Save the Date! the 5th Lean Innovation Educators Summit

SAVE THE DATE for the 5th Lean Innovation Educators Summit on The Role of Educators and the University in Building Sustainable and Innovative Ecosystems 
February 3rd, 2022 from 1 to 4pm EST, 10 to 1pm PST 

Join me, Jerry Engel, Pete Newell, and Steve Weinstein as well as educators from universities around the world for this upcoming event.  

The Summit brings together leading entrepreneurship educators who are putting Lean Innovation to work in their classrooms, accelerators, and students’ ventures. This is the fifth edition of this semi-annual gathering, a supportive peer community of educators, and we’ll meet to discuss how we adapt to meet the challenges of the current tumultuous environment. The upcoming session will focus on the role of the university, and other important organizations in our ecosystems, in supporting our critical mission of preparing the next generation of entrepreneurs and innovators. 

Why?
The role of entrepreneurs and the ecosystem that supports them is even more important as the pace of change accelerates. The challenges of the pandemic and global warming highlight the importance of capturing value from technology and the innovators who create novel and effective solutions.  How do we as entrepreneurship and innovation educators best prepare the next generation?  What is the role of the university in helping us do this?

What?
Our key note speaker is Dr. Richard Lyons of UC Berkeley – the University’s first ever Chief Innovation Officer. After ten years as Dean of the Berkeley Haas School of Business, Rich brings a fresh and broad perspective. Stimulated by Professor Lyon’s keynote, we’ll get to the heart of the Summit, our peer to peer discussions. In these moderated sessions we’ll discuss best practices with colleagues from around the world. We’ll then share the results of the breakout sessions with everyone.

How?
This session is free but limited to Innovation educators. You can register for the event here and learn more on our website:  https://www.commonmission.us/summit. We look forward to gathering as a community to continue shaping the future of Lean Innovation Education.

Panelists and moderators include:  

Ivy Schultz – Columbia University
Victoria Larke – University of Toronto
Ali Hawks – BMNT
Julie Collins – Georgia Tech
Babu DasGupta – University of Wisconsin – Milwaukee
Bob Dorf – Columbia University
Michael Marasco – Northwestern University
Sabra Horne – BMNT
Phil Weilerstein – Venture Well
Tyrome Smith – Common Mission Project
Thomas O’Neal – University of Central Florida
Paul Fox – La Salle University
Philip Bouchard – TrustedPeer Entrepreneurship
Jim Hornthal – UC Berkeley
Todd Morrill – UC Berkeley
Todd Basche – BMNT
Dave Chapman – University College London
Stephanie Marrus – University of California – San Francisco
Sid Saleh – Colorado School of Mines
Joe Smith – Department of Defense
Jim Chung – George Washington University

When?

See you February 3rd, 2022 from 1 to 4pm EST, 10 to 1pm PST.
Register here

Year End Review – What You Might Have Missed

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”

Charles Dickens


What a year for all us. The quote above sums it up for me.

I thought I’d share an end of year summary of the best of the 2021 posts.  Enjoy.


Innovation in Large Organizations

  • The difference between creating new things versus executing existing ones in two sentences. Here
  • Why innovation heroes are the sign of a dysfunctional organization. The title says it all. Here.

Culture

  • Sometimes we get trapped inside our own heads. I know I did. Here’s how to get unstuck. Here
  • We all don’t see the world the same way. And I don’t mean politics. Some of us literally can’t see what you can.  Here.

Entrepreneurship

  • Why are you waiting for permission to get smarter? You don’t need permission. Here.
  • Ever wonder how a class you took gets designed? There’s a lot under the hood. Here’s how.

National Security

  • U.S. national security problems are multiplying faster than our traditional institutions can solve. So we decided to create something different – The Gordian Knot Center for National Security Innovation.  Here.

Happy Holidays.

On to a better year.

steve

How to Find a Market? Use Jobs-To-Be-Done as the Front End of Customer Discovery

Modern entrepreneurship began at the turn of the 21st century with the observation that startups aren’t smaller versions of large companies – large companies at their core execute known business models, while startups search for scalable business models. Lean Methodology consists of three tools designed for entrepreneurs building new ventures:

These tools tell you how to rapidly find product/market fit inside a market, and how to pivot when your hypotheses are incorrect. However, they don’t help you figure out where to start the search for your new business.

Anthony Ulwick and Ted Thayer of Strategyn have a set of unique and valuable insights:

  • Rather than defining markets as existing, adjacent or new markets – or by verticals, technology, demographics, et al. all markets can be described by what job the user wants to get done
  • Their Jobs-to-be-Done Market Definition Canvas make the Lean Startup methodology even better by finding and defining a market up front. Here’s their description of why and how.

Problem – Lean Doesn’t Have a Market Definition Step
The Lean Startup methodology asks innovators to interview potential customers within their “market” to discover the customer’s unmet needs and establish a product/market fit. Given the number of interviews to get meaningful data, this can take months.

As innovators deepen their understanding of the customer, they may pivot their product concept, target a different vertical, demographic, or customer activity, or incorporate a different technology into their solution.

Some innovators define markets around a product, e.g. the vacuum cleaner market or the espresso maker market. Others define markets around verticals, e.g. the financial services market or the healthcare market. Or defined around demographics (the people over 45 market), technologies (the brain sensor market), customer activities (the fitness market), and product portfolios (the heavy equipment market).

Here’s the consequence: Depending on how founders originally define their market, making one or more of these changes can inadvertently alter the original market definition, which in turn changes the “market” they are targeting and invalidates the customer needs they have captured.

This creates a recursive process in which the team is simultaneously iterating on the market definition, customer needs, and the value proposition, with no logical way to exit. This circular loop can cause them to churn, pivot, and fail.

Startups would have a greater chance of success if founders could avoid iterating the market they are targeting while at the same time trying to establish product/market fit.

In most cases, innovators don’t create markets; they create products to serve markets. Thus, the market must be defined and validated in the innovation equation before moving to needs discovery and product definition.

