Business Experiments: A better way to manage your business?

Business Experiments: A better way to manage your business?

In our last post we looked at various management approaches to reduce risks. One of them pertained to business experiments. In this post, we’ll dig a bit deeper to better understand this approach.

You have most likely heard of business experiments. The Harvard Business Review, as well as many other business management publications, published multiple articles on the topic in the last few years.   They were mostly in the context of innovation.

What is a business experiment?

Lean Startup - Baker Marketing If you have not, a business experiment is simply testing a concept (idea, program, process, design, product, strategy, etc.) with stakeholders (customers, suppliers, distributors, employees, etc.). The experiment’s goal is to provide pertinent data to assist with decision making (usually with go/no go decisions or sometimes fine-tuning).

So yes, you do know what a business experiment is. It’s been around for, well, pretty much ever. Now you’re asking yourself; Why this article is drawing my attention to it?

The reason is that business experiments are no longer used as an occasional management tool, they are transforming into the way businesses are managed.

Why are companies experimenting at an increasing rate?

Business experiment - Baker Marketing As we mentioned, business experiments are used to collect data that assists management with decision-making.

Decision-making in the business world is becoming a more demanding task (to say the least).

  • Companies are significantly leaner (i.e. less resources and more work for everyone, including managers).
  • The amount of information available, from secondary sources, is enough to make any manager’s head spin.
  • There is a higher supply than demand for managers hence making bad decisions is a riskier proposition for your longevity in a given company than ever.
  • In many sectors, markets are moving at a faster pace than ever before with competitors coming in from everywhere and customers’ choices exploding.

Hence managers are turning to ways to reduce the time and the risk involved to make the best possible decisions.

Running a business experiment to gather pertinent and timely data quickly answers the needs of over-burdened managers to reduce the risks of the decisions they make.

This explains, in part, why organisations are experimenting. What explains the increasing rate at which they are doing it, and transforming it into a management approach, has more to do with the following reasons:

  • It’s cheaper and faster than ever to run business experiments (many can be done in minutes with free tools)
  • An increasing number of employees or outside consultants have the skills to run experiments, analyse and interpret the collected data
  • The costs to store, process and communicate the data/result are very low (compared to a decade ago) and falling constantly.

Business experiments and the Lean Startup framework

So how does an organisation go about implementing business experiments as a managerial approach? There is no one way to do so. There are however experimentation frameworks out there that can structure your approach.

One of these is the Lean Startup framework.

The base of Lean Startup is the experiment. The Lean Startup experiment is based on the scientific experiment model. It follows a build, measure, learn process.

Build Measure Learn - Baker Marketing

 

Build (designing your experiment)

Building your experiment is a 3 step process

 1. Identify the critical assumption associated with the concept to be tested

When you stop to think about it, there are thousands of assumptions we could test to assist with decision making when managing a business. If we tested all of our assumptions there would be no time or other resources left to run the business. Hence, you only want to test the critical assumptions. The ones that, if not validated, pose a business risk that you (or your organisation) are not willing to take.

2. Transform your critical assumption into a hypothesis statement

Your critical assumption was a thought you put into words. Your hypothesis statement is one sentence that can be validated (or invalidated).

3. Design the experiment that will validate (or invalidate) your hypothesis

Designing your experiment is only limited by your (and/or your team’s) imagination. The way you choose to render the concept of your hypothesis (how you present it or illustrate it) is called your Minimum Viable Product (MVP)[1].

An important part of the MVP is the minimum part of it. In the design of your experiment, you will be aiming at spending the least amount of resources in order to obtain the maximum amount of learnings from your experiment.

This doesn’t necessarily mean bootstrapping your experiment. It simply means that you will make sure that whatever learnings you need to get from your experiment, you get by using the least amount of resources possible.

This can mean it will cost you nothing but a few minutes of the time of one person or tens of thousands of dollars, if that’s the only way to go about getting the information you need. Of course, the cost of your experiment must be proportionate to the financial risk associated with it.

