Seven startup sins to avoidSeven common mistakes have led to the demise of thousands of startups, says Ben Parr. Here's what not to do.
by Ben Parr |March 21, 2012 4:05 PM PDT
Twitter and Square founder Jack Dorsey is a man who knows what causes most startups to fail.
I've seen thousands of startups fail, but they almost always fail for the same reasons. Most entrepreneurs fall into the same traps over and over again, despite how easy they are to avoid.
At the London Web Summit earlier this week, I told an audience of European entrepreneurs the seven mistakes I believe most often destroy promising startups.
These are my seven startup sins. Avoid these common mistakes at all costs:
1. Losing focus: If you're like the typical entrepreneur, you probably have hundreds of new ideas for your startup. But you must resist the urge to build lots of features, rather than focusing on the few that will actually take your product forward.
Giving users many choices and features may seem like a good idea, but it just confuses them until they abandon a product in frustration. Simplicity and focus are the keys to building a great company. Google became a $100 billion-plus company with a text box and not much else. Square became a leader in mobile payments by not trying to do too many things at once.
Jack Dorsey
✔@jack Happy 3rd Birthday @Square! I'm so proud of all we've accomplished, & all we decided not to do. instagr.am/p/G4ioytAQ9x/
11 Feb 12 ReplyRetweetFavoriteDon't start building every idea that comes into your head. Make everything as simple and streamlined as possible, and don't build everything the customer wants -- you will simply end up with a bloated product nobody will use.
2. Ignoring cashflow: In the early days of a startup, cashflow is far more crucial than revenue or profit. Your job as an entrepreneur is to find ways to extend your company's runway for as long as possible.
It doesn't mean you have to be a penny-pincher, but make sure that every purchase you make will deliver greater benefits than its cost. My company buys the fastest MacBook Pros possible for our engineers because the increased productivity more than makes up for the upfront costs of the computer.
3. Obsessing over competition: Many startups worry too much what Google or another startup may be building. If you obsess over what they're building, you're going to start building products based on your fears. There will always be competition, but the best companies focus on user experience instead of focusing on the competition.
4. Failing slowly: Your first product is most likely going to fail. Whether it takes you weeks, months, or years before you realize your product is a dud is entirely up to your flexibility.
Find out quickly whether your idea will succeed or fail -- research, build, test, and iterate as quickly as you can. Don't be discouraged by setbacks, but if you can see the writing on the wall, don't ignore it -- figure out why your product isn't gaining traction and fix it. Tools like Google Analytics, RJMetrics, and Optimizely are great for gathering the information you need to make decisions quickly.
5. Ignoring company culture: It's easy, especially in the early days, to make company culture a lower priority. But much like plaster, once a company culture is set, it becomes very tough to reshape.
"Zappos sells shoes and apparel online, but what distinguished us from our competitors was that we'd put our company culture above all else," Zappos CEO Tony Hsieh famously said after the company was sold to Amazon. Zappos used that strong culture to successfully recruit employees and customers.
The most important job of a founder is company culture and recruitment. Most successful founders stop coding as their companies scale, but their example sets the tone for the work ethic, priorities, and morals of the companies they created.
(Credit: James Martin/CNET) Mark Zuckerberg understands the importance of company culture better than almost anybody. He famously takes engineers Facebook is trying to recruit on a walk in the woods of Palo Alto to build a relationship and explain the company's vision.
You should have a strong idea of what kind of company culture you want to build long before you hire your first employee.
6. Being complacent: No company is immune to catastrophic failure -- just ask Yahoo, Digg, MySpace, RIM, and Friendster. Don't confuse traction for victory, because that is what leads to a startup becoming complacent and getting blindsided by an upstart competitor.
7. Not building: You can worry about competitors and fundraising until you pass out, but there's no bigger sin than not building. Ideas are easy to come by -- it's execution that separates successful companies from thousands of could-have-beens.
At some point, you just have to build and see how it goes. That's the beauty of entrepreneurship -- it's democratic. The people, rather than investors or competitors, will ultimately decide your startup's fate.
Wednesday, March 28, 2012
Innovation Is About Arguing, Not Brainstorming. Here’s How To Argue Productively
Innovation Is About Arguing, Not Brainstorming. Here’s How To Argue ProductivelyWritten by: Daniel Sobol
At Continuum, innovation’s secret sauce is deliberative discourse. Here’s how you do it.
