Imagine for a moment that you are hurrying up the steps to your ideal client’s office; you are full of enthusiasm looking forward to sharing the excitement of your new product developed especially for this client. You have identified a burning need. You have developed the perfect solution. The price is very reasonable. And you can’t wait to get the new product going so that you can all benefit.
A couple of hours later you leave. Your beautiful solution has been bluntly rejected: They do not want it, ever!
What happened? You know it is a great product. You know they have a need, and this will solve that need.
What went wrong?
Perhaps more importantly: Has something similar ever happened to you?
To put more context in the above example: The exuberant sales rep bounding up the steps was Thomas Edison, the most prophetic and successful product developer ever. The prospect: U.S. Congress and the fundamental problem he wanted to solve: the inefficiency and time waste associated with voting on issues.
In the traditional product development sense – find a need and solve it – Edison was right. The vote-counting system was totally inadequate and wasted a lot of time. However, he missed the most important driving force behind keeping the voting system going: the pollies loved the system. It gave them a great opportunity for politicking and posturing when they stated their voting preference.
Have you ever been in a similar situation? Believing you have a great solution when in reality you are spending time and money on something nobody actually wants? After his bitter disappointment, Edison swore, “Never again will I create something that nobody wants to buy.”
If the above strikes a chord; read on, this is going to help you.
Who is this article written for?
In his excellent book Zero to One, Peter Thiel distinguishes between two very different kinds of product developments:
One to N Product Development: This covers the majority of product and service developments worldwide. The product or service aims to deliver an improvement or an enhancement to a basic concept that is already known and accepted.
– This is the kind of development Lean StartUp is created for, and if you are a StartUp Founder, Business Owner, Product Developer or Investor in this area this is for you.
Zero to One Developments: Or as Steve Jobs called it, “Making your dent in the universe”.
This is an environment where nothing currently exists, and the objective is to provide a solution that will fundamentally change the way people do things.
PayPal is a good example: Changing the way payments are made. PayPal changed the world for the better, making bank account to bank account transfers simple, fast, and inexpensive.
– A Zero to One Development is not the ideal environment for the Lean StartUp methodology. It is a great guide; however, a number of actions have to be modified and tweaked. The requirement for a broad client education and associated time lag before income will require a huge financial burden most StartUps are unlikely to be able to meet in the current financial environment.
– For Zero to One Developments the best customer advisory board continues to be ‘the person in the mirror’. And as a StartUp, Business Owner, Product Developer and Investor, you need to have a strong belief in a lottery mentality.
Why does Lean StartUp Methodology matter to me?
My background: I spent twenty-seven years in ‘corporate life’, from Trainee Sales Rep to CEO, and seven years working with StartUps and SMEs. Throughout my career, I have been involved with seven product developments.
Of more interest, in four of those developments I was the person outside the ‘development bubble’ who had to explain to increasingly irate executive management, boards and clients why the development was running late, beg for more time and money, while at the same time protecting my team from outside interference
Does this sound familiar to you? Then this is written for you.
The more I have learned about Lean StartUp methodology and compared it to my experience, the more convinced I am that I could have saved stakeholder’s money, frustrations and sleepless nights, yet brought better products to market, in less time.
Therefore, I want to do what I can to help business owners, product developers and investors understand the benefits, and how they may be able to benefit in their developments by deploying this methodology. And, I am ‘eating my own dog food’. I have recently become involved with a product development “Get and Keep Better Clients” and it is being done according to the Lean StartUp methodology.
In summary: This article is based on my experience being involved in 7 product developments, combined with lessons from the Lean StartUp methodology and 34 years in sales.
Please read on, I promise there will be actions and ideas here you can put in place immediately and benefit from.
A couple of definitions, and a disclaimer:
Customers vs. Clients: In my opinion, customers are people and businesses who shop around constantly looking for the best-deal-of-the-day. They have no loyalty or relationships are all one-way; theirs.
