biz barcelona 2014 - lean startup and customer development (identifying problems worth solving)
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Page 1 Lean Startup
Identifying problems worth solving Paul Fox
Lean Startup and Customer
Development
(Identifying problems worth solving)
Paul Fox
Associate Professor
La Salle – Universitat Ramon Llull
Page 2 Lean Startup
Identifying problems worth solving Paul Fox
Who am I?
• Worked for Startups: Fan Asylum, intouch Group,
Vision Marketing
• Intrapreneur: MCI Systemhouse (bought Apple’s data
center when they were almost bankrupt)
• Consulting: Diamondcluster - creating web businesses
for big companies
• “Founder”: viajeria.com, allysguesthouse.com
• Professor/Mentor: over 50 projects/year
• Main Focus: Early business model development
Page 6 Lean Startup
Identifying problems worth solving Paul Fox
Your potential customers don’t want to
hear your idea either
They have Stockholm Syndrome
Page 7 Lean Startup
Identifying problems worth solving Paul Fox
Problem: Unknown Solution: Unknown Source: Eric Ries
The Lean Startup
Not enough
time spent
here!
Find a problem worth
solving before creating a
solution
Page 8 Lean Startup
Identifying problems worth solving Paul Fox
Key questions to answer
How can you identify a problem worth
solving?
• What’s the right problem for you to solve?
• How do you find the information you need about the
customer and her problems?
• What should you know before making anything?
Page 9 Lean Startup
Identifying problems worth solving Paul Fox
WHAT’S THE RIGHT PROBLEM
FOR YOU TO SOLVE?
Page 10 Lean Startup
Identifying problems worth solving Paul Fox
Where do you start?
Opportunity Identification
Marien and Miranda
Page 11 Lean Startup
Identifying problems worth solving Paul Fox
FEASIBILITY VALUE
MARKET
PERSONAL
Is it worth doing?
Financial feasibility
Can I do it?
What will it take to do it?
Whom else do I need?
ASSESSING OPPORTUNITY “DOABILITY”
Do I want to do it?
What turns me on about it?
Why do I want to do it?
Exit strategies
Is it doable?
Technological feasibility
Market feasibility
Economic feasibility
How can you find an idea? Bird in Hand
Effectuation.org
Page 12 Lean Startup
Identifying problems worth solving Paul Fox
Goal: Create a blue ocean
Step 1: find a red ocean
Red oceans represent the known market space
• Industry boundaries are defined and accepted, and the
rules of the game are well understood.
• Companies try to outperform rivals to get a share of
existing demand.
• As the space gets crowded, prospects for profit and
growth are reduced.
• Products become commodities, and the water turns
bloody.
http://www.blueoceanstrategy.com/
Page 13 Lean Startup
Identifying problems worth solving Paul Fox
Red ocean vs. blue ocean
http://www.blueoceanstrategy.com/
Page 14 Lean Startup
Identifying problems worth solving Paul Fox
Study of 108 companies by Kim and
Mauborgne
Page 15 Lean Startup
Identifying problems worth solving Paul Fox
Red Ocean vs. Blue Ocean
BLUE OCEAN RED OCEAN
Page 16 Lean Startup
Identifying problems worth solving Paul Fox
Strategy Canvas for Wii
http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/
Page 17 Lean Startup
Identifying problems worth solving Paul Fox
Four Actions Framework for Wii
http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/
Reduce
costs
Increase
Value
Page 18 Lean Startup
Identifying problems worth solving Paul Fox
HOW DO YOU FIND THE
INFORMATION YOU NEED
ABOUT THE CUSTOMER AND
HER PROBLEMS?
Page 19 Lean Startup
Identifying problems worth solving Paul Fox
Three Stages of a Startup
Goal of Customer Discovery is Problem/Solution Fit:
Do I have a problem worth solving?
- Is it something customers want? (must have)
- Will they pay for it? If not, who will? (viable)
- Can it be solved? (feasible)
Maurya (2012) Running Lean: Iterate from Plan A to a Plan that Works.