Likes Turns out that brainstorming--that go-to approach to generating new ideas since the 1940s--isn’t the golden ticket to innovation after all. Both Jonah Lehrer, in a recent article in The New Yorker, and Susan Cain, in her new book Quiet, have asserted as much. Science shows that brainstorms can activate a neurological fear of rejection and that groups are not necessarily more creative than individuals. Brainstorming can actually be detrimental to good ideas.
But the idea behind brainstorming is right. To innovate, we need environments that support imaginative thinking, where we can go through many crazy, tangential, and even bad ideas to come up with good ones. We need to work both collaboratively and individually. We also need a healthy amount of heated discussion, even arguing. We need places where someone can throw out a thought, have it critiqued, and not feel so judged that they become defensive and shut down. Yet this creative process is not necessarily supported by the traditional tenets of brainstorming: group collaboration, all ideas held equal, nothing judged.
So if not from brainstorming, where do good ideas come from?
“The creative process isn’t supported by the traditional tenets of brainstorming.” At Continuum, we use deliberative discourse--or what we fondly call “Argue. Discuss. Argue. Discuss.” Deliberative discourse was originally articulated in Aristotle’s Rhetoric. It refers to participative and collaborative (but not critique-free) communication. Multiple positions and views are expressed with a shared understanding that everyone is focused on a common goal. There is no hierarchy. It’s not debate because there are no opposing sides trying to “win.” Rather, it’s about working together to solve a problem and create new ideas.
So we argue. And discuss. And argue. A lot. But our process is far from freeform yelling. Here are five key rules of engagement that we’ve found to yield fruitful sessions and ultimately lead to meaningful ideas.
1. NO HIERARCHY
Breaking down hierarchy is critical for deliberative discourse. It’s essential to creating a space where everyone can truly contribute. My first week at Continuum, I joined a three-person team with one senior and one principal strategist. A recent graduate, I was one of the youngest members of the company. During our first session, the principal looked me in the eye and said, “You should know that you’re not doing your job if you don’t disagree with me at least once a day.” He gave me permission to voice my opinion openly, regardless of my seniority. This breakdown of hierarchy creates a space where ideas can be invented-- and challenged--without fear.
2. SAY “NO, BECAUSE”
It’s widely evangelized that successful brainstorms rely on acceptance of all ideas and judgment of none. Many refer to the cardinal rule of improv saying “Yes, AND”--for building on others’ ideas. As a former actor, I’m a major proponent of “Yes AND.”
But I’m also a fan of “no, BECAUSE.” No is a critical part of our process, but if you’re going to say no, you better be able to say why. Backing up an argument is integral in any deliberative discourse. And that “because” should be grounded in real people other than ourselves.
We conduct ethnographic research to inform our intuition, so we can understand people’s needs, problems, and values. We go out dancing with a group of women in a small Chinese village; we work in a fry shack in the deep South; we sit in living rooms and listen to caregivers discuss looking after a parent with Alzheimer’s. This research informs our intuitive “guts”--giving us both inspiration for ideas and rationale to defend or critique them.
During ideation, we constantly refer back to people, asking one another if our ideas are solving a real need that people expressed or that we witnessed. This keeps us accountable to something other than our own opinions, and it means we can push back on colleagues’ ideas without getting personal.
3. DIVERSE PERSPECTIVES
We’ve all heard of T-shaped people and of multidisciplinary teams. This model works for us because deliberative discourse requires a multiplicity of perspectives to shape ideas. We curate teams to create diversity: Walk into a project room and you may find an artist-turned-strategist, a biologist-turned-product designer, and an English professor-turned-innovation guru hashing it out together. True to form, my background is in theater and anthropology.
On a recent project, I realized the best way to tackle a particular problem was to apply a text analysis tool that actors use with new scripts. I taught this framework to the team, and we used it to generate ideas. Another time, a team member with a background in Wall Street banking wrote an equation on the whiteboard. It was exactly the framework we needed to jumpstart our next session.
When we enter deliberative discourse, arguing and discussing and arguing and discussing, we each bring different ways of looking at the world and solving problems to the table.
4. FOCUS ON A COMMON GOAL
Deliberative discourse is not just arguing for argument’s sake. Argument is productive for us because everyone knows that we’re working toward a shared goal. We develop a statement of purpose at the outset of each project and post it on the door of our project room. Every day when we walk into the room, we’re entering into a liminal play space--call it a playing field. The statement of purpose establishes the rules: It reminds us that we are working together to move the ball down the field. As much as we may argue and disagree, anything that happens in the room counts toward our shared goal. This enables us to argue and discuss without hurting one another.