What’s Missing?
What missing is a process for defining a market that reduces uncertainty, reduces iteration in the effort to establish a product/market fit, and aligns the team around the business objectives and the results.

We’ve spent a good number of years asking ourselves what constitutes the “perfect” market definition. What we have concluded is that a market should be defined in such a way that…

  • The market definition becomes a constant in the product/market fit equation, not a variable. It does not change as the study of that market unfolds.
  • It is stable over time. It does not go away when different solutions or technologies come along, thus making it a valid long-term focal point for value creation.
  • It is unique from any other market, making it distinguishable and unambiguous.
  • It does not assume a product or a solution. Rather, it is defined in problem space.
  • It indicates who the targets are for value creation—making it clear which group of people to focus on.
  • It makes the discovery of customer needs quicker, more effective, and less costly.
  • It reveals all sources of competition, making disruption and other surprises less likely.
  • It is relevant to and aligns the entire organization, e.g., sales, marketing, development, etc.

Given this set of characteristics, how should a market be defined?

How should a market be defined?
It’s worth remembering that people buy products and services to get a “job” done. A job is defined as a task people are trying to accomplish, a goal or objective they are trying to achieve, a problem they are trying to resolve, something they are trying to avoid, or anything else they are trying to accomplish. More about Jobs-to-be-Done Theory here.

When looking at a market through the Jobs-to-be-Done lens, a market is best defined as: a group of people and the job they are trying to get done.

For example, parents (a group of people) who are trying to “pass on life lessons to children” (a job-to-be-done) constitute a market. As do surgeons (a group of people) who are trying to “repair a torn rotator cuff” (a job-to-be-done), or clinicians (a group of people) who are trying to “diagnose the cause of a patient’s sleep disorder” (a job-to-be-done).

When defining markets with a jobs-to-be-done lens, thousands of unique markets exist. They are stable over time, focus on what people are trying to accomplish rather than solutions, offer a focal point for analysis, and form a foundation for deeply understanding customer needs. Learn about needs through this lens here.

Because the market is defined using “Jobs-to-be-Done” before engaging in the first step of the Lean Startup methodology, the defined market will not change as customer discovery and validation of that market unfolds. This cuts back on the number of iterations and pivots.

Big idea – Even New and Disruptive Markets can all be viewed as “Jobs-to-be-Done”
How does “Jobs-to-be-Done” work in new and disruptive markets? For example, people often talk about the cryptocurrency market as a new market, but is it really? It depends how you define “market.”

If you choose to define a market around a new product or a new technology, then, by definition, the “cryptocurrency market” would be considered new. But if you define the same market through a jobs-to-be-done lens, the story is very different, as consumers (a group of people) have for centuries been trying to intermediate the storage and exchange of value over time (the job-to-be-done).

When looking through a jobs-to-be-done lens, cryptocurrency is simply a new offering in a pre-existing market. Similarly, Uber, Netflix, electronic evidence discovery, cloud computing, smartphones, online learning, Airbnb, Spotify, Google Maps and many other products considered disruptions are in fact new offerings in pre-existing markets.

Why does this matter? When conducting needs discovery, potential customers struggle to articulate needs for a product that does not yet exist. But when you ask them about their job-to-be-done, customers can state with precision their needs associated with getting the job done better, making needs discovery faster and more effective.

To help you define your market through this lens, we have created the Jobs-to-be-Done Market Definition Canvas. We want to make this canvas available to everyone who has embraced the Lean Startup methodology and want to take it to the next level.

Instructions for using the canvas are included below, and the canvas can be downloaded here.

THE JOBS-TO-BE-DONE MARKET DEFINITION CANVAS

If you can’t see the canvas click here.

The Jobs-to-be-Done Market Definition Canvas is designed to help you define the market you are in or have chosen to serve as [a group of people] + [the job they are trying to get done].

The Market Definition Canvas works for both B2C and B2B applications. While it is optimized to define single-sided markets, it can be used twice to define both sides of a double-sided market. For component manufacturers who sell to OEMs or who are at the top of a long distribution chain, a canvas can be completed for each constituent in the distribution chain, including the end-user, as each constituent has its own unique job to get done.

See this webinar with Tony Ulwick to learn more about this canvas.

8 steps to define Jobs to Be Done

1. Start with a traditional market definition

What is the product/service/idea you seek to innovate?
The exercise starts with something you’re familiar with—a product focus. We ask, “What is the product, service, or idea you’re looking to innovate around?” We use this as the grounding point, as the subsequent steps will help transition you from a product view to a jobs-to-be-done view of your market.

2. Job executor determination

Who’s using the product to get a job done?
The focus on “jobs to be done” begins with this step. Ask, who’s using your product (or who would use your product once released) to get a job done? The goal is to reveal the diverse set of potential product users. So, list all the categories of people who use or would use the product to extract its value. Keep in mind; we are focused here on the job executors. Do not list out influencers, economic buyers, people who support the product throughout its lifecycle, or other customer types, just job executors.

For example, Bosch used this approach when trying to enter the North American circular saw market (yes, they began with a product-based market definition in mind). They concluded that finish carpenters, framers, roofers, general contractors, electricians, and plumbers use circular saws. Notice they did not use the formal job titles of the job executors; instead, they listed the categories of people who use circular saws.

3. Abstracted job executor

What overarching term can classify all the categories of people using the product to get a job done?
Next, define the one overarching term that can be used to classify or describe all people using, or potentially using, your product these people as a single group. Remember, we are defining a market as a group of people + the job-to-be-done. When defining the group of people, try not to use an actual job title. Instead, look for an all-inclusive term that encapsulates all job executors, usually a higher-level, generic term.

The Bosch team, for example, abstracted roofers, framers, plumbers, finish carpenters, etc., into a higher-level category using the term “tradespeople.” In other words, the “group of people” using circular saws was conveniently referred to as tradespeople.

For consumer product goods, the job executors are often referred to simply as “consumers.”

4. Job executor

The group of people (job executor) is defined as:
You may have come up with more than one way to describe the “group of people.” Choose a label that fits all types of people using the product, service, or idea you have in mind. For example, you may choose the term surgeons over cardiac surgeons, or tradespeople over tradesmen to be more inclusive. Other examples include educators over teachers, accountants over tax preparers, or consumers over adults.

