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.

Lean Enterprise’s Business Model

Lean Enterprise’s Business Model

 

You may have already heard about Lean Enterprise but, because it is a relatively new concept, you most likely haven’t yet.

What is Lean Enterprise?

Lean Enterprise Business Model - Baker MarketingIn short, Lean Enterprise is the Lean Startup approach adapted to large organisations. It has already been adopted by many large organisations such as GE, Toyota, the White House (about 4 years ago), NPOs  and many startups that became large such as Zappos.

 

How can Lean Enterprise be used?

Lean Enterprise can be used as the guide to an entirely new innovation program. However, since most large organisation already have an innovation program, Lean Enterprise can simply build on the existing program, improve it, make it more efficient and, over time, permeate the entire organisation with a culture of innovation.

Explaining Lean Enterprise

Explaining Lean Enterprise could be a very long process given that it touches all aspects of business and will take a very distinct flavor in each or the organisation that adopts it.

When entrepreneurs or intrapreneurs (folks responsible to make innovation happen in large organisations) want to explain their projects to me, I usually ask them to describe their business model.

Hence, I’m thinking that describing Lean Enterprise’s business model is will be a good way to explain this approach to manage innovation in large organisations succinctly.

Understanding Lean Startup first

Lean Startup approach - Baker MarketingIf you are unfamiliar with the Lean Startup approach then I suggest you brush up on it. Lean Enterprise requires a very good understanding of the underlying principles as well as the capability to run Lean Startup-type experiences.  There is an abundance of Lean Startup documentation online including the many Lean Startup related posts on this blog. Here is a sample of them that you can check out as a primer.

The Lean Enterprise Business Model

The image below (click to make it larger) is Baker Marketing’s version of what Lean Enterprise’s business model would look like. This version would not make for a good investors’ pitch but it’s also not its purpose.  Hopefully, this business model canvas will help you to understand, at a glance, what Lean Enterprise is all about.

The Lean Enterprise Business Model Canvas

Lean Enterprise's Business Model - Baker Marketing

Click for full view

Although this canvas is pretty straight forward, I will detail the Customer Segments and Value Proposition sections of the Lean Enterprise business model for better comprehension.

 Targeted Customer Segments

Lean Enterprise's Business Model - Baker MarketingThe Lean Enterprise innovation approach can be used is just about any large organisation that needs to innovate. The more disruptive the innovations it produces, the more gains it will get from the Lean Enterprise approach.

 

 

For profit organisations

This segment has the most straight forward application of Lean Enterprise for innovation purposes.

There are already dozens of large organisations incorporating Lean Enterprise in their existing innovation programs to make them more efficient. It is the case of such companies as Google, GE, Intuit, Toyota, Adobe, etc.

 

Non profit organisations

NPOs around the world all have a common pain; they are struggling to get enough resources to achieve their goals.

In many cases they are also faced with the task to innovate in order to keep being relevant to both their users and benefactors. Lean Enterprise helps them by ensuring that all the resources they do have are used as efficiently as possible when they innovate.

Lean Enterprise also helps large NPOs develop a more innovation-friendly culture.

 

Public and para-public organisations

Given that efficient use of resources is a basic principle in the application of Lean Enterprise, most public organisations could benefit from its implementation greatly. Government institutions are also in dire need of catching up to economies changing at the fastest pace ever in history.

The White House initiated the Healthcare.gov portal re-design in 2011 with a Lean Startup (not yet known as Lean Enterprise) team. The embryonic project was then taken over by CGI. When CGI was unable to deliver on time and on budget, the project was reverted to the Lean Startup team. The results they achieved were so spectacular that the White House eventually adopted Lean Enterprise for all of their innovative projects.  The approach also spread to other American government agencies and departments.

Aneesh Chopra, who was appointed CTO of the United States by Obama in 2009 (until 2012) was one of the catalysts in propagating the Lean Enterprise approach through the US government. [1]

 

 

Value Proposition

Lean Enterprise's Business Model - Baker MarketingThis is, in part, what a large organisation can expect to obtain with the implementation of a Lean Enterprise approach to innovation that their current program may not be bringing them.

 

Help innovate more efficiently

The efficiency is obtained in large part with the fact that an innovation project that is completed, within a Lean Enterprise-based innovation program, will necessarily answer the needs of its target customers/users. Hence a product/market fit or a service/user fit will be achieved every time.

