March 8, 2016 by gamalm
Have a customized management process of how you will develop your product and make sure you are always following this process, and that you are avoiding the “just do it” approach by ensuring that you have tools to continuously test a vision.
Work smarter, not harder: Ask yourself:
Should this product/service be created, and can a sustainable business be built around this set of products and services? So it’s not about: “Can this product/service be built or not?”
Build-Measure-Learn Feedback Loop:
which is not a one-time-thing. It’s not a process that you only use for building your MVP. It is how to manage your startup; it’s an ongoing cycle building, measuring, learning, and building. Step 1: Figure out the problem that needs to be solved
Step 1: Develop an MVP, to begin the process of learning quickly.
Step 3: Ensure setting specific metrics that you will use for evaluating and tracking your progress.
Step 3: Gather feedback and data that you will learn from, for improvement.
It is what the Build-Measure-Learn Feedback Loop is all about. It is the process of learning by trying out an initial idea, then measuring it to validate its effect with the customer. Each test is repeated and should result in either confirming or refuting an assumption. It is the accumulated progress you achieve through repetitive testing.
Technical risk, or Product risk:
It’s the question of whether we CAN build or create this product/service/idea at all or not. For example: if you’re looking for a cure for Cancer, there’s a big risk since you might never be able to find it. But if you do find it, you’ll definitely have customers, and therefore there’s no market risk.
Market risk, or customer risk:
If we create this product/service, will people want to use it or buy it? Therefore, SHOULD we create this product/service? For example: Assuming people would want to buy groceries online, and succeeding in creating a website that does offer groceries online and delivers too. The thing is, customers might not be interested in such service and don’t like the idea of buying groceries online, and therefore it’s the risk that customers might not like the product/service.
Business Model Risk:
Can we create a way for this product/service to make us money? Can we create a sustainable business around this product? You would be wondering about how you can make money out of it. The idea might be possible to implement, and people like it, but hard to make money out of it. For example: wanting to create a social media platform where people would share photos and edit them like Instagram. You would be wondering whether you would make money out of charging people who sign up, or of ads, etc.
It is important to have a great and diverse team, complemented by a mentor, confidante, or even an incubator, to help bounce around Ideas, build a product, bring it to the market & maintain its successful growth. N.B: A business incubator is an organization that helps startups develop by providing services such as management training, office space, or seed fund. It invites them to the office, and makes sure they mentor them, and give them the trainings they need to launch their business.
Some startups get caught up in the details that they lose sight of the overall company strategy. Others remain at a high level and overlook crucial details that result in major problems. The approach of both assessing details, at least in the early stages, while maintaining a keen focus on overall business execution, will ensure the highest likelihood of long-term success.
- Version of a new product, which allows a team to collect the maximum amount of validated learning (trying out an initial idea, then measuring it to validate the effect) about customers with the least effort.
- Smallest thing that you can build or produce that can deliver customer value, and be able to capture some of that value back.
- MVP, despite the name, is not about creating minimal products.
- Requires a lot of energy invested in talking to customers or metrics and analytics
- “Charge from day one.”
- It saves you from wasting effort building a product and then finding out it’s not worth it, because you haven’t tested.
- Example: writing a book – teaching workshops before writing the actual book.
- Sometimes the person is hit by an idea, and falls in love with the solution, and believes it’s awesome. But it’s important to not only look at the MVP in terms of the solution that you would build, but as an entire business model.
MVP goes back to a concept called “Customer Problem Presentation”
- Scripted interview with target customers (face to face, or telephone), and sometimes surveys.
- The 3 top problems you are addressing are outlined, the current solutions to the problems, and then YOUR solutions to the problems
- After each section, the interviewee is left to talk as much as he wants; here’s there’s more listening than talking
- While listening, you need to prioritize the problem/solution under “must-have,” “nice-to-have,” “don’t care.” You can also test pricing.
- The customer problem presentation is mostly an exploration of problems, rather than solutions. You’re not pitching yet, you let the customer talk all he wants.