It is important to define the “group of people” before defining the job-to-be-done, as you will be interviewing representatives of the group to determine, from them alone, the way they define the job they are trying to get done.

5. Function of the product

What “job” does the product/service/idea you want to innovate help the job executor accomplish?
Products don’t have jobs-to-be-done; people do. But to uncover the targeted group’s job-to-be-done, it is often helpful to start by understanding what function/job the product you have in mind performs.

Work with your product team, or preferably use customer discovery to go directly to the “group” of people (defined in step 4) and ask: What does/will the product or service we have in mind help you accomplish from a functional perspective? Collect and cull the responses into a single statement according to this formula:

The product will help the group of people [verb] + [object of the verb] + [contextual clarifier (optional)].

For example, a kettle may be used to “heat + water + to the desired temperature,” or a dental drill may be used to “contour + the shape + of a tooth.”

Keep in mind; this isn’t the customer’s job-to-be-done—it’s the function or the job that the product gets done, which is often only part of the job the customer is trying to get done. For example, while people may use a kettle to “heat water to the desired temperature,” the overall job they are trying to get done may be to “prepare a hot beverage for consumption.”

The goal of the market definition canvas is to help innovators uncover the job-to-be-done as perceived by the customer, not the product developer.

6. Other products used and their functions

What other products do people use in conjunction with the product?
What “job” does each of the other products get done?To get a feel for the entire job your customer is trying to get done, ask them what other products they use immediately before, while, and immediately after using your product/service.

For example, when tradespeople use a circular saw to “cut wood,” what other products are they using in conjunction with a circular saw? Perhaps they are also using a T-square, a measuring tape, sandpaper, and (or) a pencil.

List the products they use in conjunction with the one you have in mind.

Next, document the functions / jobs that each of these other products gets done for the group of people. Use the same format used previously: [verb] + [object of the verb] + [contextual clarifier (optional)].

The Bosch team, for example, determined through customer interviews that while the function of the circular saw was to “cut wood” (a job statement), that tradespeople were using a T-square to ensure they “make a cut in a straight line” (a job statement), and that they were using a pencil to “mark the cut path” (a job statement).

7. Abstracted job statement

When looking at the market through the job executor’s eyes, what core functional job do they say they are trying to get done?
Putting all the pieces together helps reveal the customer’s ultimate job-to-be-done at the right level of abstraction. Assume your product is getting part of a job done. Assume people are using these other products to complete the entire job-to-be-done.

You want to define your customer’s job-to-be-done in a way that includes your product’s function (job) and rationalizes why customers are using all these other products as they cobble together a complete solution. The Bosch team, for example, determined that tradespeople are using a circular saw along with other products so they can “cut wood in a straight line” (the abstracted job statement).

A financial services firm determined that accountants use tax preparation software in conjunction with other products so they can “formulate and execute a tax strategy for a client” (the abstracted job statement).

Defining the market at this level of abstraction allows you to evolve your product over time to help customers get more, and eventually all, of their job done—preferably before competitors do. It offers the innovator a built-in path and vision for growth—tied directly to what customers are trying to accomplish.

Remember, complete steps 5-8 employing customer interviews. Make sure you encapsulate the job of the product you have in mind in the abstracted job statement. If the job of the product is not represented, you have abstracted the job statement to too high a level. Preventing you from capturing customer need statements that will help inform the improvement of the product you have in mind.

8. Customer’s Job-to-be-Done

Now that you have your customer’s job, you can document that job in this box. If you have multiple versions of the job statement, work with job executors to gain consensus on the best version.

With this, the Market Definition Canvas is completed, and your market is defined for you through a jobs-to-be-done lens. Your market = Group of people (Step 4) + Job-to-be-Done (Step 8)

Now you can iterate quickly during your lean innovation process—and more reliably succeed in your market.

To learn more about Jobs Theory and Outcome-Driven Innovation, check out the following resources:

Lead and Disrupt

You think startups are hard? Try innovating inside a large company where 99% of the company is executing the current business model, while you’re trying to figure out and build what comes next.

Charles O’Reilly and Michael Tushman coined the term an “Ambidextrous Organization” to describe how some companies get this simultaneous execution and innovation process right. Their book Lead and Disrupt describes how others can learn how to do so.

I was honored to write the forward to their second edition.  Here it is in its entirety.


What you’re holding in your hand is a revolutionary document. It answers the questions of why some companies trace a brilliant arc as a shooting star and then flame out while others continue to thrive. Why are some companies able to reinvent themselves while others, once market leaders, are disrupted?

Is it that some CEOs are better than others? Are their people smarter? Do they have better sales, marketing, or product development groups?

The short answer is no. What the winners start with is the realization that in a world of continuous disruption, they have only a few years to develop new capabilities or be pushed over the brink. And they also recognize that simply exploiting their existing assets, capabilities, and business models is insufficient for long-term survival. So they prepare for future markets by exploring new ventures.

This radical idea of companies continuing to execute and exploit their existing business model while simultaneously exploring and creating new products, businesses, and business models is what O’Reilly and Tushman call ambidexterity. While simple at first glance, the concept is revolutionary in its ability to transform an enterprise. This book not only explains the “why does this happen” but more importantly gives you the tools for “what to do about it.”

In the 20th century, finding the successful formula for repeatable start-up success remained a black art. The idea of exploitation versus exploration was central in my own work in building the lean methodology for start-ups. The key was the realization that start-ups are not simply smaller versions of large companies, which execute/exploit known business models, and whose customers, problems, and necessary product features are all “knowns.” In sharp contrast, start-ups operate in “search/explore” mode, seeking a repeatable and profitable business model. The search for a business model requires dramatically different rules, roadmaps, skill sets, tools, and culture in order to minimize risk and optimize chances for success.