Clients, on the other hand, are people and businesses who value what you offer and how it continues to enhance their lives. They are people and businesses that you can build long-term relationships with, providing you continue to respect them and provide value in excess of the investment they make in you and your product.
I choose to work with clients, not customers.
When is a StartUp not a ‘StartUp’, but an ‘internal-StartUp’ and part of a larger business?
A StartUp does not have to be a traditional ‘couple of people in a garage wanting to put a dent in the universe’.
Any company with a group of employees charged with developing new initiatives, ideas or products in an environment of uncertainty should be treated as an Internal-StartUp. Lean StartUp methodology will work for all companies that are faced with uncertainty about what customers want.
I originally got interested because of the ‘StartUp’ tag; however, when I subsequently watched two interviews with product development managers from GE talking about the major benefits and savings they have experienced by deploying this methodology, in comparison to doing things following ‘the normal GE process’, I was hooked.
If GE can use this to save big, cut down on administration work and still manage to push out a better product, then this is worth considering.
I have subsequently discovered that clients benefiting from the Lean StartUp methodology include: entrepreneurs, universities, accelerators and groups within truly big companies in all industries.
Inside vs. outside ‘the bubble’: My experience within product development clearly shows that the most creative, focused and qualitative development is achieved when you allow a dedicated, well-balanced team of individuals to do what they do best: Be creative inside a non-interrupted environment ‘the bubble’.
You may occasionally have to apply some ‘demonstrative reminders’ about how ‘good developers ship on time’, and that the objective is ‘quality before ego’. In other words, normal management techniques from outside the bubble.
Disclaimer: Following a Lean StartUp Methodology is not a “silver bullet”, or a perfect solution that will guarantee you success.
However, if you are a company driven by a compelling vision, expect Lean StartUp mythology to benefit you in the following areas:
– Reduces misunderstandings and time wasters; The Team has a common language, values, understanding, vision and direction.
– Focuses team on solving client needs
– Reduces the risk of bringing the wrong product to market
– Reduces waste by ongoing rigorous tests of the underlying assumptions
– Reduces documentation, enabling more doing
– Increases speed-to-market with the right product.
Another good example of the benefit of knowing the answer to a key question:
Both Honda and Toyota decided to create a hybrid car.
Honda decided to take a model from its popular Civic range and create a hybrid option. The way to tell it apart from the rest of the Civic range is to look at the sticker on the back of the car.
Toyota decided to create a totally new design. Not exactly pretty, but certainly noticeable.
The result: The Toyota Prius hybrid outsells the Honda Civic Hybrid almost everywhere.
Why? Because Toyota understood that people who drive non-petrol based cars not only want to do the right thing, they also want to be seen doing the right thing.
Question: Do you want to be on Team Toyota or Team Honda?
Getting solid solutions out the door as fast as possible, with minimal risk, that clients will happily pay for from day 1, is what Lean StartUp methodology is about
How else can Lean StartUp methodology be used?
A slight aside, have you ever noticed how only communist regimes and some Venture Capitalists still insist on 5-year plans?
Most sane people realise that there are far too many uncertainties that can and will interfere with best-laid plans within an average month, let alone during 60 months.
Still, I am sure you, just like me, have spent endless days and sleepless nights creating tens (hundreds?) of pages for a required 5-year Product Development Plan/Business Plans, only to find that all people want is the Executive Summary or Summary Slide Deck?
This is another area where Lean StartUp Methodology will help you.
Everything you need to:
– Explain your product concept and vision,
– Explain the financial opportunity,
– Provide internal and external updates on the development, and
– Maybe most importantly: You do not have to reveal IP related secrets
It all comes together in a single page called “The Canvas”, easy to review, discuss and to update and distribute.
The key people behind Lean StartUp and where you can get more information:
- Steve Blank(http://steveblank.com/ ) is a Silicon Valley serial-entrepreneur and academic who teaches entrepreneurship to both undergraduate and graduate students at U.C. Berkeley, Stanford University, Columbia University, NYU and UCSF. Steve is recognized for developing the Customer Development methodology, and author of Four Steps to the Epiphany. His latest book, co-authored with Bob Dorf, The Startup Owners Manual integrates 10 years of new knowledge into a simple-to-follow guide.