Measure

The reason you are making the experiment is to get data that will help you with your decision making. Hence, you want that data to be reliable.

This is where you need a bit of knowledge about primary data gathering. You need to make sure the data you collect is not biased. You won’t be looking to get statistical quality data. That would take too long, cost too much and be an over kill for your purpose.

You’ll simply need the clear direction that your data in headed for.

In business experimentation instead of gathering a lot of data once, you gather a small amount of data repetitively. Although not as precise as statistical data it does provide you with a sufficient amount of information to de-risk, to a great extent, your decision. It is also a more suited approach to an environment that changes rapidly.

When deciding on the data you will be capturing in your experiment, remember these three important rules.

Your data should be:

Actionable

If it doesn’t go in the direction you thought it would then you can change something in your business strategy or product or program that will make the data go in the direction you want.

Accountable

You need to be able to re-produce the exact same experiment, in similar conditions and get similar results. For example, if you are testing the design of a snow shovel and are doing it during the storm of the century, the data you collect won’t be accountable.

Accessible

The more people who interpret the data you collect, the deeper and richer your learnings will be. So make sure that the data captured during your business experiments is shared throughout your organisation. Ensure that everyone knows they are welcome to share their interpretations on the data. Making your experiments, the data collected and the results accessible throughout your organisation will also accelerate business experiments process as some parts/resources of one experiment can be used for others.

The more experience one has at conducting experiments, the faster and more accurately they are done.

Learn

This part of business experiments, although it may seem like the easiest, is the hardest.  Learning means you are either

  • absorbing completely new information (rarely the case) or
  • you are changing in some way (sometimes drastically) already stored information in your brain

The second type of learning is the hardest. The more contradictory the data you have is to the one you previously had, the more difficult it is to learn from it.

This stored information in your brain will create a filter that will impact how you interpret new data.

Also, the more resources that has already been invested in a project, the more difficult it is to pivot on a previous course of action.

The benefits of using business experiments to manage

Business Experiment - Baker Marketing The main benefit, as mentioned previously, is to reduce the risk of your business decisions. This in turn will minimise your losses on various projects.

Another benefit, that is not obvious, is the improvement in work relationships.  This happens for multiple reasons.

First, employees get a sense of empowerment. If they submit ideas to upper management with supporting empirical data, they know their idea will be considered.

Also, managers don’t need to spend as much time justifying their decisions. They let the data speak for itself. They do however need to include questioning the quality of the data into their process.

Finally, as mentioned, organisations that use business experiments on a daily basis to manage usually encourage employees to share the results of their experiments. This not only improves internal communication and efficiency it also creates an environment where mistakes, that bring new learnings, are valued.

This type of environment is essential to not only foster innovation but pro-activity.

Getting started with business experiments

Business experiment - Baker MarketingIf you think that using business experiments may be a profitable management approach for your business, start with one project (which will be a meta experiment) during which all higher risk decisions will be taken with supporting data. The project you select should be one that has high inherent risk within it (like launching a product in a new and different market). It should also be a type of project that is somewhat recurrent in your organisation. This will help you have a baseline scenario in order to compare the results of the meta experiment.  Make sure to identify the metrics you’ll be evaluating before starting your meta experiment.

Some metrics (there are many others) you may want to look at would be:

  • How long the project took from start to finish
  • Overall budget
  • What % of the initial planed output was achieved
  • Variables pertaining to team cohesion
  • Variables pertaining to employee (the ones who worked on the project directly and indirectly) satisfaction
  • ROI projected vs achieved on a timeline (3, 6, 12, 24 months)

Implementing any new management approach takes a while. There is no one-size-fits-all recipe. You need to…yes you got it…experiment and find the approach best suited for your organisation.

If you need coaching or help getting started with your first experiment Baker Marketing can definitely help.

[1] Although MVP most often refers to a prototype of a product, it also means the representation of your hypothesis you will present to participants of your experience.

3 Steps to Understanding Customer Needs

3 Steps to Understanding Customer Needs

The core of every business organisation’s mission is to answer customer needs.  In order to do so you must first identify and understand them.

