We Have A Moral Obligation

I was in Boston and was interviewed by The Growth Show about my current thinking about innovation in companies and government agencies.The interviewer was great and managed to get me to summarize several years of learning in one podcast.

It’s worth a listen.

At the end of the interview I got surprised by a great question – “What’s the Problem that Still Haunts You?”  I wasn’t really prepared for the question but gave the best answer I could on the fly.

Part of the answer is the title of this blog post.

Listen to the entire interview here:
Taking the Lean Startup From Silicon Valley to Corporations and the State and Defense Department

Or just parts of the interview:
1:20  Failure and Lessons Learned

Hacking for Defense @ Stanford 2017 – Lessons Learned Presentations

We just finished our second Hacking for Defense class at Stanford. Eight teams presented their Lessons Learned presentations.

Hacking for Defense is a battle-tested problem-solving methodology that runs at Silicon Valley speed. It combines the same Lean Startup Methodology used by the National Science Foundation to commercialize science, with the rapid problem sourcing and curation methodology developed on the battlefields in Afghanistan and Iraq by Colonel Pete Newell and the US Army’s Rapid Equipping Force.

Goals for the Hacking for Defense Class
Our primary goal was to teach students entrepreneurship while they engaged in a national public service. Today if college students want to give back to their country they think of Teach for America, the Peace Corps, or Americorps or perhaps the US Digital Service or the GSA’s 18F. Few consider opportunities to make the world safer with the Department of Defense, Intelligence Community or other government agencies.

Our second goal was to teach our sponsors (the innovators inside the Department of Defense (DOD) and Intelligence Community (IC)) that there is a methodology that can help them understand and better respond to rapidly evolving asymmetric threats. That if we could get teams to rapidly discover the real problems in the field using Lean methods, and only then articulate the requirements to solve them, could defense acquisition programs operate at speed and urgency and deliver timely and needed solutions.

Finally, we also wanted to show our sponsors in the Department of Defense and Intelligence community that civilian students can make a meaningful contribution to problem understanding and rapid prototyping of solutions to real-world problems.

The Class
Here’s a brief description of the Lean Methodology our students used:

If you can’t see the video click here

Our mantra to the students was that we wanted them to learn about “Deployment not Demos.” Our observation is that the DOD has more technology demos than they need, but often lack deep problem understanding.  Our goal was to have the students first deeply understand their sponsors problem – before they started building solutions. As you can imagine with a roomful of technologists this was tough. Further we wanted the students to understand all parts of the mission model canvas, not just the beneficiaries and the value proposition. We wanted them to learn what it takes to get their product/service deployed to the field, not give yet another demo to a general. This meant that the minimal viable products the students built were focused on maximizing their learning of what to build, not just building prototypes.

(Our sponsors did remind us, that at times getting a solution deployed meant that someone did have to see a demo!)

The Hacking for Defense class was designed as “fundamental research” to be shared broadly and the results are not subject to restriction for proprietary or national security reasons. In the 10 weeks the students have, Hacking for Defense hardware and software prototypes don’t advance beyond a Technology Readiness Level 4 and remain outside the scope of US export control regulations and restrictions on foreign national participation.

Results

  • Eight teams spoke to over 800 beneficiaries, requirements writers, program managers, warfighters, legal, security, customers, etc.
  • Seven out of the eight teams realized that the problem as given by the sponsor really wasn’t the problem. Their sponsors agreed.
  • Received from a problem sponsor mid-live stream broadcast “we are working funding for this team now.”
  • Over half the student teams have decided to continue working on national security projects after this class.

This is the End
Each of the eight teams presented a 2-minute video to provide context about their problem and then gave an 8-minute presentation of their Lessons Learned over the 10-weeks. Each of their slide presentation follow their customer discovery journey. All the teams used the Mission Model Canvas, Customer Development and Agile Engineering to build Minimal Viable Products, but all of their journeys were unique.

The teams presented in front of several hundred people in person and online.

21st Century Frogman

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VA Companion

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Austra Lumina

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Xplomo

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Seacurity

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Surgency

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Broadcom

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Librarian

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The Innovation Insurgency Spreads
Hacking for Defense is now offered at eight universities in addition to Stanford – Georgetown,  University of Pittsburgh, Boise State, UC San Diego, James Madison University, University of Southern Mississippi, and later this year University of Southern California and Columbia University. We established Hacking for Defense.org a non-profit, to train educators and to provide a single point of contact for connecting the DOD/IC sponsor problems to these universities.

The Department of Defense has expanded their use of Hacking for Defense to include a classified version, and corporate partners are expanding their efforts to support the course and to create their own internal Hacking for Defense courses.

Another surprise was how applicable the “Hacking for X…” methodology is for other problems. Working with the State Department we offered a Hacking for Diplomacy class at Stanford.