5. KEEP IT FUN
We work on projects ranging from global banking for the poor to the future of pizza and life-saving medical devices. Our work requires intensity, thoughtfulness, and rigor. But no matter the nature of the project, we keep it fun. It’s rare for an hour to pass without laughter erupting from a project room. Deliberative discourse is a form of play, and for play to yield great ideas, we have to take it seriously.
But we don’t brainstorm. We deliberate.
[Images: Kazarlenya, aboikis, and Jakgree via Shutterstock]
At Continuum, innovation’s secret sauce is deliberative discourse. Here’s how you do it.
Likes Turns out that brainstorming--that go-to approach to generating new ideas since the 1940s--isn’t the golden ticket to innovation after all. Both Jonah Lehrer, in a recent article in The New Yorker, and Susan Cain, in her new book Quiet, have asserted as much. Science shows that brainstorms can activate a neurological fear of rejection and that groups are not necessarily more creative than individuals. Brainstorming can actually be detrimental to good ideas.
But the idea behind brainstorming is right. To innovate, we need environments that support imaginative thinking, where we can go through many crazy, tangential, and even bad ideas to come up with good ones. We need to work both collaboratively and individually. We also need a healthy amount of heated discussion, even arguing. We need places where someone can throw out a thought, have it critiqued, and not feel so judged that they become defensive and shut down. Yet this creative process is not necessarily supported by the traditional tenets of brainstorming: group collaboration, all ideas held equal, nothing judged.
So if not from brainstorming, where do good ideas come from?
“The creative process isn’t supported by the traditional tenets of brainstorming.” At Continuum, we use deliberative discourse--or what we fondly call “Argue. Discuss. Argue. Discuss.” Deliberative discourse was originally articulated in Aristotle’s Rhetoric. It refers to participative and collaborative (but not critique-free) communication. Multiple positions and views are expressed with a shared understanding that everyone is focused on a common goal. There is no hierarchy. It’s not debate because there are no opposing sides trying to “win.” Rather, it’s about working together to solve a problem and create new ideas.
So we argue. And discuss. And argue. A lot. But our process is far from freeform yelling. Here are five key rules of engagement that we’ve found to yield fruitful sessions and ultimately lead to meaningful ideas.
1. NO HIERARCHY
Breaking down hierarchy is critical for deliberative discourse. It’s essential to creating a space where everyone can truly contribute. My first week at Continuum, I joined a three-person team with one senior and one principal strategist. A recent graduate, I was one of the youngest members of the company. During our first session, the principal looked me in the eye and said, “You should know that you’re not doing your job if you don’t disagree with me at least once a day.” He gave me permission to voice my opinion openly, regardless of my seniority. This breakdown of hierarchy creates a space where ideas can be invented-- and challenged--without fear.
2. SAY “NO, BECAUSE”
It’s widely evangelized that successful brainstorms rely on acceptance of all ideas and judgment of none. Many refer to the cardinal rule of improv saying “Yes, AND”--for building on others’ ideas. As a former actor, I’m a major proponent of “Yes AND.”
But I’m also a fan of “no, BECAUSE.” No is a critical part of our process, but if you’re going to say no, you better be able to say why. Backing up an argument is integral in any deliberative discourse. And that “because” should be grounded in real people other than ourselves.
We conduct ethnographic research to inform our intuition, so we can understand people’s needs, problems, and values. We go out dancing with a group of women in a small Chinese village; we work in a fry shack in the deep South; we sit in living rooms and listen to caregivers discuss looking after a parent with Alzheimer’s. This research informs our intuitive “guts”--giving us both inspiration for ideas and rationale to defend or critique them.
During ideation, we constantly refer back to people, asking one another if our ideas are solving a real need that people expressed or that we witnessed. This keeps us accountable to something other than our own opinions, and it means we can push back on colleagues’ ideas without getting personal.
3. DIVERSE PERSPECTIVES
We’ve all heard of T-shaped people and of multidisciplinary teams. This model works for us because deliberative discourse requires a multiplicity of perspectives to shape ideas. We curate teams to create diversity: Walk into a project room and you may find an artist-turned-strategist, a biologist-turned-product designer, and an English professor-turned-innovation guru hashing it out together. True to form, my background is in theater and anthropology.
On a recent project, I realized the best way to tackle a particular problem was to apply a text analysis tool that actors use with new scripts. I taught this framework to the team, and we used it to generate ideas. Another time, a team member with a background in Wall Street banking wrote an equation on the whiteboard. It was exactly the framework we needed to jumpstart our next session.
