heck Out of the Building in Founder’s School: Part 2

With a ~$2 billion endowment the Kauffman Foundation is the largest non-profit focused on entrepreneurship in the world. Giving away $80 million to every year (~$25 million to entrepreneurial causes) makes Kauffman the dominant player in the entrepreneurship space.

Kauffman launched Founders School – a new education series to help entrepreneurs develop their businesses during the startup stage by highlighting how startups are different from big companies.

In January 2014 Part 1 of the “Startups” section of Founders School went online.

Now you can watch Part 2 “The Lean Approach“.

Founders School

This group of six videos provides an overview of how to successfully do Customer Discovery. You’ll learn how to:

  • get to know your customers
  • devise ways to test your hypotheses
  • glean insights from what you learn outside the building
  • get, keep and grow customers

As in the first part of this series, I’m in good company – I’m joined in Founders School by Noam Wasserman of Harvard teaching Founder’s Dilemmas, Craig Wortmann University of Chicago covering Entrepreneurial Selling, Peter McDermott helping understand Intellectual Property, and Nathan Gold offering how to give Powerful Presentations.

These videos are not only great tutorials for founders but also provide educators with another source of well produced and curated resources.

These “Startup and The Lean Approach” videos are a great general purpose companion to my “How to Build a Startup” lectures on Udacity.

And you get a tour of my living room and office…

Introduction, for Part 2 is here

Module 1, The Lean Method

  • 0:50: There are No Facts Inside Your Building — Get Outside
  • 1:28: Using the Business Model Canvas
  • 1:49: Use Customer Development to Test Your Hypotheses
  • 2:44: What is a Pivot?
  • 4:24: No Business Plan Survives First Contact with Customers

Module 2, Getting Out of the Building: Customer Development

  • 0:24: What is Customer Development?
  • 1:09: How Do You Start the Customer Development Process?
  • 1:36: Customer Discovery is a Series of Conversations
  • 2:05: The Founder and Customer Development
  • 3:16: Real World Example of Customer Development

Module 3, Customer Development Data

  • 0:31: Designing Experiments to Test Hypotheses
  • 0:48: Doing Customer Discovery Without Collecting Data is a Sin
  • 1:06: Insight is Key
  • 1:49: Why Accountants Don’t Run Startups

Module 4, Minimum Viable Products

  • 0:18: What is a Minimum Viable Product?
  • 0:38: What to Test, Why to Test and How to Test
  • 2:05: You’re Not Building a Product … You’re Getting Customer Feedback
  • 2:53: Use MVPs to Run Experiments
  • 4:15: Real World Example of an MVP

Module 5, Customer Acquisition and Archetypes

  • 0:47: Get, Keep and Grow Customers
  • 1:00: Create Customer Demand
  • 1:46: Customer Archetypes: Getting to Know Your Customers
  • 3:35: Matching Archetypes to Acquisition
  • 5:28: Growing Customers: The Lifetime Value
  • 7:35: The Biggest Mistake in Customer Acquisition

Listen to the blog post here

Download the podcast here

Beyond the Lemonade Stand: How to Teach High School Students Lean Startups

While the Lean LaunchPad class has been adopted by Universities and the National Science Foundation, the question we get is, “Can students in K-12 handle an experiential entrepreneurship class?” Hawken School has now given us an answer. Their seniors just completed the school’s first-ever 3-credit semester program in evidence-based entrepreneurship. Students are fully immersed in real-world learning during the 12-week Entrepreneurial Studies course.

Here’s what Doris Korda Associate Head of School and Tim Desmond, Assistant Director of Entrepreneurial Studies did, and how they did it.

Teaching students to think like entrepreneurs not accountants
We realized that past K-12 Entrepreneurial classes taught students “the lemonade stand” version of how to start a company: 1) come up with an idea, 2) execute the idea, 3) do the accounting (revenue, costs, etc.).

We wanted to teach our students how to think like entrepreneurs not accountants. Therefore we needed them to think and learn about two parts of a startup; 1) ideation – how to create new ideas and 2) customer development – how do they test the validity of their idea (is it the right product, customer, channel, pricing, etc.)

Our first insight was that if broke the class in half, and separated ideation from customer development, our students would understand 1) that an idea is not the company, 2) almost all initial ideas are wrong. 

So rather than starting with their own business ideas, we decided to first give our students experience doing customer discovery on someone else’s idea.  Then in the second half of our semester let our students come up with their own ideas and then run the customer discovery process on their own product.

Customer Discovery in the Real World
Our students first worked with two local startups who agreed to be their clients, on real-problems. These two startups had problems they could not solve on their own due to lack of resources—time, people, money. The startups and the teaching team crafted a challenge for the kids to tackle using the Customer Development methodology, Lean Launchpad tools and the business model canvas.