Both the Defense and Diplomacy classes created lots of interest from organizations that have realized that this “Hacking for X…” problem-solving methodology is equally applicable to solving public safety, energy, policy, community and social issues internationally and within our own communities. This fall a series of new “Hacking for X…” classes will address these deserving communities. These include:

If you’re interested in learning how to apply a “Hacking for X…” class in your workplace or school we’ve partnered with the 1776 incubator in Washington DC to offer a 2-day “Hacking for X…” certification course 26-27 July for those interested in learning how. Sign up here.

It Takes a Village
While I authored this blog post, these classes are a team project. The teaching team consisted of:

  • Joe Felter a retired Army Special Forces Colonel with research and teaching appointments at Stanford’s Center for International Security and Cooperation (CISAC), the Hoover Institution, and the dept. of Management Science and Engineering. Joe is the incoming Deputy Assistant Secretary of Defense for South and Southeast Asia.
  • Pete Newell is a retired Army Colonel currently a Senior Visiting Research Fellow at the National Defense University’s Center for Technology and National Security Policy and CEO of BMNT Partners.
  • Steve Weinstein a 30-year veteran of Silicon Valley technology companies and Hollywood media companies.  Steve is CEO of MovieLabs the joint R&D lab of all the major motion picture studios.

Our teaching assistants were all prior students: Issac Matthews our lead TA, and Melisa Tokmak, Jared Dunnmon, and Darren Hau.

We were lucky to get a team of 25 mentors (VC’s and entrepreneurs) who selflessly volunteered their time to help coach the teams. Thanks to the team Lean Startup mentors: Paul Dawes, Tom Bedecarre, Kevin Ray, Craig Seidel, Daniel Bardenstein, Roi Chobadi, Donna Slade, and Rafi Holtzman and other advisors; Lisa Wallace, Peter Higgins, Steve Hong, Robert Medve.

We were privileged to have the support of an extraordinary all volunteer team of professional senior military officers representing all branches of service attending fellowship programs at Stanford’s Hoover Institution, and Center for International Security and Cooperation (CISAC) and Asia Pacific Research Center (APARC) at the Freeman Spogli Institute (FSI). These included: Colonel Lincoln Bonner (US Air Force), Colonel Curtis Burns (US Army), Captain Kurt Clark (US Coast Guard), Lieutenant Colonel Kurt Helphinstine (US Air Force), Colonel Seth Krummrich (US Army)), Commander Leo Leos (US Navy), Lieutenant Colonel Eric Reid (US Marine Corps), Colonel Mike Turley (US Army), and Colonel Dave Zinn US Army.  Additional volunteers from the active duty military providing support to our teams included  Lieutenant Colonel Donny Haseltine (US Marine Corps), Captain Jason Rathje (US Air Force), Major Dave Ahern US Army) and, Major Kevin Mott (US Army).

And finally a special thanks to our course advisor Bill Perry, former Secretary of Defense and Professor Emeritus, and Tom Byers, Professor of Engineering and Faculty Director, STVP.

Fireside Chat with Sebastian Thrun

I did a fun fireside chat with one of my most favorite people –  Sebastian Thrun – at the Udacity conference. Sebastian is the embodiment of a renaissance person. I first heard about him when his driverless car won the 2005 DARPA Grand Challenge. He founded Google X and led the development of the Google self-driving car. He was a Professor of Computer Science at Stanford and before that at Carnegie Mellon University.

And he asks great questions.

If you can’t see the video click here

1:17     Hacking for Defense (Why did we create it?  What is it?)

3:30   Lean Startup (What is it? How it started, How did the class get on Udacity)

5:30   Pricing (Customer Validation, Sales, Pricing)

8:30  Customer Discovery (What is the Lean Stack)

10:13 What Advice Would You Give to Yourself at 18?

12:37 Small Businesses vs. Scalable Startups (Should I take Risk Capital)

15:48 Can you Teach Entrepreneurship?

19:03 What’s the Craziest Problem I’ve Ever Seen? (The Navy SEAL’s)

21:25 How Do You Find Out What Customers Really Want? (Customer Discovery, Pivots)

Everything You Ever Wanted to Know about Marketing Communications

I was having coffee with the CEO of a new startup, listening to her puzzle through how to communicate to potential customers. She was an academic on leave from Stanford now selling SAAS software to large companies, but was being inundated with marketing communications advice. “My engineers say our website is old school, and we need to be on Facebook, Twitter and Instagram, my VP of Sales says we’re wasting our marketing dollars not targeting the right people and my board keeps giving me their opinions of how we should describe our product and company. How do I sort out what to do?”

She winced as I reminded her that she had gone through the National Science Foundation Innovation Corps. “Painful and invaluable” was her reply. I reminded her that all the Lean tools she learned in class–Customer Discovery, business model and value proposition canvases– contained her answer.