Understanding your customers’ needs is essential but superficial knowledge is not enough to ensure your organisation’s profitability. To achieve product/market fit, the point where you answer needs better than your competitors, you must get to a deeper level of understanding of those needs.

Benefits of understanding customer needs

An added bonus to mastering customer needs (and providing a solution that fulfills them) is that every marketing dollar spent will yield higher returns than those of your competitors, who don’t have the same depth of knowledge.

A deeper level of understanding your customers’ needs will also ensure an overall better customer experience, which we already saw in a previous post on the customer experience journey, leads to higher profitability.

Ok, so now that you are convinced understanding customer needs is in your organisation’s best interest, the question you may be asking is how to go about mastering them.

First you have to identify the needs you will be fulfilling (hint; don’t stop at the needs attached directly to your product/service, also look at the ones surrounding the entire customer experience). Once you have zoomed in on the needs to fulfill, you must not only understand the needs but the whole story around them.[1] This process requires lots of effort, time and knowledge of data gathering techniques. It isn’t as straightforward as it may seem.

As a marketer a huge part of my role, aside from finding the right customers, is to identify and understand their needs. Over the years, I learned that there are three steps to any quest aiming to either identify or understand customers’ needs.

Those steps are; Listen, observe, and empathise

Listen

customer needs - Baker MarketingThe very first thing you should do when you have a business idea is to talk informally with potential customers. This mostly means listen to their answers.   It also helps you figure out who your early adopters are. If it’s not possible for you to talk directly to potential customers, find people who know your potential customers inside out, and talk with them.

Don’t forget to set objectives for your conversation. Examples of conversation objectives are; to see whether the needs you think exist actually do, how they are being filled and the relative importance of those needs. In order to maximise the amount of information you take in, not only do you have to limit how much talking you will do, but you need the proper mindset. Your mind should be open and devoid of as many filters as possible. Always remember that explaining your project in length and your view of the world is just taking time away from achieving your goal. Listen.

On a side note, many of the entrepreneurs I meet are worried that someone will steal their idea before they get a chance to develop it. Unless you have a truly patentable solution (very few are), and potential customers can either beat you to market (they already operate a company in the same field) or spill the beans (to an existing competitor), you have nothing to worry about. Honestly, initial business ideas are very rarely marketable. Even if they were, almost no one wants to put in the blood, sweat, tears and go through the hell that starting a new business entails. Furthermore, even if they did, they’d most likely end up with a completely different business than yours in the end. Lastly if the threat of theft is real, there are still ways to explore the needs of potential corporate customers without spilling your own beans.

Please do not let the fear of someone stealing your business idea prevent you from engaging with potential customers.

Observe

Customer needs - Baker MarketingObservation is essential to identify less obvious needs and understand all pertinent customer needs at a deeper level. Asking potential customers won’t yield the information you seek because people don’t or can’t always tell you the truth.

There are many categories of observation techniques.

 

Natural observation

Natural observation techniques allow you to observe your potential customers while they are naturally fulfilling the needs you want to address. Ideally, without them noticing you too much so their behaviours are not altered.

Such observation experiments will yield huge amounts of customer knowledge. Hence you need to ensure you set observation goals for your experiments. Your observation goals can pertain not only to your subjects’ actions but also their interactions, environments, and the tools they use.

You will most likely need to repeat such experiments many times to take in all the knowledge you will need. Alternatively, you can task multiple people to observe the same situation while giving them different observation goals.

Two of my favorite natural observation techniques are shadowing and A day in the life.[2]

Directed observation

These techniques are associated with a goal of understanding a specific thought process or behaviour in a given circumstance.

They require putting the customer in a specific situation or assigning him, or her, a task and then observing. This can be followed by a question period to help interpret what you observed. It can be done face to face, remotely with cameras or on the web (such as A/B testing).

Third person observation

This technique is used in addition to one of the previous ones where the observer is someone who has a vision of the world that is significantly different from you or anyone in your industry. This technique yields much richer interpretation/insights from the data you collect.

