B2B and the Lean Startup- Lean Startup Circle San Jose
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Hi there. For more material, please see www.alexandercowan.com . If you're in B2B and wondering how you can use Design Thinking and Lean Startup to propel your business, then this is the event for you. We'll review the core concepts, a case study, and specific exercises and tools you can apply the minute you walk out the door. You'll...: - Learn how to quickly initiate a rapid improvement loop using design thinking, Lean Startup, customer development, and agile. - See how Alex Cowan learned (the hard way) how to apply these ideas at his startup Leonid Systems. - Apply these ideas through a series of quick exercises you can use as a starting point for using the template we'll review in the talk.
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B2B and the Lean Startup- Lean Startup Circle San Jose
- 1. Copyright 2012 Cowan Publishing B2B and the Lean Startup A Case Study
- 2. Copyright 2012 Cowan Publishing
- 3. Copyright 2012 Cowan Publishing
- 4. Copyright 2012 Cowan Publishing Design Thinking Lean Startup Customer Dev. Agile } BIG VOID { Actual Practice
- 5. to learn more about launching new ideas KNOWLEDGE of software development not assumed ACTION to work on new ideas DESIRE ALEX COWAN AlexanderCowan.com @cowanSF
- 6. Copyright 2012 Cowan Publishing IDEATION PLANNING ORGANIZATION DEVELOPMENTALEX COWAN AlexanderCowan.com @cowanSF
- 7. Copyright 2012 Cowan Publishing IDEATION Self-Love Then ALEX COWAN AlexanderCowan.com @cowanSF
- 8. Copyright 2012 Cowan Publishing IDEATION ALEX COWAN AlexanderCowan.com @cowanSF
- 9. Copyright 2012 Cowan Publishing IDEATION Self-Love Then Design Thinking Now ALEX COWAN AlexanderCowan.com @cowanSF
- 10. Copyright 2012 Cowan Publishing Empathy IDEATION Creativity ALEX COWAN AlexanderCowan.com @cowanSF
- 11. Copyright 2012 Cowan Publishing IDEATION ALEX COWAN AlexanderCowan.com @cowanSF
- 12. Copyright 2012 Cowan Publishing IDEATION Entry1 Urinate as they go2 Edges preferred3 Speedy4 PB > cheese5 Empathy ALEX COWAN AlexanderCowan.com @cowanSF
- 13. Copyright 2012 Cowan Publishing Check & Repair UV Validation Relevant Placement A Better Mouse Trap Powered by Better Bait Creativity 1 2 3 4 5 ALEX COWAN AlexanderCowan.com @cowanSF
- 14. Copyright 2012 Cowan Publishing IDEATION Personas ALEX COWAN AlexanderCowan.com @cowanSF
- 15. Copyright 2012 Cowan Publishing •Women •Age 28-45 •Have kids •Socialize with other mom’s •Online with Facebook •86% said they’d like to be more organized •70% said they’d use an application that organizes them IDEATION
- 16. Copyright 2012 Cowan Publishing IDEATION
- 17. Copyright 2012 Cowan Publishing Mary is a mom by choice. She had a successful career in accounting, but welcomed the opportunity to be a stay at home mom. She loves it. But it’s not like having kids purged her creative, social instincts. She wants to connect, she wants to learn, she wants to interact. Being a mom is a job and she wants to do it well. That means corresponding with other mom’s on relevant topics and keeping the family calendar in ship shape. She posts to Facebook at least twice a week and responds to other moms’ items more often than that. She shops at Nordstrom, but only if it’s a holiday or there’s a sale. For essentials, she’ll pick up bargains at Marshalls or Target. For household stuff, Costco is the go-to place, but she’ll pick up fresh items at the farmer’s market when it’s up and splurge at Whole Foods when they’re having company. IDEATION Mary the Mom
- 18. Copyright 2012 Cowan Publishing IDEATION
- 19. Copyright 2012 Cowan Publishing IDEATION Personas User Stories Problem Scenarios ?
- 20. Copyright 2012 Cowan Publishing IDEATION Drafting Stories PERSONAS STORIES Epic Stories Stories Test Cases “As a [persona], I want to [do something] so that I can [derive a benefit]” ALEX COWAN AlexanderCowan.com @cowanSF
- 21. Copyright 2012 Cowan Publishing BorrowedwithutmostregardfromBanksy(banksy.co.uk) IDEATION
- 22. Copyright 2012 Cowan Publishing PLANNING !5,000,000% 0% 5,000,000% 10,000,000% 15,000,000% 20,000,000% 25,000,000% 30,000,000% 35,000,000% 40,000,000% 45,000,000% 2012% 2013% 2014% 2015% 2016% 2017% 2018% 2019% 2020% Revenue% Expense% EBITDA% Five Year Plan Then Iterative Management Now 6.a PIVOT experiments disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 PIVOT OR PERSEVERE? 6.b PERSEVERE experiments prove hypothesis ALEX COWAN AlexanderCowan.com @cowanSF
- 23. !5,000,000% 0% 5,000,000% 10,000,000% 15,000,000% 20,000,000% 25,000,000% 30,000,000% 35,000,000% 40,000,000% 45,000,000% 2012% 2013% 2014% 2015% 2016% 2017% 2018% 2019% 2020% Revenue% Expense% EBITDA% Copyright 2012 Cowan Publishing PLANNING ALEX COWAN AlexanderCowan.com @cowanSF
- 24. Copyright 2012 Cowan Publishing PLANNINGPLANNING Do I have real evidence from my buyer that this is compelling? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis What are the key assumptions required to make this business work? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis How do I definitely prove or disprove the assumptions with a minimum of time and effort? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis Am I reacting or am I focused on validating my pivotal assumptions? ‘Pivot or persevere?’ ALEX COWAN AlexanderCowan.com @cowanSF
- 25. Copyright 2012 Cowan Publishing Priority Key Assumption Needs Proving? Experimentation 1 [A key assumption about the business] [Whether it needs proving [Experiment to prove or disprove] 1 Parents want to better organize the distribution of allowances Yes * Post the proposition in ads online * Measure sign-up’s on a landing page 2 Parents have smart phones No n/a PLANNING ALEX COWAN AlexanderCowan.com @cowanSF
- 26. Copyright 2012 Cowan Publishing PLANNING
- 27. Copyright 2012 Cowan Publishing $ PLANNING ALEX COWAN AlexanderCowan.com @cowanSF
- 28. Copyright 2012 Cowan Publishing ORGANIZATION == Aping Then Customer Development Now ALEX COWAN AlexanderCowan.com @cowanSF
- 29. Copyright 2012 Cowan Publishing ≠ ORGANIZATION ALEX COWAN AlexanderCowan.com @cowanSF
- 30. Copyright 2012 Cowan Publishing ORGANIZATION ALEX COWAN AlexanderCowan.com @cowanSF
- 31. Big Company Recipes Applied Copyright 2012 Cowan Publishing 5 Year Plan == 10x Returns! X: < Odds at Lotto VC-Encouraged Menagerie X: Big Company != Small Company X: Lack of Experience in Hands-on Discovery X: Better Luck with the Lottery Time to Face the Music X: New Theories to Explain Plan v. Actual X: Fun and Profit- Unlikely ORGANIZATION ++ New Idea! Expanded Team Revisions to Plan == Edgy Board X: Want Lots of Capital at Work It Works! Working 5 Year Plan New HiresFounders Investors Board ALEX COWAN AlexanderCowan.com @cowanSF
- 32. Investors? Advisors? Focus on Validated Learning Copyright 2012 Cowan Publishing Key Assumptions ID’ed, Validated Lower Risk & Capital Requirement Resources As Needed Clear Focus in Hiring & Contracting Roles and Success Criteria Clear Progress is Quick and Measurable Time to Face the Music Validated Learning Answers Shared Questions Fun & Profit ORGANIZATION ++ New Idea! Full Tilt at a ‘Pivot or Persevere’ Moment Is approach working or not? Option for Non-Traditional Funding Strategies Expanded TeamNew HiresFounders Investors Board ALEX COWAN AlexanderCowan.com @cowanSF
- 33. Copyright 2012 Cowan Publishing DEVELOPMENT Waterfall Then Agile Now ALEX COWAN AlexanderCowan.com @cowanSF
- 34. Copyright 2012 Cowan Publishing Individuals Interactions > Processes Tools Working software Comprehensive Documentation > Customer collaboration Contract negotiation> Responding to change Following a plan > DEVELOPMENT ALEX COWAN AlexanderCowan.com @cowanSF
- 35. Copyright 2012 Cowan Publishing DEVELOPMENT validate feature relevance with customers Past collaborate with development team Present observe and envision what’s next Future
- 36. Copyright 2012 Cowan Publishing DESIGN THINKING LEAN STARTUP CUSTOMER DEV. AGILE ALEX COWAN AlexanderCowan.com @cowanSF
- 37. Copyright 2012 Cowan Publishing
- 38. Copyright 2012 Cowan Publishing ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
- 39. Copyright 2012 Cowan Publishing
- 40. Copyright 2012 Cowan Publishing 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
- 41. Copyright 2012 Cowan Publishing 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0
- 42. Copyright 2012 Cowan Publishing 1 2 3 4 5 6 7 8 9 0 11 2 3 4 12 6 7 8 9 0
- 43. Copyright 2012 Cowan Publishing
- 44. Copyright 2012 Cowan Publishing
- 45. Copyright 2012 Cowan Publishing
- 46. Copyright 2012 Cowan Publishing
- 47. Copyright 2012 Cowan Publishing DESIGN THINKING LEAN STARTUP CUSTOMER DEV. AGILE direction personas user stories hypothesis (assumptions) experimental design roles & team objectives working product ALEX COWAN AlexanderCowan.com @cowanSF
- 48. Copyright 2012 Cowan Publishing IDENTIFY A BEACHHEAD And storm it. FOCUS SHOW DON’T SELL Build something worth seeing. SHOW DON’T ASK PERMISSION Just do it. GO BROADCAST Leverage your work on an everyday basis. Make sure everyone knows where to find it. BROADCAST WAGING EVOLUTION: 6 TIPS MAKE YOURSELF AWESOME And everything else will fall into place. AWESOMENESS MAKE YOURSELF AGILE Structure and organize your work on the principals. YOUR AGILE
- 49. Copyright 2012 Cowan Publishing CONCEPTS AND EXAMPLES CASE STUDY PRACTICES AND TOOLS 20 20 20 MIN MIN MIN
- 50. Copyright 2012 Cowan Publishing THE STORY In 2007. I left cloud telephony provider, BroadSoft. . .