- Eric Ries, (http://theleanstartup.com) also known as ‘the Father of Lean StartUp’ is an enthusiastic former student of Steve Blank’s. Eric’s personal StartUp experience combined with insights about the Customer Development and Agile process was a game-changer in thinking. Eric’s book, The Lean Startup, is a “must have” for your library.
- Alexander Osterwalder, (http://alexosterwalder.com/), created the original Business Model Canvas ‘The Canvas’ and is lead author of Business Model Generation, the first book that enabled readers to answer “What’s your business model?” intelligently and with precision. Alex’s follow-up book,Value Proposition Design, describes how to get product/market fit right. Both books are highly recommended.
- Ash Maurya (http://ashmaurya.com/) has very constructive, practical comments on Lean StartUp, although not entirely in-line with the gentlemen above. Ash is a self-published author of the blog and website “Running Lean” (http://runninglean.co/), as well the host of a great series of videos and presentations
Summary of the Lean StartUp methodology:
This is what it is all about:
1: Building the right solution:
Far too many new developments fail to meet their expected results and end up as failures.
As many as 9 in 10 new developments are failures, draining away money, time and good careers.
Ash Maurya, in his video “Why Products Fail”, refers to a recent Silicon Valley study of 1,000 failed product developments. The #1 reason for failure was not that the development team had failed in building what they had set out to build; they failed because they had built the wrong product: A product that has no market.
2: Avoiding the “PUC effect” (“Put Up Crap”)
PUC comes from the website-building sector where the term is used to quickly claim Internet ‘real estate’. The thinking is that as long as you have a good offer, you can always come back later and, through A/B testing and other means improve, the visitor’s experience. Maybe ten years ago… but not today.
Unfortunately, PUC is not limited to website builders. It is well-acknowledged and not limited to dominant stakeholders pushing their agendas, nor to teams falling in love with their creation and pressing through developing failures in spite of contradictory evidence. It only takes seconds to ruin a reputation that has taken years to build.
What you want is solid evidence that brings you closer to delivering a solid product that will ship on time to a waiting and anticipating crowd of clients.
3: Have a better plan that can unite people behind you
I appreciate Iron Mike Tyson’s quote “Everyone has a plan ’till they get punched in the mouth!” However, if you don’t have a plan, you are planning to fail. This is especially important for resource scheduling of the various skill sets required of a development team during the development cycle. Creating and following the plan provides you with a tactile confirmation for when resources will be required.
As mentioned earlier, one of the major benefits of the Lean StartUp methodology is ‘The Business Model Canvas’, or ‘Solution Canvas’, for short. The Canvas will work equally well for a single individual getting their BHAG together, as for a team going through the stages from concept to delivery. ‘Solution Canvas’ is an implementation of the original Business Model Canvas we at Dominate Selling has found works best for us.
‘The Solution Canvas’ is a single piece of paper with 9 building blocks. The following can be downloaded from http://www.LeanStartUpMentoring.com
For a detailed description, please refer to Attachment 1: “A walk-through the 9 building blocks of The Solution Canvas.”
The following are tactical issues associated with a successful Lean StartUp project:
First Challenge: Everything must be seen through the eyes of the client. Delivering successful products means understanding, in measurable terms, how this product will improve the life of the client. There is no room for ‘features, feeds and speeds’.
Second Challenge: Continue to focus on delivering ‘The Vision’, not ‘a product’. Never get too attached to a particular option you will be considering along the way. The Vision is to deliver a solid product that will ship on time, to a waiting and anticipating crowd of clients.
Third Challenge: Start by creating a Big Canvas, i.e. A0 size (84.1 x 118.9 cm). This will enable you to create your initial ‘Plan A’ while you go through the various building blocks.
– It is highly recommended to create multiple Canvases on A4 size paper and review the same challenge, but coming from different angles.