Empathise

Customer needs - Baker MarketingWhenever possible, put yourself in your customers’ shoes or, even better; take the time to get to know some of your favorite customers personally. This will enable a relationship of trust and maybe even friendship (personal bonus for you) to develop over time.

Get involved in activities or causes your customers are passionate about. This will give you an even deeper understanding of their values and what is important to them.

Sharing your customers’ values is a requirement to attract them into your community.  If you are unsure of what I am referring to here, see this previous post on community marketing.

The 360 view of customer needs

Customer needs - Baker MarketingApplying all of these techniques to understand your customers’ needs is required to get a 360 degree view of them. Using many different perspectives to master your customers’ needs will yield rich and actionable information. It will also facilitate innovation in your organisation.

 

Customer Feedback Flow

Customer needs - Baker MarketingStriving to understand customer needs is a continuous process. Set up processes and assign resources in your organisation to make it an integral part of your business activities.

These processes can be as simple as a quick questionnaire you send out on a regular basis, or an automatic feedback one, after a certain task is completed.  Analytics reports, comments on social medias summaries or a managed (live or online) community feedback or observation reports are all valid continuous feedback processes that can yield precious information on your customers’ needs.

Be aware that this feedback is highly valuable to your organisation, if you act on it. Hence, reward your customers adequately (often a simple thank you is enough) for sharing their thoughts and concerns.

Mastering the understanding of customer needs is no small task.  Your rewards for listening, observing and empathising with your customers, will be a tighter product/market fit, greater customer satisfaction and higher profitability.

[1] Needs are always dependant other factors. E.g. The need for a given medicine will be dependant on experiencing specific symptoms at a level that requires relief and not being allergic or prone to adverse effects to said medicine.

[2] The following book describes these techniques : This is Service Design Thinking – M. Stickdorn, J. Schneider et al. – John Wiley & Son

How to identify a good community marketing partner

How to identify a good community marketing partner

In a previous post we looked at community marketing. As a reminder, community marketing is a set of tactics used to involve your customers and/or prospect customers (subsets or all of them) and their network with your organisation.

Community marketing partner- Baker MarketingCommunity Marketing Partnerships

One of the foundations of community marketing is partnering with other organisations. These partnerships are used to leverage all of your marketing and promotional activities to your potential customers. These partnerships can be with your suppliers, clients, customers (either corporate customers or the companies your customers own), or non-profit organisations.

The previous post also showed that, aside from being profitable when done right, community marketing is a great way to:

  • Increase positive brand association
  • Achieve community leadership
  • Obtain great insights in your customers needs
  • Drive innovation
  • Reduce your marketing costs
  • Get free advertising
  • Get you and your team to feel great about your job

So yes, community marketing sounds great, well on paper at least. In reality it requires the right partners in order to achieve a return on your investments.

The question then becomes:

Finding a business partner - Baker marketingHow do I know what the right community marketing partner looks like?

Like any other business partnership, there is no ‘’one-size fits all’’ answer to this question. Furthermore, time can transform an excellent community marketing partner into a negative ROI partner. Hence keeping track of the costs, revenues and benefits associated with a partnership is essential.

In order to identify criteria to help find a good community marketing partner for your company I will use two sources. The first are the studies done by non profit organisations that have applied community marketing strategies for decades to achieve their objectives.  The second will be the various community marketing experiences I have been a part of or observed in the last few years.

The following are some of the most important elements you have to look for when searching for a community marketing partner.

Community Marketing - Baker MarketingShared values

This criterion is by far the most important element to look for when searching for a new community marketing partner.

Your most important corporate values must be shared with your partners. Otherwise something will inevitably go very wrong during the course of your partnership. Usually, issues will occur sooner rather than later.

An example of this was a large food blog that strongly valued leaving the smallest carbon footprint possible. Most of their blog posts transpired this value. Their hosting provider, a community marketing partner of the blog, expanded into a new facility that used significantly more energy than the previous one they were located in. When the hosting company announced on social media it had no intention to undertake any projects to minimize their carbon footprint, it created a strong backlash in the blog readers’ community. Readership dropped more than 25% in the following 3 months. No other events could account for this exodus.

