Why the lean startup changes everything even for business schools and social enterprises

1. Why the Lean Startup
Changes Everything –
even for Business Schools and Social Enterprises
Presented by
K K Tse
Founder and Chief Education Officer
Education for Good CIC Ltd.
at the
Baptist University
School of Business Postgraduate Programs Welcome Banquet cum
Conferment of Honorary Professorship
September 18, 2014

2. An intriguing article in
Harvard Business Review
May, 2013
“Why the Lean Startup
Changes Everything?”
By Steve Blank
Stanford University
Free download:
http://steveblank.com/2013/05/06/free-reprints-of-why-the-lean-startup-changes-

3. You might ask…
 What is the ‘everything’
being changed?
 Why does it matter that
‘everything is changed’?
 How is it possible that the
Lean Startup could change
everything?
 What is Lean Startup
anyway?

4. What is the ‘everything’
being changed?
 Startups of various sorts.
 New product/service/enterprise
development in any organization
large or small, for-profits, non-profits,
social enterprises, public
sector organizations, etc.

5. Why does it matter
that ‘everything is changed’?
“The Lean Startup could do more to boost
global economic growth than any
management books written in years.”
Tom Eisenmann, Harvard Business School
“The ideas in The Lean Startup will help
create the next industrial revolution.”
Steve Blank, Stanford University

6. How is it possible that Lean Startup
could change everything?
It is a new methodology that
could be taught and mastered
so that ordinary
people would have a much
greater chance in successful
startup.
Insights from Patrick
Cheung’s 黑暗中對話

7. What is Lean Startup anyway?
 The global Lean Startup movement
is about three years old.
 It started with the publication of the book
Lean Startup by Eric Ries in 2011.

8. A book with
a mission:
To improve
the chances
of success
for startups
worldwide

9. Who is Eric Ries?

10. Eric Ries
 Entrepreneur-turned writer and consultant
 Co-founder and CTO of IMVU
 Blogger of the widely read
Startup Lessons Learned
 Thought leader of the global Lean Startup
movement
 Entrepreneur-in-residence at Harvard Business
School

11. Eric’s definition of ‘startup’
A startup is a human institution
designed to create a new product
or service under conditions of
extreme uncertainty.

12. Two other influential books
The Startup Owners Manual
by Steve Blank and Bob Dorf,
2012
Running Lean
by Ash Maurya,
2012

13. Two Lean Startup examples

14.  Zappos is the world’s largest
online shoe store.
 When it first started, founder
Nick Swinmurn envisioned a
new and superior retail
experience for
customers buying shoes.

15. The Zappos startup approach
 He DID NOT start with state-of-the-art
website, payment and delivery systems,
warehouses, logistics support,
distribution partners, etc.
 Instead, he started by running an
experiment to test the hypothesis that
customers were ready and willing to buy
shoes online.

16.  He asked local shoe stores
to allow him to take
pictures of their inventory
and undertook to buy the
shoes at full price if a
customer brought them
online.
 Only when this had
proven the demand
did he go on to build
the other parts of the
business model.

18. Dialogue in the Dark HK
 Dialogue in the Dark is a social
franchise headquartered in Germany
 It had taken root in 22 cities before
coming to Hong Kong

19. The core products are centered around
dialogue experience in the dark,
including an Experiential Exhibition
which costs millions of dollars to build

20. A lean startup approach
Founders K K Tse
and Patrick Cheung
each put in
HK$50,000 to
organize a series of
fee-charging
‘Dialogue in the
Dark’ Executive
Workshops

21. It generated close to HK$1 million of
revenue in the first 12 months before
raising HK$5.6 million of capital from
20 shareholders to rent a 10,000 sq.ft
space and spent close to HK$4 million
to build the Exhibition Hall

22. IDEAS
Build
Measure
Validated
learning
Learn
PRODUCT
DATA
MVP
Test
assumptions
Innovation
accounting
Lean startup approach
in a nutshell
Leap-of-faith
assumptions

23. 10 crucial ideas
underlying the
lean startup approach

24. 1. Design a Business Model,
not just products

25. The 9-block Business Model

26.  Your ‘solution’ is
not your product.
 Your Business
Model is your
product.
Solution

27. 2. Use a Lean Canvas,
not business plan

28. 3. Create validated learning,
not after-the-fact learning

29. Validated Learning
有的學習 Vs 無的學習

30. 4. Systematically test assumptions,
before they become too costly

31. All business models contain
multiple assumptions, many
of them will be proved to be
invalid.

32. 5. Get out of the building,
there are no facts inside.
不要<閉門造車>

33. 6. Create
‘Minimum Viable Product’
(MVP)
<最低成本可行產品>
By far the most important
concept to master.

34. 7. Launch early and fail fast

35. “If you’re not embarrassed
by the first version of the
product you’ve launched,
you’ve launched too late.”
Randall Stross,
The Launch Pad

36. 8. Use innovation accounting,
don’t focus on money
“Count what counts.”

37. 9. Persevere or Pivot
堅持 抑或 轉策

38. 10. Build a lean startup team,
not just any team
The whole team must master the lean
startup methodology

39. IDEAS
Build
Measure
Validated
learning
Learn
PRODUCT
DATA
MVP
Test
assumptions
Innovation
accounting
Minimize TOTAL time
through the
loop
Leap-of-faith
assumptions

40. The bottom line for using
lean startup approach
From
failure rate
of 80-90%
to
success rate
of 60-70%

41. What are the implications
for Social Enterprises and
Business Schools?

42. For Social Enterprises,
it is a Godsend!
Success rate will be greatly
improved.

43. Lean for social good:
a brand new website
Lean Impact
LEAN IMPACT is turning
Lean Startup into a road map for
social good organizations.

45. What about Business Schools?

46. Business Schools traditionally
teach things relevant to
‘Business as Usual’.

47. But nowadays
‘Business as Usual’ is
no longer an option.

48. “It's time to turn
capitalism upside
down - to shift our
values from an
exclusive focus on
profit to also
caring for people,
communities and
the planet.”

49. The way forward….
From
Business School
to
Social Business
School

50. My prediction
Within the next ten years,
there will be more and more
Business Schools in different
parts of the world
transforming themselves into
Social Business
Schools.

51. Social Business Schools
Educating students to create
social businesses which are
profit-making
and
solving social and
environmental problems
at the same time.

52. Dual challenges for
Business Schools
 Enable the students to master
the lean startup methodology
 Inspire the students to create
social businesses that change
the world for the better

53. Social Business is
fundamentally different from
Corporate Social
Responsibility (CSR)

54. Typically, CSR budget is less than
0.01% of corporate turnover
A social business is 100% turnover
directed at solving social or
environmental problems

55. A good example is
B Corporation –
a US-based
movement to inspire and
support mainstream business
to become social business

56. Are social business and social
enterprise the same?
Yes and No

57. They are the SAME
Both attempt to solve social
and environmental problems

58. They are DIFFERENT
in profit distribution practice
Social enterprise: 0% to 35% of profit
allowed to be distributed to
shareholders
Social business: no limits,
could be 100%, such as most
B Corps

59. Summing up…
A Social Business School
inspires, educates, and
supports its students and
graduates to create
social business and social
enterprise

60. Will the
Baptist University
School of Business
be the
first Social
Business School in Hong
Kong and Asia?

61. Thank you.