Page 20 Lean Startup
Identifying problems worth solving Paul Fox
Innovation requires a process and tools
Inspiration Ideation Execution Launch
Observation MVP Design Thinking
Strategic Roadmap
Adoption/Diffusion
Business Model Blue Ocean
Customer/User
Company
Strategy
Customer Journey
Page 21 Lean Startup
Identifying problems worth solving Paul Fox
The business model canvas is not the first step
Page 22 Lean Startup
Identifying problems worth solving Paul Fox
First you need to get to know your
customers “in the wild”
Page 23 Lean Startup
Identifying problems worth solving Paul Fox
Observation
http://www.youtube.com/watch?v=M66ZU2PCIcM
• Do secondary research – Google it!
• Create a multi-disciplinary team
• Find the problems: ask experts and observe customers/users
• Brainstorm needs and solutions
• Trial and error through rapid prototyping
Question: what is
IDEO’s innovation
process?
Page 24 Lean Startup
Identifying problems worth solving Paul Fox
Ask it
Interviews: the yellow walkman problem
Don’t ask your potential customers what
they think of your idea
Page 25 Lean Startup
Identifying problems worth solving Paul Fox
Interviews – other problems
• Bad data
– false positives
– false negatives
• Talking to the wrong people
• Surveys!
• No real commitment
Page 26 Lean Startup
Identifying problems worth solving Paul Fox
The Mom Test – 3 simple rules
1. Talk about their life
2. Ask about specifics in the
past
3. Listen more
Do Don’t
1. Talk about your idea
2. Talk about what they “usually”
do, or opinions about the future
3. Talk so much
The Mom Test leads to questions that
even your mom can’t lie to you about!
http://momtestbook.com/
Page 27 Lean Startup
Identifying problems worth solving Paul Fox
WHAT SHOULD YOU KNOW
BEFORE MAKING ANYTHING?
Page 28 Lean Startup
Identifying problems worth solving Paul Fox
Who are your main customer segments?
Personas
http://followsprocess.wordpress.com/2010/11/14/facilitating-data-driven-personas/
Page 29 Lean Startup
Identifying problems worth solving Paul Fox
Three Tiers of Customers (from Blue Ocean)
1st
2nd
3rd
There is a universe of noncustomers
which can be turned into customers to
offer a big blue ocean market.
1st tier: “Soon-to-be”
noncustomers who are on the
edge of your market
2nd tier: “Refusing” noncustomers
who consciously choose against
your market
3rd tier: “Unexplored”
noncustomers who are in markets
distant from yours
Page 30 Lean Startup
Identifying problems worth solving Paul Fox
Gym example
1st
2nd
3rd
1st tier: people who belong to a
gym but go less than once a
week.
2nd tier: People who run or bike
instead of going to the gym.
3rd tier: People who exercise less
than once a week.
Page 31 Lean Startup
Identifying problems worth solving Paul Fox
Don’t forget Extreme Users – they help you
to see a greater variety of customer activity
http://www.tentipi.com/no/our-tents-in-use/adventurers-and-other-extreme-users/
http://www.littlekidstuff.com/bazoongi-kids-mushroom-house-playhouse-tent.htm
Page 32 Lean Startup
Identifying problems worth solving Paul Fox
Extreme Users - Running Shoes
https://blog.itu.dk/DDBS-E2011/2011/10/page/2/
Page 33 Lean Startup
Identifying problems worth solving Paul Fox
How do you choose which segment(s) to
target?
• Depth of pain—how bad is the problem we’re trying to solve for
this particular segment?
• Budget—can the segment pay for a solution?
• Ease of reach—are they marketable through relatively easy
channels?
• Ease of MVP (minimum viable product)—do we think the
solution is relatively easy or complex?
• Values—how do we feel about serving this constituency?
The Lean Entrepreneur
Page 34 Lean Startup
Identifying problems worth solving Paul Fox
What are their top problems/desires?
• What are their goals? What’s important to them?
• How are they accomplishing this now?
• What problems do they encounter?
• Are they able to resolve the problems?
• How much time or money does it take to resolve these problems?
Page 35 Lean Startup
Identifying problems worth solving Paul Fox
Find the root causes of the problems
When is 700 euros less than 10 euros?