Eventually the blog owners not only lost a community partner but had to find another hosting provider. This project was of course very costly and could have been avoided had the hosting partner shared similar values.

This example brings about another lesson that was learned. Some of your values can generate a significantly higher cost structure for your company. Make certain you are ready to take on those costs before trumpeting your values to your customers.

Community Marketing - Baker marketingA committed partner

Just as any other type of partnership, your partner must be committed to the relationship. In a community marketing partner, this translates into having resources dedicated to managing the partnership and the joint projects.

Partners who also dedicate resources to measuring the outcomes of the partnership will often be easier to work with. The data they accumulated will generally lead to rational discussions with clear demands.

Market segments - Baker MarketingYou are going after the same customer segments

The closer, the match between the customers your business is aiming at to the ones your partners aim at, the better.

The whole idea of community marketing is to gain greater exposure, at a lower cost, to new potential customers. Hence, it would be worthless in that regard to partner with companies that don’t address your target markets.

Also, the closer or more complementary the needs they address to the ones you do in your markets, the better the synergy you will get out of a partnership.

Hence, if your product/service fills a need that is created by a partner’s product/service or creates a need that can be fulfilled by a partner, the partnership has the potential to provide maximum ROI.

An example for our food blog would be to partner with kitchen appliances or dinnerware companies as well as exercise/health related blogs that share similar values.

Reputation - Baker MarketingA reputation that is at least as good as yours

Community marketing is strongly based on social media presence by the partners. Hence, you will be looking for a partner that is not only adept at managing its own social media presence but one that has a reputation that will not tarnish yours.

Before signing with a new community marketing partner you need to do a thorough review of all of its social media presence. You also need to know who its other partners are and what their reputation is.  The stronger the community your future partner is a part of, the more profitable the partnership can be.

There are many other criteria that are important when choosing a community marketing partner. The previous three are, in my experience, some of the most important ones at the outset of a relationship.

In a future post, we’ll take a look at where to find the best community marketing partners. In the meantime, if you have any questions about community marketing strategy or implementation you are welcome to contact us.

Le marketing des objets connectés : Le marketing de demain?

Le marketing des objets connectés : Le marketing de demain?

Ils deviennent omniprésents dans notre quotidien. Les objets connectés se retrouvent sous forme de gadgets telle la bouteille d’eau intelligente. De façon encore plus fréquente sous forme de bracelets ou maillots de sport qui gardent le compte de nos activités physiques et de notre rythme cardiaque.  Leur point commun; ils amassent  une masse grandissante de données  sur différents aspects de notre quotidien et les transmettent à un serveur.

D’ici 2020, on peut s’attendre à ce que plus de 20 milliards d’objets connectés soient en circulation. Ils généreront des pétaoctets de données ayant la capacité de tracer un portrait de chaque minute de notre quotidien.  Dans leur ensemble, l’analyse de ces données révélera des informations qui permettront aux fabricants d’optimiser leurs produits.  Ce qui fait saliver les analystes marketing encore plus abondamment par contre est l’analyse au niveau de l’individu de ces données.

Connected object marketing- Baker MarketingNombreux analystes, dont ceux de McKinsey,  évoquent une 4ième révolution industrielle.  Ils prévoient une société où tous les produits et services vendus seront personnalisés afin de répondre aux besoins de chaque consommateur. Ce qui implique que le marketing de masse se fera au niveau de l’individu et non d’un segment.

Le message sera personnalisé en fonction du profil de l’individu, de son environnement, du contexte voir même du moment. De toute évidence, il ne sera pas créé par un humain puisque nous n’avons pas la capacité d’assimiler et de traiter une telle quantité de données à la vitesse requise. En ce qui a trait aux divers modes de livraison des messages publicitaires, je vous laisse les imaginer.