- 51. Copyright 2012 Cowan Publishing THE STORY . . . to pursue new ideas about the delivery of cloud services. NETWORK Application Servers Host Infrastructure Data Transport Customer Equipment CRM Order Management Service Delivery Billing Case Mgmt. Inventory Workflow IT Portals CONSULTING Service Design Process Design Customization & Integration
- 52. Copyright 2012 Cowan Publishing IDEATION ALEX COWAN AlexanderCowan.com @cowanSF
- 53. How do we do this more efficiently? Are we implementing best practices? How do we improve service quality? How do we verify that? Copyright 2012 Cowan Publishing IDEATION Help me integrate and standardize the infrastructure. And show my people how to use it. Creating accounts is taking a lot of time/ money. And there are a lot of mistakes. ALEX COWAN AlexanderCowan.com @cowanSF
- 54. Copyright 2012 Cowan Publishing IDEATION SERVICE STANDARDIZATION & WORKFLOW SERVICE DESIGN PROCESS AUDIT, DESIGN NETWORK PRINCIPALS OF OPERATION ALEX COWAN AlexanderCowan.com @cowanSF
- 55. Copyright 2012 Cowan Publishing IDEATION Profit Drivers Revenue Drivers Tighter Proposition (website, pres., etc.) Finite Cost Finite Deliverables Increased Use of Channels Ease of Entry Easy to See What's on MenuUpsell Intellectual Property Multipliers Tighter Talent Definition Simpler Training, Eval., Promotion Cost of Delivery Cost Drivers Less Consultative Selling Simplified Contracting Cost of Sales Standard Project Management Comparable Post Mortems Engagement Management
- 56. Copyright 2012 Cowan Publishing IDEATION Immediate, commercially relevant customer contact Discrete, structured success criteria Relevant, measurable outcomes
- 57. Copyright 2012 Cowan Publishing SELL SIMILAR CUSTOMERS Earn referrals. TARGET DRIVE TOWARDS STANDARDIZATION Service definition, sales, execution, handoff, post- mortem. STANDARDIZE SKILLS PAY BILLS And no better way to drive to product/market fit. $ CREATE AN EXTENDED FAMILY Make yourself bigger than you are. EXTERNALIZE CONCIERGE VIA CONSULTING: 6 TIPS ONCE YOU SEE THE OPENING If you’re not sure, you’re probably not (in B2B). PRODUCTIZE BECOME A DOMAIN EXPERT Or you’ll end up with a mishmash product. MASTER
- 58. Copyright 2012 Cowan Publishing IDEATION PERSONAS & USER STORIES As a [persona], I want to [do something] so that I can [derive a benefit]. “As a receptionist, I want to receive an out of the box set up that’s created against best practices so I don’t have to set it all up by myself.” “As a receptionist, I want to change the buttons on my phone so they do what I want.” PROBLEM SCENARIO Voice telephony users, particularly power users like receptionists, need a non-standard configuration of buttons on their phone to be effective. While they have a lot in common, they also need to be able to fine tune the button set up themselves.
- 59. Copyright 2012 Cowan Publishing STORY TEST CASE “As a receptionist, I want to receive an out of the box phone set up that’s created against best practices so I don’t have to set it all up by myself.” Make sure the available templates are editable in a visual environment usable by a Product Manager “As a receptionist, I want to receive an out of the box phone set up that’s created against best practices so I don’t have to set it all up by myself.” Make sure it’s possible to update the template at install time “As a receptionist, I want to receive an out of the box phone set up that’s created against best practices so I don’t have to set it all up by myself.” Make sure the template designation is available in all Loki provisioning interfaces “As a receptionist, I want to change the buttons on my phone so they do what I want.” Make sure it’s possible for the user to reset to the default template “As a receptionist, I want to change the buttons on my phone so they do what I want.” Make sure the available functions are filtered by the services assigned to the user “As a receptionist, I want to change the buttons on my phone so they do what I want.” Make sure available functions are filtered based on the capabilities of the phone key IDEATION “As a receptionist, I want a custom configuration on my phone so that I can manage calls in the way I’ve come to expect.” EPIC STORY
- 60. Copyright 2012 Cowan Publishing IDEATION ALEX COWAN AlexanderCowan.com @cowanSF
- 61. Copyright 2012 Cowan Publishing [First name] the [Role] ex: Mary the Mom ALEX COWAN AlexanderCowan.com @cowanSF
- 62. Copyright 2012 Cowan Publishing END USER PERSONAS Rita the Reseller Evan the Enterprise Exec. Ignatius the IT Guy Rhonda the Receptionist Susan the Small Bus. Owner Keith the Key System User Amy the Assistant Simone the Standard User Chuck the Call Center Agent Esteban the Executive Mikuko the Mobile User Cindy the Call Center Manager
- 63. Copyright 2012 Cowan Publishing ENTERPRISE PERSONAS Nietzsche the Network Eng. Paola the Provisioner Patricia the Sys. Planner Sidney the Sys. Admin. Percival the Product Manager Sven the Salesperson Anthony the Applications Eng. Itzhak the IT Developer Frank the Field Eng. Sam the Support Eng. Saul the Site Developer Fritz the Field Eng. Manager
- 64. Copyright 2012 Cowan Publishing PLANNING ALEX COWAN AlexanderCowan.com @cowanSF
- 65. Copyright 2012 Cowan Publishing PLANNINGPLANNING Visual device management emerged from general industry activity and follow-on work at Leonid 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis Leonid can create a compelling, useful, supportable visual device management solution. 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis Lab work followed by limited commercial release. 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis Did we validate the ‘existential’ propositions? Was it supportable? Bankable? ‘Pivot or persevere?’ ALEX COWAN AlexanderCowan.com @cowanSF
- 66. Copyright 2012 Cowan Publishing Priority Key Assumption Needs Proving? Experimentation 1 [A key assumption about the business] [Whether it needs proving [Experiment to prove or disprove] 1 Parents want to better organize the distribution of allowances Yes * Post the proposition in ads online * Measure sign-up’s on a landing page ALEX COWAN AlexanderCowan.com @cowanSF
- 67. Copyright 2012 Cowan Publishing PLANNING PRIORITY KEY ASSUMPTIONS NEEDS PROVING? EXPERIMENTATION 1 End users at large want a visual tool to manage their phones No - Already proven by prototypes from partner 1 Giving the capability to end user admin’s will do more good than harm Yes - Beta testing with customers 1 The design and architecture are supportable in current customer environments Yes - Lab testing with customers...but really... - Field testing at scale 1 The target price point is bearable by the market Yes - Initial sales negotiations - Mainline (post beta) sales 2 The capability makes sense with end users (vs. admin’s) Yes - Some proxy data on overall activity by user type - Customer interviews - Beta testing 2 (Various makes and models of phones are worth investing in) Yes - Advanced orders
- 68. This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Fixed: product development, G&A Variable: field teams, support BroadSoft Other resellers Integrators Other network system vendors Product development Large account mgmt. Consulting Custom Dev. Actionable insight on cloud UC Best practice recipes Dev. Team Licensing Maintenance & Support Consulting Custom Development Dedicated personal assistance BroadSoft SIPhon Networks Direct Reduced time & risk to get to market Reduced cost Implementation of learned best practices Large/incumbent Medium/competitive Small/niche Copyright 2012 Cowan Publishing PLANNING
- 69. This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Licensing Maintenance & Support Consulting Custom Development Dedicated personal assistance BroadSoft SIPhon Networks Direct Reduced time & risk to get to market Reduced cost Implementation of learned best practices Large/incumbent Medium/competitive Small/niche Copyright 2012 Cowan Publishing PLANNING
- 70. This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Fixed: product development, G&A Variable: field teams, support BroadSoft Other resellers Integrators Other network system vendors Product development Large account mgmt. Consulting Custom Dev. Actionable insight on cloud UC Best practice recipes Dev. Team Copyright 2012 Cowan Publishing PLANNING
