Lean Startup Meets Design Thinking

hello etna welcome to the Google for entrepreneurs hangout series in partnership with Virgin Unite I'm Kaylee Emmerich from the Google for entrepreneurs team and I'm thrilled today to welcome some of the world's leading thinkers in the design and startup communities today we're going to talk about Lean Startup methodology as well as Design Thinking we'll talk about these two concepts from the people that really literally wrote the books on these concepts and hear how they might take a similar approach and often where they might vary and their approaches to problem solving but most importantly we'll talk about ways that actual organizations in the real world have used these two concepts to tackle big problems so we invite you to join us on social we're using the hashtag lean design on Google+ and Twitter so we invite you to join us there and a warm welcome to everyone tuning in today especially to our friends at the branson centers for entrepreneurship around the world throughout today's hangout we'll be taking questions from entrepreneurs at those centers as well as some questions from users who have submitted questions on Google+ so without further ado I'd love to introduce today's guests first welcome Jake Knapp thank you hey Jake Jake joins us from Google Ventures where he is a design partner before that Jake was a designer at Google where he implemented a process called design sprints which we'll hear a lot from him about today he implemented those design sprints for teams like Gmail chrome and Google X and interestingly Jake was actually one of the first designers on Google+ Hangouts yeah it was in a closet in Stockholm far cry from this it's come a long way yes so Jake will be talking about the design sprint process and how at Google Ventures they have implemented that process with actual startups here in Silicon Valley so thanks for being here absolutely yeah next welcome to Eric Ries hello hey Eric Eric is the creator of the Lean Startup methodology and author of New York Times best-selling book the Lean Startup as an entrepreneur himself eric was co-founder and CTO of M view today Eric as an advisor to a number of tech startups and in 2010 he joined as entrepreneur in residence at Harvard Business School so Eric great to have you with us today and thanks for having me and last but not least a warm welcome to Tim Brown hello that hi Tim Tim is CEO and president of IDEO one of the world's most renowned design firms famous for taking a human centered design focused approach Tim is an industrial designer by trade and a frequent speaker on the power of design so Tim thrilled to have you with us today thanks a lot for having me great so let's jump in first I want to talk about these two different concepts design thinking and the Lean Startup methodology and then we'll get into some of the nitty-gritty first Eric this is a question for you can you give us kind of the the overview of Lean Startup methodology kind of the history and key concepts there yeah well first of all thank you for the very kind introduction and a good way to start with Lean Startup is to mention a few of the things that you were very kind not to include in my introduction which made me sound very accomplished and like the things that I have done have been a success but the truth is as any entrepreneurs being honest with you will tell you many of the startups that I have worked on many of the technologies and products I have put my energy into as an engineer which is my training have been failures and I couldn't really understand why even in the best-managed startups where the founders were you know veterans of established companies or had MBAs or really a lot of relevant experience we still kept having this like experience of fundamentally building the wrong thing building something that customers didn't want which is which is really embarrassing very expensive and not how it you know supposed to happen in the movies in the movies you know you have a good idea and poof fast forward photomontage later you're on the cover of magazines and everything's great so that was absolutely not my experience and you know eventually I had the opportunity to do some companies where we really worked in a different way a way that was more iterative more customer centric and we'll talk of course about those ideas over the course of the Hangout and eventually I started writing about that you know called it the Lean Startup borrowing ideas from the factoring and applying them to the discipline of entrepreneurship and if I had to kind of summarize like what does Lean Startup in a nutshell it's this a start-up is not just what you see in the movies kids in a garage eating ramen noodles startup is a human institution designed to create something new under conditions of extreme uncertainty so what defines being an entrepreneur what defines a startup is that we don't yet know what's going to work and therefore have to go through a process of discovery which I think should be a scientific process to discover what the right things to do are and if you follow that then that necessarily means that entrepreneurship is the management discipline that deals with those situations of high uncertainty and that really has been the mission that I've been on the last few years is try to convince people that we can do entrepreneurship and really all management under conditions of an uncertainty in a more disciplined a more scientific way wonderful Thanks and now over to you Tim I know it is a massive field but can you give us the crash course and design thinking kind of the end goal of design thinking you know I mean at its most abstract level design is about crafting the world around us to meet the needs of us as people you know that's what the disciplines are the various disciplines of design have emerged to do over you know what is now in a 150 years of the Industrial Revolution and beyond and clearly if you're going to take technology whatever it might be it might be the technology of language it might be the technology of computers of things that we do as a society and and make them as delightful and as usable for the people for which they're intended the kind of obvious thing to do is to start with the people and so that's really the kind of the fundamental core of what designs about is is through an understanding of people to then craft the technology and materials we have it are disposable to create things they might be products there might be services there might be systems that most meet the needs of those of those people there are various ways of going about each of those steps and there are places where I think we'll find as we as we talk about this that design thinking and lean startup are very similar there other places where it might be a little different but but there's sort of the I would argue that the three most important steps of design thinking are how you go about understanding the prospect the possibilities and the needs of people and they say there are various ways you can go about that then how you express your ideas and express and and in what form you learn about those ideas and then ultimately how you put those ideas out into the world how you make them real how you implement them and how you how you relate to the fields of engineering and business and everything else that's necessary so um it's at the abstract level a very simple process at the detail level a lot of possibilities a lot of complexity and a lot of craft that's necessary a lot of you know I think that sometimes we think of design