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Biz Barcelona 2014 - Lean Startup and Customer Development (Identifying problems worth solving)

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  • Page 1 Lean Startup

    Identifying problems worth solving Paul Fox

    Lean Startup and Customer

    Development

    (Identifying problems worth solving)

    Paul Fox

    Associate Professor

    La Salle Universitat Ramon Llull

  • Page 2 Lean Startup

    Identifying problems worth solving Paul Fox

    Who am I?

    Worked for Startups: Fan Asylum, intouch Group, Vision Marketing

    Intrapreneur: MCI Systemhouse (bought Apples data center when they were almost bankrupt)

    Consulting: Diamondcluster - creating web businesses for big companies

    Founder: viajeria.com, allysguesthouse.com

    Professor/Mentor: over 50 projects/year

    Main Focus: Early business model development

  • Page 3 Lean Startup

    Identifying problems worth solving Paul Fox

    @profefox paulbfox

  • Page 4 Lean Startup

    Identifying problems worth solving Paul Fox

    My daughter

  • Page 5 Lean Startup

    Identifying problems worth solving Paul Fox

    Please dont tell me your idea

  • Page 6 Lean Startup

    Identifying problems worth solving Paul Fox

    Your potential customers dont want to hear your idea either

    They have Stockholm Syndrome

  • Page 7 Lean Startup

    Identifying problems worth solving Paul Fox

    Problem: Unknown Solution: Unknown Source: Eric Ries

    The Lean Startup

    Not enough

    time spent

    here!

    Find a problem worth

    solving before creating a

    solution

  • Page 8 Lean Startup

    Identifying problems worth solving Paul Fox

    Key questions to answer

    How can you identify a problem worth

    solving?

    Whats the right problem for you to solve?

    How do you find the information you need about the customer and her problems?

    What should you know before making anything?

  • Page 9 Lean Startup

    Identifying problems worth solving Paul Fox

    WHATS THE RIGHT PROBLEM FOR YOU TO SOLVE?

  • Page 10 Lean Startup

    Identifying problems worth solving Paul Fox

    Where do you start?

    Opportunity Identification

    Marien and Miranda

  • Page 11 Lean Startup

    Identifying problems worth solving Paul Fox

    FEASIBILITY VALUE

    MARKET

    PERSONAL

    Is it worth doing?

    Financial feasibility

    Can I do it?

    What will it take to do it?

    Whom else do I need?

    ASSESSING OPPORTUNITY DOABILITY

    Do I want to do it?

    What turns me on about it?

    Why do I want to do it?

    Exit strategies

    Is it doable?

    Technological feasibility

    Market feasibility

    Economic feasibility

    How can you find an idea? Bird in Hand

    Effectuation.org

  • Page 12 Lean Startup

    Identifying problems worth solving Paul Fox

    Goal: Create a blue ocean

    Step 1: find a red ocean

    Red oceans represent the known market space

    Industry boundaries are defined and accepted, and the rules of the game are well understood.

    Companies try to outperform rivals to get a share of existing demand.

    As the space gets crowded, prospects for profit and growth are reduced.

    Products become commodities, and the water turns bloody.

    http://www.blueoceanstrategy.com/

  • Page 13 Lean Startup

    Identifying problems worth solving Paul Fox

    Red ocean vs. blue ocean

    http://www.blueoceanstrategy.com/

  • Page 14 Lean Startup

    Identifying problems worth solving Paul Fox

    Study of 108 companies by Kim and

    Mauborgne

  • Page 15 Lean Startup

    Identifying problems worth solving Paul Fox

    Red Ocean vs. Blue Ocean

    BLUE OCEAN RED OCEAN

  • Page 16 Lean Startup

    Identifying problems worth solving Paul Fox

    Strategy Canvas for Wii

    http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/

  • Page 17 Lean Startup

    Identifying problems worth solving Paul Fox

    Four Actions Framework for Wii

    http://samidob.wordpress.com/2010/06/23/case-study-blue-ocean-strategy-nintendo-wii/

    Reduce

    costs

    Increase

    Value

  • Page 18 Lean Startup

    Identifying problems worth solving Paul Fox

    HOW DO YOU FIND THE

    INFORMATION YOU NEED

    ABOUT THE CUSTOMER AND

    HER PROBLEMS?

  • Page 19 Lean Startup

    Identifying problems worth solving Paul Fox

    Three Stages of a Startup

    Goal of Customer Discovery is Problem/Solution Fit:

    Do I have a problem worth solving?