At some point, the entrepreneur will face a crossroads where they must make a decision.
Pivot: Changing your strategy
A true entrepreneur will learn from the consumers’ response to the product or service and change the business strategy or product itself.
Persevere: If a path of success and profits can be seen, you may decide to hold tight on the idea you started with
There are a number of ways an entrepreneur can pivot:
- Zoom-In: Focus on ONE feature of the product which would be the entire product à Messager on Facebook
- Zoom-Out: If the product is too narrow to create a business out of, the entrepreneur may decide to create a broader product à Phonecalls in Whatsapp
- Customer Segment: Changing the customers that were targeted at first à Adding cash option in Uber
- Customer Need: Through the customer’s response, the entrepreneur may find that their ‘solution’ is not needed and another one should be utilized instead à Netflix shifting from on-demand video rental to online movie streaming
- Business Architecture: From high margin- low volume, to low margin- high volume
- High Margin – Low Volume: Products sold at a price greater than its cost but with fewer sales à Newspaper subscriptions
- Low Margin – High Volume: Products sold at a price close to its cost and in greater bulks à Pizza King launched as a “pizza place” but then it became known as a cheaper alternative
- Technology: The ‘solution’ can be put forth using different and less expensive technology à Companies using Paypal vs. credit cards
Dropbox Case Study
Dropbox is an extremely easy-to-use file-sharing tool. It offers cloud storage, automatic organization & back-up, offline access and efficient syncing. Dropbox allows users to create a special folder on their computers, which Dropbox then synchronizes so that it appears to be the same folder (with the same contents) regardless of which device is used to view it. Files placed in this folder are also accessible via the Dropbox website and mobile apps.
- The challenge Dropbox’s team faced when starting was that it was impossible to demonstrate the working software in a prototype form. The product required that they overcome significant technical hurdles. To avoid the risk of waking up after years of development with a product nobody wanted, Drew simply made a video explaining how the product worked.
- The MVP, video, increased the Beta waiting list from 5,000 people to 75,000 people overnight.
- The MVP validated Drew’s leap- of- faith assumption that customers wanted the product he was developing not because they said so in a focus group or survey but because they actually signed up.
- To conclude; the company started iterating their product much faster in order to test what customers really wanted, early and often. Using Lean Startup principles, in just 15 months, Dropbox went form 100,000 registered users to over 4,000,000.
- Biggest risk is making something no one wants.
- Not launching is painful as it requires time and money but not launching early and not learning is fatal for the startup.
- Put something in users’ hands and get real feedback ASAP to ensure the product or service is actually what the intended customers want.
- MVP is designed not just to answer product design or technical questions. Its goal is to test fundamental business hypotheses.
- MVP is simply the fastest way to start learning how to build a sustainable business with the minimum amount of effort.
Owlet Case Study
Owlet is a device that measures infant heart rate and oxygen levels. Its features include access to live vitals, an IPhone app and pulse oximetry, a hospital technology that measures live vitals.
- The Owlet team pivoted their business model through applying the Lean Startup concept of experimenting and testing their hypothesis.
- The starting product was a smart anklet that wirelessly sends the information to a relay station, which is capable of alarming the parents in case of emergency as well as pushing the information on a smart phone for convenience.
- The team completely pivoted from original idea, focused on creating value in a new customer segment for parents in the home setting helping bring them peace of mind.
- They validated their risks (market and technology risks) through a video as their MVP.
- They made a video “showing what the product could be or could do”.
- The simple MVP got them customer validation.
- They got picked up by 40 news outlets in 23 countries.
- 500 emails of parents asking for the product or even prototype.
- They changed the original design from wireless bracelet to sock.
- FDA clearance on this product led them to pivot their idea to not having an alarm in the product.
- They asked themselves the question: “could we get a more minimal, less risky product into the market? MVP.
- They surveyed mothers and found out 2 types of mothers in each end of the spectrum; the hippie mothers who worried less and got the insight “an alarm would drive her crazy” and worried mothers.