thinking like we do all of these methodologies as once I understand the abstract idea I can just go do it and just like you know Eric was talking about before you know it actually takes discovery and experience and learning and we get better and better as we do more and more of this stuff so there's a certain amount of craft that's associated with each kind of step of the process yeah absolutely I think Jake that's something that your your team really focuses on the Google Ventures design team can you talk about how your team implements these two concepts in real life yeah we're kind of right at the right at the crossroads the intersection between Tim and Eric and it's a rough neighborhood okay actually it's great it's great spot to be we're trying to help the the companies that we invest in with design and one of the main ways we do that is a design sprint which is really all about the details as Tim was saying so it's all about how they actually execute these steps which are hard in the abstract and and use those steps to learn really quickly which is what they need to do as Eric was saying so so what we'll do is we'll spend a week kind of locked in a room with with one of our startups and you know we've got phones off laptops off and we're focused on one big problem yeah I was imagining right and then so so basically Monday we unpack everything about the problem we try to understand it Tuesday we're drawing everybody individually is sketching on paper and and that usually sounds really daunting to take designers your sketching I'm just a designer yes of the CEOs the engineers whoever we have in there and we found that if you break down the process you get very literal about the steps that anyone can can do a great job with that process and then Wednesday we've got to decide and argue which of those hypotheses we want to test Thursday we'll build a high fidelity prototype so we go from like zero to something that looks real which sounds kind of nuts but but with today's tools it's it's really very possible things like keynote and Flint oh there's great tools for prototyping and then Friday we test it with their target customers so in one week they learn whether these hypotheses work or not and it's a great kind of pre MVP for our startups cool yeah that is definitely the crossroads of both of these concepts so Eric and Tim and maybe Eric I'll let you go first our so Arlene and design basically two separate ways of of problem-solving are they for like what is similar about them I guess first yeah well I think even in just in a conversation so far you can see a lot of similarities in terms of the you know a Discovery oriented approach learning is really the unit of progress and a focus on the customer and their actual needs versus our theories and beautiful business plans that kind of things that we wish the customer would do I can't tell you how many times I thought to myself boy if the customer would just read my business plan and they would behave the way that it said they were supposed to that would make my life a heck of a lot easier that's you know I mean I'm embarrassed to admit that's kind of classic engineering thinking products would be a lot easier if it wasn't those pesky customers and it's it's easy for us to kind of get lost and forget what the purpose of our work everyday is and I think a lot of the waste that you see in the modern work environment has to do with people who become disconnected from what is that purpose was the greater meaning of the work that we do but the way I think about it you know there's a lot of approaches that come out of the different functional elements of a modern corporation that have a lot of similarities because we've all been struggling with a lot of the same problems so if you look at like if you pick a random well-run company today and you imagine zoom way out you have the God's eye view of this company and imagine each of the functional silos as if they were like big huge physical grain silos right you kind of see them operating and you grab one of the silos you are huge you know you're you're demigods view you grab the top of pop it off like a Pringles can and look inside the engineering silo what do you see you will see a highly iterative agile development extreme programming style iterative approach grab the design silo and if they've read Tim's book and if they understand the what a modern approach design looks like you will see the kind of design thinking that he mentioned grab marketing you will see customer development if you grab operations you'll see some version of DevOps you might find an organization where in every silo things are highly iterative customer centric and where people are really learning focus on learning but then zoom out you say well this must be a really adaptable learning oriented company this is fantastic but actually what you will see in a lot of companies is although there's all this iteration learning happening in each individual silo the actual work product the company produces is passed binder to binder from each silo to the next in a totally linear and old-school waterfall style approach and if you're the CEO of such a company not a day goes by where somebody who works in one of those silos doesn't come into your office and say you know what would make the company a lot better you should make my function in charge of all the other functions and if we get all the other functions to do design thinking or customer development or agile engine or pick your choice that would make life easier of course everybody in every silo is saying that and and for our modern managers it can be really challenging so for me my aspiration with Lean Startup is not just to have people adopt it as get another siloed approach but rather to take these common elements that are common to design thinking and to agile and to lean and start to apply them at a system-wide at the company level so that we have a common framework for understanding what are the problems a common approach for the process that we're going to use to solve those problems and most importantly we can speak the language of business to say here are the concrete financial and business outcomes that we can achieve if we work in this way and that really I think has been very effective in seeing companies kind of transform from that older style of working into a more modern way that's really been than what I've tried to accomplish sure and so Tim Eric's kind of talking about that not one group should own it it sounds like different groups basically have interpreted this into their own processes but it's generally the same kinds of concepts would you agree with that should and should they viii I think I'm working I think in the idealized view that's that's that's true I suspect it might agree with him when I say it's remarkably rare to go find organizations where that's happened naturally and emergently in every part of the organization and the great thing about looking at startups of course is you have a opportunity to create that right right from the beginning and and that's that's a rare and precious opportunity with organizations that have been around a little while even ones that were not with it with startups not very long oh it's a little harder to make that a little harder to make that happen and you know part of that is because of them the sort of natural approaches or I know skills and disciplines that might be parts of different parts of these organizations and you know one of the things I think that's particularly Precious about about design thinking and I think you