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Saturday, December 17, 2011

Lean Start Up: #6 - Innovation Accounting

Innovation Accounting

a. Accounting: originally invented to evaluate accountability across departments.
b. How to drive accountability with NO history, even no clients?
c. Innovation Accounting: Three learning milestones
i. Establish the baseline (avoid vanity stats…web site hits, etc.)
1. Build minimum viable product (MVP).
2. MVP: What’s the minimum that needs to be in product? In this new model, all we need is what we need to learn to see if our model is sustainable.
3. Measure per-customer behavior.
ii. Tune the engine
1. Experiment to see if we can improve metrics from the baseline towards the ideal.
2. Hypothesis testing: Using Split-Tests—offering two different versions of the product to same type audience to see which one works better.
iii. Pivot or persevere
1. When experiments reach diminishing returns, it’s time to pivot.
2. Schedule a meeting three months in advance to see if you hit predictions. Set a stake in the future to re-evaluate.

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