Efficient use of resources (especially human) being an underlying principle of Lean Enterprise, it is therefore a constant preoccupation of the project participants.

 

Use existing resources more intensively

If you work in a large organisation, I am certain you are aware of either unused resources or resources not fully used that can be put to contribution in innovation projects. If not, I suggest you ask and snoop around. You will find some in no time. The infusion of entrepreneurial attitude, brought by Lean Enterprise, makes using these resources second nature.

 

Build on existing innovation programs/practices

Lean Enterprise is based on principles, tools and techniques borrowed from many existing and proven management theories such as:

  • Lean production
  • Customer development
  • Agile development
  • Design Thinking

Most innovation programs already make use of the principles, tools or techniques of some of these theories. Lean Startup implementation can ‘’surf’’ on these existing programs in an organisation and add to them.  This greatly flattens the learning curve and is more easily adopted.

Implementing a Lean Enterprise approach to innovation is like any other change management program. It must be done incrementally, ensuring all are onboard.

 

Increase speed to market of innovations

Lean Enterprise is based on rapid iteration testing of the various parts of a business model until you reach a product/market fit or service/user fit[2].

The approach has a built-in control mechanism to ensure innovation teams don’t go astray, lose focus or momentum.

 

Pivot quickly on ideas with no positive ROI

All of the products or services that get to market with a Lean Enterprise approach are successful. This, however, doesn’t mean that these successful products or services look anything like what was imagined initially.

Lean Enterprise does not prevent or fix product or service ideas that would flop in the market.  It does however quickly show which ideas need to be discarded thus avoiding the waste of resources to bringing them to market.  Luckily, most ideas simply need a few pivots (okay many pivots) to achieve success with their markets.

 

Better manage innovation financing risks

The use of innovation accounting in Lean Enterprise innovation programs allows for incremental financing with a known risk coefficient of each of the projects increments.

It bridges the gap between corporate innovators and financial managers.

You can read more about innovation accounting in these previous posts.

 

Creates innovation culture in the long run

The real prize, at the end of the journey of implementing Lean Enterprise, is the creation of a true culture of innovation.

Some of the most important barriers today in achieving a true organisation-wide culture of innovation are the following:

  • Mistakes are neither welcome nor tolerated
  • Resources (human, financial, physical, etc.) are kept in silos
  • Decision making power is diluted (with a heavy weight at the top of the pyramid)
  • Over-abundant and rigid processes that result in slow reactions to market changes

The Lean Enterprise approach to innovation, intrinsically, removes those barriers.

As any other change management program, Lean Enterprise takes time, effort and commitment. Commitment from the innovation project champions but also from top management. Although still in its infancy, the Lean Enterprise approach shows promise of integrating innovation into large organisation’s main stream of business instead of treating it like a special cousin, as it is now.

If you want to learn more about Lean Enterprise and its application, you can pre-order Eric Ries’ new book due out in the fall, called TheStartup Way.

If you have a Lean Startup Circle community in your area, you can contact the organisers to locate experienced coaches or attend their meetups and see how entrepreneurs and intrapreneurs can help each other innovate more efficiently.

[1] This hour-long talk with Aneesh Chopra explains how Lean Enterprise came to be in the US governement

[2] Characterised by a sharp increase in the sales or adoption growth for a sustained period.

Applying Lean Startup in the concierge phase of your start-up

Applying Lean Startup in the concierge phase of your start-up

This will be the second to last post of a series of how to apply the Lean Startup approach to a new business.

Until now in this series on applying Lean Startup, we started with an introduction, then looked at the ideation phase, the discovery phase and the pre-sell phase (also known as the Death Valley).

 

Congratulations!

Applying Lean Startup in the concierge phase - Baker Marketing Either because you have made it this far in reading this series or, even more important, you have successfully crossed the Death Valley (pre-sell phase) and came out of it with the holy grail of a product/market fit (when the hockey blade becomes the stick on your revenue chart).

You now find yourself in the concierge phase.

 

What is the concierge phase

The boxes below presents a very high level summary of usual situations your start-up can expect in the concierge phase.

