How To get to problem / solution fit

Fredi SchmidliZürich, 15 August, 2016

Hear from Fredi Schmidli - lean investor - how to get to

problem/solution fit

Lean Startup ZürichMeetup

1fredi@pragmatic-‐solutions.ch15.08.2016

Fredi Schmidli

• Economist and BA• Management Teams in various functions• Entrepreneur• Business Angel and Boardmember: www.startangels.ch• Partner at pragmatic solutions• Community Builder: meetup.com/Lean-‐startup-‐Zurich/


THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TOFAIL.

Dave Mc Clure @http://500.co


Goal: To improve the success rate

Source: Ash Maurya «Running Lean»

• Develop product in half the time and at half the cost (GE)

• Reduce failure: “wrong” product and “premature” scaling


Lean Innovation Framework


Problem Solution Fit => ValueProblem Solution FitYou validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real? Will the target customer pay? Can the problem be solved?


From Idea to Problem/Solution Fit

7Source: Ash Maurya «Running Lean»

fredi@pragmatic-‐solutions.ch15.08.2016

Key Principle

Get out of the building and 1 2 3 4 5 6 7 8 9


Lean Canvas (by Ash Maurya / adapted from Osterwalder)


Why Lean Innovation?

See: http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/


The 3 Phases of Customer Development

11Source: Ash Maurya, Scaling Lean

What happens here?


Different Stages, 10x product launch

12Source: Asy Maurya, Scaling Lean

Ideation Validation Execution


Source: Ash Maurya «Running Lean» Workshop, 2015




Persona Development & Segmentation

understand the “whys” by looking at the customers behaviors

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FactsFactual information about your target customer

PainState the problem you believe your target customers have, that your solutions solves

BehaviorExisting behavior they exhibit now, because they don’t have your solution

GoalsWhat goals are they trying to accomplish with their behavior, that your solution will do better

See also: http://de.slideshare.net/LeanStartupMachinefredi@pragmatic-‐solutions.ch15.08.2016

What and why Early Adopters?

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2.5% 13.5% 34% 34% 16%


17fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015



How to uncover problems

5 Why root cause analysisà “Why is this a problem?”

“Job to be done” concept, Clayton Christensen (JTBD)• main job & related Job• Functional & emotional aspects• Personal & social dimension


BML Feedback loop

Design experiment

Proposal, Pretotype,, MVP …Results

Analyse results:persevere, pivotor quit?

weeks not years

Assumption/Hypothesis

Run experiment

20Source: Eric Ries «The Lean Startup»


Types of experiments

4) Early version with minimal feature set that can be “sold” to early adopters

1) Proposal: a document describing the solution

3) Fake demo of any kind

2) Smoke Test: Landing Page to test interest

MVP

Pretotype


Validated Learning Experiment Template

Metric: We will know we have succeeded when [quantitative/measurable outcome] or [qualitative/observable outcome]

Janice Fraser

Hypothesis: We believe that [customer type] have a need for [need/action/behavior]

Experiment: The smallest thing we can do to prove that need is [experiment]


• Welcome: Set the scene (2min)• Interviewees demographics-‐target customer? (2min)• Describe problem (your hypothesis) (2min)• Customers must rank top three problems (4min)• Listen to their world view (15min)• Wrap up. Sum up feedback to confirm understanding (2min)• Get permission to follow up. Get referrals (2min)

Problem Interview

Ash Maurya

• Document results

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Goal: Have I identified a problem worth solving?


24fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015

Test your concept early

Don’t be afraid to be “embarrassed” when customers see your “product” for the first time, you will be embarrassed anyway. Eric Ries


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Learning is hard and often frustrating

fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015









Types of experiments

4) Early version with minimal feature set that can be “sold” to early adopters

1) Proposal: a document describing the solution

3) Fake demo of any kind

2) Smoke Test: Landing Page to test interest

MVP

Pretotype


Pretotype Example (Explainer Video)

Test vision ofcloud serviceoffering –Dropbox

32

https://www.youtube.com/watch?v=7QmCUDHpNzE


Solution Interview

Ash Maurya

• Tell a story -‐ frame the product (2min)• Show Concept/UVP, Demo/Pretotype/MVP (15min)

• Wrap up. Sum up feedback to confirm understanding (2min)• Get permission to follow up. Get referrals (2min) • Document results

• Welcome: Set the scene (2min)• Collect demographics – right customer segment? (2min)

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• Test the pricing (15min)

Goal: Will I build sth. people want at the price they will pay?


LEARN: Persevere

I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 34fredi@pragmatic-‐solutions.ch15.08.2016

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Four sequential experiments

Experiment 1; 10% success

Refine target segment


Refine target segment


Experiment 4; 33% successqual. quant.

Positive Negative

From Sébastien Sacard

# interviews

10% 20% 33%

33%


LEARN: Persevere

I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 36fredi@pragmatic-‐solutions.ch15.08.2016

Experiment Report

Why is it relevant?

Quantify your goalsset scope/timebox

Plan how to executeexperiment

Results = Data

Document the learning (validated,invalidated or inconclusive)

Test value and growth hypothesis first

Move to next experiment



Lean Dash Board (Lean Stack)

Flow

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Lean Dash Board: Example

Customer Example:Insurance Company

www.pragmatic-‐solutions.ch 4015.08.2016

Problem Solution Fit => ValueProblem Solution FitYou validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real? Will the target customer pay? Can the problem be solved?


The growth assumption – test how new customers will discover a product or service. Through what engine will you acquire new customers at affordable cost.

Product Market Fit => GrowthProduct Market FitCustomer is willing to pay. Cost of acquiring new customers is smaller than profit. Evidence that market is large enough

Brant Cooper

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation


LEARN: … or pivot

Pivot: A change in strategy without a change in vision


Savings Potentials with Lean

• Lean Canvas instead of Business Plan• Identification & priorisation of risks instead oftesting the whole Business Model• Solution interviews instead of Market Research• Pretotype/MVP instead of perfect Product• Speed has biggest impact on profit


Hands on books


agility accelerates ...

FEEDBACK DOOR


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Feedback Door1. How likely is it that you would recommend this Presentation to a friend or colleague?

Source: NetPromoter Score

2. What changes would we have to make for you to give us one point more?

……………………………………………………………………………………………………………


Small Business & Entrepreneurship

How To get to problem / solution fit