    - Is it something customers want? (must have)

    - Will they pay for it? If not, who will? (viable)

    - Can it be solved? (feasible)

    Maurya (2012) Running Lean: Iterate from Plan A to a Plan that Works.

  • Page 20 Lean Startup

    Identifying problems worth solving Paul Fox

    Innovation requires a process and tools

    Inspiration Ideation Execution Launch

    Observation MVP Design Thinking

    Strategic Roadmap

    Adoption/Diffusion

    Business Model Blue Ocean

    Customer/User

    Company

    Strategy

    Customer Journey

  • Page 21 Lean Startup

    Identifying problems worth solving Paul Fox

    The business model canvas is not the first step

  • Page 22 Lean Startup

    Identifying problems worth solving Paul Fox

    First you need to get to know your

    customers in the wild

  • Page 23 Lean Startup

    Identifying problems worth solving Paul Fox

    Observation

    http://www.youtube.com/watch?v=M66ZU2PCIcM

    Do secondary research Google it!

    Create a multi-disciplinary team

    Find the problems: ask experts and observe customers/users

    Brainstorm needs and solutions

    Trial and error through rapid prototyping

    Question: what is

    IDEOs innovation process?

  • Page 24 Lean Startup

    Identifying problems worth solving Paul Fox

    Ask it

    Interviews: the yellow walkman problem

    Dont ask your potential customers what they think of your idea

  • Page 25 Lean Startup

    Identifying problems worth solving Paul Fox

    Interviews other problems

    Bad data

    false positives

    false negatives

    Talking to the wrong people

    Surveys!

    No real commitment

  • Page 26 Lean Startup

    Identifying problems worth solving Paul Fox

    The Mom Test 3 simple rules

    1. Talk about their life

    2. Ask about specifics in the

    past

    3. Listen more

    Do Dont

    1. Talk about your idea

    2. Talk about what they usually do, or opinions about the future

    3. Talk so much

    The Mom Test leads to questions that

    even your mom cant lie to you about!

    http://momtestbook.com/

  • Page 27 Lean Startup

    Identifying problems worth solving Paul Fox

    WHAT SHOULD YOU KNOW

    BEFORE MAKING ANYTHING?

  • Page 28 Lean Startup

    Identifying problems worth solving Paul Fox

    Who are your main customer segments?

    Personas

    http://followsprocess.wordpress.com/2010/11/14/facilitating-data-driven-personas/

  • Page 29 Lean Startup

    Identifying problems worth solving Paul Fox

    Three Tiers of Customers (from Blue Ocean)

    1st

    2nd

    3rd

    There is a universe of noncustomers

    which can be turned into customers to

    offer a big blue ocean market.

    1st tier: Soon-to-be noncustomers who are on the

    edge of your market

    2nd tier: Refusing noncustomers who consciously choose against

    your market

    3rd tier: Unexplored noncustomers who are in markets

    distant from yours

  • Page 30 Lean Startup

    Identifying problems worth solving Paul Fox

    Gym example

    1st

    2nd

    3rd

    1st tier: people who belong to a

    gym but go less than once a

    week.

    2nd tier: People who run or bike

    instead of going to the gym.

    3rd tier: People who exercise less

    than once a week.

  • Page 31 Lean Startup

    Identifying problems worth solving Paul Fox

    Dont forget Extreme Users they help you to see a greater variety of customer activity

    http://www.tentipi.com/no/our-tents-in-use/adventurers-and-other-extreme-users/

    http://www.littlekidstuff.com/bazoongi-kids-mushroom-house-playhouse-tent.htm

  • Page 32 Lean Startup

    Identifying problems worth solving Paul Fox

    Extreme Users - Running Shoes

    https://blog.itu.dk/DDBS-E2011/2011/10/page/2/

  • Page 33 Lean Startup

    Identifying problems worth solving Paul Fox

    How do you choose which segment(s) to

    target?

    Depth of painhow bad is the problem were trying to solve for this particular segment?

    Budgetcan the segment pay for a solution? Ease of reachare they marketable through relatively easy

    channels?

    Ease of MVP (minimum viable product)do we think the solution is relatively easy or complex?

    Valueshow do we feel about serving this constituency?

    The Lean Entrepreneur

  • Page 34 Lean Startup

    Identifying problems worth solving Paul Fox

    What are their top problems/desires?

    What are their goals? Whats important to them?

    How are they accomplishing this now?

    What problems do they encounter?

    Are they able to resolve the problems?

    How much time or money does it take to resolve these problems?