People thinking movie tickets are expensive not
because of the price, but because of their
perception of value.
Page 36 Lean Startup
Identifying problems worth solving Paul Fox
The way you reframe the problem impacts
the types of solutions you’ll find
• The problem is not “how can we sell more of our
product”.
• In fact, if your customer is not in the problem statement,
you haven’t found the core problem.
• For example, for wine instead of “how can we sell more
wine”, you might define the problem as “how can we
help customers find the right wine”
Page 37 Lean Startup
Identifying problems worth solving Paul Fox
Understand the whole product
Example: Nespresso
Page 38 Lean Startup
Identifying problems worth solving Paul Fox
How is the ecosystem currently organized?
Value chain for the wine industry
Scholefield Robinson (2008):Major Project 1: WGGA (Wine Grape Growers Australia)
Wine Industry Strategic Plan - Initial Report – Gap Analysis and Recommendations
Understand
the main
roles, and the
flow of money
and value
Page 39 Lean Startup
Identifying problems worth solving Paul Fox
Understand context – what is a “day-in-the
life” of your customer interacting with your
product/service
http://slidesha.re/qMsHAc
Page 40 Lean Startup
Identifying problems worth solving Paul Fox
Context - Customer decision-making
process
http://fbadz.com/2011/12/%E2%80%9Cshould-i-buy-that%E2%80%9D-how-social-media-influences-buying-behavior/
Page 41 Lean Startup
Identifying problems worth solving Paul Fox
A word on competition:
Analogs, Antilogs, and Leaps of Faith
“Good artists copy, great artists steal”
Pablo Picasso, as quoted by Steve Jobs
Page 42 Lean Startup
Identifying problems worth solving Paul Fox
Apple’s iPod Analogs – prove some key
aspects of your potential solution. Copy
them, but improve them.
Analog Strengths Weaknesses
Proved that people will
listen to music on a
portable device in an
anti-social way
Not digital
People liked
downloading music more
than going to the store.
They would use MP3’s
despite lower quality
Would they pay?
Page 43 Lean Startup
Identifying problems worth solving Paul Fox
Apple’s iPod Antilogs – competition
Who else is trying to solve the problem?
Antilog Strengths Weaknesses
MusicNet Subscription-based
model
Download songs to one
computer
Couldn’t use songs on
portable devices.
No subscription, files
disappear.
Poor selection
PressPlay Subscription based.
Could burn some songs
to CD
No subscription, files
disappear.
Poor selection.
MP3.com MP3 downloading
Pay per song
Poor selection
Page 44 Lean Startup
Identifying problems worth solving Paul Fox
Apple’s iPod Leaps of Faith
• Could they create the right mix of hardware and
software?
• Would people purchase at least some of the songs that
they were downloading illegally?
• Could they convince the music labels to give them
rights to MP3’s, knowing that people were storing
illegally downloaded songs on the devices?
Page 45 Lean Startup
Identifying problems worth solving Paul Fox
It’s ok if you can’t find all this information,
but you’re more likely to create a hobby
than a viable, scalable business
Page 46 Lean Startup
Identifying problems worth solving Paul Fox
Conclusions
• Find the pain and solve real problems.
• Choose a problem you can realistically solve.
• Get to the core problems and reframe the challenge.
• Follow a process and use appropriate tools.
• Know your customer.
• Understand the whole product.
• Study the ecosystem and the highs and lows in the customer
journey.
• Learn from analogs and antilogs – don’t reinvent the wheel.
• Most importantly, get out of the building!
Page 47 Lean Startup
Identifying problems worth solving Paul Fox
Taller Lean Startup
6 Talleres Prácticos de Lean Startup: de la idea a un
producto en un mes (17 de junio a 8 de julio)
http://goo.gl/CAJvwb
• PROGRAMA
• Taller 1: Introducción a Lean Startup
• Taller 2: Customer Development
• Taller 3: Business Model Canvas y Validation Board
• Taller 4: Creación y validación de maquetas (mockups)
• Taller 5: Creación y análisis del prototipo
• Taller 6: Pirate Metrics y Growth Hacking