also see it in the best technology led organizations the best the best kind of engineering organizations is a willingness to think about the future in a sort of a big and open-minded way and and and that ability to have confidence that a unknown outcome is feasible and the willingness to strive for an unknown outcome is okay what you find unfortunately all too often and other parts of organizations is a just a lack of experience in doing that and so and so our tendency towards kind of incrementalism and and I think that where I where I see sometimes organizations going wrong is they interpret both actually both Design Thinking and lean startup in a very incremental way where they sort of already know the answer before they before they ask the question and and that doesn't lead to very much in the way of kind of break breakthrough or anything particularly important so I think the comfort with the unknown which is a slightly scary world for people to be in is an important characteristic certainly of what what I think about the best of Design Thinking any way that that I do believe organizations need to embrace if they're going to do things that are truly truly do you agree that completely sure yeah and we'll talk a little bit later about kind of the concept of pivoting and the courage there to not start out knowing the answer right Jake so seems like lien is more focused on efficiency design kind of maybe in a greater way values creativity how do you guys deal with that tension is it attention started a lot I think actually that the word creativity can be a great enemy to design because when people think of creativity I think often it's like oh it's this magical thing that I understand it oh yeah or like the worst case you see somebody being creative and you think like the other engineers or whatever they're like oh yeah or they're like it's looks geeky and you know touchy-feely is like Dungeons & Dragons or something and really design is just this problem-solving and there are steps you can take to solve problems and and there's there's methods of designers use that happen to be like not that weird and not that you know not that kooky so um so you don't like Dungeons & Dragons --is I'm not saying that I don't judge ins and Dragons topic but I do recognize how it's perceived by others so um so basically we want to demystify it and I think that the tension goes away when people practice design when you get you know for we're working with a company in the you know the DNA experts or the you know the physicians or the engineers or whomever they're actually in there doing step by step and they realize like oh it's just it's just problem-solving just making the product it's making the service that we're all at this company to do that makes people comfortable with it as something they can they can actually you know do in their organization and it's not like a huge mentality chef right I think that's something you guys have done really well on the design team at Ventures is kind of break this down and you've kind of open sourced the process to make it accessible for people yeah yeah we definitely want people to to not think of design is something that only you know a specialized group OD by yeah yeah we want to just make it clean specific and that's kind of our mission for our companies and for anybody else who wants to remember you said it's online can what is yeah yeah so tv.com slash designs prints I'll try to say that URLs many times possible it's a series of posts that we've written to describe how to run a week-long design sprint every step of the way and we've heard from a lot of companies even you know once we from that before you we have read this and run it yeah both of big companies and startups totally check it out cool and so this is a question off of Google+ from Rafi Brill this is a question for Eric hey Rafi hey Rafi is there a clear difference between the prototype from design thinking and the Minimum Viable Product MVP from the lean methodology can you think of a prototype as an MVP cetera yeah I mean I really try hard not to get bogged down in semantics and you know people say is this thing the same is that thing you know the truth is what matters is not what you call it but what what role these concepts play in the work that you do every day so here's my understanding of a Minimum Viable Product and I have worked with companies where they have adopted the term prototype to mean what I'm about to say and I've worked in other companies where the term prototype has come to mean something so specific it's actually the enemy of what I'm about to say so so you know and terminology whatever but the critical thing is that once you have formed a hypothesis about what you think is going to happen in the world the key idea is to put it to the test as soon as possible so not five years from now not 10 years from now not six months from now but today as soon as as soon as humanly possible to get the initial validation about whether your idea is good or bad and so we call the Minimum Viable Product the smallest amount of work necessary to start that process of learning so sometimes an MVP is a smaller or reduced version of the product that you intend to build and that's true often especially in not just software products but industrial products I was thinking about a company that was working with recently that was making a piece of big heavy a piece of industrial equipment where the initial plan was to spend five years designing the most efficient most incredible version of this multi hundred million dollar process I mean was going to be a very elaborate development process of course it was worth the investment because this is a billion dollar or more market opportunity for the company and the reason it was going to take so long was that they had loaded up the team with requirements it had to be able to be used in five different customer segments in different territories all around the world in different environments it was really a complicated engineering problem but of course by waiting five years until the engineering is done to start selling the product you you don't have the opportunity to learn what who has really wanna buy this product what are the distribution challenges what is the right business model under which this thing should be sold what's the service contract I can go on and on about the hundreds of assumptions what we call leap of faith assumptions that don't get tested until five years from now and so working with this team this team was quite skeptical you can imagine I'm a software guy from Silicon Valley these are hardcore industrial engineers they're like what is his Minimum Viable Product you wouldn't want to fly in a Minimum Viable airplane you know that kind of attitude like what we talked about well what if our goal was to learn those other assumptions if you took those things to the test how could we do that a little bit sooner and we started to say okay well instead of producing thousands of these very expensive pieces of equipment is there a way we could produce just one individual unit and sell it to one customer in one use case and start to a meeting you'll get learn anyway this engines like well maybe we could do that kind of a prototype in about a year because prototype for them meant a working piece of equipment that met the specification but that didn't necessarily have all of the testing and supply generate but then we started to talk about okay that a year is pretty good much better to start learning in a year from five years but what can we push that further