lean startup and customer development (identifying...
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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
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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
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Your potential customers don’t want to hear your idea either They have Stockholm Syndrome
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Problem: Unknown Solution: Unknown Source: Eric Ries
The Lean Startup Not enough time spent here!
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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?
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WHAT’S THE RIGHT PROBLEM FOR YOU TO SOLVE?
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Where do you start? Opportunity Identification
Marien and Miranda
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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?
Effectuation.org
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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/
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Red ocean vs. blue ocean
http://www.blueoceanstrategy.com/
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Study of 108 companies by Kim and Mauborgne
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Red Ocean vs. Blue Ocean
BLUE OCEAN RED OCEAN
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Strategy Canvas for Wii
http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/
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Four Actions Framework for Wii
http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/
Reduce costs
Increase Value
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HOW DO YOU FIND THE INFORMATION YOU NEED ABOUT THE CUSTOMER AND HER PROBLEMS?
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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.
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Innovation requires a process and tools
Inspiration Ideation Execution Launch
Observation MVP Design Thinking
Strategic Roadmap Adoption/Diffusion
Business Model Blue Ocean
Customer/User
CompanyStrategy
Customer Journey
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The business model canvas is not the first step
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First you need to get to know your customers “in the wild”
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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?
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Ask it Interviews: the yellow walkman problem
Don’t ask your potential customers what they think of your idea
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Interviews – other problems
• Bad data – false positives – false negatives
• Talking to the wrong people • Surveys! • No real commitment
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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/
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WHAT SHOULD YOU KNOW BEFORE MAKING ANYTHING?
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Who are your main customer segments? Personas
http://followsprocess.wordpress.com/2010/11/14/facilitating-data-driven-personas/
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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
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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.
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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
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Extreme Users - Running Shoes
https://blog.itu.dk/DDBS-E2011/2011/10/page/2/
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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
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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?
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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.
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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”
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Understand the whole product Example: Nespresso
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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
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Understand context – what is a “day-in-the life” of your customer interacting with your product/service: Customer Journey
http://slidesha.re/qMsHAc
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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/
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A word on competition: Analogs, Antilogs, and Leaps of Faith
“Good artists copy, great artists steal” Pablo Picasso, as quoted by Steve Jobs
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Apple’s iPod Analogs – prove some key aspects of your potential solution. Copy them, but improve upon 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?
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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
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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?
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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
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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 the right 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!