Product

Application

  • Your core features all work pretty well
  • You created your first (official) road map to additional features

Physical product

  • If you are outsourcing, you are either looking at optimizing your suppliers or taking steps to bring production in-house
  • If you are manufacturing in–house, you are looking at getting decent equipment to start producing at a larger scale

Market

  • You are looking at more efficient tools to learn about your customers, markets, and environments
  • You are exploring new customer segments
  • You are aggressively growing your initial markets
  • You are constantly reassessing the total size of your markets
  • If you are an innovator in your market; you are keeping an eye out for the chasm (1)

[1] The saturation of the early adopters market and passage to the early majority  (re. The innovation adoption curve)

 

Processes

  • You are feeling the need to put processes down on paper so your teams has a more homogenous approach
  • You realise you need a lot of processes and procedures but don’t want to bog down your agility

HR

  • You are on boarding team members at a rapid rate
  • Job definitions are getting more specialised
  • Your core team is trying to find a fit with their new, more limited, roles in the company (spoiler alert – some won’t adjust)
  • Your core team feels as though they spend more time coaching new resources than getting work done

 

Finance

  • Money is coming in at a decent rate from sales
  • Labour costs need to be controlled as they are growing faster than your sales at times
  • Extra office space and equipment mean increasing your bank margin or taking out (mostly) short term loans
  • Investors are now calling you and want to hear about your scaling strategy

 

Too busy for Lean Startup

 

Applying Lean Startup in the concierge phase - Baker MarketingYou are now running a small business that is experiencing the fastest growth rate it ever will, short of an acquisition.

It is easy and oh so tempting to abandon the build, measure, learn approach. After all, you know your initial market’s needs very well by now and you are crazy busy fulfilling orders, fixing issues and well, running a company.

It is a trap most entrepreneurs will fall into. Until their growth rate slows down, stalls and starts to plummet. The dirty secret of the concierge phase is that most companies’ revenues during this period don’t look like a straight hockey stick handle. That straight upward slope is just the trend of your revenues. The revenues themselves go up and down regularly. If you want your slope average to be positive and steep, you need to minimise those downs. Most times these down periods will happen for the following reasons:

  • Your customer needs are changing due to a shift in the market (often due to a new competitor)
  • You experience process or production failures
  • Your initial early adopters market is getting saturated and you didn’t react quickly enough to open new markets
  • Your early adopters markets are saturated and you haven’t figured out how to sell to the early majority customers.

Continuing to apply the Lean Startup approach during your concierge phase will ensure that any new features or internal processes will answer the needs of your customers (external and internal). It will also ensure that market changes are captured and acted upon. This does mean that many of your processes must incoporate Lean Startup elements in them. In some cases, it can also mean that the you will need the build, measure and learn processes themselves to be written down and into job descriptions.

Incorporating Lean Startup in your processes is the key to keeping your company innovative and agile as it grows.

Your product, processes, marketing and overall strategy will adapt continuously. When you need to cross the chasm to reach your early adopters, the Lean Startup approach will be your natural bridge to the other side.

In our next and final post of this series, we’ll take a look at the tools that are most useful in the concierge phase.

[1] The saturation of the early adopters market and passage to the early majority  (re. The innovation adoption curve)

My 2016 Best Reads on Marketing, Innovation and Lean Startup

My 2016 Best Reads on Marketing, Innovation and Lean Startup

It’s the end of the year already. It went by incredibly fast. This is the time to look back and identify what needs to be fixed. It’s also the time to be grateful for all that we were able to achieve.

One of the things I am always very grateful for is the knowledge I gain during the year. Important sources for the knowledge I pick up are the books and articles I read.

I have to admit that I didn’t have as much time to read this year as I got involved in many (maybe too many) projects. I did however manage to read some very good books on marketing, innovation and Lean Startup.

As I did last year, I am sharing with you some of the ones I especially liked.

Best Reads on Marketing

I didn’t keep up with all that is new in marketing this year. It’s nearly impossible to do so. I tuned in to a few webinars that helped me focus my readings.

I read mostly on mobile marketing (various aspects), influencer as well as community marketing. Community marketing is a strategy that isn’t as easy to implement as one might think. Here is a post I wrote on how to find a profitable community marketing partner.

HubSpot - Best reads 2016 -Baker MarketingAgain this year, I found that my most interesting marketing reads came from blog posts on mainly two sites; eMarketer and HubSpot

 

Growth Engines - Best reads 2016 -Baker MarketingSpeaking of HubSpot it is one of the case study in Sean Ellis’s book; Growth Engines: Case Studies of How today’s Most Successful Startups Unlock Extraordinary Growth.