En poussant cet exercice de prospective à sa limite on peut même en arriver à la conclusion qu’une intelligence artificielle filtrera les messages publicitaires et ne laissera passer que ceux qui correspondent à nos besoins et désirs conscients voir même inconscients.

Revenons du monde de la science fiction et regardons comment nous effectuons le marketing des objets connectés aujourd’hui en examinant les stratégies du bracelet Fitbit et du thermostat intelligent d’Alphabet (Google), le Nest.

Nest marketing - Baker MarketingOn pourrait penser que Google, champion du big data, serait avant-gardiste dans la commercialisation du Nest. En fait, il n’en est rien. Alphabet a embauché en 2013 Doug Sweeny, ancien VP marketing de Levis (les jeans), afin de commercialiser le Nest.  Non seulement Sweeny ne veut-il pas exploiter les données d’utilisation amassées par Nest dans sa stratégie marketing il opte pour une stratégie des plus traditionnelles pour un produit de grande consommation. Nest focalise depuis les dernières années, quasi uniquement,  à croître son réseau de distribution physique (et non en ligne).  Nest fait peu de publicité dans les médias et n’a aucune stratégie de marketing personalisé.

Quant à Fitbit, cotée en bourse depuis 2015, sa stratégie marketing est beaucoup plus évoluée et exploite, bien que de manière limitée, les données amassées par ses utilisateurs.

Fitbit utFitbit Marketing - Baker Marketingilise ses données pour développer sa gamme de produits qui compte près d’une dizaine de bracelets. Fitbit déploie également des campagnes marketing hautement personnalisées en adaptant le contenu de chaque courriel qu’elle envoie à ses  millions de clients.

De plus, Fitbit inclut dans sa stratégie le marketing communautaire. Outre sa communauté Facebook principale, avec près de 1.5 million de j’aime, Fitbit anime également des communautés pour chacun de ses produits sur de multiples plateformes de médias sociaux. Fitbit commandite aussi de nombreux événements sportifs et créé du contenu numérique destiné à être rediffusé par ses utilisateurs.

Il y a plusieurs autres stratégies marketing particulièrement bien adaptées pour le marketing des objets connectés tel  le marketing prédictif, le marketing en temps réel et le co-marketing qui ne sont encore que peu ou pas utilisées dans ce secteur.

Les principaux freins au déploiement de stratégies marketing plus avant-gardistes par les fabricants d’objets connectés sont :

  • La perception des consommateurs de l’utilisation de leurs données à des fins de commercialisation
  • La convergence requise des compétences statistique, informatique, analytique, psychologique, sociologique et marketing
  • L’Absence de formation des analystes marketing dans les stratégies de commercialisation utilisant les données de masse (big data)
  • Le coût élevé des infrastructures et applications nécessaires à l’analyse de la modélisation des données

Les trois derniers freins expliquent également pourquoi les fabricants d’objets connectés utilisent principalement des fournisseurs externes pour analyser les données et développer leurs stratégies marketing.

Il est évident que le marketing des objets connectés en est encore qu’à ses balbutiements. À défaut d’une innovation de rupture dans le domaine, il faudra attendre de nombreuses années encore avant de voir le marketing des objets connectés se différencier substantiellement du marketing courant.

My best business reads for 2015 on marketing, innovation and lean startup

My best business reads for 2015 on marketing, innovation and lean startup

It is this time of the year. The time when we reflect on what we accomplished during last 12 months. What we did well and what we need to improve upon. It is also the time to consolidate our learnings for the year. One of the ways I circle back on my learnings for the year is to make a compilation of the books I read throughout the year and my best business reads list for the year.
I consider myself very lucky. My work requires me to not only keep up with what is going on in my field but keep ahead of the curve. Hence I need to read an average of probably 20-25 hours a week and I love it.
The one thing I noticed this year is that the marketing books I read were not my best sources of information to keep ahead of the marketing curve. Marketing is moving at the speed of light these days and the published book format is not well suited to keep you abreast of what is on and ahead of the curve. It is still however a great format to do a deep dive on a given topic.
Hence most of the marketing information I used to write my blog posts came from blogs or webzines. Therefore I will focus on my favorite cutting edge marketing information web sources for this year’s review.
As they are an inherent part of the services I offer to my customers I must also keep up on innovation and Lean Startup literature. I read many really great books on these two topics this year. It was hard to pick just a few for this review. Here are my best business reads for 2015.