Here’s how.
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Define the Mission of Marketing Communications
Companies often confuse communications tactics (“What should my webpage look like or should I be using Facebook/Instagram/Twitter?”) with a strategy. A communications strategy answers the question, “Why are we doing these activities?” For example, our goal could be:

  1. Create demand for our products and drive it into our sales channel
  2. Create awareness of our company and brand for potential customers
  3. Create awareness for fundraising (VC, angels, corporate partners)
  4. Create awareness for potential acquirers of our company

(Marketing communications is a subset of the Marketing department’s mission. Read the post about mission and intent here.)

Audience(s), Message, Media, Messenger
Once you figure out why you’re creating a communications strategy then you can figure out how to use it. The “how” requires just four steps:

  1. Understand your audience(s)
  2. Craft the message for that specific audience
  3. Select the media you want the message to be read/seen/heard on
  4. Select the messenger you want to carry your message

Step 1: Who’s the Audience(s)?
An audience means – who specifically you want your messages to reach. Is it all the people on earth? Everyone in San Francisco? Potential customers such as gamers who like to play specific types of games? Or people inside companies with a specific title, like product or program managers, CIOs, etc? Venture Capitalists who may want to invest? Other companies that may want to acquire you?

What’s confusing is that often there are multiple audiences you want to communicate with. So, refer to your strategy: Are you trying to reach potential customers or potential investors and acquirers? These are very different audiences, each requires its own messages, media and messengers.

If you’re selling a product to a company, for example, is the audience the user of the product? Her boss? The person who has the budget? The CEO?

How do you figure out who the audience is? It turns out that if you’ve been doing customer discovery and using the value proposition canvas, you know a lot about each customer/ beneficiary. The first step is to put all those value proposition canvases on the wall to remind you that these are the people you need to reach.

How do you figure out which of these customers/beneficiaries is most important? Who’s the least important? If you’ve been out talking to customers, you will have an idea of who’s involved in the buying process. Who’s the user of product? The recommender? The decision maker? The saboteur? As you map out what you learned about the role each of these customers plays in the buying process, marketing communications and sales can decide which one of the customers/beneficiaries is the primary audience of your messages. (And they can decide if there any secondary audiences you should reach.) Often there are multiple people in a sales process worth influencing.

If you’re trying to reach potential acquirers or investors, the customer discovery process is the same. Spend time building value proposition canvases for these audiences.

Step 2: What’s the Message?
Messages are what you delivering to the audience(s) you’ve selected. Messages answer three questions:

  1. Why should the audience care?
  2. What are you offering?
  3. What’s the call to action?

Your customers have already told you how to craft the first part of your message. The answer to “Why should your audience care?” comes directly from the pains and gains on the right side of the value proposition canvas.

And the answer to the second question “What are you offering?” comes from the left side of the value proposition canvas. It’s not just the product feature list, but the pain relievers and gain creators.

Once you get your audience to read your message, then what? What’s the call to action? Do you want them to download a demo, schedule a sales call, visit a physical store location or a website, download an app, click for more information, give you their email address, etc.? Your message needs to include a specific call to action.

Other things to keep in mind about messages:

Message context
A message that is brilliant today and gets the press writing about you and customers begging to buy your product could have been met with blank stares two years ago and may be obsolete next year. In crafting your messages, remember that all messages operate in a context that may have an expiration date. Netbooks, 3DTVs, online classes disrupting higher ed, all had their moment in time. Make sure your context is current and revisit your messages periodically to see if they still work.

Sticky Messages
Messages also need to be memorable – “sticky.” Why? Because the more memorable the message, the greater its ability to create change. Not only do we want people to change their buying behavior, we also want them to change how they think. (This is often a tough concept for engineering founders who believe that if we just tell customers about the features that make their product faster, cheaper, etc. they’ll win.)

Consider that if you were told you were going to pay for cold, dead fish wrapped in seaweed you might not be too hungry. But when we call it sushi people line up.

The same goes for a hamburger. You may eat a lot of them, but if McDonald’s message was “dead cow, slaughtered by the millions, butchered by minimum wage earners, then ground into patties, frozen into solid blocks, and reheated when you order them,” instead of “You deserve a break today,” sales might be a tad lower.

Product versus Company Messages
There is a difference between detailed product messages versus messages about your company. At times, you may have to communicate what the company stands for before a customer is ready to listen to you talk about product messages. For example, to outflank a competitor who had faster products, Intel moved the conversation about microprocessors away from speed and technology to create a valued brand. They created the “Intel Inside” campaign.

Apple was trying to resurrect a then-dying company by reminding people what Apple stood for with their “Think Different” ad campaign

Both Apple and Intel were selling complicated technology but did so by simplifying the message so it had broad emotional appeal. Both Intel Inside and Think Different became sticky corporate messages.

