Speaking about Lean Startup takes me all over the world, and I have the opportunity to speak with some very interesting people about this concept. For the last 2 weeks, I have been in Sri Lanka, speaking about Lean Startup, so I wanted to write a quick blog post outlining what it’s all about. Thank you to SLASSCOM for hosting the two events and to the sponsors Virtusa, Regus Sri Lanka and Pick Me and to the 200+ attendees.
Lean Startup, customer development and business model innovation are transforming the way in which new products are built and how growth strategies are developed.
The key message in all of my talks, and in the Lean approach is that organisations must design and build products that customers want.
To briefly explain the concept of Lean, it is essentially about eliminating waste (achieving efficiency), and was an idea originally developed by Eiji Toyoda and Taiichi Ohno at Toyota (known as the ‘Toyota Way’). Customer Development is a term that was popularised by Steve Blank in his book ‘The Four Steps to Epiphany’, and takes a customer-centric approach to understanding customer needs and problems. Alex Osterwalder, in his book ‘The Business Model Innovation’, describes a business model as how an organisation creates, delivers and captures value. The Osterwalder business model canvas is a great tool for a startup to validate their assumptions. Think of the canvas as a set of hypotheses (guesses). It will help to organise your thinking. The real task is to change these guesses into FACTS.
The issue is that many organisations focus on products and solutions versus understanding the problem or the need they are addressing for customers. Dave McClure has a great quote here when he says, “Your solution is NOT my problem.”
Steve Blank, the father of Lean Startup movement, talks about the big idea, which is really simple: “Get out of the building and talk to customers”. The first step in his four steps is ‘Customer Discovery”. Talking to customers is nothing new and is a very simple concept, but we don’t do enough of it. We make too many assumptions about customers’ needs.
Ash Maurya in his book ‘Running Lean’ (one of my favourite books on the subject of Lean Startup) talks about the 3 stages in product development.
The first step is to find the Problem/Solution Fit. Ask yourself, “Do I have a problem worth solving?” If so:
• Who has the problem?
• What is the main problem?
• How is it solved today?
• Where do they have the problem or in what context do they have a problem? (see Clayton Christensen’s milkshake example)
• When do they have the problem?
• Why is it a problem? (This is known as root cause analysis. ‘Why?’ is the single best word for creating value in a start-up and an established business)
It is not possible to know what the main problem is without knowing where, when and why they have a problem. Bear in mind that the questions may not be answered in sequence e.g. will we find the problem and the person with the problem at the same time?
Once you’ve identified the problem, then take a stab at defining the solution:
• Build a demo (MVP)
• Test it with assumed customers
• Will the solution work? Can the proposed solution create customer value that exceeds the cost to produce and deliver the solution to the customer?
• Who is the ‘Early Adopter’?
• Does the pricing model work?
Then test it with a small sample (qualitatively) followed by a larger sample (quantitatively). Once this is validated, you have your Problem/Solution fit.
The next step is to find a Product/Market fit. Have I built something people want? This is the first significant milestone in a startup!
Customer development is not easy and is often the task that entrepreneurs find the most daunting, but it will help you reduce your risk of failure.
“There are no shortcuts to any place worth going” – Beverly Sills
I wish you every success with your ventures! Good luck!
You may download the presentation from SlideShare.