- 71. This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Fixed: product development, G&A Variable: field teams, support BroadSoft Other resellers Integrators Other network system vendors Product development Large account mgmt. Consulting Custom Dev. Actionable insight on cloud UC Best practice recipes Dev. Team Copyright 2012 Cowan Publishing PLANNING
- 72. Copyright 2012 Cowan Publishing PLANNING see alexandercowan.com/finplan operations begin 2007 2008 2009 2010 2011 2012 Revenue (consulting) (+some software) (50% software) (scaling software) Expenses (small/me+) (variable) (++fixed costs) Financing (n/a) (small debt offer- family) (n/a) (bank-based financing) Earnings (profitable) Visibility (moderate) (low/ moderate) (low/ moderate) (high) (high) (current products: high new products: moderate)
- 73. Copyright 2012 Cowan Publishing PLANNING Theses Growth? Retention? Supportability? Ongoing investment? Competition? Hypotheses Does anyone want this? Are we the people to do it? Pivot or persevere? ALEX COWAN AlexanderCowan.com @cowanSF
- 74. Copyright 2012 Cowan Publishing ORGANIZATION ALEX COWAN AlexanderCowan.com @cowanSF
- 75. Copyright 2012 Cowan Publishing ORGANIZATION Feasibility (me) (dev contractors) Customer Development (me) (dev & ops mgmt.) (dev & operations team) Scaling (me) (expanded sr. mgmt.) (dev & operations team) ALEX COWAN AlexanderCowan.com @cowanSF
- 76. Specialties (VARIOUS)DESIGN UNIXSYSADMIN RUBY PYTON JAVA PHP ... ... ... SEO ANALYTICS ... (VARIOUS)MGMT. ... Copyright 2012 Cowan Publishing ORGANIZATION Basic Technical Literacy SOFTWARE FUNDAMENTALS Model-View-Controller ARCHITECTURE FUNDAMENTALS App. & Platform Integration ROLES & SYSTEMS In a Technical Team Stories Personas Development Discussion Foundation Concepts ITERATIVE MANAGEMENT DESIGN THINKING CUSTOMER DEVELOPMENT AGILE Collaboration AGILE As Product Owner
- 77. Copyright 2012 Cowan Publishing DEVELOPMENT ALEX COWAN AlexanderCowan.com @cowanSF
- 78. Copyright 2012 Cowan Publishing DEVELOPMENT LOKI PORTALS ITERATION 01 ITERATION 02 ITERATION 03 ITERATION 04 ITERATION 01 ITERATION 02 ITERATION 03 ITERATION 04 LOKI PROVISIONING LOKI BPM DOC’S & INFRASTRUCTURE A ITERATION 05 ITERATION 05 D E C G Predictive Content B F Predictive Content Predictive Content Predictive Content Adaptive Content Adaptive Content Adaptive Content Adaptive Content
- 79. Copyright 2012 Cowan Publishing DOING IT alexandercowan.com/resources ALEX COWAN AlexanderCowan.com @cowanSF
- 80. Copyright 2012 Cowan Publishing DOING IT ALEX COWAN AlexanderCowan.com @cowanSF
- 81. Copyright 2012 Cowan Publishing Making Progress IDEA! Positioning Statement? Field Work & Analytics Ideation & Design Product Development General Management Pivotal Assumptions? Customer Definition Personas? Problem Scenarios? Field Discovery Still Learning? Field Validation Draft Prototype Quicky Prototype? Yes? Confident? No? Create User Stories Done? New Learning? Define MVP CUSTOMER VALIDATION ALEX COWAN AlexanderCowan.com @cowanSF
- 82. Copyright 2012 Cowan Publishing BUY THE BOOK A practical primer for anyone wanting to actually implement today’s best practices in product development (available online or at any major retailer) VISIT THE SITE Free talks, tutorials, and resources for product development and new ventures. MORE? ALEX COWAN AlexanderCowan.com @cowanSF
- 83. Copyright 2012 Cowan Publishing www.alexandercowan.com/speaking(THE REST?) @cowanSF alexandercowan.com/blog acowan@alexandercowan.com alexandercowan.com/speaking
- 84. Copyright 2012 Cowan Publishing 1. How likely would you be to recommend the talk to a friend or acquaintance (1-10; 10 the most likely)? 2. What did you find most useful? 3. What did you find least useful? 4. What else would you like to see? ALEX COWAN AlexanderCowan.com @cowanSF
Notas do Editor
- About Me When I get up in the morning, I help run an enterprise software company I founded called Leonid systems. Leonid ’ s market is service providers, companies like Verizon and France Telecom.
- I ’ m also the author of ‘ Starting a Tech Business ’ which was published this April by Wiley . ‘ Starting a Tech Business ’ is about bringing your ideas to life.
- There are powerful, new ideas about how to build better companies, better products. And they ’ re almost universally liked- it ’ s not like pundits are out there arguing about whether these are good or bad ideas. But there are amazingly few companies actually doing these things. And there ’ s still lots of waste from applying outdated ideas on how to build products and companies. So, that ’ s weird. Why? Why and particularly how you change that is my area of interest - the big void between all the new ideas about doing startup ’ s, doing new products and actual practice. That ’ s what we ’ re going to cover- a practical view of how to apply these practices.
- About You Now let ’ s talk about you for a minute. I ’ ve made a few assumptions about you and hopefully those are true. First, I ’ m assuming you have the desire to learn more about launching new ideas. Second, I ’ m not assuming you have any background in software development. It doesn ’ t hurt, but it ’ s not required for what we ’ re going to do here. Third, I ’ m assuming that you want to take action and work on new ideas, and that means you want to walk out of here with techniques you can sit down and apply tomorrow. Is that a reasonably accurate set of assumptions? Because I ’ m not here to bore you. //In Person * We have a reasonable sized group here. If you don ’ t mind, let ’ s go around and everyone give their job and what they ’ d like to get out of our session.
- Agenda We ’ re going to cover four areas ... And what we ’ ll do is compare the legacy approaches in these areas to these new best practices that are particularly applicable to startup ’ s. For current purposes, we ’ ll consider a startup any line of business that ’ s still working to understand what problem it ’ s trying to solve and how it ’ s going to solve it.
- IDEATION Ideation is the process of pulling together the conceptual basis for your product. (Or service, I ’ ll use ‘ product ’ to mean both.) Back ‘ Then ’ you had a lot of self-love around the ideation process- your idea was your baby- you stuck with it to the end (bitter or sweet). Now we have Design Thinking, which involves hands-on observation of users and the application of empathy and creativity to those observations. I would say the self-love thing peaked in the dot.com period, so the mid to late nineties. But it was a very classical idea
- IDEATION Where did this self-love thing come from? It ’ s a very classical idea. Henry Ford said if he asked customers what they wanted they ’ d say ‘ a faster horse ’ . And there ’ s some validity to that idea, especially if you ’ re truly breaking new ground. But look at Ford now. Once you ’ re in market and probably before I don ’ t know of any case where design thinking is a bad idea.
- IDEATION Ideation is the process of pulling together the conceptual basis for your product. (Or service, I ’ ll use ‘ product ’ to mean both.) Back ‘ Then ’ you had a lot of self-love around the ideation process- your idea was your baby- you stuck with it to the end (bitter or sweet). Now we have Design Thinking, which involves hands-on observation of users and the application of empathy and creativity to those observations. I would say the self-love thing peaked in the dot.com period, so the mid to late nineties. But it was a very classical idea
- Design Thinking I ’ d say empathy is the first pillar of design thinking. And here ’ s the #1 critical success factor in this whole rubric of design thinking: you have to care. The woman in this photo is a seamstress. She ’ s at a sewing machine but the classical seamstress spends a lot of time with scissors and needs a high degree of control over them for close work. (transition) At some point someone who had a high degree of empathy for the seamstress . . . developed modern sewing scissors. Have you ever held a pair of sewing scissors? They ’ re incredible- your hand slides into them so perfectly. So we take these scissors for granted but someone with a high degree of empathy for the seamstress applied their creativity to this and now we have terrific sewing scissors. So, how do you do it, specifically for technology products? Luckily, there are a couple of popular techniques in our area that are ready-made for the application of design thinking.