and and one engineer said you know there's actually an existing piece of equipment in our product portfolio that with some modifications could be used in one of the five use cases that we have in mind for this product and uh we could modify it and we talked about how long that would take so I probably take 60 to 90 days and I was asking was the kind of workshop does anyone in this workshop have an idea of a customer might be able to buy that like so I'm getting pretty excited here we have a team it's gonna go from five years to first learning to 90 days to first learning and things are going really well until one of the senior executives who was participating in this workshop who is really not having a good time and was not a happy camper interrupts me to say I'm sorry but what is the point of selling only one product to one customer in one use case you've taken my business plan and you've taken note 80% of the value out of it because now we're only going to be in one use case and you've taken all the scale out of my business we were going to sell thousands of these now I'm going to sell one it's ridiculous and that I think is really the crux of the issue whether you you know whatever we want to call methodology with all that stuff aside fundamentally what I said to him is what I say to so many entrepreneurs if you already know what's going to happen in the future then you you're right this no point because innovation is easy if you can predict the future and at first he was like oh good problem-solve cuz he's got a spreadsheet that says what's supposed to happen over the next 25 years and he's made this plan and he thinks he knows what's gonna happen again and then his colleagues luckily were like wait a sec wait a second how you're telling me that in order for this innovation to work we have to be able to forecast what our industry is gonna look like in the year 2025 that's ridiculous a much more reliable approach would be to try to understand what are the leading indicators of those changes in trends that we can learn about you know not next year not five years from now but this year immediately today right away and that's that's really what the Minimum Viable Product is it's that initial experiment designed a test those leap of faith assumptions that help us understand what's really going on in the world not just at the whiteboard that's an awesome example um pretty cool especially you see it not just in software but in with like industrial yeah I wish you could see this piece of equipment anima T of the company in question they see this thing it is a beast as people say this is only for software only for you know right you know Apple products and stuff that this is we have to take these ideas there's a pretty unusual places sure um Tim back to you a question on the design side of things so in Eric's book he talks about how entrepreneurship is kind of idolized and very trendy hot topic whereas management is considered kind of passe and boring when in fact management is super critical to being an entrepreneur are there any kind of similar misconceptions in the design thinking space around what's the cool fun part and something that's not as exciting oh yeah I mean of course I mean I mean that sort of everybody gets excited about the beginning of the process because it's it's it's fun and it's fast and you get lots of you know lots of insights pile up really quickly when you're going out into the field maybe and working with users and understanding the world in a new way you're trying the first ideas are taking a few days to do that and you know and so often people's assumptions about design thinking is that it you're done when you have a good idea right that once you've got a good idea or maybe you've just proved it a little bit you know you build a prototype and people who said they liked it or they've used it you're done and you know that's like all that or some thing you 1% along the journey at that point really you know that that you know they're kind of so much the common language I think between design thinking and lean startup is this idea of iteration well it's there for a reason because you just take many things over and over and over again till you get them right and and that's and that's hard work and unfortunately one of the sort of this approaches to management that we've taken for the last few decades has been a very linear approach to the idea of how things get done right that we we actually got so good at building products for the sort of consumer kind of the consumer economy I'd say this lasted up through the late 1990s we got so good at that that we could take a pretty good shot in large companies of planning that out in a linear fashion so we thought we knew the future essentially and and and so a lot of what happened to entrepreneurship in big companies it kind of went away because because everybody thought they knew what was going on and they were sort of knew what the answer was what happened to design is that is that got a little it got a little bit distant from the from the realities of the market and a lot of these iterations were going in going on behind closed doors sort of in the lab without actually getting real feedback and and you know what what happened with the kind of the wonderful kind of Cambrian explosion that we had with you know with the web where was that so much of that was blown apart right and so and so you know I think there are there are misconceptions about just how much work you have to do kind of out in you know in the real world getting your idea to the point where it really is robust and and mature and there's an this and there's also a lot of mention the word craft before it's one that I'll probably come back to a couple times there's a lot of craft in that there's a lot of design in the original idea but as a hacker a lot of design in making ideas right and actually getting them to be the point where they really do work for people and they also work for the business and they also work a lot of noodling is what Mike I think about it you know and so you know like great engineers and great designers luck you know they know how to noodle they love to noodle but they left a noodle for a reason because it's how you get get things really right that's what for me distinguishes the great companies that produce sustainable products that really meet needs is they know how to get that last turns out to be it's the last 90 percent but everybody thinks about it in the last 10 percent sure yeah and if I could just add one thing if you don't mind I mean just to build on my comment of what Tim was talking about as well as some of the Jake said about about creativity about unleashing the creativity the people that work in companies I mean I cringe even to say such a thing because it sounds so woo woo and so like fake you know like oh we're gonna put people on beanbag chairs and they're gonna be more creative or whatnot or I mean if people really have a very very superficial idea what that means but but what I have seen is that I think Tim's is completely right that we had built up this competency in the industrialized world of this very old-fashioned 20th century style company that could work in this very linear way and that that actually was very effective for a time and one of the one of the biggest impacts of the web is not just obviously its direct impacts which of course I mean it's made all of our lives better in so many ways and so it's economic in fact its technological impacts of course are immense but one of its biggest impacts I think has been to