– As an example, try to work through how you would solve the challenge if you had no financial limits. You can use any material or manufacturing process available anywhere, and you have no time constraints. You should also consider options like solve the challenge coming from an industry different from yours. It only takes 30 to 40 min to create a canvas, once you get used to it.
Once you have consolidated your various options and have settled on your initial ‘Plan A’, your Big Canvas should be full of post-it notes meeting the requirements of each of the 9 building blocks.
Fourth Challenge: “Get out of the building.” You must verify your theories, your hypotheses, about the various parts of the 9 building blocks. This cannot be done inside the bubble, trying to resolve the questions will lead to misdirection and waste. You must get out and discuss face to face with the appropriate stakeholders. Furthermore, this task cannot be outsourced or delegated. The discussions must be done by the individual responsible.
– Conformity amongst team members is a must. While, conceptually, the team will be molded together within the bubble sharing viewpoints and experiences, it becomes a challenge outside the bubble interfacing with non-team members.
There is a methodology called “5 Whys” that it may be beneficial to ensure everybody is trained and skilled in. For more information, the following link is a good start: http://www.isixsigma.com/tools-templates/cause-effect/determine-root-cause-5-whys/
As you return to the bubble and update your hypotheses, you also update the Big Canvas- I recommend you use traffic light colors for your Big Canvas, i.e.:I recommend you use traffic light colors for your Big Canvas,
I recommend you use traffic light colors for your Big Canvas, i.e.:Red stick-it notes: Original Plan A thinking,
– Red stick-it notes: Original Plan A thinking,
– Yellow stick-it-notes: Updated iterations and pivots on Plan A ideas as you learn
– Green stick-it-notes: Your hypothesis has been verified by multiple sources and you are confident you have not just nailed it when it comes to the client’s problem, but you have also nailed it in the other 8 building blocks of The Canvas.
Starting at the conclusion of Plan A of your Big Canvas, download a PC-based version of the Canvas and regularly update in line with your changes. This will serve as record keeping of work achieved, as well as provide updates to internal team members, and whoever-needs-to-know on the outside.
– Do not destroy disregarded hypotheses. You never know when, under different circumstances, they could become valid.
Fifth Challenge: OK, you have completed the work. You have a Big Canvas full of green stick-it-notes. You have Nailed It! Time to start building the product?
This is the time to congratulate the team on completing a great first part of the job.
Your next job is to sort through and prioritise the requirements for the features required to meet the expectation of your product.
This is the time to channel Steve Jobs, ”Less is more”; what are the absolute minimal number of features needed to solve the problem which is to improve the life and make it a great experience for the client?
Another Steve Jobs obsession you may want to consider is: How can we create a product that solves the client’s problem, improves their life and make it a great experience in the most straightforward way? Read: No user manual is required.
– This is a great challenge for engineers who, by nature, will try and load up on features that may be elegant, but will do nothing to solve the basic problem you set out to solve.
Sixth Challenge: Continually update all stakeholders about what is happening.
Following is a truism from sales: ‘”A win has many parents. A loss is an unwanted orphan”. Never exclude people you believe can be beneficial to the project.
This is not about ego, but about making everybody desire to be part of your amazingly exciting project. The more key contributors are involved, the more risk is minimised, and when a successful product is delivered on time to a waiting crowd, there will be plenty of rewards to go around.
– Comment about bad news: Bad news will happen, so get over it. Never keep it to yourself, you will not be able to solve it alone and sharing problems will not reduce your stature. The opposite is true; people grow and step forward to help when they are trusted with the truth.
Seventh Challenge: When you have decided on a minimal-features-required product, this becomes your MVP (Minimal Viable Product), which, of course, will have all stakeholders, especially first-ship clients’, support and approval before any code is cut, or plastic mold ordered. The good news is that you are getting closer to having something concrete you can touch and feel and get people focused on.