Recognizing the anomaly was just the first step. There were no standard tools, methods, or playbooks for start-ups. So we built our own tools to enable founders to rapidly translate their vision into hypotheses and then into validated facts. These tools—Customer Development, Agile Engineering, and Business Model design—became the lean start-up methodology, a rigorous approach to testing hypotheses and building prototypes, and, on the basis of data and evidence, adjusting or pivoting to a variant of the original hypothesis. Today, lean is the de facto method for building new start-ups.

Fast forward two decades, and many companies have adopted these start-up tools and methods to deal with disruption. However, after watching innovators in large companies try to use the lean start-up methodology, I’m embarrassed to say that it has mostly devolved into standalone innovation activities (corporate incubators, accelerators, and so on) resulting in “innovation theater,” with nice coffee mugs and posters but little impact on the top or bottom line.

In this book O’Reilly and Tushman succinctly articulate why these tools succeed in start-ups but fail in large companies. Most R&D budgets in established companies are spent on sustaining innovations that support existing products and operating divisions and the attendant processes and procedures, rigorous measurement, and controls. These formalized structures, necessary  for managing execution/exploitation, actually strangle disruptive innovation before it can start.

Companies built around exploitation emphasize efficiency, productivity, and the reduction of variance, whereas exploration demands searching, discovering, and accepting risk and failure. To accomplish both simultaneously—to be an ambidextrous company—requires not only separate organizations for each function, but also different business models, competencies, systems, processes, incentives, and cultures. In short, it requires a different way not only to manage a company, but a different way to organize it as well.

This is a really big idea.

To be truly successful at ambidexterity firms must master the new skills of ideation, incubation, and scaling. Firms first generate new ideas via ideation: the last twenty years have seen an explosion of corporate venture capital, open innovation, and employee involvement via hackathons and incubators. A smaller number of companies have become proficient at the next step—incubation—rigorously testing new business concepts, using the lean start-up methods of Customer Development, Agile Engineering, and Business Model design. However, relatively few have successfully scaled new internal ventures to enable them to stay ahead of disruption. It is this discipline of scaling, actually building new, substantive, profitable businesses, that is critical to the success of new, highly innovative corporate ventures. It’s only when companies can scale that they truly win. Scaling is the crux of ambidexterity.

Recognizing the need for ambidexterity and building an ambidextrous organization are tests of corporate leadership.

In the end, exploitation pays your salary while exploration pays your pension. Companies that survive do both.

This book will do for companies what the lean methodology did for start-ups – give its leaders the essential playbook for transforming their organizations to meet the future.

Get your copy of Lead and Disrupt.

Why Innovation Heroes are a Sign of a Dysfunctional Organization

A week ago I got invited to an “innovation hero” award ceremony at a government agency. I don’t know how many of these I’ve been to in the last couple years, but this one just made my head explode.

The award was for an entrepreneur who worked against all odds to buck the system to turn her insight into an application. She had realized it was possible to automate a process that was being done manually – reentering data from one spreadsheet to another and annotating it with additional data from another system. Inspired by her own work problem, she talked to her peers and other stakeholders, built multiple minimum viable products, and figured out how to get engineering, policy, legal, security and everyone else in the enterprise to actually approve it. And then she fought with the acquisition folks to buy the trivial amount of additional hardware needed to connect it. It was a development process that would’ve taken three weeks in a startup, but inside this agency took 10 months (which was considered fast.) At each step she was confronted with “we’re not budgeted for this” or “this isn’t on our schedule” and “this isn’t your job.” Most rational people would’ve given up and said “you can’t fight the system“ but yet she persisted.

Having seen this scenario play out multiple times at multiple large corporations and government agencies, I could’ve repeated the speech her agency director made at the ceremony verbatim. “Blah blah blah and a $100 bonus.” Everyone politely applauded and went back to work feeling good. I was simply depressed. Never once did anyone ever step back and say that what we just witnessed was leadership rewarding and perpetuating a dysfunctional and broken system.

I’m constantly puzzled why thoughtful and astute CEOs and Agency Directors never ask, “Why is it that innovations require heroics to occur in our organization? Why don’t we have a repeatable process for innovation? What are the obstacles in the way of delivering needed innovation with speed and urgency in our organization? Why is it that after each one of these awards we don’t go back and fix the parts of the system that made creating something new so difficult?”

Instead, everyone at this award ceremony just went back to work like it was business as usual. I realized that innovation in this organization was going to continue to happen by heroics and exception rather than by design. As I’ve seen play out way too many times, ultimately the innovators get tired of banging their heads against the wall and leave government service or large companies. Their organizations hemorrhage the very people they need to help them compete against aggressive adversaries or competitors who have them in their sights.

An Organizational Design Problem
Sadly, this wasn’t a single act of bad management or malice. No single individual thought they weren’t doing their job. However, if anyone had taken the time to deconstruct the reason for the roadblocks to innovation, they would have uncovered they weren’t just obstinate middle managers, or a single bad process. Asking a series of “five whys,” (see this HBR article) would have discovered that:

  1. The agency’s existing processes were not designed for non-standard work. As in most large organizations, they were designed for the repeatable execution of pre-defined tasks.
  2. There were no resources available for non-standard work or any parallel organization responsible for innovation.
  3. The culture of the organization discouraged experimentation and punished the inevitable failures of a learning and discovery process.

Ultimately, the root cause was the entire government agency lacked an Innovation Doctrine. This manifested itself as an organizational design problem. There was simply no permanent place in the organization for unscheduled innovation to happen. And even if there had been, there was no way to turn demos into deployment with speed and at scale.Innovation Doctrine
In peacetime and/or when you’re the dominant superpower (or a commercial market leader), the emphasis is on process, procedures, and sustainment of existing systems. Deviations from that create chaos and diverge from the predetermined are not welcomed, let alone promoted, and funded. They are eliminated. This works great when the external environment -competitors, adversaries, technologies, threats – is static. However in times of crisis, war or disruption, these unconventional thinkers and innovators are exactly what is needed, and their ideas need to be rapidly deployed.

Well-managed organizations realize that they need both innovation and execution. With execution being dominant in peacetime/competitive advantage you have managers of process. In crisis/wartime innovation is dominant. Instead of mangers of process you need innovation leaders who shepherd ideas through an innovation pipeline. (see this HBR article.) Successful organizations recognize that innovation isn’t a single activity (incubators, accelerators, hackathons); it is a strategically organized end-to-end process from idea to deployment.

