lean Archives - Entrepreneurs with Denis Oakley

Entrepreneurs with Denis Oakley

I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

You are here: Home / Archives for lean

lean

By

How to Get Your Startup Started

How to Get Your Startup Started

Startups have many problems. Across all my channels I probably look at between 5 and twenty startups in the earliest stages of their lives each week. In many cases the entrepreneur has given me a brief that they want me to do X and they have given me some information about the company. In a very large proportion of the startups it is not clear what the problem is that they are solving, who the customer is or how they are going to make money.

Since I started working in startup back pre-2003 I have spoken to thousands of entrepreneurs and this appears to be a pervasive and nontrivial problem. There are many many entrepreneurs who do get it. In part this is because they have nous that the rest of us like, or because they have gone through on e of the many amazing training courses available – whether from Ycombinator, Udacity or a huge range of startup blogs like this one.

At the same time there are so many entrepreneurs who have never come across this idea and so they build a product to service an idea not a customer with a problem.

So being really clear, the first things that you need to be sure of as an entrepreneur are:

Is there a real problem?

If you can’t give me 10 real people’s names and what the problem is in their words I’m going to be a bit cynical. In a lot of cases if you can’t do that you haven’t got out the building and started trying to sell the idea. You haven’t seen your idea splinter as it comes into contact with reality. It’s better to do it now than it is later when you have spent thousands of hours and a shed load of money and are into serious panic mode.

Do the customers care?

Some problems are so small, so trivial or just not worth solving. You may have proved it but if the customer is going to pay you peanuts and there aren’t enough customers out there to justify buying enough peanuts to make a jar of peanut butter then why bother? In many case a lot of people cannot accurately describe their customers (partly because they have never met any)

How hard is it to solve?

It’s amazing building mousetraps. Seriously. There is nothing better than to sit down and make or build something awesome. I built a sandpit once for my kids. It was made out of IKEA slats from an old bed. It was glued together and had a waterproof inner line. It was a work of art. They played with the cheap plastic sandpit we got from Tesco.  In that case I supplied a wonderful but over engineered solution that cost massively more – both in cash and time – than they wanted to pay.

So What to Do?

Get out the building! Talk to customers as early as possible and build what they want. It’s actually far less scary than sales because you aren’t actually selling anything to anyone. All you are doing is asking

“Do you have this problem?”

That can be put into conversation in so many ways. As you do it hundreds and thousands of times as you get into your startup you get a real sense of who the customer is. Then they tell you this is the problem I really have and this is how you can solve it for me.

Without even sounding a teeny bit salesly you can then ask

How much would you pay for that?

And they tell you. Bang! In just a few hours a potential customer has said if you build me this I will buy it from you. Then all you have to do is jot down their email or phone number and move onto the next person.

“Do you have this problem?”

And pretty soon you have a bunch of answers that you can categorise and derive the feature sets that customers really want. And you have a nice big email list of people who can can say to

You said you had this problem and that you would buy the solution if it cost $X. Well guess what we have got a solution for the problem and it costs $X. Press this button to go to the checkout.

This converts. It is far easier than building a business in any other way.

In a nutshell this is what I do for my customers. I help them to get from the idea to delivering the first products to customers

By

Using the Lean Canvas – Part 1

This week we are going to start with our lean experiment using Ash Maurya’s Running Lean book. So starting off with Chapter 1 we start by documenting the vision and producing our first lean canvas

From experience with hundreds of entrepreneurs we know that every entrepreneur has an idea. To get from idea, to execution, to results requires turning it into a plan. To start with most ideas are pretty vague. They may focus on a problem, or a solution or perhaps even a customer segment which has particularly attractive characteristics.

Now lean, and the whole startup ecosystem has borrowed heavily from the stuff that we were taught in Chemistry class. That is we must have a hypothesis before we start, we must develop an experiment to test the hypothesis, we get some reliable results and then we decide whether our hypothesis is right.