Marketing

Best reads Hubspot - Baker MarketingHubspot

This site is designed to draw in affiliates. Hence the information is tailored for marketing consultants. Hubspot picks up quickly on new trends and is therefore an excellent source of information to keep on top of the curve marketing-wise.

Best Reads 2015 eMarketer - Baker MarketingeMarketer

eMarketer is a great source of market data. It also has some excellent white papers that draw a very clear picture of digital marketing, media and commerce. I especially like that they have extensive data on Canada and even some on Quebec.

Best reads 2015 CCO - Baker MarketingCCO Magazine

The articles in the Chief Content Officer magazine are dedicated to content marketing which is an ever inclusive field. The articles are often in-depth and of excellent quality.

Honorable mention goes to the Harvard Business Review (HBR). Although it isn’t specifically a marketing magazine, their marketing articles are truly well researched and written by some of the most brilliant American marketing minds.

Many of my blog posts, including 3 Digital Makreting Hurdles, Me Inc, Influencer marketing, retargeting, community marketing and co-marketing were all inspired and researched using at least one of these sources.

 Innovation

Best Reads How to Fly a Horse - Baker MarketingThe very best book on innovation I read this year, hands down, is How to Fly a Horse by Kevin Ashton. Using examples of true disruptive innovations over the last century, Ashton explains not only the process of creating a disruptive innovation but its required environment as well. It inspired me to write an entire series of post on creativity and innovation, creativity stimuli, creativity killers and how to foster innovation in large corporations. The posts on this blog are in French but I translated the first one on Medium. The others will follow in the New Year.

Best reads Mindset - Baker MarketingAlthough not on innovation per se, Mindset: The new psychology of success written by psychologist Carol Dweck is a fantastic book that will help marketers, innovators and entrepreneurs foster an attitude that will, along with hard work, lead them to success. It was recommended to me by a colleague and I since recommended the book to a few friends and acquaintances. Most of them said it was one of, or the best, and most useful book they read in a long time.

Lean Startup

Dozens of Lean Startup related books covering topics from management, finance, marketing, corporate culture, analytics, product management and others came out in 2015. There were too many to read. Amazon’s list of Lean Startup related books to be published in 2016 makes me think that all the Lean Startup related books written in 2015 will only amount to a fraction of what is coming next year. Erie Ries himself (Lean Startup author) will be publishing a second book called The Leaders’ Guide, in 2016.

MVP Marketing Plan - Baker MarketingI was even inspired myself this year to create some Lean Startup content. I shared with my readers the Marketing Minimum Viable Plan (Marketing MVP) in a series of 3 posts (part 1, part 2 and part 3).

Three of the books based on Lean Startup principles that stood out from the others for me were the following.

BBest reads Lean Product Playbook - Baker MarketingThe Lean Product Playbook: How to innovate with Minimum Viable Products and Rapid Customer Feedback from Dan Olsen is one of them. It will help anyone developing a new product figure out how to apply Lean Startup principles and minimize commercialisation risks for their specific situation. It is well written and has loads of pertinent examples to facilitate comprehension of various concepts. It inspired me to write a post on product/market fit.

Best Reads Lean Enterprise - Baker MarketingLean Enterprise: How corporations can innovate like start-ups by Trevor Owen is another book that stood out. Based in large part on Christensen’s Innovator’s Dilemma, it clearly shows the barriers to innovation in large corporations. It also talks about the concept of innovation colonies and many of the practical aspects of setting up innovation friendly environments in large businesses.

lean b2b150vFinally Lean B2B: Build Products Businesses Want by Etienne Garbugli is a comprehensive look at developing B2B products using Lean Startup principles. It takes a practical, hands-on approach which shows you step by step how Lean Startup product management is done in a B2B environment. It is the only book on Lean Startup I read that uses a layout and techniques one usually finds in textbooks to facilitate comprehension.