For their first startup, we chose a 3-year old funded company that was working to refine its customer segment and channel for its physical product.  For the second startup, we chose a year-old web/mobile startup whose market is college bound teens, with a founder who had skipped the initial customer validation process. These two startups served as the students’ introduction to customer development methodology. Each student team conducted over 100 detailed interviews in an effort to develop results for each client.

Hawken students doing Customer Discovery in a mall

Hawken students practicing Customer Discovery in a mall

Because these were high school kids with, for the first time, a real business relying on them, this portion of the class shook them so badly they couldn’t move from their seats–literally. All their hard-wired school habits turned to dust as the kids realized their school tools were useless: there were no solution keys, no rubrics, no answers in the back of the book. Feeling the pressure, after 3 wasted days, one student on one team finally convinced her team they needed to get out of the building, like in Steve’s video. That’s when everything changed.

Knowing they had 3 weeks before presenting to the company co-founders, the kids felt intensity like no traditional classroom could generate. The pace and uncertainty of the class picked up and never let up from that point.

The second startup, because it was in an earlier stage and more complicated than the first, had the kids going even deeper into the 9 blocks of the business model canvas. Because the students’ customer development narratives revealed the client’s user interface was problematic, students with no programming experience began redesigning the user interface using Lean UX principles, tools and strategies.

Yet students were still afraid to rethink the client’s product: “if we tell [her] how to unclutter the interface, it will cost her a ton of money and she’ll be mad at us.”  One of their mentors, a professional UX designer, encouraged the kids, “You have the facts. You’ve developed archetype and narratives from a ton of real customer interviews. You need to propose disruptive solutions. What can you propose that will solve the customers’ problems and set this product apart in a meaningful way?” This was a huge learning moment. Their final presentations were substantive and evidence-based.

Starting Your Own Company
For the last three weeks of class, the 16 students came up with their own business ideas that they pitched to their peers; 4 of these ideas moved forward in the quest for viable business models. Interestingly the four founders of teams whose ideas “won” argued over which team would get the students with the most advanced technical skills. By the end of the half hour, students were suggesting that our school should offer more programming earlier in school and throughout this course.

We assigned one mentor to each of the four teams and used LaunchPad Central to hold all the details together, including hundreds of customer interviews, narratives, days in the life, archetypes, storyboards, user interfaces, live presentations and tons of often painful feedback.

Teams spent 3 weeks getting out of the classroom and iterated and pivoted, put to use the visual and lean tools along with all they learned from Steve Blank’s Udacity lectures, then pulled together enough data and crafted compelling stories for their final Shark-Tank style presentations. They presented to local sharks from four local accelerators—Bizdom, JumpStart, FlashStarts and LaunchHouse (which runs the country’s first kid launched/kid run accelerator for kids, called LightHouse).

Hawken students pitching the local "Sharks"

Hawken students pitching the local “Sharks”

Having practiced negotiating terms, students calculated their companies’ valuations, ranging from 50k- 300k, and wrestled with the sharks over equity. Sharks, in turn, argued with one another and even attempted to form syndication in one instance.  At the close of the presentations, two teams were invited to apply for funding through local accelerators. The semester concluded with pizza and ice cream.

Pioneers are the Ones With Arrows in Their Backs
Trying to fit an Entrepreneurial Studies course into a college prep high school outside of Silicon Valley is an interesting challenge.

Being a pioneer means that there’s nothing familiar about this for parents, students and our administration. Hawken is exactly the right school to do this, but still our high school students and parents and other teachers are steeped in more traditional classes and subjects, college placement-related pressures, graduation requirements, AP courses, grades, etc.

Creating it feels a lot like building something totally new inside an existing business. But the course was spectacular for its students in ways that no other course is, so we’re getting money and institutional support for growing it. We’re learning a lot as we go…we’re figuring it out.

Summary
The Entrepreneurial Studies course serves as a vehicle for the school to realize its mission — forward-focused preparation for the real world through development of character and intellect.  The 16 seniors who just completed the first Entrepreneurial Studies course told us that it was different from anything they have ever done in school – all the learning was active and all the work was collaborative and team-oriented. In evaluations they explained the biggest lessons they learned were often about themselves and how they handled failure, their character and their own strengths and weaknesses.

From one senior: “For the first time I am working because I care. Not just for a grade.”

Lessons Learned:

  • Students work harder, better and deeper when the stakes are real
  • Working for local startups gives them a great way to quickly gain business and life experience alongside customer development experience
  • Working for local startups creates real world intensity and urgency in the course
  • Kids freak out, get paralyzed and waste time doing so. It’s all part of the learning process
  • The learning and growth of how to work well on a team is reason enough for students to enroll in Lean Launch Pad
  • We never anticipated the amount of learning that happened here
  • Even at a very progressive school, we are breaking new ground and challenging all the traditions and biases of regular school

This June, Hawken School is holding an Educator’s Workshop for middle and high school educators who want to build or grow their own LLP-based programs.