help people make it completely obvious to almost everybody in the world now that the future is uncertain and that disruption does happen I mean it's just become such a fact of life that conceptual psychological impact that it has had on all of us I think is truly immense and I hope it's something that we can keep alive as as we go forward so I think that if you look at the way that modern companies need to be built they can't be built to that old-fashioned 20th century blueprint I think we fundamentally need a new blueprint of what a company looks like and to me one of the things that's so striking about that old fashioned blueprint is it's missing a core function just like there's the functions of design and marketing and engineering and operations in supply chain there needs to be a function for Entrepreneurship because even if you're a great R&D lab even if you have designers coming up as jim says people think that getting started getting ideas is the hard part but every company i meet from five years old to 100 years old is overloaded with ideas and tons of people getting tons of things started the question is how do you take something from an idea from a concept from a prototype to a hyper growth commercially viable new division new break - idea have tremendous impact that's the discipline of entrepreneurship and that function is missing in most companies there's a lot less than a percent that yeah like who's like there's a lot of people starting but who are the finishers right who are the growth where the growth teams were the people who can do you can manage hyper growth and for whom that's no big deal the uncertainty that that implies is no big deal it's actually part of their core competency who is training people to develop that skill that craft that muscle memory to do this new thing and here's a really crazy part I I work with companies now of a lot of different ages and sizes and including government agencies and all kinds of crazy people up to do these corporate transformations to help people become more entrepreneurial and of course for a company that's 100 years old they kind of have a built-in excuse it's old you know and there's always legacy bureaucracy and policies okay that's no problem but then I also work with these super hot Silicon Valley hyper growth companies some of them are like only five years old and already have hundreds or even thousands of employees and millions or hundreds of millions of customers and I kid you not those same problems of functional silos of people not knowing how to drive innovation being conservative one protect the Brent I see that in our hyper growth tech companies it's almost exactly the same as these old industrial companies yeah the reason is they've been built to the same mental blueprint of what a company looks like so the founders took this old fashioned blueprint with them into a brand new company and they recreated the very thing they were trying to get away from so that's pretty depressing if the good news is it's just an idea in people's head the blueprint is not a physical thing it's just a concept so if we can change the idea in people's mind about what a company looks like what is a modern company look like I think we can have tremendous impact that's great so they mentioned that the design world can kind of be a little bit siloed and that it can be seen as a little bit fluffy you kind of hinted at that too yet Google Ventures their model they actually have an entire team of designers and they're very much a for-profit venture firm why like what is the value that they see in the design side of things yeah well I should probably explain in case anyone doesn't know Google Ventures those which you I won't be offended works almost everyone's heard of Google that so if you haven't you should check it out so that's great search engine but but there's there's big Google and Google Ventures is actually a little separate company so I think 50 or 60 employees and the idea is that big Google gives us money and here we in turn invested in startups so we've invested in like 250 startups and like you said we we invest for financial return so not for not for strategic way to Google if we want those companies to be successful and we found that design is a really powerful lever to make them successful so we have 12 investing partners we have five design partners and it's our job to kind of take these abstract ideas about design and and actually affect the kind of transformation that Eric talked about at the companies so we want to do is get in there with them show them concretely how you do design how you run a design driven organization and how you learn fast because it turns out that design has the fastest toolbox to test and get data when you can get data within a week on an idea it's it's really powerful it really accelerates their learning so that's our job we're in there you know kind of trying to to make them learn faster so that if you think it was startups with the startups yes if you think of the startups I was like a kid who just walked up to a you know pac-man arcade game for the first time we think that by teaching them how to do design quickly we're giving them like a ton of quarters so that they can get good at it as quickly as possible okay can you talk about can you talk a little bit maybe about a recent sprint you guys have done and what that actually looked like for a company yeah so recently we were actually today we're running a tasked with a company that makes robots which is kind of a crazy application for it but um but we actually found out that in the case of robots which are obviously like a robot like you know Eric's describing this industrial machine like little robot like there's all kinds of complexity you can I mean I can't build a robot in a week but but there are all kinds of parts that you can test in a week so the robots got a screen on it well you can lock up what goes on the screen and keynote like put it on an iPad stick that on you tape that to the robot the robot moves around and like make sounds those are things that you can prototype even if you don't write the algorithm for how the robot moves smartly you can like kind of fake it you can walk behind the robot with a joystick and if you run through this lens of we've got to test something on Friday then you know you get really inventive so what is it I mean when this startup came to you guys what was what did they say was the problem like what are they trying to learn through disable scissors so they're trying to understand without giving away too much about about what they're doing should but they're this company savvy out there trying to figure out how robots would work in kind of a real-life environment like you know a hotel for instance and when a robot encounters if it's going to deliver something and it encounters a somebody who's not expecting a robot yes how does that interaction go like that's pretty complicated if you have to build you know if every time you want to change something you have to build a new robot like that's not gonna a second half share it quickly so so yeah we're trying to help them use design to test a lot of those things and you know and the few days timeframe rather than a few months timeframe right yeah that makes sense cool and we'll come back to some more examples from from your work that makes specially excited to hear about Blue Bottle um when a quick question sorry do we have a question okay um question for Eric this is from melissa von Frankenberg she's part of the team at the Branson Center for Entrepreneurship in