Eighth Challenge: Because all stakeholders have been kept up to date during the ups and downs of the project so far, you are in a position where you are meeting budget, timeline expectations and shipping your product to a group of clients, who know exactly what they will receive, and are excited.
Now you can celebrate.
Ninth Challenge: From here, it becomes a leveraging issue. You will be able to get great testimonials from first-ship clients that can be leveraged onto associated client groups with minimal risks, and internal purse strings will be loosened as you have delivered on the most critical part of any product development; you have built the right product for a grateful market.
Some final comments about first-ship-clients: It is very critical to get this right; happy first-ship clients will carry you and your product. Unhappy first-ship clients will ruin you. Ensure when you identify the market niche for your first-ship clients you make it a very well defined micro-market-niche.
If you need a reminder, think Facebook. Mark Zuckerberg did not start with an initial plan to enslave the world and have 1.4 Billion users (Q4, 2014). He started building a dating site for his classmates at Harvard University. When he dominated that market niche, Facebook became available to the whole of the Harvard University. From there Facebook was opened up to east coast universities, then U.S. universities as a whole. After that, European universities and gradually non-universities became involved country by country.
The same is true for Amazon and eBay. Both started with micro-niches they could dominate and gradually leveraged into associated market-niches until they became the massive entities they are today.
Are there other areas that should be considered for a complete solution?
I believe that the Lean StartUp methodology is brilliant for the core product development. Create the plan, build the MVP and gradually leverage into bigger and bigger markets.
However, there is a potential dichotomy. Product creation is traditionally, and quite rightly, the area of Engineering. Whereas taking a product and leveraging into larger and ever bigger markets is a Sales activity. Is there a clash? I do not think so – providing it is handled as part of the plan. Sales need to be part of your plan from the start and have valuable input to provide – just do not allow Sales to take over your project.
What can Dominate Selling do to help?
Apart from educating and training people in the Lean StartUp methodology, there are three other areas we can help:
Right client, Message and Media:
A lot of focus and time needs to be committed to identifying whom, exactly, are the most suitable clients, the clients who will most benefit from this product. This is normally done by identifying the client’s age, sex, position, income, marriage status and so on and so forth. However, that is only part of what you need to know.
At least as important is seeing the issue from the aspect of your client. You need to start with questions like; what kind of a supplier do they expect to buy this product from? How do they expect to buy it?
That will determine what you have to change to become the ‘right supplier for the right client’, and is this something your company is willing to undertake.
Secondly, getting the message right so that it will attract the right client. One of our biggest issues with advertising is that we have taught ourselves to totally ignore the estimated 8,800 ‘requests for attention’ we are bombarded with every day. How to break through to the people that matter to us, our ideal clients? Difficult, but not impossible, it requires a lot of social science and sociology feedback. However, the same feedback also provides input to how that group of the population wants to be serviced, so the effort is worth it.
Thirdly, when the right client group has been identified, and the right message to attract them, it becomes an issue of what is the most effective media to communicate with your ideal clients.
I keep getting surprised at how little attention is placed on making sure the people that work together, want to work together in the first place. The reality is that if you think you have won, or lost, you are right. And it takes very little in terms of right, or wrong, mindset to cause havoc inside the bubble. Make sure you have a team with the right mindset throughout working with you.
This is the last contributing factor. You need somebody who can and will take the longer-view. Once a StartUp of any size has been established; it is very difficult to change. It is at the start the crucial decisions regarding vision, mission and values are set. Unfortunately, this is another victim of the PUC effect; “We can always come back and make changes if required later.” Oh no, you can’t; it is very difficult to do without big human costs. Lastly, somebody needs to watch out and ensure internal and external systems and regulations are met, not always something getting a lot of attention during the excitement of development.
Your best next step:
The following are a few options for you:
You can get up to speed by yourself. Start by goggling “Lean StartUp” (2,970,000 hits) or “Lean StartUp methodology” (203,000 hits) and start reading, or look up people referenced earlier in this white paper.
We can help you. The following may be of interest:
- Please send an email to me at firstname.lastname@example.org to be included in the next webinar where we will be expanding further on the principles discussed in this article.
