It’s All About Learning
So, you think you know what your customers want and have settled on a product or service for your start-up. How do you know if things are headed in the right direction?
It is all too easy to fall into the measurement trap where you measure your progress based upon the amount of work that has proceeded to plan. You might even judge it on whether the work is finished to a high standard or whether your project costs are accurately reflected in your budgeting. These are all bad ways to measure progress. What happens if you build something no one wanted? All you have achieved is the successful execution of a plan to nowhere. You have achieved failure. Congratulations.
Not All Experience Is Equal
You might chalk this failure down to experience and start again. Using your new idea, you will probably continue to progress down the measurement trap once more. But make no mistake, learning in this context is used as an excuse. All you have learned is that your one product is not valued by the market.
The real problem behind this is a failure of execution and a failure to deliver as promised. The learning gained carries little to no monetary value and will therefore be unable to pay for salaries or further product development.
Where to Look
While learning is vital for a start-up to achieve its vision, it is the type of learning you achieve that will help you on your goal. You need to continually learn two things:
Which elements of your strategy are working?
What customers really want?
NOTE: What customers really want is not the same as what they say they want!
As we now know, building a product no one wants is a waste of time. Your goal is to learn how the customer behaves and understand what they want as fast as you can. You should be asking yourself these questions:
- Why does it take so long to find out?
- How much of the effort contributed to the essential lessons?
- Could you learn these lessons earlier and more easily?
The Role of Validated Learning
The Lean Start-up is a method used to ensure you stay on track and achieve the best chance of successfully realising your vision. It is based upon the principle of validated learning. This is a rigorous method for demonstrating progress within the context of extreme uncertainty. It demonstrates that the entrepreneur has uncovered valuable truths about a start-up’s present and future business prospects.
Validated learning helps uncover the incorrect preconceptions that drive your decisions and contribute to fundamentally flawed strategies. This type of learning will help provide information upon which you can base your future decisions.
Validated learning is faster and more accurate than forecasting
You need to find evidence to back up your claims of learning. This comes by putting your theories into practice and testing them with actual real-life customers. As your start to gather data, you are then able to adjust your product or service to meet the needs of your customer. Your goal is to align your product or service with a strategy that values your customer's real needs.
Gathering quantitative data will help you understand what your product or service is really achieving. You can use quantitative targets to help guide any subsequent qualitative inquiry you undertake.
Eventually you will find a point between your vision and what the customer needs or will accept (not necessarily what they tell you they want). You achieve this happy point by running lots of experiments where you vary what your customers are offered. Each subsequent piece of evidence helps guide further experiments and strategic decisions. Simply asking your customers isn’t useful as they don’t know in advance. Instead, you will see what they want through their actions or inactions.
Providing Value to the Business
Validated learning is based upon identifying activities which provide value to the start-up. Anything else should be deemed as waste. You need to identify which of your efforts are creating value for customers or which are leading to growth for your business. These are efforts that should be maintained. Those efforts which are not contributing to value or growth are wasteful and should then be eliminated.
When you begin the process of learning what efforts are creating value for the customer, you might initially struggle to clearly define value. This is because there are usually two unknowns: Who is the customer? What might the customer find valuable? You need a way to answer these questions using the minimum amount of effort. The solution is to create a minimum viable product which can achieve this learning.
Let’s Get Started: A Minimum Viable Product
By now I am sure you are seeing a lot of similarities with what you may know as Quality Improvement. That’s because they are both based upon the same foundations of lean manufacturing. As with quality improvement, the learning cannot begin until you start experimenting. This means you need a minimum viable product.
Delaying launch to perfect your minimum viable product will simply delay the feedback you need to get your start-up off the ground. Only once you have launched will you be able to discover the different ways customers interact with your product and understand what prevents them from taking actions, whether that is using the product or using a new feature. Beware, different customer demographics will interact in different and unexpected ways with your product.
- The Lean Startup; Eric Ries
- The $100 Startup; Chris Guillebeau