When we enter deliberative discourse, arguing and discussing and arguing and discussing, we each bring different ways of looking at the world and solving problems to the table.
4. FOCUS ON A COMMON GOAL
Deliberative discourse is not just arguing for argument’s sake. Argument is productive for us because everyone knows that we’re working toward a shared goal. We develop a statement of purpose at the outset of each project and post it on the door of our project room. Every day when we walk into the room, we’re entering into a liminal play space--call it a playing field. The statement of purpose establishes the rules: It reminds us that we are working together to move the ball down the field. As much as we may argue and disagree, anything that happens in the room counts toward our shared goal. This enables us to argue and discuss without hurting one another.
5. KEEP IT FUN
We work on projects ranging from global banking for the poor to the future of pizza and life-saving medical devices. Our work requires intensity, thoughtfulness, and rigor. But no matter the nature of the project, we keep it fun. It’s rare for an hour to pass without laughter erupting from a project room. Deliberative discourse is a form of play, and for play to yield great ideas, we have to take it seriously.
But we don’t brainstorm. We deliberate.
[Images: Kazarlenya, aboikis, and Jakgree via Shutterstock]
Monday, March 26, 2012
Beyond Stage Gate – Repeating Disruptive Innovation
Beyond Stage Gate – Repeating Disruptive InnovationPosted on March 18, 2012 by Jose A. Briones, Ph.D.
Existing methods for the management of innovation projects have a low probability of success in the development of radical of disruptive innovations. A new spiral approach has been developed that provides the balance of flexibility and control needed for a repeatable and successful approach to disruptive innovation.
Product innovation has been described as the way out of today’s difficult business environment. However, the rate of success of development projects, in particular white space and disruptive innovation projects, remains low.
This low success rate can be attributed in part to the erroneous application of methods designed for incremental innovation to projects with high levels of uncertainty. Common approaches to the management of innovation projects, like Waterfall or Stage-Gate, follow a linear approach that does not provide the flexibility needed for disruptive innovation to be successful.
The key to success in disruptive innovation is the use of a strategy that reconciles opposite needs: flexibility and control. A framework of controlled iteration can provide the right level of flexibility while at the same time give management the information required for proper allocation of resources. It’s time for an innovation in innovation itself.
The need for effective approaches to the management of innovation projects led to the development of the Spiral System for disruptive innovation management. This method applies an iterative, agile approach to market and business development. Development projects are classified based on degree of uncertainty and managed along project tracks appropriate to the level of uncertainty. Finally, appropriate innovation tool sets are employed based on the best fit between information available and decision making needs.
The Spiral System offers a balanced, agile approach to innovation management. It preserves the metrics needed for measurement of project progress, but also provides the flexibility needed for high uncertainty innovation projects to succeed.
Problem Statement
Recent examples such as Blockbuster, Borders, Kodak, Nokia and Blackberry show that innovation has become a matter of life and death for companies today. But innovation may be costly.
Dr. William Strauss of FutureMetrics has documented that the ratio of R&D needed per unit of GDP output has gone from 1:1 in the early 90’s to ~3:1 in 2009. This increase can be attributed to the fact that the rate of success of innovation projects, particularly radical or new market innovation projects rarely exceeds 20% and may be as low as 2.5%.
Referring to classical innovation management processes such as Stage Gate, Clayton Christensen, author of the book “The Innovator’s Dilemma”, has stated:
“The Stage-Gate system assumes that the proposed strategy is the right strategy; the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance. The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative.”
Christensen’s observation reflects the need for new management approaches that increase the probability of success, but at the same time preserve the metrics required for measurement of progress and resource allocation. The challenge is then to reconcile a formal management framework with the flexibility that is needed for innovation to thrive.
The Need for Iterations:
To develop disruptive innovations, 1 round of voice of the customer is not enough to be the cornerstone of a project. This is because customers cannot say that they want what they do not know, and can only provide feedback on incremental modifications on what they do know. As the American industrialist Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.”
The Spiral Solution
The solution to this challenge consists of 3 parts:
1. Classifying projects according to the degree of uncertainty
2. Adopting a controlled iterative process to discovery
3. Using the right analysis tools that correspond to the level of uncertainty at each iteration level
The practical framework that incorporates these solutions is show in Figure 1 below
Time is the X axis, resources is the Y axis. Center = 0 for both, thus they both grow from the center. This is visual way to indicate that time and resources allocated should be low for level 1 projects and grow as more information is obtained and uncertainty is reduced.
Keys to the Process:
•Time and resources required are low when uncertainty is high, but increase as the project advances through each iteration and likelihood of success increase.
•The analysis is repeated at each level, but the tools used for each level are different.
•The first iteration at level 1 uses tools more suitable for high levels of uncertainty, i.e. Discovery Driven Planning, Probabilistic Decision Analysis
•The 3rd level of iteration uses more conventional management tools, i.e. Linear Stage-Gate, Agile, NPV.
Benefits of the Spiral Approach:
The use of this framework offers the following advantages compared to traditional linear innovation management systems:
• For disruptive innovation projects iterations are needed where customers evaluate a prototype and a new cycle starts, complete with a new VOC, market and business analysis. This framework allows for the iterations to occur in a controlled manner;
• The use of this framework, combined with the right analysis tools, allows for effective financial forecasting even in the early stages of the innovation project where uncertainty is high.
• The initial iterations, where uncertainty and risk are high (represented by the inner spirals on the chart) can be completed quickly and at low cost. Ideas can be rapidly promoted to the next iteration – or discarded. Because initial resource allocation is minimal, resources are made available to focus on projects that have entered iteration 3
• The controlled iteration approach provides a way to properly define the right value for the product or offering, leading to more accurate price estimates.
• In this framework, allocation of time and resources starts at low levels. These increase as the levels go up and the uncertainty is reduced, thus minimizing risk.
• This approach does not compare incremental innovation projects to radical innovation projects in the early stages, a classical mistake made by established leaders which results in the early kill of radical innovation projects.
This framework for the management of innovation projects provides the flexibility needed for successful innovation projects in any industry and the metrics needed for proper measurement of progress and resource allocation. By utilizing this approach, managers insure that radical and disruptive innovation projects have a chance to prove their benefits and create the innovative products and services that companies need to remain competitive.
This method has been used to successfully introduce a disruptive innovation to the construction additives market in Europe. Compared to conventional innovation management approaches, this framework led to the switch from an incremental innovation goal to a disruptive innovation technology with an identified profit potential of 25 MM$/yr.
Resources
A short video that summarizes the Beyond Stage Gate framework for innovation
http://www.slideshare.net/Brioneja/a-new-approach-to-innovation-managment
“Beyond Stage Gate” Framework Presentation
http://www.slideshare.net/Brioneja/brioneja-beyond-stagegate-a-new-approach-for-innovation
Stage-Gate® is a registered trademark from Stage-Gate International’s Product Development Institute Inc.
The Vision, the Product Backlog and the Minimal Viable Product
The Vision, the Product Backlog and the Minimal Viable Product
I find the Lean Startup concept of a minimal viable product (MVP) rather exciting: It entails creating a first product version to test our ideas as quickly and cheaply as possible. This could be a throwaway prototype such as a mock-up or a product increment, working software that is tested and documented. The MVP works together with a build-measure-learn cycle: developing software, gathering customer feedback, and learning from it.
Build, Measure, Learn
With roots in the Scrum tradition, this sounds rather familiar to me: Validating assumptions by gathering customer feedback using product increments is called empirical management or inspect-and-adapt in Scrum.
But Scrum advocates the use of a product backlog containing the outstanding work necessary to create a successful product. How does the backlog fit into the picture? And can the product backlog be helpful to create a minimal viable product?
This blog posts answers this question and investigates how Lean Startup and Scrum concepts can be combined successfully.
The Product Vision
“If I had asked people what they wanted, they would have said faster horses,” said Henry Ford famously. A vision, an idea of the future product, is the start of any successful innovation. Without a vision, we lack a shared goal, a common direction.
To reach our goal, we have to decide on an approach or strategy. This includes making assumptions about the target group, the needs the product should address, the key product features, and the value it should create for the organisation developing. I use my vision board to capture and visualise the product strategy.
The strategy’s assumptions must be validated. A great way to do this is to create the minimal viable product and to release it to the target customers and users.
The Product Backlog
Unfortunately, the product strategy is often too coarse-grained and partial to be used as a direct input for writing software. It can therefore be helpful to take an intermediate step, and to identify the work that is required to validate the strategy.
The corresponding items are placed in a sketchy, lightweight product backlog. To put it differently, the backlog is derived from the product strategy; it makes the strategy implementable.
Vision, Product Strategy, Product Backlog
From Backlog to Minimal Viable Product
Once we have a strategy and initial product backlog available, we create the minimum amount of functionality necessary to test our assumptions. This may take a day or two, or one or more sprints with a preference for the shorter timescales. Our goal is to find out quickly if the product generates a positive response amongst the target users and customers, and if the target group members use the product in the intended way. Once we’ve created the MVP, we release it and gather the relevant data.
Strategy, Backlog, and MVP
Note that releasing the MVP can be limited to a small group of users if the respondents are representative for the target group. Google, for instance, released early versions of its Chrome browser internally and asked its employees to test the software and to provide feedback before a first public beta was released in October 2008. A counter example is Google Buzz: The software was apparently loved by Google engineers, but unfortunately not by the rest of the world.
Pivot or Persevere?
Once we’ve gathered and evaluated the feedback, we need to decide if and how to act upon it. If the feedback invalidates any assumptions in the product strategy – which is likely to be the case when a new product is developed – we should adjust it together with the product backlog. Making changes to the strategy is also called pivot.
We may decide to change the target group or the needs selected, for instance; maybe the features or the look and feel envisioned is not right; or the business model does not work as expected, for instance, users never click on the ads displayed. Changing the product strategy can require restocking the backlog. With the backlog updated, we continue with the next cycle, develop a new MVP, and gather new feedback.
Pivot
If the data confirms our strategy, we preserve and adapt the product backlog by incorporating the insights gained. Depending on the quality of the MVP, we may have to throw away any mock-ups and prototypes created so far, and start afresh developing tested and documented software using agile development practices. If the MVP is a product increment, we can progressively transform it into a shippable product using a series of sprints.
Persevere
Summary
Using a minimal viable product is a powerful concept to validate the product backlog that be used in harmony with Scrum’s approach of creating working software, exposing it to customers and users, investigating their feedback, and making the necessary adaptations. Many thanks to @stefanroock for feedback on the first MVP of this post.
If you’ve found this blog post interesting, you are likely to benefit from my Agile Product Management training. The course teaches a combination of Lean Startup, Scrum, Kanban, and Design Thinking techniques. Check it out!
I find the Lean Startup concept of a minimal viable product (MVP) rather exciting: It entails creating a first product version to test our ideas as quickly and cheaply as possible. This could be a throwaway prototype such as a mock-up or a product increment, working software that is tested and documented. The MVP works together with a build-measure-learn cycle: developing software, gathering customer feedback, and learning from it.
Build, Measure, Learn
With roots in the Scrum tradition, this sounds rather familiar to me: Validating assumptions by gathering customer feedback using product increments is called empirical management or inspect-and-adapt in Scrum.
But Scrum advocates the use of a product backlog containing the outstanding work necessary to create a successful product. How does the backlog fit into the picture? And can the product backlog be helpful to create a minimal viable product?
This blog posts answers this question and investigates how Lean Startup and Scrum concepts can be combined successfully.
The Product Vision
“If I had asked people what they wanted, they would have said faster horses,” said Henry Ford famously. A vision, an idea of the future product, is the start of any successful innovation. Without a vision, we lack a shared goal, a common direction.
To reach our goal, we have to decide on an approach or strategy. This includes making assumptions about the target group, the needs the product should address, the key product features, and the value it should create for the organisation developing. I use my vision board to capture and visualise the product strategy.
The strategy’s assumptions must be validated. A great way to do this is to create the minimal viable product and to release it to the target customers and users.
The Product Backlog
Unfortunately, the product strategy is often too coarse-grained and partial to be used as a direct input for writing software. It can therefore be helpful to take an intermediate step, and to identify the work that is required to validate the strategy.
The corresponding items are placed in a sketchy, lightweight product backlog. To put it differently, the backlog is derived from the product strategy; it makes the strategy implementable.
Vision, Product Strategy, Product Backlog
From Backlog to Minimal Viable Product
Once we have a strategy and initial product backlog available, we create the minimum amount of functionality necessary to test our assumptions. This may take a day or two, or one or more sprints with a preference for the shorter timescales. Our goal is to find out quickly if the product generates a positive response amongst the target users and customers, and if the target group members use the product in the intended way. Once we’ve created the MVP, we release it and gather the relevant data.
Strategy, Backlog, and MVP
Note that releasing the MVP can be limited to a small group of users if the respondents are representative for the target group. Google, for instance, released early versions of its Chrome browser internally and asked its employees to test the software and to provide feedback before a first public beta was released in October 2008. A counter example is Google Buzz: The software was apparently loved by Google engineers, but unfortunately not by the rest of the world.
Pivot or Persevere?
Once we’ve gathered and evaluated the feedback, we need to decide if and how to act upon it. If the feedback invalidates any assumptions in the product strategy – which is likely to be the case when a new product is developed – we should adjust it together with the product backlog. Making changes to the strategy is also called pivot.
We may decide to change the target group or the needs selected, for instance; maybe the features or the look and feel envisioned is not right; or the business model does not work as expected, for instance, users never click on the ads displayed. Changing the product strategy can require restocking the backlog. With the backlog updated, we continue with the next cycle, develop a new MVP, and gather new feedback.
Pivot
If the data confirms our strategy, we preserve and adapt the product backlog by incorporating the insights gained. Depending on the quality of the MVP, we may have to throw away any mock-ups and prototypes created so far, and start afresh developing tested and documented software using agile development practices. If the MVP is a product increment, we can progressively transform it into a shippable product using a series of sprints.
Persevere
Summary
Using a minimal viable product is a powerful concept to validate the product backlog that be used in harmony with Scrum’s approach of creating working software, exposing it to customers and users, investigating their feedback, and making the necessary adaptations. Many thanks to @stefanroock for feedback on the first MVP of this post.
If you’ve found this blog post interesting, you are likely to benefit from my Agile Product Management training. The course teaches a combination of Lean Startup, Scrum, Kanban, and Design Thinking techniques. Check it out!
Friday, March 16, 2012
Karen Webster's Do's and Don'ts for Payments Innovation
Karen Webster's Do's and Don'ts for Payments Innovation
by Karen Webster
I had an awesome invitation to participate on a panel this year at BAI on Innovation in Financial Services and was not able to make it at the last minute. The format was a moderated Q&A and the laundry list of questions was focused on how FIs need to think about innovation and where to invest. Here is what I would have said had I been able to make it:
It’s a mindset not a business unit. Innovation isn’t the job of a person or a division, it’s what needs to drive the organization. Sure, it is okay to have a central group that is responsible for filtering ideas, even doing some incubating and then diffusing new ideas and products into the broader organization, but thinking that it is someone else’s job to innovate is a sure elevator ride down to the bottom floor. If you don’t believe me, look at the players who are kicking butt today in payments and financial services: PayPal, Intuit, Google, Green Dot (prepaid) and other companies who are defined by the innovation they produce, not by a couple of innovative products produced and launched every now and then.
Some things need to be broken before they can be innovated. This is the whole idea of creative destruction, but with a twist. Innovation is sometimes about improving a core product in new and different ways – such as online banking that becomes a mobile banking environment, for instance. Other times it’s about gutting and rebuilding from scratch. I would put loyalty in that category. Loyalty is one of those things that once made a difference to customers because they were really differentiated, but is now an undifferentiated morass, built primarily around points that are awarded for certain actions. Points, by and large that don’t mean as much as they used to. The new environment of offers and deals has shown the consumer not only that they can get better stuff that way but that rewards and points have become really meaningless and a currency that is not accepted at any of the places that people like to shop. There are exceptions of course, but thinking that loyalty can be innovated on the back of either an offers/deals or points-based scheme is thinking inside a box that first needs to be destroyed.
Just because a competitor is doing something doesn’t mean it’s innovative (or good enough for you to copy). Innovation isn’t necessarily copying what everyone else is doing (although in some cases imitation is not only the sincerest form of flattery but a great way to free ride on someone else’s great idea) . My favorite example of this is NFC and mobile payments. Raise your hands if you remember a time a few years ago (a year ago?) when you were virtually tossed out of an issuers office if you tried to talk to them about anything but NFC as a mobile payments strategy. Why, because FIs drank the analyst NFC Kool-Aid (e.g. that 50% of all transactions will be done via NFC-enabled mobile phones by 2010) and no one wanted to risk bucking the pack to try something that actually had a chance of working. Those who did, are players like PayPal and emerging entrepreneurs who are using bar codes and other creative POS enablements to make mobile payments happen – today. Don’t be afraid to copy great ideas, but beware of the perils of groupthink.
Sometimes it’s better to buy or partner it and not build it. FIs are judged by how well they manage risk and protect their customer’s assets. That is big and important stuff. It is also the stuff that turns the IT folks into the corporate version of Cerberus, guarding the gates of hell while their hands are full with other things like compliance. Getting into that queue is a bear. Rather than try, it is often easier to buy or partner with innovators who have built great technology but need distribution and who would love nothing more than to do a deal with a FI. It makes the pace of moving innovation from the drawing board to the marketplace in the FI world a heck of a lot faster not to mention cheaper.