- Contact me directly – email@example.com or +61 407 900 939 – and arrange a suitable time for a conversation.
The way we do this is:
– We will send you some questions regarding your objective, which will remain confidential between you and me, and agree on a time that is convenient for you.
– Based on your answers, we will research your issues in preparation for the conversation.
– The conversation will take place using Skype and during the conversation, I will do everything possible to help and assist you put a plan together to resolve your challenge.
Up until this point, there will be no charge, nor any further commitment expected from either party.
Should we subsequently agree to work together, we work on a very reasonable investment basis.
To further minimise your risk, every invoice from Dominate Selling comes with the following statement: “Unless you feel that we have delivered value in excess of this invoice: Please tell us, and then tear up this invoice”.
Summary of the Lean StartUp and getting Dominate Selling involved: No Surprises
Attachment 1: “A walk-through the 9 building blocks of The Canvas.”
For the purpose of this walk-through I have used my own Solution Canvas downloaded from http://www.LeanStartUpMentoring.com
First comment: Always focus on client needs, and how whatever you are creating will add benefit to the client.
Second comment: Do not get hung-up on the definitions of each building block. Focus on the intention of the building block and consider replacing the descriptive words for the block with something that resonates with you, and your team.
Third comment: The process of going from a concept to success in each building block is dependent on the owner getting “out of the building to test and validate”. This cannot be outsourced or delegated.
– The objective of getting out of the building to test and validate is to eliminate the unknowns early, and get bad news out of the way soonest. Bad news may be painful, but knowing where the roadblocks are early on will enable you to re-do and pivot early, and possibly often. This, in turn, will save you money, time and frustration, in the long-run.
Last comment: Make sure you focus on and measure only what matters.
And what matters? Whatever will bring you closer to creating a solid product, which will ship on time, to a waiting and anticipating crowd of clients.
Reminder: The objective and benefit of a ‘Business Model Canvas’ is, on a single page, to map out the entire business model using only 9 building blocks.
The following is a summary of the intent of each building block:
Block 1: Pain or Desire.
Think for a moment about your own situation: There are only two reasons anybody spends money; (1) To avoid pain or (2) To get something they desire. Based on experiments we know people will more often spend money to avoid pain than they will spend on something they desire.
An example; money. You are more likely to spend money on protecting a saved $100,000 from being stolen from you than you are on learning what it is going to take to save $100,000.
How does this relate to what you are working on? You need to view your solution as if you are a prospect looking at it and asking: “What pains does it solve for me?” You need to identify the three most critical pains you help avoid.
Ideal situation is when you can understand what it will take for a user of your solution to tell her friends: “Prior to discovering [name of your product] I had big problems with [whatever your solution fixes]. What no longer having these problems really means [this is the most critical part: You must be able to identify measurable benefit(s) from using your solution].
When you feel you have good answers to the issue in Block 1, move to;
Block 2: Initial niche
Here you need to identify: Who are the people most impacted by the pain your solution fixes, and make this niche very narrow.
As an example, think of today’s dominating brands:
– Facebook started as a dating site for Harvard University students
– eBay started as a trading site for beanie-babies
– Amazon started as a site for people living long distances from bookstores and an interest in unusual books, and
– PayPal started as a payment option for a small group of power-vendors on eBay.
Once you have identified the group of people most likely to benefit from your solution, you need to identify what characteristics early adopters have within this group. They are usually the go-to people, and once you have a handful of them benefitting from your solution, just by sheer example a large group will follow.
As part of this process you need to be able to answer the key questions of:
1: What do my clients do today to overcome this pain? And there are always competitive solutions. ‘Do nothing’ is a competitive solution.
2: What will I need to demonstrate to get my prospects to try my solution?
3: What are my Unique Advantages?
Time to get out the building
In Blocks 1 and 2 you have built great ideas based on your knowledge and research. However, they are at best assumptions until validated.