Listen to the post here

Download the podcast here

Is This Startup Ready For Investment?

Since 2005 startup accelerators have provided cohorts of startups with mentoring, pitch practice and product focus. However, accelerator Demo Days are a combination of graduation ceremony and pitch contest, with the uncomfortable feel of a swimsuit competition. Other than “I’ll know it when I see it”, there’s no formal way for an investor attending Demo Day to assess project maturity or quantify risks. Other than measuring engineering progress, there’s no standard language to communicate progress.

Corporations running internal incubators face many of the same selection issues as startup investors, plus they must grapple with the issues of integrating new ideas into existing P&L-driven functions or business units.

What’s been missing for everyone is:

  • a common language for investors to communicate objectives to startups
  • a language corporate innovation groups can use to communicate to business units and finance
  • data that investors, accelerators and incubators can use to inform selection

While it doesn’t eliminate great investor judgment, pattern recognition skills and mentoring, we’ve developed an Investment Readiness Level tool that fills in these missing pieces.

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Investment Readiness Level (IRL) for Corporations and Investors
The startups in our Lean LaunchPad classes and the NSF I-Corps incubator use LaunchPad Central to collect a continuous stream of data across all the teams. Over 10 weeks each team gets out of the building talking to 100 customers to test their hypotheses across all 9 boxes in the business model canvas.

We track each team’s progress as they test their business model hypotheses. We collect the complete narrative of what they discovered talking to customers as well as aggregate interviews, hypotheses to test, invalidated hypotheses and mentor and instructor engagements. This data gives innovation managers and investors a feel for the evidence and trajectory of the cohort as a whole and a top-level view of each teams progress. The software rolls all the data into an Investment Readiness Level score.

(Take a quick read of the post on the Investment Readiness Level – it’s short. Or watch the video here.)

The Power of the Investment Readiness Level: Different Metrics for Different Industry Segments
Recently we ran a Lean LaunchPad for Life Sciences class with 26 teams of clinicians and researchers at UCSF.  The teams developed businesses in 4 different areas– therapeutics, diagnostics, medical devices and digital health.  To understand the power of this tool, look at how the VC overseeing each market segment modified the Investment Readiness Level so that it reflected metrics relevant to their particular industry.

Medical Devices
Allan May of Life Science Angels modified the standard Investment Readiness Level to include metrics that were specific for medical device startups. These included; identification of a compelling clinical need, large enough market, intellectual property, regulatory issues, and reimbursement, and whether there was a plausible exit.

In the pictures below, note that all the thermometers are visual proxies for the more detailed evaluation criteria that lie behind them.

Device IRL

Investment Readiness Level for Medical Devices

You can watch the entire presentation here

Therapeutics
Karl Handelsman of CMEA Capital modified the standard Investment Readiness Level (IRL) for teams developing therapeutics to include identifying clinical problems, and agreeing on a timeline to pre-clinical and clinical data, cost and value of data points, what quality data to deliver to a company, and building a Key Opinion Leader (KOL) network. The heart of the therapeutics IRL also required “Proof of relevance” – was there a path to revenues fully articulated, an operational plan defined. Finally, did the team understand the key therapeutic liabilities, have data proving on-target activity and evidence of a therapeutic effect.

Therapeutics IRL

You can see the entire presentation here

Digital Health
For teams developing Digital Health solutions, Abhas Gupta of MDV noted that the Investment Readiness Level was closest to the standard web/mobile/cloud model with the addition of reimbursement and technical validation.

Digital Health

Diagnostics
Todd Morrill wanted teams developing Diagnostics to have a reimbursement strategy fully documented, the necessary IP in place, regulation and technical validation (clinical trial) regime understood and described and the cost structure and financing needs well documented.

Diagnostics IRL

You can see the entire presentation here

For their final presentations, each team explained how they tested and validated their business model (value proposition, customer segment, channel, customer relationships, revenue, costs, activities, resources and partners.) But they also scored themselves using the Investment Readiness Level criteria for their  market. After the teams reported the results of their self-evaluation, the  VC’s then told them how they actually scored.  We were fascinated to see that the team scores and the VC scores were almost the same.

Lessons Learned

  • The Investment Readiness Level provides a “how are we doing” set of metrics
  • It also creates a common language and metrics that investors, corporate innovation groups and entrepreneurs can share
  • It’s flexible enough to be modified for industry-specific business models
  • It’s part of a much larger suite of tools for those who manage corporate innovation, accelerators and incubators

Listen to the blog post here

Download the podcast here

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