A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. – Eric Ries
LET YOUR PROSPECTIVE CUSTOMERS BE YOUR GUIDE
Build-Measure-Learn With the publication of “The Lean Startup” (Ries, 2011), Eric Ries provided entrepreneurs with a comprehensive roadmap for building a new business through repeated cycles of rapid testing and empirically-based learning: a guide that is both inspiring and tremendously helpful. Reis’ “Build-Measure-Lean” testing cycle (Ries, 2011, p. 75), together with cohort analysis and innovation accounting (Ries, 2011, p. 121), offers a clear roadmap for startup innovators who are contemplating making the leap into the unknown.
He also documents a personal history of “lessons learned the hard way” through a startup venture that nearly failed. At various points in “The Lean Startup” Ries asserts that customer research is pointless because “customers don’t know what they want in advance.” (Ries, 2011, p. 49) While that statement is largely true on the surface, it is also deeply misleading. No one with experience in new product research would ever directly ask a target customer “What features or functionality do you want in ‘New Product X’?” … and expect to get a reasonable answer. That’s not how it’s done. Instead, you ask your customers to help you understand their world, and then build something that fits well within it.
There are many variants on the theme, but stripped to the basics, productive new product development research is a two-phase process that usually starts with a category exploration, often qualitative in nature, and then continues with at least one artfully crafted concept test.
A qualitative category exploration is generally the first step in a new product development effort. It’s relatively cheap, it doesn’t require a massive study or a subscription to access a syndicated data base, and it can take a variety of forms depending on budget and project needs.
Qualitative category explorations are intentionally non-directive at the outset. The objective is to allow the user to describe, in their own terms, how they participate in the category, what products they currently use, how they feel about the options available to them, and finally, the benefits (and problems) they have experienced in the category. These explorations can take many forms. For information on the principal options, read more here…
The second step in the development process involves a concept test. New product concepts can take many forms and, to his credit, Ries mentions several of them. (A favorite example is the video created by Drew Hudson to demo the intended functionality of Dropbox. (Ries, 2011, p. 97)) In its simplest form a product or service concept is a short written statement – generally accompanied by a visual element – that describes what the product or service does, lists a small number of differentiating attributes and (hopefully!) communicates the intended end-user benefit. In more elaborate variants on this theme – which we recommend – one creates a small suite of concept statements or visuals that are crafted to intentionally vary the highlighted functionality and potential end-user benefits. These concepts are then presented to prospective customers/end-users for preference assessment either singly or in rotation depending on the assessment methodology. For more information about how concept tests can accelerate the “Build-Measure-Learn” validated learning loop, click here…
Both of these standard new product develop steps can be inserted at the front-end of the validated learning cycle where the impact can be the greatest: prior to any investment in the “Build” phase of the process.
The qualitative category exploration is designed to inform and to clarify the entrepreneur’s vision of the market and of the proposed new product or service – specifically, how the startup might best fit within the framework of existing options. This, in turn, leads to the concept test phase where those ideas are translated into specific product descriptions complete with references to unique features and a clear, compelling customer benefit.
By injecting customer research into the front-end of the process, the development team can dramatically reduce uncertainty in terms of feature set, user benefit and product positioning, which form the conceptual framework for the MVP. This, in turn, should both focus and accelerate the “Build-Measure-Learn” feedback loop by eliminating non-starters before the “Build” process is initiated. Read more here…
Moore, G. A. (2014). Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers (3rd Edition ed.). New York: HarperBusiness, and imprint of HarperCollins Publishers.
Ries, E. (2011). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radially Successful Businesses. New York: Crown Publishing Group, a division of Random House, Inc.