- Let ’ s look at another example- You ’ ve got rats or mice in the house. Now, I don ’ t like to kill things- if there ’ s a bug in the house I catch it in a glass and shoosh it outside. But rats or mice you have to get rid of and they ’ re hard to catch. We ’ ve all seen Tom & Jerry as kids- when you have rodents you go buy one of these wooden mouse traps, which they still sell in quantity at Home Depot, stick a piece of cheese on it, try not to snap off a finger, put it down in the basement, and hope for the best. But with a little empathy and creativity we can do a lot better than that. I live in a woodsy area, had this problem. Here ’ s what I did.
- The subject of our empathy is the rodent itself. Five things I learned about rats and mice through learning and experimentation. First, they obviously have to get into the house and you can do a lot to shore up a house and prevent that. This is obviously the best place to start since this allows you to peacefully coexist. Second, how do you know where they ’ re entering? Here you need some empathy. Mice and rats are incontinent and piddle as they walk (you don ’ t see that in Tom & Jerry). We apply a little creativity to this in that a UV light will highlight bodily fluids. (Never use one in a dark hotel room. You will literally lose your mind.) I checked around the edge of the house w/ such a light and found where the mice were entering and patched up those spots. Third, mice like to walk along the edges of walls and such- much safer. Except when you use this acquired empathy to place traps along the wall (both directions is best.) Fourth, they ’ re very speedy. Those old school traps will miss them a lot of the time. This (show) is literally a better mouse trap built with directed creativity by someone with a lot of empathy for the situation. The arm goes up only 180 degrees and automatically locks- much easier to set up. And the trigger is the whole platform instead of a finicky piece of metal in the case of a traditional trap. Fifth, they actually like PB a lot better than cheese.
- The subject of our empathy is the rodent itself. Five things I learned about rats and mice through learning and experimentation. First, they obviously have to get into the house and you can do a lot to shore up a house and prevent that. This is obviously the best place to start since this allows you to peacefully coexist. Second, how do you know where they ’ re entering? Here you need some empathy. Mice and rats are incontinent and piddle as they walk (you don ’ t see that in Tom & Jerry). We apply a little creativity to this in that a UV light will highlight bodily fluids. (Never use one in a dark hotel room. You will literally lose your mind.) I checked around the edge of the house w/ such a light and found where the mice were entering and patched up those spots. Third, mice like to walk along the edges of walls and such- much safer. Except when you use this acquired empathy to place traps along the wall (both directions is best.) Fourth, they ’ re very speedy. Those old school traps will miss them a lot of the time. This (show) is literally a better mouse trap built with directed creativity by someone with a lot of empathy for the situation. The arm goes up only 180 degrees and automatically locks- much easier to set up. And the trigger is the whole platform instead of a finicky piece of metal in the case of a traditional trap. Fifth, they actually like PB a lot better than cheese.
- Tools for Design Thinking The first is personas. A persona is a vivid description of a user- everything about them that would have any bearing on their identifying, researching, purchasing, and using your product. You can ’ t develop personas if you ’ re not out interacting with your users . For example, we have 35 people at Leonid but I try to get out at least twice a year to teach our introductory classes, and I should probably do it more. It helps me get a first person perspective on our users. A persona is not a vague statistical aggregate
- Persona (Bad) What you ’ re seeing here, this is not a persona this image was taken off the Internet this data was collected from the same place and the rest of it looks like it was in response to a questionnaire this is a subtle but important point- you should _observe_ customers, not interrogate them you can ask customer factual things like ‘ how many times last month did you eat potatoes ’ or questions about their emotions like ‘ how do you feel when you go to the dentist ’ but they ’ re not trained to describe what they want, for the most part- so you can ’ t ask them ‘ would you like a product that does [x]? ’
- Persona (Bad) there ’ s a great story from Sony about this Sony had a yellow walkman they were thinking of rolling out and they got a bunch of people off the street together and did a focus group about this walkman the participants loved the yellow walkman- it made them feel sporty, fun but someone had the foresight to offer a walkman on the way out- they had a pile of yellow ones and black ones everyone took the black one on the way out for posterity, I tried to corroborate this story which I heard years ago no citations and actually one had it the other way around that said, I ’ ve personally seen many instances of this, even with more sophisticated techniques like conjoint analysis you need to learn about users and watch what they do- but don ’ t expect them to tell you if you ’ re product is good or bad you ’ ll need to figure that out by connecting the dots
- Persona (Good) A persona is vivid- you should be able to describe your personas like your best friend This is a rough persona- it ’ s descriptive; t ’ s like we ’ re introducing her in a novel or a play. Notice the photo- it ’ s LoFi, i took it out in the field with my iPhone, which is where you should be when you ’ re developing personas. ID, Think, See, Feel, Do is a good checklist if you ’ re looking for a framework to use in getting started.
- Tools for Design Thinking: User Stores Once you know your users through personas, you start telling stories about them. A story is _not_ just a statement about one of your personas. It has a very specific syntax which you can see above (above) Let ’ s talk about the the three components in brackets. It ’ s obviously important to contextualize stories by persona. Many applications have different things going on depending on who you are. Everyone gets y, everyone get that you need to say what the user wants to do. ‘ Z ’ is easy to miss but actually the most important. Z makes you say why Z is really what so much of this is about- stepping back and figuring out if and why you think you ’ re right We ’ ll talk more about how to do stories in the next segment, our second 20 minutes. Stories are naturally aligned with design thinking- like personas they drive empathy. They ’ re also very directed, which helps set the stage for creative solutions. Regardless of whether you ’ re a professional designer, design thinking is something everyone can do. The main thing is to care and do it. //Standalone Only There ’ s actually a template on alexandercowan.com under Resources that you may want to use as a starting point
- When you dig in to your stories, you ’ ll probably find you have a lot and a lot of details you want to link to them. There are a couple of standard techniques for this. First, there ’ s the idea of an epic story that contains multiple stories. and those are a web not a straight line more like choose your own adventure vs. a traditional story Second, there ’ s the idea of a test case that you link to a story. This is a great way to layer in additional detail. Let ’ s take a look at an example....
- The main thing about design thinking is just doing it. Have you ever been working w/ a developer or other type of specialist and when they get confused they ask you 'What problem are we trying to solve here?' Well, they're implicitly asking you to do design thinking- to tell them what you're thinking in a more full articulated fashion. You don ’ t have to have a closet full of black sweaters to do this stuff. Or funky glasses. Or a scooter. You don ’ t even have to have a Mac. But you do have to practice. You don ’ t have to be building the next great iPhone app, either. Let ’ s say you ’ re working on a spreadsheet. Think about how others want to use it and how you can you make it better.
- PLANNING This is where planning comes in. Back then you had a five year plan, something that was developed I think originally by Stalin for communist totalitarianism and then applied to large companies and then applied to startup ’ s. Now you have the idea of iterative management- organizing the development of your startup in discrete iterations based on proving out a set of assumptions to remove its uncertainty This general idea of applying more empiricism to the startup was popularized by Eric Ries in his book ‘ The Lean Startup ’ .
- IDEATION It doesn ’ t work for startup ’ s because if you ’ re operating against an unknown problem formulating an unknown solution you don ’ t have anything like the visibility to create a five year plan. Having no real plan at all is equally unmanageable- The problem before was that you had either this notion of the five year plan or an equally unmanageable lack of any plan at all. Both of them are just in human nature to a degree. There ’ s also something in human nature where you put on the blinders, put the plan in a drawer, and just respond to whatever urgencies or opportunities present themselves- that ’ s the tree blowing in the wind thing
- PLANNING PLANNING The great thing is that there was a terrific alternative all along- science. In the scientific method you have Guess what- the answer was there all along it ’ s science you have an idea you develop a hypothesis- this is a set of assumptions about the business you design an experiment- the quickest, cheapest way you can think of to validate those assumptions you make sure you ’ ve designed your validation to get definitive results these should prove or disprove the business if you disprove it, you rework the idea if you prove it, you scale up the business There are a few tools out there to help you do this
- PLANNING This is a simple table to organize your assumptions I personally think the priority column is really important- you want to put assumptions that are most pivotal and easiest to prove at the top; then work your way down Not every assumption needs proving- and just because it ’ s important it doesn ’ t mean it needs proving For instance, the assumption that mom ’ s 25-45 use Facebook- that doesn ’ t need proving Then you ’ ve got the experiment. Exactly what you ’ re going to do to prove or disprove the assumption probably won ’ t fit in a little cell- that ’ s just for a basic description. I actually think this is the most important planning tool and the one I would begin with.