Through ten case studies, including Yelp, Uber, LinkedIn and HubSpot, Ellis explains the different types of growth engines and the contexts in which they worked best for those companies.

Although I read Growth Engines to better understand a concept that is integral to Lean Startup, this book offers some very valuable marketing lessons. It also touches on growth hacking, a term coined by Ellis. It inspired me to write a post on what growth hacking is and isn’t.

UX Strategy - Best reads 2016 - Baker MarketingAnother book that I thoroughly enjoyed was UX Strategy by Jamie Levy. Having been a Product Manager at a time where UX was but one part of the job description, it was great to delve into the depths of UX strategy.

Whether you are starting a new venture to create the killer app, or trying to innovate in an existing small, medium or large business, this book is a must read before you start. It can help you define a winning value proposition. It also guides yourr competitive analysis and helps you see which features you need to focus on.

The book is an easy read and doesn’t require any prior knowledge on UX design or app development.

Best Reads on Innovation

I was invited to a university workshop on blockchain earlier this year. Given I knew nothing on the topic I figured that it would be a great opportunity to learn. Montreal, where Baker Marketing is located, is a hotbed for blockchain research and development. The workshop did teach me the basics of blockchain but left me wanting to know more (a lot more, this is exciting stuff and definitely a game changer) about how this new technology could be used.

Blockchain Revolution - Best reads 2016 - Baker MarketingOne of the researcher at the workshop suggested Blockchain Revolution: How the Technology behind Bitcoin is Changing Money, Business and the World, by Don and Alex Tapscott. It was exactly what this non scientific reader needed. The Tapscotts explain the concept in very simple terms. They also explore a large number of applications for blockchain. They clearly show how significant a game changer this technology could be.

 

In Spring I also contributed to the organisation of the Montreal edition of the Intrapreneurship Conference.
During the conference one of the keynote speakers was Guillaume Hervé. Hervé is a veteran practitioner of intrapreneurship. He contributed to several corporate spinoffs in the aeronautics and health sectors. In case you are not familiar with the term, intrapreneurship is entrepreneurship adapted to large enterprise.

Winning at Intrapreneurship - Best reads 2016 - Baker MarketingIntrapreneurship is however not the same as entrepreneurship. These differences are the focus of Hervé’s book Winning at Intrapreneurship: 12 Labors to Overcome Corporate Culture and Achieve Startup Success.

Based on the 12 labors of Hercules, Winning at Intrapreneurship looks at the traps, pitfalls and myths of innovating in large businesses. Hervé saw them all in his career as an intrapreneur. He shares with us some tricks of the trade on how to avoid and debunk them. You can read more on this topic on the post I wrote titled Entrepreneurs as Corporate Innovators.

Best reads on Lean Startup

Leader's Guide - Best reads 2016 - Baker MarketingContinuing on the innovation in large business topic, Eric Ries published a second book this year. It’s titled the Leader’s Guide to Adopting Lean Startup at Scale.

First, Eric innovated in the way he published the book. He financed the book with a Kickstarter campaign. The backers were invited to join the Leader’s Guide community (managed by Mightybell). He used the community to test hypotheses about the content and cover of his book. Yep, he did it the Lean Startup way.

Unfortunately however, Eric only printed as many books as there were backers who pledged the sufficient amount. It isn’t available anywhere for purchase now that the Kickstarter campaign is over. You can however get a free digital copy if you know someone who invested in the campaign.

The Leader’s Guide is based on Eric’s experience (as well as that of some backers) on implementing Lean Startup in large corporations, like GE, and government organisations (like the White House).

I especially like the format of the book. Symbols are used in the margins throughout the chapters in order to quickly understand what the text pertains to. The coach’s Guide sections, for example, are about tips and subtleties in implementing the concepts.

It’s truly a guide that you will go to when implementing a Lean Startup approach to a large organisation.

Eric also announced that he will be publishing a third book next year. It’s tentative title is The Startup Way.

Scaling Lean - 2016 Best Reads - Baker MarketingWe were lucky to have another great Lean Startup practitioner write his second book this year.  Ash Maurya penned Scaling Lean: Mastering the Key Metrics for Startup Growth.

As a follow up to his first book, Running Lean, Ash is now looking at how to use metrics to scale your business once you have found the elusive product/market fit.

His rigorous approach to using key metrics to track your progress and focus your efforts has shown great results in many successful startups.

