The following is the continuation of the article: “Using Lean StartUp As A Stepping-stone” by Peter Gjersoe, Lean StartUp Mentor
To download your free copy of the Solution Canvas, please: (1) Click on the image below. (2) After a second or two the image will open in its own window (3) You can now format the size of the canvas when you press the print button; I recommend full page, and (4) When you have printed your own copy, press the arrow pointing left (back) in the upper left corner to get back to the instructions for filling in the canvas.
OK, when you are ready, we can get to work identifying a hungry crowd eagerly looking for your solution.
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 email@example.com
I hope the article has been of use to you, and I wish you the very best success.