the Caribbean and yeah she says that their startups at the center they require them to write a business plan they call it an investor proposal in order to move forward in their program as one of the few startup experts whose actually pro business plan can you how would you explain the value fairly briefly to an entrepreneur of having a business man yeah I feel like I'm the last person in start-up land who's Pro Plan and listen a lot of a lot of business plan competitions and business my processes of friction writing contests so I definitely don't approve with the fiction writing part of business plans you can throw all the pros out I don't think a business plan requires word okay so that that part you can skip to me what is precious in a entrepreneurs business plan is the spreadsheet that used to be an appendix B in two point font the reason that spreadsheet is so powerful is that it lays out in quantitative terms how the specific customer behaviors that we're trying to unlock with our startup ultimately aggregate together into a business outcome that people can care about so the spreadsheet is the magical tool that can translate from the squishy and vague discussions about learning and customers and the kind of support I met today that like entrepreneurs and designers and uh people who really get on to present been around a long time could really understand in a deep way like okay here's customers who are passionate who find our product delightful those concepts are very powerful uh when you should any people who talk think in dollars and cents you cannot start talking about delightful things or you're gonna get killed sure and entrepreneurs have this really bad habit a truly bad habit that is universal to all entrepreneurs whether they're in a garage in a venture portfolio or in a corporation entrepreneurs spend other people's money that's what we do uh and you know and you go back to someone whose you gave the money and you say listen I blew all the money has none left and I didn't you know and I know I said that we were gonna have like millions of customers and things were gonna be awesome but like hasn't exactly worked out that way I once was doing a venture poor pitch where I had a graph hockey stick shape graph I was very proud look at how we made this graph turn up to the right in the front and venture capitals was like this is sounds great what are the units on this graph is this in thousands and I'm like oh I'm sorry sir this is in ones like these are the actual numbers in the ground we only have a few penny which is like want how many millions of dollars for women right where's the ROI so at a certain point every entrepreneurs are gonna have to face this question of what progress have you made in terms of dollars and cents and unfortunately the way it mostly works today is people resort to what I call vanity metrics to try to put on a show a success theater show about how great they're doing and I'm sure Jake's been the receiving end of these pitches many times you know exactly what I'm talking about right you know all the numbers are up into the right and we were in TechCrunch and all this and that and the problem with that approach is that it creates a terrible incentive to do theater instead of the actual work of understanding customer so like I would much rather entrepreneur go to a hundred customers and show that their product is incredibly passionately addicted for those summers they love it they have a tremendous reaction to it then get ten thousand or a hundred thousand customers to like kick the tires once and say a no big deal I know what actor you're gonna show someone a graph where the numbers are up into the right up to a hundred you can't like actors that's not does not compute so the critical thing about a business plan is to show how if we can learn about these customer behaviors then here's how over time those behaviors can be aggregated into an outcome that people can get excited about now this is a process I call innovation accounting and as I say the word accounting like 50 percent of people tuning in just about it's like oh god nobody wants to talk about I'm not a creative bag chairs like come on accounting seriously but listen I am not kidding around with this if you want to have an entrepreneurial revolution if you want to improve the practice of innovation in companies of all sizes you have to get serious about accounting and metrics it's just a core part of the discipline of creating the context to unlock that creativity we were talking about before so first of all do not try this at home unless you learn the math okay this is not a part of the Lean Startup that you can stick on a bumper sticker we had a lot of good bumper sticker slogans you actually buy t-shirts with various lean startup sayings on them like go nuts innovation accounting is not yet made it to any bumper stickers that I've ever seen okay it involves math it's tedious it's difficult but it is a very valuable part of because it can solve this conundrum it can allow us as a team as team of entrepreneurs to prove to our investors but also to ourselves that we are actually making progress and that progress is valuable the problem with learning is a unit of progress and we all have faced this if flirting is your unit of progress every idiot has a story about how much they learned when they screwed up okay in normal corporate settings learning is like the last excuse when you're scraping the bottom of the barrel of excuses for why you failed to accomplish your results the very last thing you resort to is like well it was a great learning experience and we learned so much about and as soon as you say that you're pretty much fired sure because it means you failed right learning is a synonym for failure in so many places so this is a way out of that trap we can say look we don't have a lot of customers yet but we have over several versions of our products ever those like mind-numbingly difficult iterations that Tim was talking about by iteration we are in proving customer behaviors in a way that is actually very valuable to the future of our business and here is the deductive evidence why that is like all the way down to the dollars and cents that even a hardcore financial auditor can say oh yeah that makes sense to me sure and it is a lot more about the data and showing your incremental learning testing this yeah it's complicated there's work to learning this it's not something you just go do on day one but for the teams that have mastered it has been enormous ly powerful yep yeah I mean that concept of success theater is so tempting when you need to be selling to your team keeping morale up you know assuring your investors or whomever else it seems like that's almost your job as an entrepreneur in some ways but in your book you talk about it's very dangerous but you talk about either coming to these kind of forks in the road and needing to persevere or decide to pivot the team and the concepts and Jake I want to ask if you guys have seen in real life any of your maybe through design sprints or even outside of that companies decide to take that bold step and pivot yeah I think a lot of times what we'll see is that the fundamental core of the product doesn't always have to be chained where you pivot is in the way you explain it to customers and sort of the face of it that the customers use and a really great story recently we worked this company called cluster and clusters trying to do what what Eric was talking about build up a small base of people who are using it passionately before they they go to