Step 3: Media
Media means the type of communications media each audience member reads/listens to/watches. Is could be print (newspapers/magazine), Internet (website, podcasts, etc.), broadcast (TV, radio, etc.) or social media (Facebook, Twitter, etc.). In customer discovery, you asked prospects how they get information about new companies and new products. (If not, get back out and do so!) The media your prospective customers told you they use ought to be on top of your target media.

The online media your company controls (your corporate website, company Facebook page, Twitter, Instagram, etc.) should be the first place you experiment finding your audience(s) and message.

Typically, you pick several media to reach each audience. It’s likely that each audience reads different media (potential customers read something very different than potential investors.) You’ll need a media strategy – a plan that describes the mix of media and how you will use it. This plan should include the category of media; print, internet, broadcast and then identify specific sites, blogs, magazine, etc.

Step 4: Messengers
Messengers are the well-placed and highly leveraged individuals who have influence over your audience(s). Messengers convey and amplify your message to your audience through the media you’ve chosen.

There are four types of messengers: reporters, experts, evangelists and connectors. (Each audience will have its own unique set of messengers.)

Reporters are paid by specific media to write about news. Which reporters you should talk to comes from discovering which media your audience has said they read. Your goal is to identify who are the reporters in the media your audience reads and what they write about, and to figure out why they should write about you. (Wrong answer – because we have a new product. Very wrong answer – because my CEO wants to be on the cover of publication X or Y.)

Experts know your industry or product in detail, and others rely on them for their opinions. Experts may be industry analysts in private research firms (Gartner, NPD, AMR), Wall Street research analysts (Morgan Stanley, Goldman Sachs), consultants who provide advice for your industry or bloggers with wide followings. Experts may even be potential customers who run user groups that other potential customers turn to for advice.

(Today some reporters are experts – product reviewers in the Tech Section of the Wall Street Journal, or the Technology section of the New York Times (or its product review site Wirecutter)).

Evangelists are unabashed cheerleaders and salespeople for your product and, if you are creating a new market, for your company vision. They tell everyone how great the product is and about the unlimited potential of your product and market. While nominally carrying less credibility than experts, evangelists have two advantages: typically, they are paying customers, and they are incredibly enthusiastic about what they say. (Evangelists are not customers who will give a reference. A customer reference is something you have to twist arms to get; an evangelist is someone you can’t get off the phone.)

Connectors are individuals who seem to know everyone. Each industry has a few. They may be bloggers who expound on the general state of your industry and write magazine or newspaper columns. They may be individuals who organize and hold conferences where the key industry thought leaders gather. Often, they themselves are the thought leaders.

Founders ask me all the time whether they should hire a PR agency. I tell them, “The question isn’t if.  The question is when?” Influencing the messengers is what great public relations firms know how to do. They may have their own language describing who the messengers are (e.g., “influencers”) and how they manage them (e.g. “information chain”), but once you’ve done a first pass of the audience > message > media > messenger, a competent PR firm can add tremendous value.

Customer Discovery Never Stops
Understanding your audience(s) is important for not just startups, but for companies already selling products. It helps you stay current with customers, get ideas for other needs to fill and to create new products. In addition, the audience > message > media > messenger cycle seamlessly moves this learning into getting, keeping and growing customers. Today, Marketing Automation tools (customer analytics, SEO, and Customer Relationship Management (CRM) platforms) generate customer behavior history about what messages worked on which media. These tools generate data that companies use to feed AdTech tools (demand-side platforms, ad exchanges and networks) to automate selling and buying of online ads.

Communications as a Force Multiplier

  • Smart CEOs treat communications as a force multiplier for sales, a tool to dramatically increase valuation and the vehicle to get acquirers lined up at the door. Not so successful CEOs treat it as tactic that can be handed to others.
  • Hiring a PR agency too early is a sign that the CEO is treating this as someone else’s problem. In a startup, the first pass of understanding Audience, Message, Media, Messenger can only be done with the founders/CEO engaged.
  • Getting publicity for a product that does not yet exist is how startups get noticed. But don’t fall victim to your own reality distortion field and hype a product that can never be made (think of Tesla versus Theranos.)
  • Figuring out who the possible audiences are, what messages to send, and what media to use, feels overwhelming at first. The temptation is to try to reach all the audiences with a single message and a single media. That’s a going out of business strategy. Use Customer Discovery, and your customers will teach you who they are, what to say to them and how to reach them.

Lessons Learned

  • Marketing Communications = Audience, Message, Media, Messenger
  • Use the Value Proposition Canvas to understand who your audience(s) are
  • Craft messages to match what your audience has already told you
  • Pick the media they said they read
  • Find the right messengers to amplify your message

Herding Cats – Using Lean to Work Together

When Colonel Peter Newell headed up the Army’s Rapid Equipping Force (REF) he used lean methods on the battlefields of Iraq and Afghanistan to provide immediate technology solutions to urgent problems.