So in the Chemistry lab our hypothesis may be that when we put sodium in water and it catches fire that the remaining liquid will be acidic. As it’s been a while since I’ve done any chemistry experiments I have no idea what the result is. I have an opinion but it may be wrong. Opinions – in lean – suck. We want data. So we pop the sodium into the water. Step back and watch it bang and fizzle and burn. Then we give the remaining liquid a good stir and add a piece of litmus paper. Litmus paper detects whether a liquid is acid or alkali and that gives us the answer.

Chemistry is easy when put that way. An entrepreneur’s idea is somewhat harder. So a good first step is to use something called the lean canvas. You can use the business model canvas which we have done a great deal of. The difference between the lean canvas and the business model canvas is that the business model canvas gives you a picture of the whole business and allows you to see how it should work. It’s an abstraction that lets you quickly and easily understand how all the parts relate to each other – and then play with the different parts of the business to make it more competitive or better or….

The Lean Canvas – First Draft

The lean canvas, in contrast, focuses far more on looking at the problem and finding a path to solutions that work and are profitable. They are complementary strategic tools and generally I will produce both when working with a startup.

Problems

So we started off when Leander noticed that in Malaysia it’s really difficult to get business cards simply and easily. Finding a designer, a printer and getting delivery of the cards are all much slower and difficult than in his native Netherlands.

So the first step was to map out the hypothesis on a lean canvas. this gives a bunch of structure and allows us to analyse the idea and this was the first draft

If we look at the lean canvas we can see that there are some clear problems.

There’s a great video (and podcast) at Stanford Ecorner that addresses problems.

Bernard Roth talks about reframing problems. What is the real problem here?

The real problem is that people don’t have time, that there is no standardised process for purchasing business cards in their company, or it is the first time they’ve done it. Think about it. Producing a business card is relatively complex and requires a lot of tasks to be done in a relatively short time – and especially for a single person the costs can’t be spread over 100 sales people who all need very similar business cards.

So we can frame the problem then a business cards are disproportionately difficult to get.

Customer Segments

The question then is for who?

For the CEO of Google business cards just appear on his desk. It’s not a problem. The Queen of England doesn;t really care. She’s meta-business card and almost everyone in the world knows her address.

One of the approaches that Ash suggests is to think of problems and segments simultaneously. What we did on this lean canvas is to express one persons problems (Leander’s as he tried to get business cards printed for Business Model Guru) generalise it into a hypothesis and then look at a range of possible segments.

Fairly quickly we can see, given the reframed problem, that the key characteristics of segments is going to be that 1 or 2 people need a business card, and it may be the first time that the organisation has procured business cards.

At the same time there must be a payoff for them having a business card. Students in the case of our example don’t really have a strong need for business cards,  so we are looking at some customer segments that coalesce around entrepreneurs and small businesses.

Unique Value Proposition

Moving onto the Unique Value Proposition

Steve Blank states it as the

Simple, clear compelling message that states why you are different and worth buying.

Our first attempt here is

Online ordering and smooth delivery of consumer designed business cards

As you can see we’ve jumped into the solution space a bit here and used the value proposition to hive off particular segments – people who are designing their own. So let’s rephrase the UVP to directly address the problem that customers are facing

Awesomely easy business cards

Now that’s unlikely to be the final value proposition but it clear offers a solution to the problems that we think that our target group has.

We’ve got something that we can test here. What are the problems that entrepreneurs and small business face with business cards? We can get out of the building and talk to them. We can ask them what an awesomely easy business card would look like and start to develop data driven solutions.

At the same time we still need to consider why, coming back to Bernard Roth’s point on problem solving, our target segment needs a business card. They want to have one so that they can use it to build relationships and sell something or get someone to do something. Their goal is not to have a business card, but to make a change in people’s behaviour.

As we iterate the lean canvas that’s something that we need to think about.

The next post will consider some of the other sections of the lean canvas and then thoughts on how we got out and start testing hypotheses

Using the Lean Canvas - Part 1