- PLANNING With all this questioning of the traditional business plan for startup ’ s, you wonder what ’ s the alternative. You need someplace to describe the business and think about it ’ s key drivers. Alex Osterwolder and a few others folks came up with this idea of a business model canvas, which they described in a book called Business Model Generation they pose a few questions about each of these nine elements in the canvas and you fill those in they have an app. and examples online This is especially useful as a starting point even if you ’ re going to write up a more formal plan We ’ ll go through an example canvas in the next module in our second 20 minutes
- PLANNING You do need a place to keep track of the money. You need to keep your books in some kind of a GL, of course, like Quickbooks and then you need something to look at the business on a forward basis, usually a model in Excel. The planning part is important and detail is important there- you want to have a viable financial plan that you can work from day to day. That will keep you from worrying about money all the time. How is this compatible with iterative management? On the short term, your current pivot, you do need a budget so you a) don ’ t run out of money and b) if you can, leave yourself enough headroom for another pivot if you need one. In the long run, you do want some tools to model out what the business would look like at scale, particularly once you start to understand your unit economies. You just don ’ t want to waste a lot of time detailing things where you ’ re actually visibility is low. We ’ re going to review an example of a model that I think is pretty compatible with all this in the next module.
- ORGANIZATION Our second topic is organization. Back then, you had what I ’ ll call ‘ aping ’ and now we have an idea called customer development.
- The idea with customer development is that a startup, meaning any entity that ’ s not in an established business, is emphatically _not_ the same thing as a big company. And when you ’ re a startup you need to organize and focus in fundamentally different ways. so a small startup is not equal to a large established organization When you ’ re still learning about your proposition and business model, those kind of hires are a huge waste of treasure
- Instead, what you put together in a startup is a Customer Development Team This is a team with various talents but very flat and 100% focused on validating the business ’ key assumptions the customer development team does this through hands-on validated learning: watching customers, testing mock-up ’ s and prototypes...putting things online and seeing what happens We actually do this inside Leonid we have established products where we use a relatively traditional departmental model- sales sells stuff, development builds stuff, operations maintains stuff ...but for our new products where we ’ re still tuning product/market fit we have customer develop teams which are a mix of consulting engineers, developers, operations working together in a very fluid fashion with less defined process I ’ ve run into the misperception that according to Customer Development large organizations and defined processes are just plain bad- they ’ re not. They ’ s scalable, they work well, and they can also be highly creative. Plenty of companies go sideways because they don ’ t build good, scalable organizations after they do validate product/market fit and then they don ’ t scale well.
- Here we see a series of events from a company ’ s founding to its first board meeting. The founders have an awesome idea. They want to go raise venture capital so they put together a five year plan that shows the VC ’ s a 10x return. x This is a big problem- at this stage you have better odds of winning the lotto than being right about a five year plan. That ’ s even if your idea is really solid. Let ’ s say they ’ re in a hot space and they get the VC- which is a total hail mary. It ’ s very hard to raise VC. x The VC wants to put a lot of capital to work- they ’ re in a scale business themselves, at least the traditional ones. The VC ’ s encourage the founders to bring in executives from big companies, and the lawyers and accounts that love big companies.That ’ s what they ’ re comfortable with and it ’ s a great way to spend all that money. x The problem is that achieving success in a big company doesn ’ t follow the same pattern as achieving success in a startup. So, these new executives start deploying the recipes they used at these big companies, the idea being this will make the startup a big, successful company. x The problem is the startup hasn ’ t found their product/market fit yet. And hires from big companies probably lack the experience or desire to do the hands-on work required to identify and validate that fit. So everyone ’ s working like crazy to make this five year plan the VC ’ s bought a reality. x The problem is everyone would be better off going to the local 7-11 and buying scratch tickets. Startup ’ s by definition operate in an environment of uncertainty and prior to fixing on a strong product/market fit extrapolating out a five year plan is near impossible. And by the way, the comp. for all those executives and managers who are effectively idle amounts to a lot of scratch tickets. Now it ’ s time for the first big board meeting where they tell the VC ’ s how things are going. Everyone ’ s occupied with creating some theory about why the five year plan isn ’ t on track. x And that ’ s near impossible. The board starts getting edgy and, well, you can see where this is headed- x not fun and not profitable. I picked an example with a startup company and VC ’ s. Very similar things happen at various scales on internal projects at existing companies. Companies have budget cycles, management priorities- things that drive them towards scale and predictable plans which are often a bad fit if you ’ re working to figure out if and how your project really makes sense.
- Now let ’ s take a look at this with these alternative frameworks of Design Thinking and Customer Development. The founders have an awesome idea- and they work out all the key assumptions to validate product/market fit and make a business out of this idea. Instead of dotting every i and crossing every t on an elaborate plan, they ’ re out in front of their customer validating that product/market fit. * The focus on arriving at a validated product/market fit before scaling the organization is going to reduce the amount of capital they need. And as they work through that they ’ ll be lowering the risk profile of the business. At this point, they may or may not need to go raise capital. * What they need to do for initial launch may not require a large capital investment. They may be able to boostrap it, maybe raise some friends and family money. For example, at Leonid we started out doing a lot of consulting which pays regularly and that allowed us to fund our software development. Five years later we haven ’ t taken a dollar of venture capital. So our founders maybe bring in capital and certainly advisors to help them arrive at a solid product/market fit. * That focus will help them shepherd their resources carefully. If they do new hires, it ’ s just a few and it ’ s to fill out the Customer Development team- those people are probably making something or supporting customers * Everyone ’ s got a role with a clear and immediate success criteria. That ’ s important because in a startup you have this difficult pairing of uncertainty and urgency you have to manage. So these new hires are focused on validated learning against assumptions- that might mean putting some propositions online and seeing who signs up. It might mean building prototypes or mockup ’ s and seeing how customers interact with them. The expanded team is running full tilt towards a point where the company validates its product/market fit and is ready to scale up or recognizes they ’ re on the wrong track and pivots to an alternative approach. * It ’ s a lot easier to identify specific tasks and milestones in this fashion than it is against a five year plan. Progress should be quick and it should be measurable. They arrive at this pivot or persevere moment where they ’ ve proven or disproven their assumptions. The board may just be the founders themselves. * Towards this assessment they have a set of definitive results- data they can look at and decide against. That doesn ’ t necessarily mean it ’ s statistically significant, but it should have a yes/no or A|B|C type definitions. We ’ ll talk more about that in the next module. Fun and profitable because you ’ re laying out assumptions and validating them through learning. The alternative we had with the five year plan swings between blithe optimism and equally disproportionate pessimism. So this is a much better alternative.
- DEVELOPMENT Development ’ s our last item Back then you had what ’ s called ‘ waterfall ’ development. Basically, this is high tech ’ s version of the five year plan You define a set of ‘ requirements ’ up front and then you move in sequence from there. No changes, or, if there are, you have to redo the plan. This has a lot of the same kind of problems we talked about with the five year plan, particularly for startup ’ s first you don ’ t exactly know what you want to build yet or how customer ’ s will react to it second, you want to get a minimum viable product out quickly to see if you ’ re barking up the right tree this model doesn ’ t accommodate that very well it ’ s designed for building big things over long time scales Agile is a much better development framework fit for startup ’ s First, it takes personas and stories as the input to development rather than requirements have you see a requirements document? a PRD or MRD? they tend to look like federal legislation- it ’ s easy to miss things and get out of step with the customer the use of personas and stories is a great way to communicate empathy to your implementation team and the idea is to have the developers work with someone who ’ s out in the market, called a ‘ product owner ’ the fact that this product owner is talking about these stories while you develop is great for creativity The other great thing about agile is that it ’ s organized into iterations which last 2-6 weeks, which is a good timescale for a startup it allows you to react quickly but also provide some structure and continuity which is important
- DEVELOPMENT A group of developers published The Agile Manifesto in 2001 It ’ s only 68 words and the basic points are (above) You can see consistency with a lot of what we ’ ve covered already- in fact these ideas drove a lot of new ideas in the business community, like iterative management While there are highly developed agile techniques like Scrum, agile ’ s not about orthodoxy. This is good because it allows startup ’ s to adapt it to their particular circumstances
- DEVELOPMENT If you ’ re the one out learning about the market, that probably means you ’ re the ‘ product owner ’ in agile terms, responsible for writing stories and discussing them with your implementation team One of the nice features about agile is those cycles of 2-6 weeks. As a product owner, for the last iteration, you ’ re out validating what you all created with customers- you built it, it works, but does it matter to customers? this is super important because in classic agile you have a product owner who knows the problem and is just helping you interpret the solution but in a startup you don ’ t have that, even if you have someone acting in that product owner capacity so if that ’ s your job, you need to be out validating the assumptions under which you decided to implement whatever was in that last iteration for the current iteration, you ’ re discussing stories with your development team to figure out how best to implement them and for the iteration that ’ s coming up, you ’ re working to write new stories to describe what you ’ re finding the customer wants and formulating the assumptions you ’ re looking to validate with these new features
- Agenda We ’ re going to cover four areas ... And what we ’ ll do is compare the legacy approaches in these areas to these new best practices that are particularly applicable to startup ’ s. For current purposes, we ’ ll consider a startup any line of business that ’ s still working to understand what problem it ’ s trying to solve and how it ’ s going to solve it.
- Let ’ s say your or business is a soccer match.