Grasshopper Herder - 2016 Best Reads - Baker MarketingFinally, I want to mention a website whose author consistently publishes great Lean Startup material. Tristan Kromer’s Grasshopper Herder is chalk full of Lean Startup ideas, tools and resources. Tristan was until recently one of the organisers of the San Francisco Lean Startup Circle.

If you are starting a new project and interested in putting Lean Startup into practice take a look at the series of posts on implementing Lean Startup. It is meant to guide you along your journey when you first start your project.

This concludes this year’s crop of my best reads on marketing, innovation and Lean Startup. Maybe some of them will become your favorites.

Thank you for taking the time to read Techno Marketing this year. I hope you take some time off during the holidays to rest and replenish, as we will.

Baker Marketing offers you its best wishes for the holidays. May 2017 be filled with health, serenity and lots of successful projects.
Happy Holidays from Baker Marketing

Using Lean Startup in the Pre-Sell Phase

Using Lean Startup in the Pre-Sell Phase

In this series of posts we have looked at how to use Lean Startup during the ideation and discovery phases. We also dove into the experimentation process and the tools to use in the discovery phase.

In this post, we’ll look at how to use Lean Startup in your pre-sell phase.

What is the pre-sell phase?

Lean Startup in pre-sell - Baker MarketingThe pre-sell phase begins when you have sufficiently tested your leap-of-faith assumptions of your business model to be confident that you have a shot at a viable business. This not because you believe so (as you did in the ideation phase) but because most (or all) of your business’s stakeholders (potential customers, suppliers, distributors, etc.) have told you so.

Typically, during the pre-sell phase you will be:

  • Finding a (or several) co-founder(s)
  • On-boarding your first employees
  • Developing your product/service
  • Starting to put into place some key partnerships

This is also the phase at which you will start getting real feedback from paying customers[1] (closer to the end of the pre-sell phase) and other stakeholders. It’s the reality test.

A test, unfortunately, many startup ideas fail.  It’s when you will either:

  •  Make significant pivots,
  • Change your mission entirely (go back to square one)
  • Throw in the towel, or
  • Confirm your business model

The end of this stage, when successful, is also often the time to go for seed funding.

Why continue experimenting?

Lean Startup in the pre-sell phase - Baker MarketingSo now that you have confirmed your business model, why should you continue experimenting?  It would be so much faster to just go full steam ahead and develop.

Your ideation and discovery phases were mostly planning.  As you know, plans usually don’t work out the way we think they will.

Also, during the time you take to put in place your business model, elements of your business’s eco-system as well as market realities will change. The higher the volatility of your business environment, the more important it is for you to test the elements of your business model while developing. Otherwise you may expand great efforts and resources to develop key partnerships, distribution networks, and develop your product/services for nothing.

This may not seem so bad from this end of the journey. Entrepreneurs who put every ounce of energy they had and every penny they owned (and some they don’t), for a few years, in a business that doesn’t lift off will tell you it’s as difficult as going through a death in the family. Some never fully recover.

 

Lean Startup experiments in the pre-sell stage

The mechanics of the experiments we saw in the discovery stage will be the same.

You will still start by asking yourself; Will the negative impact on my future business be significant if the assumption I am making (regarding whatever part of your startup you are currently working on)  isn’t real? If the answer is yes, you turn it into a hypothesis you can test. You design your experiment using tools to minimize your efforts, chose your metric and standard and execute your experiment.

By this time, you will be getting very good at experimenting. Hence most of your experiments will take you less than a couple of days to run and often only a few hours or minutes.

Also, because you will have gotten out of the building often during your discovery phase experiments, you won’t need to talk to your stakeholder face to face as much. Many of your experiments will be done on the web or over the phone. You can also hire people to do them for you.

There will be times however when you aren’t sure of your next steps. This is usually the flag that means you need to go be around your potential customers. Talking or observing them. They will invariably show you the way.

At this stage, you will not only be testing elements of your product/service you will also be testing your distribution channels. The web will be your first one if you’re using it.  Also, if you are thinking of launching in markets that are not physically close to you, now is the time to start testing with those markets.

Not only will you be familiarizing yourself with the tools to find those markets but also you will, hopefully, have developed the reflex to go to the Lean Startup community for assistance.

