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

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Identifying problems worth solving Paul Fox

Lean Startup and Customer

Development

(Identifying problems worth solving)

Paul Fox

Associate Professor

La Salle – Universitat Ramon Llull

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Who am I?

• Worked for Startups: Fan Asylum, intouch Group,

Vision Marketing

• Intrapreneur: MCI Systemhouse (bought Apple’s 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

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@profefox paulbfox

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My daughter

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Please don’t tell me your idea

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Your potential customers don’t want to

hear your idea either

They have Stockholm Syndrome

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Problem: Unknown Solution: Unknown Source: Eric Ries

The Lean Startup

Not enough

time spent

here!

Find a problem worth

solving before creating a

solution

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Key questions to answer

How can you identify a problem worth

solving?

• What’s 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?

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WHAT’S THE RIGHT PROBLEM

FOR YOU TO SOLVE?

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Where do you start?

Opportunity Identification

Marien and Miranda



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



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/



Red ocean vs. blue ocean

http://www.blueoceanstrategy.com/



Study of 108 companies by Kim and

Mauborgne



Red Ocean vs. Blue Ocean

BLUE OCEAN RED OCEAN



Strategy Canvas for Wii

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



Four Actions Framework for Wii

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

Reduce

costs

Increase

Value



HOW DO YOU FIND THE

INFORMATION YOU NEED

ABOUT THE CUSTOMER AND

HER PROBLEMS?



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.



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



The business model canvas is not the first step



First you need to get to know your

customers “in the wild”



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

IDEO’s innovation

process?





Ask it

Interviews: the yellow walkman problem

Don’t ask your potential customers what

they think of your idea



Interviews – other problems

• Bad data

– false positives

– false negatives

• Talking to the wrong people

• Surveys!

• No real commitment



The Mom Test – 3 simple rules

1. Talk about their life

2. Ask about specifics in the

past

3. Listen more

Do Don’t

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 can’t lie to you about!

http://momtestbook.com/

http://momtestbook.com/



WHAT SHOULD YOU KNOW

BEFORE MAKING ANYTHING?



Who are your main customer segments?

Personas

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



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



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.



Don’t 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



Extreme Users - Running Shoes

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



How do you choose which segment(s) to

target?

• Depth of pain—how bad is the problem we’re trying to solve for

this particular segment?

• Budget—can the segment pay for a solution?

• Ease of reach—are they marketable through relatively easy

channels?

• Ease of MVP (minimum viable product)—do we think the

solution is relatively easy or complex?

• Values—how do we feel about serving this constituency?

The Lean Entrepreneur



What are their top problems/desires?

• What are their goals? What’s 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?



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.



The way you reframe the problem impacts

the types of solutions you’ll 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 haven’t 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”



Understand the whole product

Example: Nespresso



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



Understand context – what is a “day-in-the

life” of your customer interacting with your

product/service

http://slidesha.re/qMsHAc



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/



A word on competition:

Analogs, Antilogs, and Leaps of Faith

“Good artists copy, great artists steal”

Pablo Picasso, as quoted by Steve Jobs



Apple’s 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 MP3’s

despite lower quality

Would they pay?



Apple’s iPod Antilogs – competition

Who else is trying to solve the problem?

Antilog Strengths Weaknesses

MusicNet Subscription-based

model

Download songs to one

computer

Couldn’t 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



Apple’s 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 MP3’s, knowing that people were storing

illegally downloaded songs on the devices?



It’s ok if you can’t find all this information,

but you’re more likely to create a hobby

than a viable, scalable business



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 – don’t reinvent the wheel.

• Most importantly, get out of the building!



Taller Lean Startup

6 Talleres Prácticos 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: Introducción a Lean Startup

• Taller 2: Customer Development

• Taller 3: Business Model Canvas y Validation Board

• Taller 4: Creación y validación de maquetas (mockups)

• Taller 5: Creación y análisis del prototipo

• Taller 6: Pirate Metrics y Growth Hacking






Thank you!

@profefox paulbfox