market big and their idea was to build an app that let you share at an event so I go to a wedding and I could share with all the people at the wedding and then you know talk to those people yeah and what what happens in real life they found is that you know people would do that they share the the wedding but you know I don't want to talk to the people who went to - I can cousin's wedding for like you know 10 years afterwards I can probably was good to see them just that time so so they noticed though there's a few users who were just using it like crazy and then they interview these people and I found out like they kind of using the app wrong like they're they're they're using the app to share photos like when there's one great story this couple sharing photos of their baby with the grandparents and like I have kids on if you guys have kids I grandparents have an insatiable desire for photos of baby looks like way more than you'd put on facebook anything I'll just you know look at it forever and the guys from class to realize like oh my god like that's it's a private social network you know where you share differently it's not about the event at all okay so um so just add use case let's use Kent from the use case I couldn't care less about two one I'm very interested in yeah this is right I'm right on your own yes cluster yeah you should used Toit check it out so I'm the app store yeah I've got Android iPhone yeah I've had parents who are very eager yeah this is uh this is this is high traffic in my house all the zoo so the the four four cluster the design sprint was about how do you change the messaging so you can basically if it turns out we learned you can keep most of the product intact but the front end the way people come in and the marketing the way they discover it if it's covered on the app store all of that totally changes when they set up the app for the first time and how they use it how they see it and how do you think is going to fit into their lives that's something that design thinking is really well suited to do to understand why somebody understands something or not in a way that's hard to get from a real life launch where you're just looking at numbers and that kind of insight it's really um no no I think it's I think is something that that when like a founder can get in the habit of interviewing their customers and not just pitching to them they'll get the kind of insights that help them make the smartest pivot and you guys we're kind of running out of time here but I do want to hear from everyone and in first music you guys use Craigslist actually to do this really simple interviewing process can you talk yeah I can talk really quickly about that I mean I think a lot of people are reluctant to talk to their customers because they think like I need like a fancy room with a one-way mirror I need like a laser eye tracker a behavioral psychologist and in reality it's it can be done very cheaply and very fast and so one of our favorite tricks to get people in is to use craigslist post an ad in a big city you'll get 250 300 responses and we put a survey on the ad so that we can get the people who are interested to answer questions and then in a big spreadsheet you're you know filtering through and finding the customers that actually match your target profile by products they use or their occupation or whatever behaviors you you think identify the people who might start using your product easy to get five people and in just a couple of days and it enables people to use that as this manufactured deadline that user study that they can do again and again and again really quickly sure so and you guys we had some questions on Google+ Javid RT asked about does that small sample size of interviewing like five people undermine the huge amounts of data maybe you would get through a lean research setting yeah well I think I think they're different they're complementary and they're both they're both really good but the pitfall to only shipping is that if you if you ship a real product it's costly to build it takes more time than you think almost every time and it can be hard to bring it back if it doesn't work and and what's most frustrating is when somebody launches something and they don't know why it's not working because the numbers don't tell you why they're just low numbers so um so what we'll often find is a good case is Blue Bottle which you mentioned yeah with Blue Bottle they're bluella coffee it's actually a coffee company not a clever name for a start-up but it's one of our investments and they were redesigning their web store so you can go on Blue Bottle and order coffee they'll ship beans to your house and we found when we actually talked to their customers that the way that they organized beans a way that every coffee company from the most you know fancy coffee company to Starbucks organizes their coffees is by region this is Guatemalan coffee this is Colombian coffee if you're a coffee expert if you're the one signing the coffee you're like of course like that's the way we organize it but if you're a consumer it turns out when you actually talk to people they're a little sheepish but they'll say like you know I have no idea that it's I have no idea what I'm you sell if you guys like maybe Eric they know a blue bottle all the time but I have no idea I love that from area beans yeah it's no no nobody knows and and so with that realization oh yeah like we should it is Alea it's totally delicious but they're like you know we should organize it differently and they looked to the the way they train their baristas to handle a customer interaction in the store when someone's looking for coffee and they'll ask how do you brew your coffee at home and they organize the breeze does right yeah go ask you know do you use a French press or jeez a drip machine or Chemex or whatever that's the way to organize the different blends or the differ not the region that makes sense to people so we did that on the website and it worked tremendously well I think doubled their sales growth but the that insight is not something you'd ever get just for the embers yeah what are they Tim I want to shoot it over to you I want to talk about the power of design thinking to do good especially not just in startups but in larger or very traditional organizations a Google+ user Andrew Kaczynski asked about open I do and some of the work you guys have done in the public sector can you talk about that yeah I mean I mean it clearly a lot of the challenges we're facing the world not at the scale of a it may be a knowledge scale of a single company maybe not at the scale of a single product or or a single app but there are there are sort of social scale and and if we're going to tackle those my view on that is that we actually need a lot of a lot of entrepreneurial firepower we need a lot of design firepower and so you know we've been experimenting that for a while now with with this platform called open audio which is a great place by the way if you're interested in practicing your kind of design thinking skills great place to go and hang out because it gives you a chance to kind of participate in different different pieces of difference to different challenges but really the power of platforms like that is you know you can bring 50 or 60,000 people together to and to collaborate around things like you know how do we make the urban center safe for girls all over the world or you know how do we how do we deal with youth unemployment or you know how do we create clean clean water and sanitation and countries they don't