 

The tools of Lean Startup

Lean Startup in the pre-sell phase - Baker MarketingNow that you will most likely have a, or several, co-founder(s) and employee(s), often not in the same city or working space, efficient communication will be a real need.

Slack, Trello and Dropbox may already be part of your daily routine. You may now want higher performance project management tools (such as Asana, Jira or Wrike[2]) or to start taking notice of Slack management best practices.

If you’ve embraced the integrated multiplatform communication route of Slack, you may also want to look at some of its competitors such as Bitrix24 and HipChat.

If your product is IT application, you’ll want to use one of the thousands of productivity apps available, often for free, to help you develop and test it. Tools such as Balsamiq Mockups , Fluid UI or HotGloo for wireframing.  GitHub, Zappier or LucidChart for developing your application. Test Fairy, Hiptest or SauceLabs for automated testing. Once your app is functional you can also put it up on Product Hunt and see what kind of reaction you get from a crowd of mostly innovators and early adopters.

If you are developing a non IT product, you can look for tools such as Ask Your Target Market (AYTM), Facebook or Survey Monkey and combine them with any potential customer email lists or profiles you have already collected.

You will also need to use your creativity to design experiments such as webinars or gatherings to have potential users interact with your product. Tools such as Meetup, Eventbrite, GotoMeeting will be very useful.

When you want to start testing packaging and pricing, A/B testing will be your friend. A/B testing is also very useful to test the conversion rates of different elements of your web pages. Tools such as Unbounce, Optimizely and LauchRock will be necessary unless you hold a degree in statistics.

If you are launching a new restaurant or brick and mortar business sites such as Potloc can help you find the best location and get feedback from potential customers.

 

Upping your game on metrics

Lean Startup in the pre-sell phase - Baker MarketingExperimenting and collecting all this information is great. You’ll need however to store, crunch and make sense of all of this data.

You’ll also need to figure out what metrics will be the key ones for your business. If you haven’t read Lean Analytics (Croll & Yoskovitz) yet, you need to by now.

Analytics is one of the parts of Lean Startup that isn’t intuitive. There is knowledge involved here, quite a bit of it. The learning curve is steep. If you will be running an online business (fully online or parts of it) you definitely need some deep analytics knowledge in your company.

Zoho Reports, Segments and Tableau are all great options. Initially you may however simply use an Excel spreadsheet in conjunction with Google Analytics. By the end of this stage, you may find however that the home grown solution requires too much time to manage and you’ll see value in the previously mentioned apps.

As you can see applying the Lean Startup approach gets easier and easier as your startup grows.

The next and last post of this series will be on how to apply Lean Startup during the concierge phase of your startup.

[1] Although you may be selling at a discount or simply selling and reimbursing as your product is not yet ready.

[2] Doesn’t integrate with Slack

Lean Startup Tools – Discovery Phase

Lean Startup Tools – Discovery Phase

This post follows Lean Startup Experiment – Discovery Phase. It will help you find Lean Startup tools that will accelerate your experiments significantly. Many of these Lean Startup tools increase productivity and can also be used on a daily basis in your business.

None of these tools, aside from the Javelin board and the experiment log template were developped specifically to be used within the Lean Startup approach. They are simply productivity tools that enable fast and efficient Lean Startup experiments.

Lean Startup experiment - Baker MarketingLean Startup Tools

Lean Startup tools make continuous experimentation throughout your startup feasible. Many of those tools are free or cost very little. None of the tools presented in this post were developed specifically for Lean Startup.  They are simply productivity tools that are used by the Lean Startup community to increase their productivity.

The following are some of the tools I find most useful and often recommend when entrepreneurs are in the discovery phase. Keep in mind there are hundreds if not thousands more of these tools out there. A bit of googling and asking around will yield you many options to accomplish the same task.

 

Lean Startup tools - Baker MarketingLean Startup tools to organise

These applications are great as they often work as a checklist as well as organisers. The following Lean Startup tools are all free or have free parts to them. Click on the titles for links.

LeanStack

Ash Maurya has graciously made his Lean Canvas application, which is very well made, free for your first project. It will help you keep a record of the various iterations, enable you to share with other team members and print your canvas.

Business Model Fiddle

Free business model canvas application developed by Johan Steenkamp. It has some really great features such as various colours for your post-its, picture and sketching capabilities as well as communication features for your team.

Budgeto

This is a great tool to start figuring out your cost and revenue model. It will act as a check list of all the items you need to take into consideration in your revenue statement.  As you progress in your startup, Budgeto will also take care of most of your accounting needs.