- Imagine. . . . . . you ’ re dropped on a soccer field but you don ’ t know what team you ’ re on or which end of the field you should drive toward.
- Design thinking gives you that perspective. Done right, it ’ s the foundation of your visibility into customers and the marketplace at large. B2B is actually one of the easiest places to start doing this but there are a few key things you need to do that are a little non-obvious.
- You have to decide how you ’ re going to rotate your players in and out of the game. Will you try to plan all that out?
- Or instead do you have a few focal assumptions about how things may go, watch the state of play on the field, and adjust accordingly?
- Watching the field and updating your plan works a lot better in any environment with uncertainty and that ’ s what Lean Startup is about. We ’ ll look at some case studies from B2B- and we ’ ll look at big, existential examples of this as well as very tactical, everyday use of Lean Startup techniques.
- What kind of team do you need at the match? A lot of ventures get snared on this, one the team building part. A startup isn ’ t a smaller version of a big company- it ’ s a fundamentally different animal and you need a fundamentally different team that ’ s focused on ascertaining the product/market fit you don ’ t yet have.
- Don ’ t bring a baseball team to a soccer match That was the fundamental revelation of customer development. And we ’ re going to look at what that actually means in a B2B context both for a startup and for a company that ’ s got a product market fit and wants to keep innovating.
- Once you have to actually start developing product, you ’ ve got another facet to the game. Do you want to make one giant hail mary kick and hope you get lucky?
- Or do you dribble down the field, avoiding opposition and monitoring the state of play as you go along? The latter works a lot better in a startup. That ’ s what agile does for the venture and we ’ ll look at how this threads in with the other techniques in our B2B example. One of the most crucial things for effective practice of these ideas is understanding the key linkages between them.
- INTEGRATION Design thinking gives us direction, personas and user stories. It ’ s true the Lean Startup proposition that successful entrepreneurs have better practices not better ideas; but the quality of the ideas still matters. We then link these to a series of assumptions about what ’ s critical to make a desirable product a business out of those ideas. And we focus on validating or invalidating those as quickly and cheaply as possible. We do this in a customer development team- a fluid team focused on validating those assumptions and experimenting its way to a working product/market fit. Finally we have agile to get us working product in the small batches and time frames required to make the rest of these techniques feasible.
- * I don ’ t think there ’ s a position in high tech that ’ s simultaneously as poorly understood and important as product management. You ’ re at the intersection of basically everything your company does that ’ s a major determinant of success. * A lot of the questions I ’ ve gotten from folks in the role are around how to start applying these ideas within their organization. * To that end, I put together six tips. * Don ’ t....You can start tomorrow. We ’ re going to review a few simple tools to help you do exactly that. * Show......All the ideas we ’ ve talked about are highly empirical- building something worth seeing is the best way to sell it inside your organization. * Focus...There ’ s a lot you could potentially do and few of us get to finish everything we ’ d like to do professionally. Start by finding something you think you can tackle that will have an observable impact and focus on that. * Broadcast....The best way to introduce these new techniques is on an incremental, success-based, everyday basis. But you do want to make sure that as you ’ re showing, your colleagues and collaborators can find your work. Keep what you ’ re doing on Google Doc ’ s, a shared drive, whatever you use to share and collaborate. Even if it ’ s not perfect yet. Agile....We talked about the simplicity and power of the agile manifesto. Try organizing your own work around them- agile ’ s increasingly popular outside the core engineering function. Use stories, formulate iterations. One easy place to start and something I do personally is a Daily Do email that draws on agile ’ s daily standup technique. There ’ s a post about that on alexandercowan.com- or if you Google ‘ Daily Do Alex Cowan ’ you ’ ll find it. * Awesome....Finally, make yourself awesome; focus on that and everything else will ultimately fall into place. * Don ’ t wait for the last judgement- it takes place every day. (Camus)
- Agenda We have an hour together. In the first twenty minutes I ’ m going to hit you with something I call ‘ Much Ado About Something ’ where we ’ ll talk about four highly relevant and useable ideas coming out of high tech. In the second twenty minutes, we ’ re going to go into more detail about how you actually put yourself in a position to succeed in applying those ideas. And in the last twenty minutes, we ’ re going to do a mini workshop where you all will answer some questions and develop your point of view on a few things related to the material.
- * where I was running their professional services business
- * ..about how I could help operators more and better cloud services to their customers by way of some consulting and IT products where I saw there was a vacuum in the market * by operator, I mean service providers like Comcast, Verizon, companies like that * these operators see themselves as having two big hemispheres: network and IT * Being in the applicaiton server category, BroadSoft is considered part of their network infrastructure- providing services like telephony and web collaboration * In front of all this network stuff, is what the operators call ‘ IT ’ which is basically enterprise software and covers functions from ecommerce to billing and everything in between * Supporting all this is consulting and big items there are designing these new cloud services, working out processes to scale them, and then putting together the systems to support them * Consulting ’ s where Leonid started- in the context of a startup, this was more swinging from one monkey bar to another than a big leap. I was going out on my own to sell basically a known set of consulting products to a market I already knew.
- But what we did at Leonid was take the things we learned in the consulting business and the cash we could scrape together, and started building software on a bootstrap basis. And that was not easy and what we were going to build we didn ’ t know beforehand. We ’ l start the IDEATION section with the story of how we did that.
- * We started off doing a lot of integration, documentation and training on cloud communications systems. We were getting the same general requests from multiple customers, and getting referrals. We identified a product/market fit there and created a consulting product called ‘ Network.... ’ . * That was good, it grew, but didn ’ t lead us to identify any major product expansion opportunities. * A few months in, we started to hear a lot of requests around order management and services provisioning- that it wasn ’ t standardized enough and there were errors. That it was too labor-intensive. We did a few engagements in that area and arrived at a consulting product called “ // ’ . * And this one did beg for a piece of software- we MVP ’ ed something and that ’ s grown into what we now call Loki Provisioning. * Once our customers had their offers operationalized they were focused on improvement- how do we make the service better? How do we validate that? * Along the way, we, Leonid and the customer, ran into a lot of places where we wanted to tweak the web portal experience but what we wanted to do was difficult and expensive. We MVP ’ ed a platform that became what we now call Loki Portals. * Two years in, we started getting requests around making the processes more efficient as our operators were scaling. We did some work there and quickly drove to a process audit and design practice on the consulting side. Later on, we built a product to do all the stuff we were recommending on top of two popular enterprise platforms- SugarCRM and Salesforce.
- * We started off doing a lot of integration, documentation and training on cloud communications systems. We were getting the same general requests from multiple customers, and getting referrals. We identified a product/market fit there and created a consulting product called ‘ Network.... ’ . * That was good, it grew, but didn ’ t lead us to identify any major product expansion opportunities. * A few months in, we started to hear a lot of requests around order management and services provisioning- that it wasn ’ t standardized enough and there were errors. That it was too labor-intensive. We did a few engagements in that area and arrived at a consulting product called “ // ’ . * And this one did beg for a piece of software- we MVP ’ ed something and that ’ s grown into what we now call Loki Provisioning. * Once our customers had their offers operationalized they were focused on improvement- how do we make the service better? How do we validate that? * Along the way, we, Leonid and the customer, ran into a lot of places where we wanted to tweak the web portal experience but what we wanted to do was difficult and expensive. We MVP ’ ed a platform that became what we now call Loki Portals. * Two years in, we started getting requests around making the processes more efficient as our operators were scaling. We did some work there and quickly drove to a process audit and design practice on the consulting side. Later on, we built a product to do all the stuff we were recommending on top of two popular enterprise platforms- SugarCRM and Salesforce.
- * Build/measure: Concierge test opportunity in Lean terms
- * Standardize: Do your best to assess that there ’ s a substantial market first. Set yourself up to bring in others and monitor carefully your ability to do that. * Externalize: Avoid commissions at the beginning. It makes things complicated and they die on the vine. If a lot of deals start happening do it later.
- IDEATION When we were out working with customers on their service design, we kept hitting a wall with the time and money constraints around building a good self-service portal. You ’ re a product manager/business owner and you know what you want the customer experience to be- but you ’ re faced with a big custom development project. The architectures and tools were out there for us to build and offer something as a vendor that would deliver a high quality portal experience that was fast and cheap to customize. On that basis we created Loki Portals We had a process design practice where we saw it was taking folks in the back office literally hours to set up cloud services for small office of say 40 people- and what they had to do was repetitive and hellishly boring. automating most of the work was the obvious thing to do but the legacy systems were hard to adapt for new elements fortunately, there were lightweight architectures available for doing this that allowed us to do that, side stepping the legacy stuff without really complicating their existing IT environment The output of those process design engagements implied certain things for how the business layer systems, CRM, order management, billing, should work. Our customers were really struggling to get there with their existing systems. The IT hemisphere wasn ’ t modernizing at the same rate as the network hemisphere Legacy systems were hard to adapt and rolling out COTS platforms like SAP, Salesforce carried a lot of risk legacy vs. 70% of enterprise SW implementations fail
- * Here ’ s another things we learned. * ...
