The third residential session of the European Incubator for Innovation in Education is underway in Berlin! We started the week with a bang, thanks to our master class with Dr. Christian Lüdtke, founder and managing partner at etventure. etventure specializes in digital startups - its activities include building startups, running an EU accelerator, and executive education.
Christian is a specialist when it comes to corporate businesses and intrapreneurship and has extensive experience in business development and investment. He was employed by the Bertelsmann Group for over 10 years and, among other things, brought the venture capital arm of BDMI into beginning. Most recently, he directed a multi-million dollar innovation fund of American publisher Houghton Mifflin Harcourt.
Five lean innovation principles
1. Be a gold-digger (not in the Kanye way)
As an entrepreneur, you'll find that a lot of the things you try don't work out and a lot of your ideas end up not amounting to anything. Rather than getting discouraged, think of yourself as a gold digger; you have to go through the mud in order to get to those precious little nuggets. Following a systematic appraoch - such as the lean model - can help you sift through the dirt faster.
2. Think radically and focus on the fundamentals
What's the best way to solve a problem? Focusing on the solution calls for an incremental mindset, whereas focusing on the pain point requires more fundamental thinking. The example Christian gave is was of a child who can't reach the books on the upper shelves of a bookshelf. How would an entrepreneur solve this problem? One solution is to give the child a ladder. This is an example of incremental thinking, which solves the immediate problem but does not really address the root of the issue. The fundamental pain point is the child needs better access to information. A more radical thinker could come up with a completely different way to deliver that information. If you want to grow a big business, focus on the fundamentals.
3. Avoid "featuritis"
Building on the principle of focusing on the fundamentals, Christian emphasized that a great product doesn't need a lot of features. It should have just the necessary features and nothing more.
4. Start early
Christian spoke about how important it is to move quickly and get a product to market as soon as possible. He backed up with point with some notable quotes:
"If everything seems under control, you’re not going fast enough." -- Mario Andretti, world champion racing driver
"If you are not embarrassed by the first version of your product, you’ve launched too late." -- Reid Hoffman, Founder of LinkedIn
5. Proto from Day 1
Get feedback from potential users as early as you can. You don't have to have a working version of your product, even a hand-drawn example could be a prototype. Get feedback at every stage with whatever kind of prototype you can whip up and use that feedback to move forward.
Christian concluded his presentation with this image:
Why does an education startup have to be lean?
Christian spoke from personal experience; he gave an example of one of his startups in which he invested heavily in high production value content, only to find that people were much more interested in the testing questions, which only made up 10 to 15% of the development budget. If he could do it again, he would not pretend to be smarter than the students – rather, he would test early and see what they want to use. Christian added that there are varying definitions of lean – you can be as lean as you need to be.
What is your preference, B2B or B2C?
B2C requires a higher marketing budget; with B2B you only need one big reference client. You still need a sales team, but it can be a lot smaller and have more one-to-one contact with your clients.
In a lean startup model where you are constantly iterating or pivoting, why do you still need a 5-year business plan?
There are two cases in which you need a business plan:
- For pitching to investors - this helps them to understand the game and what you are aiming to achieve.
- For working with corporations - when you're kicking off a new project, they want to know what to expect. You can emphasize that the business plan is a result of the startup process, not a starting point.
Even if these cases don't apply to you, also as an exercise for yourself to understand the market and the metrics of your business and the industry you're working in.
After the Q&A session, three of the teams gave a short presentation of their project and Christian gave them concrete feedback based on the principles of the lean startup model. If you want to find out what he said, the full video of this master class available for you to watch.