While innovation and execution have different processes, people, and culture, they need to respect and depend on each other. This ambidexterity (see this HBR article) and the innovation processes that go with it require an innovation doctrine – an overall strategy and playbook for the entire organization and enterprise that includes an innovation pipeline and processes intended to drive innovation efforts, and describes the role of innovation leaders in an ambidextrous organization – all focused on rapid deployment of new capabilities.

Lessons Learned

  • Innovation heroics are a symptom of a lack of an innovation doctrine
  • An innovation doctrine has a playbook, and innovation pipeline and describes the role of innovation leaders in an ambidextrous organization – all focused on rapid deployment of new capabilities
  • All large organizations – both government and corporate—need an innovation doctrine or else risk being outpaced by competitors.

You Don’t Need Permission

I was pleasantly surprised to hear from Suresh, an ex-student I’ve known for a long time. A U.S. citizen he was now the head of sales and marketing for a company in London selling medical devices to hospitals in the UK National Health Service.  His boss had identified the U.S. as their next market and wanted him to set up a U.S. salesforce. Suresh understood that the U.S. health system was very different from the system in the UK, not just the regulatory regime through the FDA, but the reimbursement process and the entire sales process.

Over a Zoom call Suresh explained, “I’m trying to push the importance of running customer discovery and testing these hypotheses before we build our U.S. product, but I’m running into a pushback from my CEO. He says, “We’re disruptors! Discovery is going to slow us down.  We need to move quickly!”

Suresh was concerned. “If we don’t test our assumptions about the market and any changes needed to our products, we’ll build something I can’t sell. Worse, given how expensive clinical trials are in medtech, I’m concerned if we build a product that isn’t commercially viable, we’ll be out of business before we even start.”

I could hear his frustration and concern when he asked, “How can I convince my boss to use customer discovery to test our hypotheses?”

That’s when I realized that Suresh was overlooking a few things.

  1. He was trying to sell the “story” of Customer Discovery as part of the Lean Methodology to his CEO by explaining how discovery worked with the business model canvas, agile engineering, pivots and MVPs.
  2. But talking about the method to others is not the same as “doing” Customer Discovery.
  3. Customer Discovery is about gathering validated evidence, not proselytizing a method.
  4. The goal of discovery is to gather evidence to test hypotheses, deeply understand the customer problem and validate a solution.
  5. As head of sales and marketing, Suresh didn’t need his CEO to buy into the process or give his permission to start the discovery process. He was in charge.
  6. Given the ubiquity of Zoom, he could use it to rapidly get out of the building to the U.S. to test some hypotheses and gather some initial insights.

I pointed out that once he had potential customer, regulator, and reimbursement data from his Discovery interviews, he could bring that data into conversations with his CEO.

Having real data turns conversations from faith-based to evidence-based.

Lessons Learned

  • Talking about the Lean method to others is not the same as doing it
  • If you’re in charge or part of a customer-facing organization, you don’t need to wait for permission to talk to customers to test hypotheses
  • Having real data turns conversations from faith-based to evidence-based

Your Product is Not Their Problem

There are no facts inside your building, so get the heck outside

I just had a call with Lorenz, a former business school student who started a job at a biotech startup making bacteria to take CO2 out of the air. His job was to find new commercial markets for this bacteria at scale.  And he wanted to chat about how to best enter a new market.

His market research found that the concrete industry contributes between 5 and 10% of the world’s carbon emissions. So it seemed logical to him that the concrete industry was going to be one the first places to approach since it was obvious that they need to reduce carbon emissions. He believed that if used as an additive to concrete, his bacteria could strengthen it while reducing CO2.

The conversation got interesting when I asked, “How are you going to describe the product to potential customers in the concrete industry?” Lorenz began a long description of the details of the bacteria, his founders’ research papers on bacteria, the scientific advisory board bacteria experts they had assembled, how the bacteria was made at scale in fluidized bed reactors, etc… This went on for at least ten more minutes. When he was done I asked him, “So why should anybody in the concrete industry care? Do you really think they’re looking for bacteria made in fluidized bed reactors? Do you think there are a significant number whose number one issue is to buy bacteria? Do you know what if any of the features you mentioned actually matter to a potential customer?” There was silence for a moment. And then he said, “I don’t know.”

I wasn’t completely surprised because as a young marketeer, I made this mistake all the time – thinking that my product was a solution to someone’s problem  – without ever understanding what problems the customers really had. And that I needed to have all the answers when in fact I didn’t even understand the questions.

I suggested that perhaps he should get out of the building and actually talk to some large-scale concrete suppliers and rather than starting with what he wanted to sell them, try to understand what their needs were. For example, how were current and upcoming green building regulations on CO2 emissions affecting the concrete industry? How are they solving that problem today? (If they weren’t solving it, it may not be a problem they’ll pay to solve.) What was the current cost of low carbon concrete? How much would they have to charge to be competitive? Were there specific use-cases that made sense for initial adoption/pilots? What additional benefits could bacteria as an concrete additive make (ie. greater strength, crack healing)?

We talked for a few minutes more and by then I could see the lightbulb going on over his head when he said, “I think I got my work cut out for me.”

Lessons learned

  • Your product is not someone’s problem
  • Start with a deep understanding of a customer problem or need before you start pitching your solution
  • Ask customers how they solve the problem today
  • Understand future regulations that might change your customer’s priorities or challenges

These Five Principles Will Accelerate Innovation

As Director of the U.S. Army’s Rapid Equipping Force Pete Newell delivered innovation at speed and scale in the Department of Defense. Pete is now CEO of BMNT, a company that delivers innovation solutions and processes for governments.

Here are Pete’s 5 principles that will accelerate innovation.


To help a large Defense organization wrestle with how to increase the velocity of innovation in their ranks Steve Blank and I spent the better part of last week with our heads together reviewing everything we learned in the five years since we merged the concepts of problem curation and Lean while launching the innovation pipeline.