  • Page 35 Lean Startup

    Identifying problems worth solving Paul Fox

    Find the root causes of the problems

    When is 700 euros less than 10 euros?

    People thinking movie tickets are expensive not

    because of the price, but because of their

    perception of value.

  • Page 36 Lean Startup

    Identifying problems worth solving Paul Fox

    The way you reframe the problem impacts

    the types of solutions youll find

    The problem is not how can we sell more of our product.

    In fact, if your customer is not in the problem statement, you havent found the core problem.

    For example, for wine instead of how can we sell more wine, you might define the problem as how can we help customers find the right wine

  • Page 37 Lean Startup

    Identifying problems worth solving Paul Fox

    Understand the whole product

    Example: Nespresso

  • Page 38 Lean Startup

    Identifying problems worth solving Paul Fox

    How is the ecosystem currently organized?

    Value chain for the wine industry

    Scholefield Robinson (2008):Major Project 1: WGGA (Wine Grape Growers Australia)

    Wine Industry Strategic Plan - Initial Report Gap Analysis and Recommendations

    Understand

    the main

    roles, and the

    flow of money

    and value

  • Page 39 Lean Startup

    Identifying problems worth solving Paul Fox

    Understand context what is a day-in-the life of your customer interacting with your product/service

    http://slidesha.re/qMsHAc

  • Page 40 Lean Startup

    Identifying problems worth solving Paul Fox

    Context - Customer decision-making

    process

    http://fbadz.com/2011/12/%E2%80%9Cshould-i-buy-that%E2%80%9D-how-social-media-influences-buying-behavior/

  • Page 41 Lean Startup

    Identifying problems worth solving Paul Fox

    A word on competition:

    Analogs, Antilogs, and Leaps of Faith

    Good artists copy, great artists steal

    Pablo Picasso, as quoted by Steve Jobs

  • Page 42 Lean Startup

    Identifying problems worth solving Paul Fox

    Apples iPod Analogs prove some key aspects of your potential solution. Copy

    them, but improve them.

    Analog Strengths Weaknesses

    Proved that people will

    listen to music on a

    portable device in an

    anti-social way

    Not digital

    People liked

    downloading music more

    than going to the store.

    They would use MP3s despite lower quality

    Would they pay?

  • Page 43 Lean Startup

    Identifying problems worth solving Paul Fox

    Apples iPod Antilogs competition Who else is trying to solve the problem?

    Antilog Strengths Weaknesses

    MusicNet Subscription-based

    model

    Download songs to one

    computer

    Couldnt use songs on portable devices.

    No subscription, files

    disappear.

    Poor selection

    PressPlay Subscription based.

    Could burn some songs

    to CD

    No subscription, files

    disappear.

    Poor selection.

    MP3.com MP3 downloading

    Pay per song

    Poor selection

  • Page 44 Lean Startup

    Identifying problems worth solving Paul Fox

    Apples iPod Leaps of Faith

    Could they create the right mix of hardware and software?

    Would people purchase at least some of the songs that they were downloading illegally?

    Could they convince the music labels to give them rights to MP3s, knowing that people were storing illegally downloaded songs on the devices?

  • Page 45 Lean Startup

    Identifying problems worth solving Paul Fox

    Its ok if you cant find all this information, but youre more likely to create a hobby than a viable, scalable business

  • Page 46 Lean Startup

    Identifying problems worth solving Paul Fox

    Conclusions

    Find the pain and solve real problems.

    Choose a problem you can realistically solve.

    Get to the core problems and reframe the challenge.

    Follow a process and use appropriate tools.

    Know your customer.

    Understand the whole product.

    Study the ecosystem and the highs and lows in the customer journey.

    Learn from analogs and antilogs dont reinvent the wheel.

    Most importantly, get out of the building!

  • Page 47 Lean Startup

    Identifying problems worth solving Paul Fox

    Taller Lean Startup

    6 Talleres Prcticos de Lean Startup: de la idea a un

    producto en un mes (17 de junio a 8 de julio)

    http://goo.gl/CAJvwb

    PROGRAMA

    Taller 1: Introduccin a Lean Startup

    Taller 2: Customer Development

    Taller 3: Business Model Canvas y Validation Board

    Taller 4: Creacin y validacin de maquetas (mockups)

    Taller 5: Creacin y anlisis del prototipo

    Taller 6: Pirate Metrics y Growth Hacking

  • Page 48 Lean Startup

    Identifying problems worth solving Paul Fox

    Thank you!

    @profefox paulbfox

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