This means you need to leave the building and go meet with your prospects. Ask them questions like: “Is this true for you?” “If the following were available, would you buy it?” “What would it be worth for you to have these pains taken away?” You need to ask these questions again and again of various people within your initial niche.
The benefits of this process are multiple:
– You will learn a tremendous lot about what you are working on
– You will get prospects’ helping you develop the new solution => These are likely to be your most loyal and supportive clients
– You will start to build a very good feeling for what price parameters you need to be within => Never sell anything for cost + a margin. Sell to what the clients believe it is worth to them and work back from there.
– You are building a list of features the solution must have, and features it would be good to have => You now have the basis for your initial product (your Minimal Feature & Value Product) as well as future enhancements.
As you get results from your interaction with prospects, update your canvas. Note; it is not uncommon that you decide to change radically, or ‘pivot’, your product direction as you review the results from prospect interviews. This is good. Better to learn early if you are working on a solution nobody wants, and it will help you identify what you should be working on.
Once you feel you have validation of the issues in Blocks 1 and 2, move to:
Block 3: Client values
Questions you need to understand:
– What do your prospects need to be convinced of if they are to consider your solution?
– What kind of relationship do they want with you before they are willing to buy your solution?
– What kinds of guarantees do you need to offer?
Block 4: Channels
Questions you need to understand:
– What are the right channels to reach your niche?
– Are there enough prospects located where you can reach and service them in sufficient number to make this a profitable business?
Block 5: Solution
Based on the ‘outside the building’ gathering of validations you can now start considering what your solution needs to be to become desirable for your initial niche.
– List the parameters of the solution
– Determine what you need to deliver to the solution and what you can outsource or Joint Venture with other non-competitive partners
– Identify who those Joint Ventures are
Block 6: Unique advantage
Through your inquiries, you will know precisely: What pains are you solving that nobody else is. How you can set yourself apart from the competition. How can you reach your niche like nobody else. How you can look after your clients better than anybody else, and How you can price your solution so it becomes an investment and not a cost, i.e. ‘a no-brainer buying decision’. This is your ‘Unique Advantage’.
Ideally it should be a single punchy sentence along the lines: We are [Business name] and we [the measurable benefit from Block 1]
Block 7: Investment structure
Here you list each step, as well as costings, for the total flow from creating the solution to delivering it safely in your client’s hands.
If there are any steps you feel are a ‘cost’ and not an ‘investment’ contributing to the quality of your solution; re-think that step.
Block 8: Key metrics
You need to identify the key areas you are going to monitor closely to ensure your business is constantly growing, and it is very different depending on what kind of solution you are considering. However, the following should be measured as a minimum on a rolling monthly basis: Number of new clients, client churn, the cost of client acquisition, lifetime value, profit/loss for the month.
Block 9: Revenue
Include all the income opportunities you have uncovered during your investigation and list them under the headings of:
– ‘Initial income streams*’ from your Minimal Feature & Value Product as well as other income opportunities you are uncovering.
* First 12 months from launch
– ‘Medium term income streams’ look for where you can take your solution in the medium term (12-24 Months out)
– ‘Long term opportunities*’ which is likely to include IPO, Exit or merger
* beyond three years
Common consideration from Blocks 8 and 9: Think like an investor; how can you secure a return of 20% on any money invested?
This may look overwhelming to start with, so I would like to make you the following offer: A free webinar where I will go through the structure and background as well as give you the opportunity to ask questions which hopefully will make this easier for you. If you are interested, please send your details including where you live so I can set a best suitable time to firstname.lastname@example.org
Attachment 2: Final comments:
Knowing where roadblocks may hide will make your journey smoother. The following are observations and comments that will be good to keep in mind.
Team members sometimes believe they know better than the prospects and will avoid “going outside the building” for verification.
– This has been proven again and again, NOT to be a good idea. You need to continually verify that everybody is “on the same bus” and doing what is expected. “You need to inspect what you expect”.
– Another underlying reason for getting outside verification is the fact that if you want to create something successful, it is a question of risk mitigation, and risk mitigation is about continually verifying that you are on the right track.