Today, his company BMNT does for government and commercial customers what the Rapid Equipping Force did for the U.S. Army.

Pete and I created the Hacking for Defense class (with Joe Felter and Tom Byers.) One of the problems our students run into is that there are always multiple beneficiaries and stakeholders associated with a problem, often with conflicting value propositions and missions.  So how do you figure out whose needs to satisfy?

Here’s Pete’s view of how you do it.


Unlike businesses, government organizations don’t sell products, and they don’t earn revenue. Instead, they have missions to accomplish and very hard problems to solve.  They use a variant of the Business Model Canvas –  the Mission Model Canvas – to map their hypotheses, and they get of the building to do beneficiary discovery. (A beneficiary can be a soldier, program manager, commanding general, government contractor, stakeholder, customer, etc.)  And just like in a commercial business they are trying to determine whether the value proposition solves the problem and helps the beneficiary accomplish their mission.

Discovery for both business and government is similar in that the only way to do it is to turn assumptions into facts by generating hypotheses, developing Minimum Viable Products and getting out of the building to test those MVP’s in the trenches where the customers and beneficiaries work. Early in the discovery process, teams are faced with a cacophony of personalities and organizations. Often, they struggle with understanding which person or group represents a beneficiary, supporter, advocate or potential key partner. It’s only through repetitive hypothesis testing that they begin to sort them all out.

It’s in the trenches however, where things become different.

Multiple Beneficiaries, Multiple Conflicts
Unlike their commercial counterparts, government problem solvers are often faced with multiple beneficiaries associated with a problem, often with conflicting value propositions. As these differences become apparent, teams must make decisions about the value proposition trade-offs between conflicting beneficiaries – sometimes even pivoting completely in favor of one beneficiary to the detriment of another.

During last year’s Hacking for Defense class at Stanford Team Aqualink experienced the conflicting beneficiaries’ problem.  The result was a significant pivot of both beneficiary and value proposition.

Aqualink started with a problem given to them from the chief medical officer of the Navy SEALS – they had no way to understand chronic long-term health issues divers face. Divers work 60 to 200 feet underwater for 2-4 hours, but Navy doctors currently have no way to monitor divers’ core temperature, maximum dive pressure, blood pressure, pulse and the rebreather (air consumption), or the dive computer (dive profile) data.

Having all this new data would give a diver early warning of hypothermia or the bends. More importantly the data would allow the medical director to individually assess the short and long-term health of each diver. And medical researchers would have access to detailed physiological data. The medical director tasked the team with building a wearable sensor system and developing apps that would allow divers to monitor their own physiological conditions while underwater and to download it for later analysis.

In the first week of the class this team got out of the building, suited up in full Navy diving gear and did customer discovery by spending an hour in the life of the beneficiary.

But as the students on the Aqualink team spoke to the SEAL team divers, (another one of their beneficiaries), they experienced an existential crisis. Most of the divers were “ambivalent” (read hostile) about the introduction of a vitals monitoring platform, (“If you gave to us at 0900, it would end up on the bottom of the ocean by 0905.”) Having worked so hard to get into the SEALS, no diver wanted doctors telling them they could no longer dive.

After further questioning, the team discovered the reason the divers were spending so much time underwater – they often did not know where they were. To find out, they had to get a GPS fix. This meant their minisub (called the SEAL Delivery Vehicle) had to rise to within 6 feet of the ocean surface so the GPS antenna could broach the surface. And to do so they had to surface slowly to avoid giving the divers the bends.

The divers told our student team, “Screw the health sensors. Build us a GPS sensor that can be deployed from 100 feet underwater.”

Now the team had a dilemma. They would have to decide which beneficiary to focus on – the SEAL Team medical director, who was the sponsor of their problem, or the operators of the delivery vehicle and divers within SEAL Delivery Vehicle Team One, along with their immediate chains of command in SDVT-1 and Naval Special Warfare Group 3.

When they went back to the medical director with their findings, he was surprised as they were.  “Never knew that’s why they spent all that time down there.  Heck, yes, fix their problem first.”

Understanding the Problem Context and Problem Ecosystem
As Aqualink shows, getting out of the building – interviewing the beneficiaries, drawing their workflows and mapping a day-in -their-life – will give you a more complete picture of the context in which a proposed problem exists. Talking to multiple beneficiaries will lead to better understanding of the entire ecosystem of the problem. Often this will show that the problem you have been given is merely a symptom of a larger problem, or is the result of a different problem.

The solution is to:

  1. Cross check the results of your discovery between different beneficiaries. Often, you’ll find that they seldom have a complete understanding of one another’s workflows and pain points but instead are championing the solution to a mere symptom of a different problem.
  2. Share what you learned in discovery among the different beneficiaries. This will arm you with the tools needed to get them (or their leadership) to agree on the right problem that needs to be solved first. In many cases this will lead to your first pivot!