The original Innovation Pipeline sketch – 2016

I spent yesterday sifting through the most recent lessons learned and results from a series of accelerators BMNT is running for the intelligence community. Then last night I watched the final presentations from the inaugural Hacking for National Security course in Australia before jumping over to teach Stanford’s Hacking for Defense® (H4D) class.

Looking back on the week I’m blown away by how far we’ve come since we merged the two methodologies five years ago and by how fast we are discovering the pathways toward solving incredibly hard problems. Some examples:

  • In less than six weeks a Stanford H4D team has redefined a problem related to security vetting and radicalization while also describing the pathway a solution could follow to deployment within the Department of Defense and the Intelligence Community.
  • A Navy team recently sourced 80 problems, then curated down to one priority problem to solve. In less than 60 days they created 26 MVPs while interviewing over two dozen companies. They then incubated and delivered a solution that will help get large vessels back to sea faster, potentially saving the Navy $20M-$30M a year.
  • In just three weeks, the DIA MARS team sourced 100 problems from nearly 400 people, then curated and selected five priority problems to focus on. In eight weeks, five teams conducted more than 125 interviews (across 53 stakeholder organizations) and 12 experiments to deliver five validated proofs-of-concept and the evidence needed to confidently invest resources to prototype three of the five based on their user desirability, technical feasibility and organizational viability.

What I observed from the week’s deep dive: Whether it is an agency cross-functional team or a university-based “Hacking for” team we are accelerating, five key concepts drive the foundation for this increasing pace of learning and solution delivery. They are

  1. The power of Lean Methodology is supercharged when discovery begins with a well-curated and prioritized problem. Getting to one well-curated problem requires access to a source of hundreds of them.   
  2. Problem curation doesn’t stop until discovery is complete — the process of trying to discover the solution to a problem helps define the actual problem (and for .gov folks the actual requirement for the future solution).
  3. Stakeholder mapping and nailing the value propositions for beneficiaries, buyers, supporters, advocates and potential saboteurs are critical to building a pathway through the phases of the innovation pipeline and transitioning a solution to deployment. 
  4. The key to understanding value propositions is in building interviews that are based on a set of hypotheses (about the problem, the stakeholder and potential solutions to be explored) and data to be captured while using minimum viable products (just enough “product” to increase the efficacy of a conversation and increase the speed of learning).
  5. Innovation happens because of people and it takes a village. Whether academic-based like our Hacking for Defense teams or internal organizational Integrated Product or Cross-Functional Teams (IPTs/CFTs), accelerator teams perform best when supported by:
    1. Teachers – who can ground teams in a common framework and language for the discipline of innovation and entrepreneurship.
    2. Coaches – who can walk teams through the practical application of innovation tools in context with the problem they are trying to solve.
    3. Mentors – who will provide relentlessly direct feedback to teams and challenge them on the quality of the hypotheses, MVPs and the analysis of what they’ve learned, while driving them through each pivot rather than letting them get bogged down in “analysis paralysis.”
    4. Advisors – who will provide alternative viewpoints that will enable teams to see clearer pathways through bureaucracies.
    5. Connectors – who will help teams rapidly grow their networks to gain new insights from unique partners not yet discovered.

If your organization is running innovation activities or an accelerator and these five principles aren’t part of their program they are likely wasting your organization’s time and resources, and contributing to Innovation Theater instead of deploying solutions to real problems.

—–

Next up we’ll dig into how the innovation pipeline serves a parallel process for managing innovation

Enterprise Innovation for the 21st Century

Today’s environment requires separate systems for innovation and execution that operate with parallel and sometimes overlapping processes


A Path to the Minimum Viable Product

I first met Shawn Carolan and his wife Jennifer at the turn of the century at 11,000 feet. I was hiking with my kids between the Yosemite High Sierra camps. Having just retired from a career as an entrepreneur I had started thinking about why startups were different from large companies. The ideas were bouncing around my head so hard that I shared them with these strangers around a campfire, drawing out the four steps with a stick in the dirt. Shawn immediately said the name I had given the four steps was confusing – I had called it market development – he suggested that I call it Customer Development – and the name stuck. What I didn’t realize was that both were graduate students at Stanford and later both would become great VCs – Shawn at Menlo Ventures and Jennifer at Reach Capital. (And Jennifer is now my co-instructor in the Stanford Lean LaunchPad class.)

The MVP Tree
Over the last two decades Shawn has seen hundreds of startups use the Lean Methodology. Many of them get hung up on understanding how to select the right minimal viable product. He came up with the concept to simply the search for product/market fit by using an MVP Tree.

Shawns guest blog post describing describing the MVP Tree is below.

(Note that if you’re familiar with the business model canvas, Steps 1-4 below are equivalent to a visual map of the choices a founder makes as they develop a business model canvas. Step 5 and 6 leads you to selecting the right MVPs.)


It’s commonly believed that the top two reasons startups fail is because “there’s no market need” and “they ran out of cash.”  These reasons are mental gymnastics to avoid a plain truth: startups fail when they don’t build a simple solution to a problem many people have.

startup_fails.pngMany startups fall into the trap of building toward a “mission” rather than a minimum viable product (MVP).

Your mission is your baby. It’s the North Star that got your people on board and inspires them daily. However, solely focusing on your mission is the same as being unfocused.

Bridging the gap between a big, ambitious dream and the reality of what you can accomplish with limited resources isn’t fun because it requires saying no (for now) to a lot of things that have you excited. Paradoxically, resource limitations are the secret to success; they teach lessons that experienced entrepreneurs have harnessed. Constraints force you to pause—or even permanently shelve—certain aspects of your mission in favor of proving that you can deliver one specific thing that really matters to customers.

During the crucial mission-to-MVP planning phase, the objective of a startup is to solve one job for one customer group such that customers consistently use your minimally viable product for an important part of their work or personal lives. In other words, you prove retention. It’s really all that matters at the earliest stage.

The tool for doing this efficiently and effectively? We call it an MVP tree.

