lean startups: spinning straw into gold

HOW TO SPIN STRAW INTO GOLD

LEAN STARTUP AND THE ART OF MAKING A DIFFERENCE

BERLIN // AUGUST 2012

In the last couple of years, there‘s been a lot of talk about...

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Design Thinking

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Business Modelling

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Customer Development

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Lean Startup

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While they might seem to be saying completely different things, their core

messages are pretty similar.

In fact, they all teach the following...

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Your business is not what you say it is.it’s what they say it is.

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In other words: don’t get trapped byyour own assumptions!

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Common lessons:

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Put people first.It’s the customer who buys.

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Learn & discover.Get out of the building.

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Test your assumptions.Only customers give proof.

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Fail early and fast.Detect what really works.

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Repeat before you proceed.Play with your ideas, don’t stick to them.

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Iteration (understanding/learning) is a fundamental part of each process.

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The message of each method: Iterate until your product perfectly

fits the needs of your target customers.

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The message of each method: Iterate until your product perfectly

fits the needs of your target customers.

The message of each method: Iterate until your product perfectly

fits the needs of your target customers.WRONG.

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The message of each method: Iterate until your product perfectly

fits the needs of your target customers.

The message of each method: Iterate until your product perfectly

fits the needs of your target customers.FALSE.

The message of each method: Iterate until your product perfectly

fits the needs of your target customers.

The message of each method: Iterate until your product perfectly

The message of each method: Iterate until your product perfectly

fits the needs of your target customers.Iterate until your product perfectly

fits the needs of your target customers.FALSE.PIVOT!

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Customer focus is definitelyimportant for your business.

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But it’s not the only thing that‘s important.

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(At least not in a mass market.)

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Target Customer

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Your Company

Target Customer

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Company C Your Company Company D

Target Customer

Company A Company B

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Company C Your Company Company D

Target Customer

Company A Company B

Everybody builds the same stuffthanks to customer orientation.

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Customer orientation is 20%, establishing a difference is 80%.

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Okay. The usual suspects.But what about this...

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It’s not customer focus which makes these offers a success.

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It’s also not their business model,not their features, not their usability.

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It’s simply: their execution.

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Marketing.

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Branding.

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Story.

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Design.

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Thus: make a difference,

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FACTOR 7 FACTOR 3

FACTOR 1

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FACTOR 2FACTOR 8

FACTOR 6 FACTOR 4

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Not a test winner.

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HTTP://WWW.WARC.COM/NEWS/PRINTNEWSITEM.ASPX?ID=27690

The most popular posts on the Warc Blog over the last 12 months covered subjects including pre-testing, the evolution of a new communications paradigm and the future of planning.

Taking pole position was a piece by Peter Field, a marketing consultant, discussing the weaknesses of qualitative pre-testing in determining which creative ideas will provide a real payback for brands.

Based on an analysis of 880 case studies from the IPA Effectiveness Awards, Field found just 4% of campaigns subjected to qualitative pre-testing delivered "very large profit growth", rising to 24% for those that were not.

These figures stood at 45% and 58% respectively regarding the "effectiveness success rate", seemingly showing that pre-testing tends to underperform as a predictive tool.

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It’s as the long tail theory says:there are customers for each offering.

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Getting them to use our stuffis the challenge.

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Not building this stuff.

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Final lesson:

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Test what you’ve got to test.

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And for the rest: create some magic!

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assumptions = strawtesting = silver

difference = gold

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Torsten Henning HenselHead of Brand Management

Chausseestraße 5, 10115 BerlinTEL + 49-30-283921-213torsten.hensel@greenkern.comwww.greenkern.com

Daniel SimonManaging Partner

Chausseestraße 5, 10115 BerlinTEL + 49-30-283921-215daniel.simon@greenkern.comwww.greenkern.com

Your Contact

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END NOTE: WHY THIS TITLE & COVER PIC?

READING ABOUT THE LEAN STARTUP, THE APPROACH SOMEHOW REMINDS ME AT RUMPELSTILTSKIN. RUMPELSTILTSKIN REVOLVES AROUND A BEAUTIFUL MILLER’S DAUGHTER WHO IS IMPRISONED UNDER THREAT OF EXECUTION UNLESS SHE CAN SPIN STRAW INTO GOLD. RUMPELSTILTSKIN HELPS HER WITH THIS TASK, FIRST AT THE COST OF HER NECKLACE, THEN AT THE COST OF HER RING AND ULTIMATELY AT THE COST OF HER FIRST-BORN CHILD; HOWEVER, SHE MAKES A NEW BARGAIN WITH HIM AND IS ABLE TO KEEP HER CHILD AFTER SUCCESSFULLY GUESSING HIS NAME. IN THE END, SHE MARRIES THE KING AND LIVES HAPPILY AS A QUEEN.

STARTUPS (AKA THE BEAUTIFUL MILLER’S DAUGHTER) ARE FORCED TO ACT IN A SIMILAR NIGHTMARE: THEY ARE IMPRISONED UNDER THE THREAT OF ANNIHILATION UNLESS THEY CAN TURN THEIR ASSUMPTIONS (THE STRAW) INTO VALIDATED LEARNINGS – PROVEN INSIGHTS OF WHAT TO BUILD AND HOW TO BUILD IT (THE GOLD). DIVERSE TESTING METHODS (AKA RUMPELSTILTSKIN) HELP OUR STARTUPS WITH THIS TASK, OFTEN AT THE COST OF THEIR INITIAL BUSINESS IDEA; HOWEVER, IN THE END SOME OF THEM GAIN PERFECT PRODUCT-MARKET FIT AND MAKE THEIR INVESTORS (THE KING) HAPPY.

;-)