The goal is to sort out who has a value proposition that must be addressed first.

The power of beneficiaries helping one another
While discovery with multiple beneficiaries can be confusing and exhausting, there is immense power when all the beneficiaries work together. Therefore, the goal of customer discovery is not just to understand the pains and gains of individual beneficiaries, but to find a shared purpose between all of them.

Once they understand they share the same goal, they can solve pain points or create gains for each other using the resources they already control. A “shared” sense of purpose is a very powerful step in the pathway towards a deployable solution.

When the Department of Energy asked BMNT to build a training program for getting veterans into advanced manufacturing jobs, we saw the power of a shared purpose between multiple beneficiaries first hand.

The problem we were asked to solve is that of the 10,000 veterans who leave military service every month, many remain unemployed or underemployed, yet at the same time the number of unfilled advanced manufacturing jobs in the U.S. is expected to climb to over a million by 2020. From a business perspective, obtaining technically qualified talent is among the top constraints to growth in the US.

Seems like it would be a match made in heaven, right?  Not so fast…

While we initially thought the beneficiaries of the effort were the veterans, we quickly discovered there were other beneficiaries in advanced manufacturing. We found these additional beneficiaries had different pains and gains which in turn required different value propositions to solve their problems.

Our customer discovery taught us that there were three additional beneficiaries:

  • Universities needed to grow their enrollments. Our discovery showed us universities were willing to create programming for Advanced Manufacturing, but first needed to see a business case for how it would increase their enrollment to make it a worthwhile effort.
  • Industry needed to attract and hire qualified employees. We learned that technically qualified employees within industry were in such demand that the number one way to get qualified employees was to pilfer them from others.
  • Government Agencies needed to help their communities build skilled labor pools to attract new industries.

And we learned that our initial beneficiary, veterans leaving service, didn’t need internships or low-paying jobs, but needed jobs that paid enough to support their families.

We found each of these beneficiaries had a shared purpose. And each of them had a value proposition that would create a gain or relieve a pain point for another beneficiary. These were big ideas.

We found that as these overlapping value propositions emerged, we used the results to get the beneficiaries to come together in a workshop designed to jointly create a shared minimum viable product that they could then use to test within their own organizations.

Bringing the groups together in a workshop also served to align value propositions between beneficiaries by demonstrating that there was a way to create a single program that served all their needs. And we created an environment that allowed each beneficiary to discover that the other beneficiaries were partners they could work with in the future.

What was the impact of bringing the beneficiaries together in a workshop and creating this beneficiary ecosystem for advanced manufacturing?

Lawrence Livermore National Lab (LLNL) created a veterans’ jobs program. They teamed with a local college to create internships that allowed veterans to work during the summer.  In turn, the local college created additional advanced manufacturing classes to meet LLNL’s technical needs and the regional workforce investment board provided funding.

In Fort Riley, the Army base in Kansas, the military teamed with Kansas State University to create an advanced manufacturing program. Kansas State created a series of advanced manufacturing classes. Soldiers leaving the service can take these courses at a nearby campus beginning up to six months before they leave service.

An unexpected consequence is that today there are soldiers from Fort Riley using advanced manufacturing processes to create parts for vehicles and equipment at the Army base.

Lessons learned

  • Government problem solvers will often be faced with multiple beneficiaries with different value propositions. Share what you learn from different beneficiaries with each other to sort out which has a value proposition that must be addressed first.
  • The benefit of having multiple beneficiaries is that their strengths can be used to help one another create gains and relieve pains for one another. Creating a shared sense of empowerment from working together smooths the pathway towards scaling the right solution.

Don’t let process distract you from finding the strategy

When you’re up to your neck in alligators, don’t forget the goal was to drain the swamp.

I love teaching because I learn something new every class.

This time it was, “Don’t let process distract you from finding the strategy.”


The latest “aha” moment for me when I was at Columbia University teaching an intensive 5-day version of the Lean LaunchPad/I-Corps class.  The goal of the class is to expose students to the basics of the Lean MethodologyBusiness Model Design, Customer Development and Agile Engineering.

In this short version of the class, students (in teams of four) spend half their day out of the classroom testing their hypotheses by talking to customers and building minimum viable products.  The teams come back into the class and present what they found, and then they get out and talk to more customers.  Repeat for 5 days.  All teams talk to at least 50 customers/ partners/ stakeholders, and some manage to reach more than 100.

One of the teams wanted to create a new woman’s clothing brand. The good news is that they were passionate, smart and committed.  The not so good news is that other than having been customers, none of them had ever been in the fashion business. But hey, no problem.  They had the Lean Startup model to follow. They could figure it out by simply talking to customers and stores that carry unique fashion brands.  How hard can this be?!

