Innovation and Enterprise Lean Startup

www.rallydev.com @zachnies! ©2013!
Innovation in an
Agile Portfolio
Enterprise Lean Startup!
Zach Nies – Chief Technologist!

Zach Nies
@zachnies
Zach Nies, Chief Technologist
Rally Software

Font Sampler!
http://en.wikipedia.org/wiki/File:Caslon-schriftmusterblatt.jpeghttp://media.kelbymediagroup.com/layersmagazine/images/columns/artoftype/may06/glyph-set.jpg

I love to change
industries !

Apply new 
disciplines!

Become
disciplined
explorers…!

who know how to
balance
exploration 
and execution!

Build what 
people want!

Take advantage
of market
opportunities!

What happened to
this company?!

1 2 5
iPhone Released1
iPhone App SDK Released2
Android w/ Nav Released5
Major Recession3
3
iPhone App Released4
4

A lot can !
happen in 
1.5 years.!

Is your business
Agile enough?!

Turn these
disruptions into
opportunities!

What’s changing?!

Time to excellence!

http://en.wikipedia.org/wiki/File:Disruptivetechnology.gif

http://en.wikipedia.org/wiki/File:Disruptivetechnology.gif
Excellence!

Some examples…!

1984!

2006!

About 20 years!

2001!

5 years!

2007!

2010!

3 years!

2012!

2 years!

2008!

4 years!

“The Tesla Model S outscores every other car 
in our test Ratings.” – Consumer Reports!

1979!

1989!

10 years!

2.5 years!

1.5 years!

http://hbr.org/2013/03/big-bang-disruption/

Disruption can
sneak up on you!

Impact on
companies!

500

Question:!
!
How long does the average company
on this list survive?!

1958: !
Average lifespan was 61 years!
!
2012: !
Average lifespan was 18 years!

8 years!

Incumbent
advantage 
is going away !

How does this
impact Product
Development?!

Role of uncertainty!

Chaotic! Simple!Complicated!Complex!
Uncertainty!
High! Low!

Product lifecycle!

Disruption!
Product lifecycle!

Product lifecycle!
Disruption!

Take
Action!
Follow
Rules!
Analyze!
Guess &
Learn!
Chaotic! Simple!Complex! Complicated!
Uncertainty!

Take
Action!
Follow
Rules!
Analyze!
Guess &
Learn!
Chaotic! Simple!Complex! Complicated!
Bureaucrat!Engineer!Fireﬁghter! Entrepreneur!
Uncertainty!

S
e
n
s
e
A
n
a
l
y
z
e
Uncertainty!

E
x
p
l
o
r
e
O
p
e
r
a
t
e
Uncertainty!

Aligning action 
with uncertainty!

http://www.flickr.com/photos/isaacmao/380257543
Create a plan to
predict the future!

Market research!
Product deﬁnition!
Product requirements!
Detailed plan!
Alpha release!
Beta release!
Final release!
FIRST CONTACT WITH
CUSTOMERS!

Market research!
Product deﬁnition!
Product requirements!
Detailed plan!
Alpha release!
Beta release!
Final release!
FIRST CONTACT WITH CUSTOMERS!

HOW MANY
GUESSES?!

FIRST CONTACT
WITH POTENTIAL
CUSTOMERS!

http://www.flickr.com/photos/oregondot/4132135156

Obscure 
the uncertainty 
with details!

Embrace and
reveal 
the uncertainty!

Sounds like 
a startup!

How does 
Eric Ries deﬁne 
a Lean Startup?!

Where does
uncertainty live?!

Brown, Tim (2009-09-16). Change by Design (Kindle Location 1984). Harper Collins, Inc.. Kindle Edition.

Level of uncertainty!

What to do!
Operate!

What to do!

What to do!
Big 
Companies!

Big
Companies!
http://www.flickr.com/photos/ironnickel/6076087519

Startups!
http://www.flickr.com/photos/elcapitan/2387917709

What we need 
is a way to 
discover the future!

Uncertainty!
Knowledge!
Experiments!

Discover the future!
Validate!Discover! Transition!
Business Model!
Vision and Empathy!
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Innovation Sandbox!

“Get out of the
building!”!
Steve Blank!

“Meaning emerges
through
interaction”!
Dave Snowden!

Innovation Sandbox!

http://www.flickr.com/photos/b0jangles/7114571717

Vision and Empathy!
Innovation Sandbox!

http://www.flickr.com/photos/klearchos/4541072707
Vision!

The idea is not
the thing that
matters.!

What does
matter?!
!
According to Simon Sinek!

Why you’re doing
it matters.!

http://www.flickr.com/photos/usarmyafrica/4553749920
Empathy!

Technology adoption
is a human
phenomenon !

Not a technological
phenomenon !

An example…!

Need human
centered approach!

Business Model!
Vision and Empathy!
Innovation Sandbox!

Business Model!