have it today you know really big systemic systemic problems and and we're seeing through the power of collaboration through the power of design thinking through the power of kind of entrepreneurial thinking that's applied in a sort of an open an open way where people are kind of big enough with their ideas that they're willing to share them and actually sort of interesting evidence of what's something that Eric was talking about before that what we've seen is with with several of our challenges that that all of the ideas on on open idea are free for anybody to use it's the way the IP set up and but what's happening is that they're kind of the cleverness comes in in some of the entrepreneurs are then taking those idea and then going and turning them into little companies social organizations whatever it might be in South America or Africa and so it's a combination if you like of some some people contributing to great ideas and then the right entrepreneurs knowing how to take those and and build them and I think we need a lot more of that if we're going to really make going to make some progress on some of these kind of kind of less than well sorted out systems that we have today including things like education and and climate change and that kind of stuff yeah kudos Tim for doing that I think it's really a very cool initiative absolutely as I just open I do comm open audio comm go and check out I think there's a new challenge being launched in the next day or two with with the Clinton Global Initiative so oh cool and so we'll start to wrap it up here I wanted to these are kind of these concepts can be really big if you were to give one piece of advice to entrepreneurs tuning and today I know it's hard to boil it all down into one one concept but I'd love to hear what advice you would offer folks tuning in so Jake we'll start with you yeah well I will I'll use the opportunity to trumpet my own URL so check out jvcom slash design sprint and try a design sprint so I think taking one week to experiment with this process and having a very literal game plan for what to do how to do each step we found it to be really helpful in a great way to start changing your organization whether it's whether it's a startup or whether it's an academic or a larger company so it's not as scary once you see these don't you see like I really had to do it so GV comm slash designs weren't very liberal how to guys great thanks and Tim over to you one piece of advice it's learn how to take your hypothesis and turn it into an experiment learn how learn how to make your learning live but don't don't be try not to constrain the scale of that hypothesis just because that's the only experiment you can run I mean it's very tempting and you see this in the scientific community a lot of like we do the experiments we know how to do and so the hypothesis the the ideas of you like a limited because we only know how to do certain kinds of expert and I think I think that can that that that can mean we we don't we don't go for the kind of the ideas that are as big as they might be so the trick is to figure out I I have my hypothesis I have this big idea how can I possibly find a way to prototype that rather than changing my idea just because that's all I know how to prototype and so dealing with that tension is but I think one of the most important things in in innovation today beautiful thank you and then what about you Eric well I'll build on what Tim is saying that that is exactly right that first of all vision is still at the heart of entrepreneurship so so thinking big is not at odds with starting small in fact the people who I believe deserve the title of visionary are not the people making grandiose pronouncements and working on multi-decade projects where there's no feedback for years the people that I think deserve that title other people who are actually trying to figure out like my vision is so important for transforming the world it's such an important thing I can't risk it on a faith-based initiative I need to find out I urgently personally need to know whether this can work or not or more importantly not whether it can work but how it can work right there are multiple different strategies by which I can achieve which is the one so my piece of advice would be again job taking with him saying let's step further uh people started to ask me about what I want I'm thinking about should I do a product or should I do an experiment or like one of the risks of taking an experimental approach if you want this question like what if I do it and I'm like no interests and a start-up is an experiment everything you do when I start it's already an experiment whether you admit it or not because fundamentally we don't know what's going to happen and discovering what's going to happen is the only thing that we exist to do so you're doing an experiment now the question is is it a good experiment have you actually thought about is this the best way to learn the thing that I fundamentally need to learn and a surprising number of times I mean I now get to meet so many entrepreneurs around the world it is rare to meet someone where the experiment is like really well designed sure it's often like full of extra work like this the other thing this is about doing less work not more we create in our mind well I can't ship a product unless it has a manual on a box and it's shiny it look and I'll be embarrassed of this that right we make up a story about how this extra chrome is necessary to before we're allowed to put something from the customers if you say what but wait a minute it's our goal to like have people say wow you're a very thorough diligent person in putting together the manual like that's not our goal our goal is to learn fundamentally is this in line with our vision or not is this a strategy that can get us where we want to go where the world needs to go for something that we care that passionately about this is a terribly designed experiment right a design sprint that took one week would have been a much better way to find out a simple prototype you know what we call a smoke test or Wizard of Oz test where the work where the customer thinks what they're seeing is real but actually it's like pay no attention to the man behind the curtain like if you said I'm I am a scientist already I'm doing an experiment may as well make it a good one so that's my tip great thank you it's so rare I mean it's wonderful to get to hear from from each of you but especially I hear these two concepts which can be kind of kind of intimidating to hear them talked about side by side that they share so much has been has been a delight so thank you all so much for joining us Tim thank you for joining us live from IDEO in San Francisco it's been great to hear about Design Thinking from you thanks for the opportunity thank you and Eric thank you so much for joining us today sharing from Lean Startup methodology it's really been my pleasure and good luck to all the entrepreneurs turning in thank you and Jake thank you for sharing these real-world examples and really excited for some folks to be able to use your resources online to run their own sprints yeah we cannot advertise that as yeah thank you so much gayly Eric and Tim thank you - great so I'm Kaylee Emmerich on behalf of Google for entrepreneurs and Virgin Unite thank you so much for tuning in today and goodbye

Channel: Google for Startups

Views: 194,561

Rating: 4.9108863 out of 5

Keywords: #hangoutsonair, Hangouts On Air, #hoa

Id: bvFnHzU4_W8

Length: 55min 24sec (3324 seconds)

Published: Thu Jul 17 2014