2_8_maraBy the second day the team appeared to be making lots of progress –  they had talked to many women about their clothing line, and had marched up and down NY stores talking to buyers in clothing boutiques.  They built detailed value proposition canvases for each customer segment (young urban professional woman, students, etc.) –  trying to match customer pains, gains and jobs to be done with their value proposition (their new clothing line.) They were busily testing their hypotheses about customer segments and value proposition, seeing if they could find product/market fit.

In listening to them it dawned on me that I had fallen victim to teaching process rather than helping the teams gain insight. I asked them to remind the class what business they were in.  “We’re creating a clothing fashion brand,” was the reply.  I asked, “And how much fashion brand expertise do you have as a team?” “None, we’re using customer discovery to quickly acquire it.”  On the surface, it sounded like a good answer.

But then I asked, “Has anyone on your team asked if any of your 120 classmates are in the apparel/fashion business?”  After a moment of reflection they did just that, and eight of their classmates raised their hands. I asked, “Do you think you might want to do customer discovery first on the domain experts in your own class?”  A small lightbulb appeared over their heads.

A day later, after interviewing their classmates, the team discovered that when creating a woman’s clothing brand, the clothing itself has less to do with success than the brand does. And the one critical element in creating a brand is getting written about by a small group (less than 10) of “brand influencers” (reviewers, editors, etc.) in fashion magazines and blogs.

fashion-brandWhoah… the big insight was that how you initially “get” these key influencers – not customers or stores – is the critical part of creating a clothing fashion brand. This meant understanding these influencers was more important than anything else on the business model canvas. The team immediately added brand influencers to their business model canvas, created a separate value proposition canvas for them and started setting up customer discovery interviews.
The lessons?

  • This team was entering an existing market. (The team had already drawn the Petal Diagram mapping the competitive landscape.)petal-and-canvas
  • In an existing market there is a track record for how new entrants create a brand, get traction and scale. Many of the key insights about the business model and value proposition canvases are already known.
  • In an existing market, going through customer discovery (talking to customers, buyers, distribution channel, etc.) without first asking, “Are there any insights that can be gained by understanding the incumbent strategies, can be a trap for the unwary.”

Ironically, when I was entrepreneur I knew and practiced this. When I started a new venture in existing markets I would spend part of my initial customer discovery attending conferences, reading analysts’ reports and talking to domain experts to understand current market entry strategies. (None of this obligated me to follow the path of other companies. At times I took this information and created a different strategy to disrupt the incumbents.) But as an educator I was getting trapped in teaching the process not the strategy.

The fashion brand team’s experience was a great wake-up call.

From now on my first question to startups in an existing market is: “Tell me the critical success factors of the existing incumbents.”

Lessons Learned

  • In an existing market, draw a Petal Diagram with adjacent companies
  • Focus part of your initial customer discovery on learning competitive insights.
  • Describe how those companies entered the market. What was critical?

 

Entrepreneurs are Everywhere Show No. 45: Dan Miller and Brian Zuercher

I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. But even when I reached that point, I continued to try to brute force it into existence. I wound up losing a lot.

We followed every test and experimental process from the get-go but we didn’t tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide. When they found out, they questioned my decision-making and me as an entrepreneur.

The same passion that got your startup idea off the ground can blind you to signs that your company is failing.

And not keep investors informed about changes to your business model can have serious consequences.

How to recognize when it’s time to pull the plug on your startup idea, and why founders can’t operate afford to operate in a vacuum were the focus on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

dan-miller

Dan Miller

Joining me in the Stanford University studio were

brian-zuercher

Brian Zuercher

Listen to my full interviews with Dan and Brian by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Dan Miller is the co-founder and CEO of Level Therapy, which provides access to psychotherapists through video, voice, and text. Before Level, Dan was the founder and CEO of Freshsessions, the world’s first marketplace for musicians to find and book studio time anywhere.

Before setting out on his own, Dan held various product, research, and operations roles at Salesforce, SurveyMonkey, Forrester Research, and The Ladders. He was also on the team that wrote the business plan for BlackGirlsCode. In 2014, Business Insider listed Dan as one of the top 46 African Americans in Tech.

With Freshsessions, Dan thought he was on to a great idea. Other people thought so, too, but weren’t willing to pay for the service:

It was going pretty well at the very beginning. We built a landing page, and ran some ads, and started to drive targeted traffic to the ads to see if people would be interested in it.

There was a lot of interest. But it was very difficult to find engaged studio owners that wanted to change how they were operating their businesses to adopt a technology-based model, and find musicians that had enough money to book consistent sessions through the platform.

We found the need, but no payers.

If you can’t hear the clip, click here

He wanted Freshsessions to work so badly that he was tone-deaf to signs that it was time to shut the business down:

I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. Even when, I believe, in hindsight, that I reached that point, I continued to try to brute force it into existence.

We were trying out different cities, and I was flying around the country, and we were trying different campaigns and various things, and ultimately they were not working.