Discover!
Discover!
Business Model!
Vision and Empathy!
Innovation Sandbox!

Discover!
Problem 
Discovery!
We understand the
problem a customer 
wants solved!
Discover!

http://www.flickr.com/photos/adactio/2535502416

Discover!
Solution 
Validation!
Our product idea 
solves the customer’s 
problem!
Discover!

Video Demo (Landing Page)!
Concierge!
Wizard of Oz!
Crowd Funding 
Single Key Feature!
Types of Minimum Viable Products!

Discover!
Business 
Validation!
Our business model 
can be proﬁtable!
Discover!

High level business model!
http://www.forentrepreneurs.com/saas-metrics/

Business Model!
Vision and Empathy!
Pivot 
or 
Persevere?!
Innovation Sandbox!

Validate!
Validate!
Business Model!
Vision and Empathy!
Innovation Sandbox!

Validate!
Prepare to Sell!
The founders can: 
Understand the ﬂow of
money and sell the offer!
Validate!

You!
?

Validate!
Close
Deals!
Our draft sales plan will
close or activate
customers!
Validate!

Sales Funnel!
http://www.flickr.com/photos/carlagates247/5524789016

Validate!
Package
Offer!
We can package, price,
position and promote 
our offer!
Validate!

For (target customers)!
Who (have the following problem)!
The (product name) is a (describe the
product or solution) !
That provides (key beneﬁt) !
Unlike (reference competition),!
The product/solution (describe the key
point of competitive differentiation)!
Product Positioning!

Transition!
Business Model!
Vision and Empathy!
Innovation Sandbox!

Transition!
Transition
Team!
We have budget and 
assembled a cross-
department transition team!
Transition!

Managing a Portfolio  
The Three Horizons Model!
Horizon 1
0 to 12 months
Horizon 2
12 to 36 months
Horizon 3
36 to 72 months
Current
Businesses
Generate
today’s cash
flow
High Growth
Businesses
Today’s
revenue
growth +
tomorrow’s
cash flow
Growth
Options
Options on
future
high-growth
businesses
Expected Window of Returns
AccumulatedTotalReturns
Figure 2.4

Transition!
Integrate
into Depts!
Transition!
Departments can take on
our new offer!

Inventors
Inventor to department transition

Orchestrator
Inventors Deployers
Departments

Orchestrator
Inventors Deployers
Departments
Product
Engineering
Marketing
Sales

Validate!
Roll off
Inventors!
We no longer need our
inventors on the team!
Transition!

Departments
Product
Engineering
Marketing
Sales

Validate!Discover! Transition!
Frame
Measure
Build
Learn
Business Model!
Vision and Empathy!
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Innovation Sandbox!

Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn
Frame
Measure
Build
Learn

Guesses!
Knowledge!
Experiments!

Empathize & Frame!
Test & Measure!
Build&Ship!
Learn&Share!
Experiments!

TAKE EACH MAJOR
GUESS!

RUN AN EXPERIMENT!

http://www.youtube.com/watch?v=Iyjs3zeoSrM

http://www.richard-feynman.net/gallery.htm

Disciplined
exploration!

Your turn!

Background: What do you want to learn and why?
Frame the Experiment: What is your Problem Statement?
Write the Problem Statement from the Define worksheet here. What pain or problem is being experienced?
[Customer Segment] needs a way to [describe job to be done], (because|but|surprisingly) [describe insight].
Hypothesis to Test
[Specific repeatable action] will create [expected result].
Is this hypothesis falsifiable?
Experiment Details
Describe the experiment you plan to run and how you are going to attempt to falsify your hypothesis.
Safety: How is the experiment safe to run and how will you recover?
Describe how the experiment is safe to run.
Describe how you will recover from running the experiment upon completion or if you discover it isn’t safe to run.
Measures
What will you measure to invalidate your hypothesis?
What will you measure to indicate the experiment is safe to run?
What will you measure to indicate you should amplify the experiment?
Measures can be Qualitative and Quantitative.
Experiment Backlog
Stack ranked list of actions needed to run the experiment.
Next Steps: Given what you learned, what’s next?
Experiment Results and Learnings
Describe what you learned from the experiment? Did you invalidate your hypothesis or does it live on?
Experiment Name:
Owner:
Mentor: Date:
I-2

Guess: 
Removing our cubicle
walls will increase 
the value we ship 
to our customers!

The impact of
innovation is
changing!

Extend Agility into
your business!

Take advantage of
market
opportunities!

1
Began Using Lean Startup1
2
$50M in New Product Revenue2
3
1800 Concurrent Experiments3

Books that informed this talk!

Geoffrey 
Moore!
David Snowden!
Ash 
Maurya!
Tim 
Brown!
Clayton 
Christensen!
Steve 
Blank!
Eric 
Ries!
People who informed this talk!
Brant Cooper
Patrick
Vlaskovits!

Go Agile. Go Rally.!

Innovation and Enterprise Lean Startup

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