Solution: Build an MVP Tree
Company missions tend to fall to the extremes: either the mission isn’t ambitious enough or it’s too ambitious to build with your current resources.

It bears repeating: an early-stage startup must focus on making one customer group excited by a mission-aligned product. Doing so is usually a long way away from realizing your full mission statement, and that’s okay.

An MVP tree is a way of methodically breaking your mission into smaller components and formulating MVP candidates that may get your company sustainable and scalable. Using the tree structure outlined below increases the chance that your first step forward (the MVP) will be successful with a small team, while taking you in the right direction to achieve your company’s big mission. An MVP tree has three main components—customer archetypes, jobs to be done, and execution—and we’ll walk you through them step by step with a case study of Roku, a former portfolio company we’ve been fortunate to see execute from a $20 million first VC round to what is now a $50 billion public company.

(To get started, we draw our tree out using Whimsical, a product that I’m a big fan of.)

Step 1: Define Your Big Mission in a Simple Statement

In the day-to-day fray of prioritizing features, considering customer input, and handling people issues, it’s easy for a team to lose their bearings. The world is full of great products and it’s essential to be crystal clear on your reason for being; to avoid wandering in circles, you need a mission statement. A few examples:

  • Roku: “To be the TV streaming platform that connects the entire TV ecosystem around the world”

  • Uber: “To bring transportation—for everyone, everywhere”

  • Chime: “We believe everyone deserves financial peace of mind”

Your mission statement needs to stand for something specific and impactful. It may change as you build and learn from your customers, but aim for it to conjure up an image of a better future with your product at the center.

Your mission statement is the center of your MVP Tree.

Screen Shot 2021-03-17 at 11.21.46 AM.png

A motivating mission statement inspires action. It may be tempting to jump right into coding, but slow down—remember, the goal of this exercise is to determine how little you can do to acquire and retain customers. With both growth and retention, you earn the right to build more.

Step 2: Customer Archetypes

A customer archetype is a category of similar people with similar needs (e.g., segmented by age, gender, profession, personality type, etc.). While it may be tempting to want to build a product for everyone, everywhere (7 billion TAM, right?!), doing so will distract you from building exactly what one group needs. Each new segment you attempt to serve can increase scope, adding to your workload and demanding more of your limited resources.

The intent of this branch of the tree is to identify one group of potential customers who would be highly motivated to fix their pain as part of your MVP. Draw out a few customer archetypes that might be a fit for your startup, (we’ll discuss later how to prioritize the one group to tackle first.)

Screen Shot 2021-03-17 at 11.22.16 AM.png

Step 3: Jobs to Be Done

Clayton Christensen’s Jobs to Be Done framework proposes that focusing solely on customer data leads founders on a wild goose chase. Founders should understand what the customer hopes to accomplish, or what their job to be done is.

Break down your mission statement into different “jobs”; this itemization will likely narrow your product scope considerably, while still allowing you to create something of significant value.

When consumers have a job to be done, they’ll look around at their choices and select the best tool for the job. Your goal is to build the best tool for meaningful, reoccurring jobs that people face. Map out the jobs that you believe exist for the customer archetypes identified in step 2.

The more common jobs may apply to several of the archetypes, while the more esoteric jobs may apply to just one. There will be plenty of overlap, which is why jobs have their own branch of the MVP tree rather than attaching directly to the archetype branches.

The more common jobs may apply to several of the archetypes, while the more esoteric jobs may apply to just one. There will be plenty of overlap, which is why jobs have their own branch of the MVP tree rather than attaching directly to the archetype branches.

Step 4: Execution Branches 

Execution branches will vary based on the company, but think of them as the components of what gets built and where it gets sold. These branches of the MVP tree comprise the components of market expansion that urge founders to explore the tactical side of getting a solid product in front of the right people. This first product launch can either be a costly mistake or an ingenious first step that shows traction with early customers and gives your team and investors confidence. Map these out now as part of the tree and reduce the odds of a headache down the road.

In the Roku case study we’ve chosen three execution branches: (1) delivery platforms, (2) sales channels, and (3) chip platforms.

Delivery platforms
Delivery platforms are the vehicles through which customers come to interact with your product. For software products, they would be the operating systems with big market shares: iOS, Android, web, Mac, and PC. While supporting each additional platform expands your addressable market or breadth of customer touchpoints, it can dramatically increase scope. Developing for multiple platforms at once spreads already-thin resources, which ultimately harms the creation of the best product possible for a specific customer segment.

The fewer platforms you choose to support, the smaller the scope. Pick one delivery platform to save resources and prove your value. Investors will recognize that a successful app on iOS will also work on Android with more capital. Focus your precious time on making one platform sing.

Clubhouse, a recent startup darling, has quietly grown to over 2M users exclusively on Apple. Some early users might be frustrated because they can’t invite their Android peers, but the strategy to focus on iOS helped Team Clubhouse minimize their initial scope and meticulously learn from early users without the distraction that may come from opening the floodgates.

For hardware companies, delivery platforms are essentially the potential SKUs you might consider shipping. Steve Jobs once said that if you are really serious about software, you should build your own hardware. You can think of these hardware form factors as software delivery vehicles. Most people only know Roku for their TV devices, but Roku initially shipped an audio device for Internet radio stations and a PhotoBridge product to get digital photo libraries to the TV. Even when moving to video, consumers had the choice between a stand-alone box or a smaller plug-in stick. Today, Roku has become an operating system embedded in other brands’ TVs.

Sales channels
Sales channels are the paths through which your product lands in customers’ hands. For software products, the channels are typically through the mobile app stores or directly over the Internet. For hardware products, it’s D2C e-commerce, online retailers, or physical retail.

Some sales channels may behave similarly; more often than not, they each pose unique challenges. Every additional sales channel costs resources and increases scope. Pick one channel, prove traction, then experiment with the next.

Roku_MVP4.png

Chip platforms
Unique to hardware companies is the choice of which chip to use, and it’s a big one. The choice of semiconductor has profound implications on system requirements like how much memory is needed, how much power is required—and ultimately, the end system cost. Owners of the new Mac M1 laptops are taking advantage of a decade of Apple’s mobile chip development, which is finally robust enough to run the MacOS. The Roku OS has come to run on several different chipsets over time, but in the beginning they had to choose one.

