Lean Startup and Customer Development (Identifying ...media.firabcn.es/content/S092014/docs/presentacions_agenda/P1S2... · Page 1 Lean Startup Identifying problems worth solving

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


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


My daughter


Please don’t tell me your idea


Your potential customers don’t want to hear your idea either They have Stockholm Syndrome


Problem: Unknown Solution: Unknown Source: Eric Ries

The Lean Startup Not enough time spent here!


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?


WHAT’S THE RIGHT PROBLEM FOR YOU TO SOLVE?


Where do you start? Opportunity Identification

Marien and Miranda


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


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/


Red ocean vs. blue ocean

http://www.blueoceanstrategy.com/


Study of 108 companies by Kim and Mauborgne


Red Ocean vs. Blue Ocean

BLUE OCEAN RED OCEAN


Strategy Canvas for Wii

http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/


Four Actions Framework for Wii

http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/

Reduce costs

Increase Value


HOW DO YOU FIND THE INFORMATION YOU NEED ABOUT THE CUSTOMER AND HER PROBLEMS?


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.


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


The business model canvas is not the first step


First you need to get to know your customers “in the wild”


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?

http://www.youtube.com/watch?v=M66ZU2PCIcM

http://www.youtube.com/watch?v=M66ZU2PCIcM


Ask it Interviews: the yellow walkman problem

Don’t ask your potential customers what they think of your idea


Interviews – other problems

• Bad data – false positives – false negatives

• Talking to the wrong people • Surveys! • No real commitment


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/

http://momtestbook.com/


WHAT SHOULD YOU KNOW BEFORE MAKING ANYTHING?


Who are your main customer segments? Personas

http://followsprocess.wordpress.com/2010/11/14/facilitating-data-driven-personas/


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


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.


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


Extreme Users - Running Shoes

https://blog.itu.dk/DDBS-E2011/2011/10/page/2/


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


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?


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.


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”


Understand the whole product Example: Nespresso


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


Understand context – what is a “day-in-the life” of your customer interacting with your product/service: Customer Journey

http://slidesha.re/qMsHAc


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/


A word on competition: Analogs, Antilogs, and Leaps of Faith

“Good artists copy, great artists steal” Pablo Picasso, as quoted by Steve Jobs


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?


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


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?


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


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!


Thank you!

@profefox paulbfox

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Lean Startup and Customer Development (Identifying ...media.firabcn.es/content/S092014/docs/presentacions_agenda/P1S2... · Page 1 Lean Startup Identifying problems worth solving