- IDEATION * What this lead us to is the idea that we ’ d build a very literal, visual representation of the phone that users could play with in the portal. * Here are those stories with test cases layered in. * Those test cases are a place to layer in additional details you think of that may not be obvious to the implementor. For instance, we talked about having a standard template for these phones. Well, who creates that? Turns out it ’ s a product manager, who ’ s usually not technical, so we need to make sure they have a visual environment to create and maintain those templates so their users are having a good out of the box experience. * Another example is what if the user goofs up their phone? Or what if they ’ re afraid to mess with it- there ’ s a principal in interface design called safe exploration. Well, let ’ s make sure we give them a simple way to go back to home base- a reset function.
- *Here ’ s what it looks like today.
- like Mary the Mom
- Here we going to talk about the application of lean principals and customer development at Leonid. Leonid is an enterprise software company focused on service providers who offer cloud services.
- We had an idea for a visual device mgmt. tool the MVP supported just one model of phone and just the most commonly used functions that was enough to validate our core propositions
- like Mary the Mom
- PLANNING This is an excerpt from the hypothesis we put together for visual device management- now proven. VDM was a line extension so we had the advantage of an installed base which made validation quicker and easier in the case of a ground zero startup, you ’ re more so going out cold- interviewing prospects, posting AdWords and seeing what happens on a landing page, stuff like that End users... Our partner had already rolled out a prototype of the functionality and both operators and their end customers were actively requesting the capability End User Admin ’ s there was no way to do this but beta test w/ customers if it turned out that the capability generated more support calls than it prevented, it just didn ’ t make economic sense the MVP we gave to our customers was something they could test in their labs to start validating this third assumption about supportability but we decided w/ our customers that the ability to do resets to different templates needed to be part of our beta, which was still really an MVP in the sense that we needed it as well to validate these priority 1 existential assumptions we learned about price point with our initial deals and a couple of deals that followed on the beta- and now we were past the exisential stuff and into tuning for example, should we roll the capability out to end users as well as admin ’ s most of the data we have so far says that ’ s probably not a particularly compelling idea so we ’ re looking at it but we haven ’ t pursued it aggressively then we ’ re looking at things like new devices we ’ ll support, etc.; we look for an order on that now
- PLANNING A lot of these assumptions have to do with validating customer behavior. I think there ’ s an implicit assumption that if something is good it will automatically go viral and you ’ ll have tons of the users you want While there ’ s some truth to that, it ’ s not a good way to plan your customer development and it ’ s often not true many big successes that looked viral were actually closely choreographed Geoff Moore ’ s adaption of the technology adoption life cycle is one of the oldest and most well known they key idea is that even though you find initial buyers, you hit a ‘ chasm ’ between early adapters and you ’ re first set of mainstream buyers I think this was more applicable five or ten years ago when high tech was more about infrastructure and platforms- switching costs were high so selection was a big deal What ’ s my switching cost for an online service or mobile app.? it ’ s not zero- it takes time for me to set it up and see if I like it time ’ s scarce and I value mine but it ’ s not high Pool is maybe easier and more flexible starter idea After I learned to hit the ball, the second thing I learned about pool is that you always have to be thinking about your where the cue ball (the white one) is going to end up and leave you for your next shot. For example, in games and toys, companies tend to promote to the top of their age range since kids don ’ t like to play with things they think are meant for their juniors. The key point is this using the scientific method we went through, make your assumptions about how adoption will progress explicit, then test them do not rely on ‘ vanity metrics ’ - simple increases you may be about to hit a wall or painting yourself into a corner on adoption and not even know it At Leonid, what we do is we have ‘ Goldilocks ’ customers they ’ re not our biggest or our smallest they ’ re very good at giving us specific, usually validated feedback and getting things they think they ’ ll find useful to market quickly so we can learn together we work to take extra special care of them
- PLANNING Here we see a business model canvas for Leonid Customer Segments First we have large, incumbent operators; these are companies like Verizon or Comcast, and they usually own the physical copper or cable plant in a few regions They typically buy individual products from us like Loki Portals and they usually buy them through channels because their procurement process is complex Second we have medium to large competitive operators. These are companies like Level3 where they ’ ve built up a large franchise based on a particular competitive focus Last we have smaller customers. They usually have some particular competitive niche. For example, we have a customer that services auto dealerships and they sell communications services as an add-on to a SaaS application they built for that market. Value Propositions I think the single biggest thing we do is help identify a strong proposition for our customers to bring to market, and we do that as part of an ecosystem, and then we help them get there quickly the landscape is changing quickly so that ’ s really important We also reduce cost- that matters, but usually not as much as time to market And we help them implement known best practices we think that ’ s really important and as a company we ’ re very focused on updating those but we recognize that the other items are by and large more important to our base Channels We ’ re worked up to the point where a lot of our business is going indirect, through channels there ’ s a requirement for dedicated personal assistance, esp. during the sales cycle, and it would increase our SG&A a lot to do that across geographies and customer segments so we work hard to create a good opportunity for our partners Customer Relationships As a company that sells a relatively large amount of stuff to a relatively few customers, this is pretty typical Revenue Streams We have licensing which we earn when we sell product Then we sell maintenance and support as a percentage of the licensing And we do consulting, usually in support of one or more of our products Key Resources I think the biggest thing is (); without this we wouldn ’ t know what to build, wouldn ’ t be of value to our customers we get this through working with customers and generally being very hands on in the space our consulting practice has also been a good source of learning here Development is big- this is our product execution And then, like any enterprise model, our ability to install, upgrade, provide documentatino and help- to generally operationalize the product, that ’ s criticial and something we ’ ve been working on a lot as we scale Key Activities Our biggest activity is developing products that help our customers bring new things to market, use new channels to sell those things We ’ re also focused on process-driven improvements to how they operate; that ’ s important, but most of our customers perceive the topline stuff to be more important Key Partnerships We have BroadSoft- they ’ re the most prominent application server we support and also a channel We have other resellers- very important for sales to certain segments and regions Then we have integrators- these are folks that take our product and help operationalize them with customers, usually in the context of customization or integration into a larger system Then we also have other network elements we support- Genband routers, Polycom IP phones, things like that Cost Structure Like most software companies, we have a big mostly fixed product devleopment and G&A component And then consulting and support which is more variable with how much product we have out there This is something you can print out and use at businessmodelgeneration.com
- PLANNING Here we see a business model canvas for Leonid Customer Segments First we have large, incumbent operators; these are companies like Verizon or Comcast, and they usually own the physical copper or cable plant in a few regions They typically buy individual products from us like Loki Portals and they usually buy them through channels because their procurement process is complex Second we have medium to large competitive operators. These are companies like Level3 where they ’ ve built up a large franchise based on a particular competitive focus Last we have smaller customers. They usually have some particular competitive niche. For example, we have a customer that services auto dealerships and they sell communications services as an add-on to a SaaS application they built for that market. Value Propositions I think the single biggest thing we do is help identify a strong proposition for our customers to bring to market, and we do that as part of an ecosystem, and then we help them get there quickly the landscape is changing quickly so that ’ s really important We also reduce cost- that matters, but usually not as much as time to market And we help them implement known best practices we think that ’ s really important and as a company we ’ re very focused on updating those but we recognize that the other items are by and large more important to our base Channels We ’ re worked up to the point where a lot of our business is going indirect, through channels there ’ s a requirement for dedicated personal assistance, esp. during the sales cycle, and it would increase our SG&A a lot to do that across geographies and customer segments so we work hard to create a good opportunity for our partners Customer Relationships As a company that sells a relatively large amount of stuff to a relatively few customers, this is pretty typical Revenue Streams We have licensing which we earn when we sell product Then we sell maintenance and support as a percentage of the licensing And we do consulting, usually in support of one or more of our products Key Resources I think the biggest thing is (); without this we wouldn ’ t know what to build, wouldn ’ t be of value to our customers we get this through working with customers and generally being very hands on in the space our consulting practice has also been a good source of learning here Development is big- this is our product execution And then, like any enterprise model, our ability to install, upgrade, provide documentatino and help- to generally operationalize the product, that ’ s criticial and something we ’ ve been working on a lot as we scale Key Activities Our biggest activity is developing products that help our customers bring new things to market, use new channels to sell those things We ’ re also focused on process-driven improvements to how they operate; that ’ s important, but most of our customers perceive the topline stuff to be more important Key Partnerships We have BroadSoft- they ’ re the most prominent application server we support and also a channel We have other resellers- very important for sales to certain segments and regions Then we have integrators- these are folks that take our product and help operationalize them with customers, usually in the context of customization or integration into a larger system Then we also have other network elements we support- Genband routers, Polycom IP phones, things like that Cost Structure Like most software companies, we have a big mostly fixed product devleopment and G&A component And then consulting and support which is more variable with how much product we have out there This is something you can print out and use at businessmodelgeneration.com
- PLANNING Here we see a business model canvas for Leonid Customer Segments First we have large, incumbent operators; these are companies like Verizon or Comcast, and they usually own the physical copper or cable plant in a few regions They typically buy individual products from us like Loki Portals and they usually buy them through channels because their procurement process is complex Second we have medium to large competitive operators. These are companies like Level3 where they ’ ve built up a large franchise based on a particular competitive focus Last we have smaller customers. They usually have some particular competitive niche. For example, we have a customer that services auto dealerships and they sell communications services as an add-on to a SaaS application they built for that market. Value Propositions I think the single biggest thing we do is help identify a strong proposition for our customers to bring to market, and we do that as part of an ecosystem, and then we help them get there quickly the landscape is changing quickly so that ’ s really important We also reduce cost- that matters, but usually not as much as time to market And we help them implement known best practices we think that ’ s really important and as a company we ’ re very focused on updating those but we recognize that the other items are by and large more important to our base Channels We ’ re worked up to the point where a lot of our business is going indirect, through channels there ’ s a requirement for dedicated personal assistance, esp. during the sales cycle, and it would increase our SG&A a lot to do that across geographies and customer segments so we work hard to create a good opportunity for our partners Customer Relationships As a company that sells a relatively large amount of stuff to a relatively few customers, this is pretty typical Revenue Streams We have licensing which we earn when we sell product Then we sell maintenance and support as a percentage of the licensing And we do consulting, usually in support of one or more of our products Key Resources I think the biggest thing is (); without this we wouldn ’ t know what to build, wouldn ’ t be of value to our customers we get this through working with customers and generally being very hands on in the space our consulting practice has also been a good source of learning here Development is big- this is our product execution And then, like any enterprise model, our ability to install, upgrade, provide documentatino and help- to generally operationalize the product, that ’ s criticial and something we ’ ve been working on a lot as we scale Key Activities Our biggest activity is developing products that help our customers bring new things to market, use new channels to sell those things We ’ re also focused on process-driven improvements to how they operate; that ’ s important, but most of our customers perceive the topline stuff to be more important Key Partnerships We have BroadSoft- they ’ re the most prominent application server we support and also a channel We have other resellers- very important for sales to certain segments and regions Then we have integrators- these are folks that take our product and help operationalize them with customers, usually in the context of customization or integration into a larger system Then we also have other network elements we support- Genband routers, Polycom IP phones, things like that Cost Structure Like most software companies, we have a big mostly fixed product devleopment and G&A component And then consulting and support which is more variable with how much product we have out there This is something you can print out and use at businessmodelgeneration.com
- PLANNING Here we see a business model canvas for Leonid Customer Segments First we have large, incumbent operators; these are companies like Verizon or Comcast, and they usually own the physical copper or cable plant in a few regions They typically buy individual products from us like Loki Portals and they usually buy them through channels because their procurement process is complex Second we have medium to large competitive operators. These are companies like Level3 where they ’ ve built up a large franchise based on a particular competitive focus Last we have smaller customers. They usually have some particular competitive niche. For example, we have a customer that services auto dealerships and they sell communications services as an add-on to a SaaS application they built for that market. Value Propositions I think the single biggest thing we do is help identify a strong proposition for our customers to bring to market, and we do that as part of an ecosystem, and then we help them get there quickly the landscape is changing quickly so that ’ s really important We also reduce cost- that matters, but usually not as much as time to market And we help them implement known best practices we think that ’ s really important and as a company we ’ re very focused on updating those but we recognize that the other items are by and large more important to our base Channels We ’ re worked up to the point where a lot of our business is going indirect, through channels there ’ s a requirement for dedicated personal assistance, esp. during the sales cycle, and it would increase our SG&A a lot to do that across geographies and customer segments so we work hard to create a good opportunity for our partners Customer Relationships As a company that sells a relatively large amount of stuff to a relatively few customers, this is pretty typical Revenue Streams We have licensing which we earn when we sell product Then we sell maintenance and support as a percentage of the licensing And we do consulting, usually in support of one or more of our products Key Resources I think the biggest thing is (); without this we wouldn ’ t know what to build, wouldn ’ t be of value to our customers we get this through working with customers and generally being very hands on in the space our consulting practice has also been a good source of learning here Development is big- this is our product execution And then, like any enterprise model, our ability to install, upgrade, provide documentatino and help- to generally operationalize the product, that ’ s criticial and something we ’ ve been working on a lot as we scale Key Activities Our biggest activity is developing products that help our customers bring new things to market, use new channels to sell those things We ’ re also focused on process-driven improvements to how they operate; that ’ s important, but most of our customers perceive the topline stuff to be more important Key Partnerships We have BroadSoft- they ’ re the most prominent application server we support and also a channel We have other resellers- very important for sales to certain segments and regions Then we have integrators- these are folks that take our product and help operationalize them with customers, usually in the context of customization or integration into a larger system Then we also have other network elements we support- Genband routers, Polycom IP phones, things like that Cost Structure Like most software companies, we have a big mostly fixed product devleopment and G&A component And then consulting and support which is more variable with how much product we have out there This is something you can print out and use at businessmodelgeneration.com
- PLANNING Here ’ s a summary view of how all this translated in our financial results. We ’ ve never had an equity investor so we ’ ve had to scale up against the business itself We started out with consulting and that created a base of revenue that allowed us to invest in the SW business which became an increasingly large part of our business. And that ’ s not a model that would work for everyone but I think it ’ s underutilized. We managed expenses carefully- it was pretty linear through 2008 since that ’ s the nature of the consulting business. In 2009, we were increasingly operating in a more fixed cost environment because of our product development teams. We never did any financings, though we did have some family debt early on and now have some bank financing. We ’ ve always been profitable- the nature of our model enforced that. As we incresed the SW busienss our earnings got more visibible. We have a relatively predictable product/market fit. Now that ’ s the core of our business and we invest on a much smaller scale in new products where we have less visibility.
- PLANNING We ’ re still doing new products where we haven ’ t ascertained a product/market fit. And there we ’ re doing customer discovery, we ’ re creating a hypothesis and we ’ re out testing it. And there we ’ re answering more existential questions- pivot or persevere type questions Then we have products where we have a working product/market fit. But emphasis on working- it ’ s a thesis. So we lay out our key assumptions and we periodically review those- because this is an important point- things change! We keep these on a Google doc where the responsible folks and anyone that ’ s interested can keep an eye on them.
- ORGANIZATION Here we ’ re going to review an example of customer development and organizational development at Leonid Systems, an enterprise software company specializing in cloud applications. Leonid has products where they ’ ve obtained a product/market fit as well as new products where they ’ re doing customer discovery. How are they going to organize to do this?
- ORGANIZATION Leonid started out as a way to pay the mortgage- a great way to arrive at what makes money quick. And that helped us arrive at a set of workable consulting practices quickly We didn ’ t want to ramp expenses before we knew what we really wanted to build and even then we didn ’ t want to ramp them until we ’ d validated our sales and deployment model. And as a bootstrapped company that wasn ’ t really an option anyway. Then we started to experiment with small scale software utilities and applications. For this I worked with contractors, all part timers. Then we started to scale that up- Leonid needed dev. and ops managers and we added full time resources, scaling carefully with our growth. As we scale, we ’ ve updated our senior management team with more experienced, more specialized talent and we ’ re continuing to update our process for scalability. We have mostly kept intact an agile, short cycle approach since we ’ re always learning new things with customers. And that ’ s particularly applicable on our new products.
- No matter what academic background you have, you can very readily get yourself to a place where you have the skills to do much of the up front work on your startup. raw talent and drive is the most important My advice is start off with the foundation concepts- the things we ’ ve covered today read up on them practice them You want to acquire a basic technical literacy .... Learn about agile as a ‘ product owner ’ ; that mostly means formulating inputs and being available to discuss implementation questions based on your experience with the customer; it also means prioritizing what ’ s important As a manager, I highly recommend looking into process design if you ’ re going to scale sounds boring but this is actually a great way to keep the creativity flowing and avoid a lot of wasted time Beyond that, there are a whole bunch of specialties where you can get to various levels of depth There ’ s really an abundance of places to get all this, and practice is the most important thing. My book, ‘ Starting a Tech Business ’ covers all this. I don ’ t want to oversell it here but I wrote it because I identified the importance of these concepts. There are also a whole bunch of other books in the Resources section of the book ’ s website, alexandercowan.com
- We apply a lot of agile practices at Leonid- probably what most people would call agile. We now have monthy iterations but next year we ’ re moving to quarterly releases to ease up on documentation and QA. One of the interesting things we have, we have dependencies between the products- that ’ s trickly and other than good management the only other trick is to keep the interfaces clean and well delineated, functionally. In general, we have a majority component of adaptive content but always a chunk of predictive content- that ’ s things like keeping up w/ vendor subsystem updats and larger multi-cycle projects we do with customers.