This rounds up my list of best business reads for 2015.

Thank you for having taken the time to read the TechnoMarketing blog this year.

I would like to wish you and yours happy holidays and a healthy and fruitful 2016.Happy Holidays from Baker Marketing

 

 

Finding the elusive product-market fit

Finding the elusive product-market fit

Every start-up is looking for the elusive product-market fit. It’s the only way to get to the hockey stick market growth that can eventually lead to unicorn land.

Finding the product-market fit is this magical moment in time when a corporation has found the market(s) who perceive the value proposition of their product to be irresistible.

The three parts of the product-market fit definition

The first part is finding a (or a few) market(s) who perceive(s) your product as irresistible. This means you have found[1] a market which has unmet needs that they consider important enough to want to pay you, rather than anyone else, to fulfill them.

What is important to remember is that the needs to be fulfilled are often not directly related to the product itself. They are peripheral needs that the solution, which envelops the product, will fulfill.
The Uber taxi service is an example. Its customers are not choosing them over the many competing taxi services because they want to satisfy the need to get from point A to point B. They are choosing to give their money to Uber and its drivers mostly because Uber made it easier to order and pay for a taxi ride from their cell phone. Also because the passenger has an important say in who gets not only to drive him or her but to drive a Uber taxi.

Value proposition - Baker MarketingThe second part of the product-market fit definition is creating the value proposition which will prove irresistible. In order to provide significant gains, reduce some of the pains a market segment is experiencing, and help them do their jobs (real of figurative) more efficiently, you need to understand not only their needs but the environment in which they are felt.

The third part of the product-market fit definition is the moment in time aspect. The product market fit has a start and a finish in time. It does not last forever once you have found it. It is tributary to a slew of variables that all need to be within a certain range for the fit to happen. As soon as one of the critical variables, or a sufficient amount of non critical ones, move outside of the ideal range, the fit disappears.

How to achieve product-market fit

Achieving product-market fit can only be done through trials, errors and adjustments.
The fastest way to achieve product-market fit is to start with intimate knowledge of how one or a few market segments, with sufficient purchasing power for your product, fulfill one or many needs.
It is then a matter of translating this information into a solution with an irresistible value proposition to these markets.
This approach is significantly faster than developing a product for which you don’t have a specific market in mind and hence don’t know exactly which needs you will be fulfilling.
This approach entails that you need to guess which market segment will find your value proposition irresistible then get to understand their needs. You then either must adapt your product to this new information, or if the value proposition is unappealing to this particular segment, move on to another and repeat the process.
The risk of running out of funds is significantly higher with the second approach.

How to know when you have achieved product-market fit

Product-market fit - Baker MarketingThere are a few indicators that will allow you to know when -your product-market fit has been achieved.

The one I find the simplest is to plot on a graph your sales to total marketing costs (which includes your promotion costs) ratio over time for a specific market segment. If you are targeting multiple segments, you will need to allocate a part of your marketing costs for each segment.
When you see constant growth for a period equivalent to 4 to 6 sales cycle, you will have achieved product-market fit. A sales cycle beign defined as the time it takes a customer to go through the sales funnel (from awareness stage to purchase). Hence if your sales cycle is 7 days, you will need to see one month to one and a half month of constant growth of your sales to marketing cost ratio. If your sales cycle is a month long then you will need to observe 4 to 6 months of constant growth to know you have achieved your product-market fit.
You’ll want to keep an eye out for non-replicable events. If you are selling a new type of snow shovels, for example, and an unexpected heavy snowfall occurs, you will need to remove the period of the snowfall from your data.

Finding the product-market fit is the holy grail of any start-up. It is the acid test which lets you know your efforts were not in vain.

Now all that is left to do is find new markets so you can scale your business and keep a constant eye on your current one to make sure you don’t lose your product-market fit.

Can I get you a coffee or a Red Bull perhaps?

 

 

[1] In rare occasions, the market has found them