How to fine tune your “product” to create “customer value”

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If your business was a musical instrument – Pivot is the process of tuning it

Product development is expensive, it takes time, resources and capital – everything that is precious and rare in any startup or enterprise. To go all out on product development from idea to market without periodic checking is like serving food without tasting. You do not want to find out after launch if the product meets its intended purpose or not. This is a recipe for a slow and painful death. Time and again founder’s tell the stories of how they had to adjust and adapt their product or business model to market needs. It is almost never that a successful product goes to market the way it was first envisioned. This is called pivoting or making changes and adjustments along the way. Common pivots involve change to product features, target customers/markets or business models (mostly go to market method) but it can be anything. P&G was close to pulling the plug on their best selling product ‘Febreeze’. Febreeze was a great new find – a chemical formulation that could eliminate odors and be economically produced. P&G marketers jumped at the opportunity to market it as an odor eliminator. Sales sagged and languished. Febreeze was on a death row when it got a final chance – Market Researchers did more customer research by going into the homes of users and video recording house wives using Febreeze. What they found is a humbling lesson in market research. After cleaning and tidying a room they noticed that housewives took pride the look and feel of a clean room or bed. They displayed this subtly, with something as simple as a tap to fluff up the pillow on a freshly made bed. But they had an expression of satisfaction and pride when they did that. It was the reward at the end of a routine. The marketers noticed that for the women that regularly used Febreeze, that it had become a part of the reward. After cleaning a room and making the bed, they squirted Febreeze and felt the pride of a clean room. It was the same in the kitchen – a few squirts of febreeze to celebrate the look of a clean shiny counter top. Kudos to P&G to unearth this. They changed their marketing message from odor elimination to the emotion of a job well done – a medium to celebrate a clean and fresh room or bed. This turned around Febreeze and made it the product it is today. I am amazed at the subtlety of the pivot that made Febreeze into a billion dollar product. Not all companies have the resources and resilience like P&G, the sooner you fine tune your product or business model or both to create value, the less you waste and more likely you are to succeed.

Test your business hypothesis with target customers

At the core to pivoting sooner is the need to test your hypothesis and assumptions. Early in the ideation phase, the founder comes up with an idea based on the intuition that there will be demand or use for the idea. This is the hypothesis, as it based on a hunch and much needs to be proved and tested. The wrong way to do this is to create the product and launch only to find out that there is no demand. So you must test your hypothesis and assumptions with the potential customer’s right from the get go. Listen carefully to the feedback and make adjustments to your business model or product accordingly. This is the cycle of Validated Learning by Eric Ries or PDCA by Edward Deming. The way to do this is to interact with real customers – have them use the product, through interviews or experiments. Steve Bank (2000’s) said “Get out of the building” and Taichi Ohno (1950’s) said “Go to the Gemba” (Japanese for ‘Real Place’). The principle has not changed since post world war when Taichi Ohno started the Lean Manufacturing movement at Toyota to Steve Blank’s adaptation to Lean Startup movement. Even though the principle is simple at its core, it is very difficult and counter intuitive to practice. Founders are often blinded by their passion and belief in their invention or idea that they overlook the fine tuning required for transforming a good idea to a commercial success. An early stage startup is a collection of assumptions. You have to go to the Gemba (in other words – meet the customers) to validate and fine tune the idea (commonly referred to as pivoting).

Use the Business Model Canvas to identify the biggest risks and assumptions

The first step in pivoting is to identify your most risky assumptions. The business model canvas is a great tool to use to flesh out the riskiest assumptions. These will be core to the value proposition (WHY customers will buy) and business model (HOW will you create and deliver value – & get paid). As you complete the canvas use some well tested techniques to get to the bottom of the assumptions – ask “why” five times (this is the 5 why’s technique used in lean manufacturing) or ask “so what” when you hear yourself mention features. For example if you say: “mobile phone with 48 hours between charges”; ask “so what” this should lead you to something like – “because the college students go without charging some nights and they need the phone to stay charged for extended period”. Do you see the assumptions jumping at you? Are college students lax in their charging habits? Will they pay for extended battery life? Are college students your target customer? Who else might this problem? Capture these assumptions and create actions and tasks to validate them.

Use Minimum Viable Product to adjust your idea for commercialization

A Minimum Viable Product is a means to test and validate the startup hypothesis early in the process. The inputs to a MVP (Min Viable Product) are the assumptions around your market and product strategy. These are pretty broad terms and calls for some explanation. A product /or service should solve an urgent customer need in a unique way. A couple of frameworks I really like to help formulate the product strategy are – Blue Ocean Strategy and Jobs-To-Be-Done frame work. These frame works helps you identify the unique solution (blue ocean) that solves a customer’s requirement (Job-To-Be-Done). The other input / prerequisite to MVP is the market analysis and customer persona. I love the analogy of fishing – customers are like fish. Just like fish move about in schools, customers can be grouped with segments that can be defined with common habits, interests and behavior patterns etc. You should identify your segment and research their traits and size etc. There are several templates available for this including one on Entroids.com. This research is required to complete the business model canvas. Next, you start testing the top risks through MVP.

The minimum viable product is the embodiment of the assumption that can be created quickly, and is something the potential customer can interact with. A MVP is not representation of the final product. You pick one or more of the assumptions to test and build the minimum required to for a potential customer to interact. You have to recruit some early adopters let them use the MVP and you should get honest feedback on its value, usability etc. You can get creative in how to do an MVP, below are some ways founders have done MVP testing.

Methods to do a MVP;

  • Video of product/service concept – Drop Box
  • Landing page with CTA – Buffer
  • Simulate – Zappos started selling shoes that were on the shelves of local stores
  • Concierge – do an automated task manually like ‘food on the table’.
  • Smoke Test – test the most valuable elements with simple tools like google docs, excel etc.
  • Interviews – build prototypes or demos for one or one or small group interviews
  • Beta – let users to use beta versions

An MVP is not a one-time event. You should do it at all stages of development; however, as you reach final stages, it will merge into your beta and then final product. The result of the MVP feedback should be to tweak and adjust your value proposition and business model. This is an iterative process to continuously adjust your product or service to fit the customer needs (Problem Solution Fit) and to be able to do so economically with ability to scale (Product Market Fit).

Tools available to do an MVP

Hopefully, you have appreciated the simple concepts discussed above for the importance of identifying the target customers and staying in sync with their needs. You could start doing your MVP in a power point presentation or a video. But there are several tools out there to help. I am no authority on this nor is this an endorsement but some tools that I am aware of that you can use for MVP testing are;

  • com – tagline; Build something greater
  • co – tagline; A platform for launching new startups
  • Google forms – survey tool
  • And your creativity J

Agreed, this is quite a lame list but I am sure you guys know things that I don’t. Please leave your comment on what your thoughts and also the tools available for MVP testing.

 

 

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