Roku_MVP5.png

Other branches
There are several other execution branches that may be relevant to your business. If you are an office productivity tool, the data ecosystem you pick is a big one: Google or Microsoft? It’s lazy thinking (and expensive engineering) to try to build for both at the same time. Pick one, show success, then raise more money to address the other half of the market. Again, the fewer of these branches (ecosystems, etc.) you choose to support, the smaller the scope. If your startup doesn’t need to access customer data, the choice of consumer-grade vs. enterprise-grade is a big one that adds scope. The theme remains the same: be selective and pick the branch you have the best shot at success with before adding more.

Roku_MVP6.png

Step 5: Scope Out Your Candidate MVPs

If your map looks like Roku’s, you’re probably now staring at something that has grown to become quite complex, with many “leaves” at the ends of your branches. A single leaf chosen on each branch is what makes up an MVP. The reasonable permutations are your candidate MVPs.

Remember, an MVP is the minimally scoped product that gets some job done for your chosen customer archetype.

Step 6: Evaluate Your Candidate MVPs

How do you know which MVP to build first? Choose wisely: This will be the next several months of your life.
A successful MVP satisfies three criteria:

  1. It addresses a meaningful job to be done. A customer spending their own time or money to do a job chooses your solution as the best option for them. Pick a meaningful job—the more frequently occurring the better—and offer a significant advantage (better, faster, or cheaper).

  2. It has a growth engine. Build or price growth into your product. There are two viable growth engines for tech companies:

    1. Viral, or “inherently viral” growth: Customers either intentionally or unintentionally recruit new customers by using your product. Social platforms use intentional virality; this occurs when users get a more fulfilling experience as more of  their friends join the same platform. Unintentional virality happens when customers inadvertently introduce others to the product experience, similar to how shared bike or scooter riders serve as mobile billboards for the experience.

    2. Economic paid acquisition: Contribution margins from customers are recycled into advertising, marketing, and other PR activities that successfully drive additional customers. Note well, though: this engine is “economic” because it must fuel itself. It’s easy to simply buy customers, but only real value makes them stay. Your product must collect far more value over the lifetime of the customer relationship than the cost of acquiring that customer in the first place.

  3. It has a rapid time-to-value: How long must customers wait for the “aha” moment? With my first Uber ride in late 2011, it took about two minutes for that moment to arrive: I installed the app, entered my credit card, ordered a car, and it was waiting for me by the time I walked down one flight of stairs. Aha! I knew I’d never wait for another taxi in San Francisco again. The faster and more simply your product can prove its worth, the higher rate of conversion from tire-kickers to retained customers. For software startups, ask yourselves this question: What’s the one screen that will make your customers get it? 

Step 7: Pick, Beta, Ship

Now’s the time to let the rubber meet the road and get a minimal product into a customer’s hands. Can it do the job better than their prior solution? Keep iterating until you’re getting that one specific job done. 

Roku’s first two MVPs weren’t a success (sound bridge + photo bridge). It was however, through the process of mapping out MVPs candidates, testing, and learning that brought intense clarity to and laid out the infrastructure for what would ultimately work — a delivery platform for Netflix. Even if the first MVP isn’t a hit, you’ll be building the muscle needed for the company such as making key hires.

Don’t pivot to a different job unless you’ve learned something new that causes you to reconsider your initial hypothesis. This may take a lot of time, but that’s perfectly fine. Stay focused on solving that job until you prove your hypothesis right or wrong. The world is littered with failed companies that never got a product right. Where there’s a job to be done, you can build a solution with enough time, talent, and focus.

Roku’s Winning MVP:

Roku_MVP7.png

Step 8: Double-Down

When you finally find your product getting a recurring job done better than any other tool, stick with it. Don’t take your eye off the prize and move onto new things too quickly.

Earn the right to increase scope and move on to other jobs, platforms, and customer archetypes after solidifying your position among this first set of customers―and creating a sustainable growth engine.

Final Thoughts

Founders become infatuated with a bold and ambitious mission—as they should. However, what separates a startup that actually brings its mission to life from one that doesn’t is the ability to shed the rose-colored glasses and solve for a small job to be done.

A proper MVP framework, such as our MVP Tree presented here, is a critical first step in fulfilling your mission, even though it might seem like you are selling it short. Be patient. It won’t be easy realizing your mission, and it shouldn’t be. If your mission were easy, it would already be done by someone else!

Want to see an MVP Tree for another startup? Tweet @Shawnvc to nominate a company!


A Quick Course on Lean

Over the weekend I got asked the best way to teach students the principles of Lean via Zoom.

One of the key lessons from our Educators Conference is that when teaching online complex information needs to be delivered to students in small, easily processed parts.

I realized that pre-pandemic I had put together a series of two-minute videos called “See Why.”  They’re not only helpful for a formal class but for anyone who wants to review the basics. Here’s what I suggested they offer their students:

Lean in Context

No Business Plan Survives First Contact With Customers

How did we build startups in the past?

The Business Model

An introduction to The Business Model Canvas

The Minimal Viable Product

How to Get, Keep and Grow Customers?

How to Get Out of the Building and Test the Business Model

What is Customer Development

What is Customer Discovery and Why Do it?

Why Get Out of the Building?

A short article on how to do Customer Discovery via Zoom

Jobs to be done

Customer Validation

The Pivot

The Harvard Business Review Article “Why the Lean Startup Changes Everything” ties the pieces together here

The Mission Model Canvas

What is the Mission Model Canvas

The Mission Model Canvas Videos

Extra’s

Why Customer Development is done by founders

What Do Customers Get from You?

What are Customer Problems/Pains?

Users, Payers and Multi-sided markets

How do I Know I Have the Right Customers – Testing

How big is it?

How to Avoid Pricing Mistakes

More two-minute lectures here

Tools for educators here

Tools for students here

Lessons Learned

  • Break up online lessons into small parts

 

 

 

%d bloggers like this: