Feel the Pain

I’ve talked a bit about value proposition design recently, and the need to get out of the building and find out what your customers really want. But what if this isn’t enough? And why is it that so many stories of inventors getting out of the building have  customers do the exact opposite of what was expected?

In this December interview with business review weekly, James Dyson (of cyclonic vacuum cleaner fame) said that:

To design well, one must have experienced the pain and frustration of an existing product not working well

To me, this means more than simply observing your customers in the field. This is about actually trying the product for yourself and living the customer journey. When you can bond with your customers over shared pain, and find a better way forward … that is where true insight comes from. Tim Brown of IDEO encourages us not to ask ‘what’, but to ask ‘why’. Understanding why your customers are behaving in the way they are, and being able to get inside of their heads through having shared their pain and frustration is essential if you want your customer discovery observations to provide real insight.

Using Five Whys to find Customer Jobs

If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it (Albert Einstein)

Making sure you are solving the right problem is THE most important part of business model innovation. In terms of developing your value proposition, this means spending time discovering which jobs matter most to your customers, before you go looking for solutions that will offer effective pain relief and gain generation. This post is part 3 of my series on using creative thinking techniques to put the innovation back into business model innovation. In today’s post, I’ll be looking at how the Five Whys technique can be used to get to the heart of the problem your business model is trying to solve.

Validating a Value Proposition

There seem to be a ton of products starting to emerge for developing business model canvases, and running lean customer discovery experiments. This one in particular caught my eye:

How Trevor Saved $10,000 and 6 Months With the Validation Board

This great story takes us through Trevor’s efforts at launching a business focused on getting people to ride around on Vespas. Here are the headlines:

1. Trevor tried to launch a vespa resale business on campus. He managed to score 1 customer in 6 months. He kept trying but it just didn’t work
2. A while later, Trevor tried out the validation board to test out some key assumptions. After just 2 days he had a validated value proposition and 50 paying customers in just 2 hours of posting his launch page…

And here are the assumptions he busted using the board as a tracking mechanism:

• Assumption 1: people care about the environment and want a vespa because it uses less oil
• Assumption 2: commuters will want one…if only they knew someone else who had one
• Assumption 3: commuters will rent one for a bit and try out the hipster thing [YES…50 paying customers in 2 hours! dowser, this is what I call validation]

For me, this nice story brings out a couple of really important features of this approach. Firstly, the focus is on the value proposition…not the entire business model, just the core proposition of what the heck customers want. Second, Trevor uses a Minimum Viable Product to test out his assumptions, in this case a single web page with a submit button taking users to a “coming soon” page. And most importantly, during the test phase, Trevor gets out of the building to talk to his customers. He observes the environment and comes up with some real insight as to what customers want. He isn’t sitting behind a desk making guesses about what else might work, he is going to subway stations and talking to people.

It’s difficult leaving the comfort of your own space and getting in front of people. And it’s difficult to challenge yourself and move from one idea to the next in the face of evidence and customer feedback…especially when that feedback is vague. But when you have a value proposition that works, boy does it work. Great work Trevor. A really nice example of fieldwork and persistence.

Different ways to fail

I ran across this great collection of quotes on the importance of failure to innovation:

• “Ideas won’t keep. Something must be done about them.” – Alfred North Whitehead
• “To accomplish great things we must dream as well as act.” – Anatole France
• “99 percent of success is built on failure.” – Charles Kettering
• “The man with a new idea is a crank – until the idea succeeds.” – Mark Twain
• “The way to succeed is to double your failure rate.” – Thomas Watson, (Founder of IBM)

But are all failures created equal? It struck me that there are many different ways to fail, including (i) failure to act, (i) failure to get it working, and (iii) failure to get it working but learning what might work better and trying again. The last one is my personal favourite. Here they are in a bit more detail.

Customer Discovery for Large Projects

Few business plans get it right first time with nearly nine out of ten business start-ups and one in six business transformations failing. Why is this? Is it due to inadequate planning, poor execution, or perhaps it is simply the cost of doing business? Sadly, it’s usually because the business plan is the first idea we came up with.

Finding a Business Plan that Works

The business plan is widely accepted as the starting point for most major business ventures including new ventures, new services, or major business transformations. In fact, any place with a high enough degree of risk and uncertainty to warrant a business plan.

So how do you get the business plan right? The answer is to introduce a period of discovery. This way, you get to iterate through a lot of different business plans until you find one that does work.

What does Business Plan Discovery Look Like

Well, it doesn’t look like a whole lot more analysis. Business plans cannot be validated through analysis. Instead, teams must interact directly with their customers from day one, according to the following principles:

• Get out of the building:  Don’t guess what your customers want, ask them.
• Keep prototypes minimal: Prototypes are used to validate assumptions. They should have only those features needed to prove a point.
• Fail quickly: Iterations should be fast to maintain momentum and learn as much as possible.
• Find out Why, not What: Most important of all is to learn why customers need the product, this enables you to anticipate change and not just react to it

How does this apply to large internal projects? 

By Large Internal Project, I mean something transformational enough to change the way the business operates. Say a core systems replacement for a bank, or the adoption of a completely new operating model. These kind of projects usually have a business plan, some degree of change management, and a lot of analysis designed to predict what might work. They also fail big, and fail often.

So how  could we adopt a customer development approach here? Here are some ideas:

• Define the problem to be solved. Amazing how often we jump straight into corporate solution and forget to check that there is in fact an underlying purpose
• Validate what people need and want. Complex change seems to work a whole lot better when those affected are actively engaged in shaping the solution. I don’t mean a simple survey, I mean active involvement and observation of what actually works. Give people a reason to change before expecting them to actually change anything
• Validate the delivery mechanism. Don’t just trust your suppliers, put them to the test. This includes internal suppliers to.
• Validate the ongoing cost mode. This includes maintenance and servicing once systems are in place, as well as training costs and any other operating costs. Will the change happen in isolation or will there be a follow on effect? Try it with a small prototype and find out.

This is a brief look at a pretty large area. I may come back to it over time. Feedback welcome.

Seniors are the new Innovators

Much has been written about co-creation recently, including this recent article from Innovation Excellence on seniors as the new innovators. The major focus of the article is on the HelloAgainChallenge in which senior members of our aging population are actively involved in the creation of new ways to use mobile technology to address the needs of the senior sector.

At present the challenge is set up as an ideas channel, in which potential future customers are asked what they want on the promise of winning some sort of prize. Great motivation and nicely setup. Along with outlines of each idea, contributors are also asked to explain the problem being solved. Having spent a while looking at the customer development process of late this got me thinking…

Putting the Cart before the Horse

It’s all very exciting coming up with solutions, but it’s all about finding the right problem to solve. By gathering details of the problem up front, there is scope for the challenge to group ideas by problem and start from there.

Discovery and Design Pivots

Once you have a problem with customer who NEED to get it solved, the customer discovery phase would typically move through an iterative phase as a solution is developed and as a business model is uncovered. I’m a bit unclear as to how solutions will be developed over time, and how teams will collaborate with each other, particularly with prizes involved. Perhaps this will be a first stage.

The Business Model

Okay, so lets assume they find some great and compelling problems to solve, and some needy customers who are willing to pay for them…at what point is the business model developed? After all, an idea has to earn more than it costs to create. Perhaps a good way forwards would be to use the competition as a customer development channel in which participants are used as the early adopters with teams developing, validating and pivoting appropriate business models along the way.

 

Business Model Innovation

Note: This article was originally posted here, on InnovationExcellence. I thought I would repost it here.

Nine out of ten business start-ups, and one in six business transformations will confirm it. If you want to be part of the one in ten who succeeds, you’ll need to search for the answers first. By innovating our business model before we start executing, we can improve our chances of success and reduce the high risk and high cost of failure in an uncertain environment.