 

Lean Startup tools - Baker MarketingLean Startup Tools to communicate/collaborate

Slack

If you don’t yet know about Slack, you must. It’s an instant messaging app, on stereoids, that allows you to connect just about any other popular productivity tool such as Dropbox, Google docs or Hangouts, Skype, Trello and hundreds more. It’s mobile friendly so it will enable you to keep in touch with your team wherever you are.

Trello

Trello is one of the many simple and intuitive project management tools out there. Trello is the only full application that still offers free access. It is very powerfull and still simple to use. Other project management platforms such as Asana and Basecamp are even more complete but don’t offer any free versions.

Dropbox

Definitely one of the best ways to share large files and documents. It’s as simple to use as can be and is entirely free unless you are a power user.

Lean Startup experiment - Baker MarketingLean Startup tools to run my first experiments

Javelin Experiment Board

Javalin first developed the Experiment Board for the Lean Startup Machine a couple of years ago. They are now developing it in an app and are still in the testing phase. Until the app is out, you can get a Google docs version of it and print it out.  Watch this great video tutorial, from Grace Ng, of how to use the Experiment board.

 This is Service Design Thinking

This book contains over a dozen techniques to help you conduct offline experiments. Each technique is well explained and illustrated with an example.  If you’re not familiar with data gathering techniques, it’s the best place to start.

SurveyMonkey

Powerful online survey creation and data analysis application. It’s free for basic forms and data crunching. It has more survey question options and data analysis capabilities than AYTM and GCS.  You must provide your own participants list.

Google Forms and Consumer Surveys

Google Forms enables you to create surveys that you can send to your own participants list. Google Consumer Surveys provides the participants and you only pay for completed questionnaires. Pricing starts at $0.10USD per completed survey.

AYTM -Ask your target market

Similar to Consumer Surveys AYTM offers highly targeted participants to answer  your surveys.

Pricing starts at about $1USD per participant. AYTM boasts over 25 million survey or experts panel participants.

Experiment log

As of writing this post, I haven’t seen any experiment log templates or application to facilitate the keeping of a journal of your experiments.

Hence, I created one for my own use that I will share with you. It’s a simple Excel spreadsheet that you can modify as you see fit. The important part is to keep your rows constant over time so you can have a base to compare.

Keeping an experiment log is a pain and requires some time and effort. Hence, if you don’t plan on going to VCs for funding, it’s not a must to keep one.

An added benefit of the log is that of a training tool when you onboard other members. Careful reading of this journal will help your new recruits know about your young corporate history and learn from you previous mistakes and wrong turns.

Note: I will add the experiment log template to this post very soon.

 Lean Startup tools - Baker MarketingTapping into the Lean Startup community

Some of the most important resources found in Lean Startup are its local and international communities.  It is by far the entrepreneurial community that is the most generous with its time and knowledge that I have encountered.

Locally, you have Lean Startup Circles members that meet periodically to learn, practice and exchange on Lean Startup experiments, tools and resources. Circles have experienced coaches that can help you with any part of your experiments.

You can locate the Lean Startup Circle nearest you by consulting the list on the Lean Startup wiki. Most of them, such as the Montreal LSC, have a Meetup page, Facebook page and/or website where you can register to become part of the community.

Once you are part of a Lean Startup Circle community you will gain access to the Lean Startup Slack channels by asking your local organisers. These channels encompass hundreds of members that form a help community.

If you are stuck somewhere in your experiment, are looking for a tool, experiment design ideas, want to know how to go about testing a foreign market, your local and virtual Lean Startup communities will be there to help.

Lean Startup tools - Baker MarketingThe next phase

Once you have acquired sufficient knowledge on your various stakeholders and have attained a certain level of validation with your business model, you will want to put it to the test.

The next phase will be about validating your business model where it counts; in the market. It is the true acid test. This phase is also sometimes referred to as the Valley of Death. It is when most start-ups end up dying in the Lean Startup approach.

This phase will also be when you start developing your product/service. The good news is if you can’t find any way to have your product/service fly in the market, you will not have spent months or years working on it.

The next post will guide you through this phase using Lean Startup. It will show you how Lean Startup can help transform, some (no, not all) ideas that would have died, into lucrative ventures. We will also present tools and tactics that can help you survive these difficult times.