Through that process, I lost a lot including some relationships with individuals, and I started to develop symptoms of acute anxiety.

 

If you can’t hear the clip, click here

Brian Zuercher is the CEO and co-founder of Seen, a marketing software platform that is helping marketers tell the story of their brand and build relationships with their customers through consumer generated photos and videos. Seen was recognized as the “Innovation Game Changer” at the 2012 Ohio Interactive Awards.  

Actively involved in the local startup community, Brian is a Startup Weekend Columbus host and MC at the monthly morning pitch event for entrepreneurs, WakeUp StartUp.

Additionally, he has an extensive background in building and launching consumer products at Seen, Clearwish (founder), and Woods Industries.

Today, Seen has achieved some success, but it took Brian and his team several pivots to get where they are. They didn’t always keep their angel investors informed about the changes they were making and it nearly cost them:

We followed every test and experimental process from the get-go but we didn’t tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide as the product, but that didn’t work out in our case. 

We did three iterations of the product in less than 12 months, each one progressively going off of different consumer metrics that we found and then partner feedback.

Ultimately, it didn’t work and we decided we had enough time to maybe do one last iteration. We did the tough thing of letting everyone go, reducing the burn down to two of us from almost 10 at one point, and gave ourselves six weeks to turn into a new product.

Meanwhile, the investors thought we were dead. We’d told them, “Hey, we let everyone go. We’ve got some money left, but we don’t know if we’ve got much left.” 

They questioned my decision-making and me as an entrepreneur. Fortunately we had the confidence of a couple board members as well who were able to stand up for us.

If you can’t hear the clip, click here

Seeking help to cope with the anxiety he developed as Freshsessions was falling apart, Dan tried some web-based mental health practitioners. The experience wasn’t positive, and led him to come up with the idea for Level Therapy:

I tried one that was solely web-based, with an interesting subscription model, but they didn’t accept insurance. I walked away from that experience feeling cold, and more like a number than a person.  

Immediately, the entrepreneur in me started to kick in, and I started to think about why, objectively, was I having those thoughts? Where did this company miss? How could I build a solution that would address those points?

If you can’t hear the clip, click here

Dan suggests other founders seek out not just a single mentor but a network of fellow entrepreneurs that can act as a kind of advisory board:

I would aim to find other entrepreneurs that are perhaps six months ahead of where you currently are as a company, or six months to a year or two years ahead of where you are, so they are contemporaries that have experience, potentially the same types of challenges that you’re experiencing. They can give you timely advice.  

Also, individuals that are further out, so perhaps they have either sold companies or they’ve been operating companies for three plus years, five plus years, etc. They can give you more long-term strategic advice.

If you can’t hear the clip, click here

Based on his experience with Freshsessions, he also counsels founders to never work with friends:

It was difficult to overnight go from being someone whose relationship was based around just having fun to actually motivating them and inspiring them and pushing them.  

Maybe that was a function of me being young in my professional career as well, but that was my experience. I wouldn’t do it again.

If you can’t hear the clip, click here

In his first startup, Clearwish, Brian learned it isn’t enough to focus on trying to realize your vision. The founding team must be on the same page about possible future directions for the company, too.

We were approached to get funded and had enough success and promise at the time, but we couldn’t find alignment around the notion of building a lifestyle business first, a venture-based business, and how big it could really be.

 We had never discussed everyone’s expectations when we founded the company. Oh we had a happy, fun conversation over a couple of beers, but we did not sit down and say, ‘Hey wait, where’s everyone want to go with their life?”

Instead, we launched the product, got momentum very quickly, and were swept up in this process. We misfired on that and broke down that team. It was a learning experience for sure.

 

If you can’t hear the clip, click here

Having worked with startups in Columbus, Ohio, Brian says it’s not necessary to be in a startup ecosystem to make your startup work:

When I was complaining about raising money in Columbus many years ago, Bill Diffenderffer, who ran SkyBus and is now one of the founders of Silvercar, told me, “You keep saying here, but there is no here here, so just go get the money.”

That really stuck with me. The place isn’t necessarily going to make the business go.

If you can’t hear the clip, click here

His advice for other founders? Think big:

I think I try to ask all the questions that I’ve been asking myself, like why are you doing this? Why are you making the decision? Why are you looking at that? Is this what you believe is right for the business versus right for what some financier asked you to do? I push them to think really big.

If you can’t hear the clip, click here

Listen to my full interviews with Dan and Brian by downloading them from SoundCloud here and here (And download any of the past shows here.)

Coming up next on the blog: Emily Kennedy, founder and CEO of Marinus Analytics; and Chris Cabrera, founder of Xactly

Tune in Thursday, Oct. 13, at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere: George Zimmer, founder of Men’s Wearhouse and now founder, chairman and CEO of Generation Tux; and Scott Adams, creator of Dilbert

 

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