As you move into the phase of outside verifications you have started down a path with one objective; Dreamtime is over! The mantra, “Viability is more important than concept”, has to be your main focus. However, that does not stop you changing and pivoting in your pursuit of meeting the vision with the best solution.
As the owner of the project, you need to identify very early on what you determine as success criteria especially “What?” and “When?” Then add in; what evidence procedure do you need to achieve for you to be confident that success has been reached.
– This may sound weird, however unless you have a clear vision from the outset, there is the possibility that the project goes on and on, striving to achieve minimal improvements.
‘Why?’ – what a good question, often forgotten.
Remember, it is not just about shipping a solid product on-time; there is always a bigger picture; the longer-term company objective. Do not lose sight of the wood, because you are focused on the individual trees.
– ‘Why’ are you doing this product development? Where does it fit into the bigger picture and what else, outside the bubble, do you need to keep an eye on? These are important questions to keep on top of. Otherwise they can come out of the dark and torpedo you and your project.
Initial ship clients: Do not get side-tracked by others wanting to make this group bigger than you want.
– Remember: if you believe everybody is your prospect, you will end up with none. Focus on the correct micro-market-niche. Using Facebook again, Mark may have had wild dreams about world domination at the start, but he focused on his class members as initial ship clients. When he dominated that micro-niche, he leveraged into larger and associated markets. First, the rest of Harvard University, and then other U.S. universities. Before he knew it, Facebook had become ‘freakishly addictive’ and the snowball was on its roll down a very big hill.
You must nail the client pain early. This means inserting yourself deeply into your client’s mind and understanding what problems and issues they want solved. The question you then need to answer is, “Should we build this?”, not “Can we build it?”.
– Today it is no longer a situation of ‘if you build it, they will come,’ Hollywood has a lot to answer for.
As soon as you have verified that you have nailed the real client pain, you should start to shape ‘The Offer’.
– ‘The Offer’ is what will initially get, and keep, your ideal client’s attention. It is never about ‘the product’, which is likely to change over and over.
You need to combine two facts that will not change: Your client’s pain, combined with your unique ability to solve their pain. Based on external verification, keep changing and modifying The Offer until you get verification: ‘This is it! This is exactly what your ideal clients want to hear.’ Then, make it the common rally-point and the foundation you can build the rest of your campaign on.
A difficult question, especially for very new StartUps, is the key question in Building Block 2, “What is our unique value proposition?” That, in turn, leads to other key questions you need to have good, ready answer to; ‘Why should the client deal with us? Why are we the best and only option for our clients?”
– First, appreciate that the questions are tough questions for any company, big or small. Next; Never go for platitudes; your clients will see straight through them and never forgive you.
For very new StartUps, without previous wins to leverage from, the most important factor is: You! You are what is unique. Your values and commitments are what will set you apart, and what your clients want to know about. Do not allow others’ perceived grandeur to minimise your dreams and aspirations. Never compare your backstage chaos to others’ front stage show.
Be very careful with your resources. Money is like oxygen; once it’s gone, you’re dead.
– Ensure you are aware of how much runway you need, compared to how much you have. Don’t just have a Plan A, make sure there is a Plan B and C when it comes to resources.
Speaking of having back-up plans, above I specifically only refer to having resource back-up plans, I am not referring to the major development.
– Never allow alternative, just-in-case plans, to creep in and steal oxygen from your major objective. The reality is that if you have back-up plans, that is where you are going to end up. ‘Burn the ships on the beach, and make a dent in your universe’.
‘First mover advantage’ is old hat. When you analyse Toyota, Ford, Apple, Microsoft, Google and Facebook; all fast followers.
– The companies that are striving for first mover advantage today are the cowboys of yesteryear, easily recognizable by the arrows sticking out of their backs.
My closing wish for you:
Go Forth And Create, Then Deliver Value While Capturing Profits
To the best of your success
Best regards, Peter
Lean StartUp Mentor