Innovation has to solve a real problem. Technology makes a whole bunch of stuff possible today but that doesn’t mean that it’s worth doing or that consumers will jump on board. Remember Blippy – the platform that posted your transactions to your Facebook news feed? Yep, technology and the Facebook API made that possible and the company CEO was convinced that young people would adopt it because they live such transparent lives. Blippy no longer exists, because even young people thought it was too creepy and it didn’t solve any real problem for them. What problem exists that posting transaction activity to Facebook would solve? Same gig with P2P. Sure, P2P is possible, but the often-described use cases for splitting the lunch check never made any sense because it is not the sort of problem that people lie in bed at night wishing for a solution. Ditto with the dual stripe plastic cards that are credit and debit cards in one. Technology makes it possible but consumers find it confusing. Consumers have to pull a card out of their wallet anyway at the point of sale, is it really that much harder to pull out THE card that she wanted to use? FIs should resist the siren song of innovation for that which really helps consumers solve a problem and for which they would trust their FI to help them solve.
The financial crisis and the difficult regulatory environment that followed really put FIs on the ropes for the last couple of years. So much of their world was in flux, that the last thing anyone thought about (or was rewarded by Wall Street for thinking about) was being innovative. Survival was the name of the game. We’re through that now and the environment for FIs to innovate is now pretty awesome. They have had the chance to evaluate what others have done to see what has worked and what hasn’t. First mover advantage, all of the empirical studies show, isn’t all that it is cracked up to be. It’s often much better to watch what others have done and adapt those learnings to your own market and customer base. That is the opportunity that FIs now have. They still have an amazing customer base, and a sticky one – for better or worse, it is still not all that easy to switch FIs right now. That won’t always be the case as the economy gets stronger. So, now is the time to thoughtfully innovate so that customers are not only well served while they are a somewhat captive audience, but satisfied enough not to switch if and when the time comes when they aren’t.
by Karen Webster
I had an awesome invitation to participate on a panel this year at BAI on Innovation in Financial Services and was not able to make it at the last minute. The format was a moderated Q&A and the laundry list of questions was focused on how FIs need to think about innovation and where to invest. Here is what I would have said had I been able to make it:
It’s a mindset not a business unit. Innovation isn’t the job of a person or a division, it’s what needs to drive the organization. Sure, it is okay to have a central group that is responsible for filtering ideas, even doing some incubating and then diffusing new ideas and products into the broader organization, but thinking that it is someone else’s job to innovate is a sure elevator ride down to the bottom floor. If you don’t believe me, look at the players who are kicking butt today in payments and financial services: PayPal, Intuit, Google, Green Dot (prepaid) and other companies who are defined by the innovation they produce, not by a couple of innovative products produced and launched every now and then.
Some things need to be broken before they can be innovated. This is the whole idea of creative destruction, but with a twist. Innovation is sometimes about improving a core product in new and different ways – such as online banking that becomes a mobile banking environment, for instance. Other times it’s about gutting and rebuilding from scratch. I would put loyalty in that category. Loyalty is one of those things that once made a difference to customers because they were really differentiated, but is now an undifferentiated morass, built primarily around points that are awarded for certain actions. Points, by and large that don’t mean as much as they used to. The new environment of offers and deals has shown the consumer not only that they can get better stuff that way but that rewards and points have become really meaningless and a currency that is not accepted at any of the places that people like to shop. There are exceptions of course, but thinking that loyalty can be innovated on the back of either an offers/deals or points-based scheme is thinking inside a box that first needs to be destroyed.
Just because a competitor is doing something doesn’t mean it’s innovative (or good enough for you to copy). Innovation isn’t necessarily copying what everyone else is doing (although in some cases imitation is not only the sincerest form of flattery but a great way to free ride on someone else’s great idea) . My favorite example of this is NFC and mobile payments. Raise your hands if you remember a time a few years ago (a year ago?) when you were virtually tossed out of an issuers office if you tried to talk to them about anything but NFC as a mobile payments strategy. Why, because FIs drank the analyst NFC Kool-Aid (e.g. that 50% of all transactions will be done via NFC-enabled mobile phones by 2010) and no one wanted to risk bucking the pack to try something that actually had a chance of working. Those who did, are players like PayPal and emerging entrepreneurs who are using bar codes and other creative POS enablements to make mobile payments happen – today. Don’t be afraid to copy great ideas, but beware of the perils of groupthink.
Sometimes it’s better to buy or partner it and not build it. FIs are judged by how well they manage risk and protect their customer’s assets. That is big and important stuff. It is also the stuff that turns the IT folks into the corporate version of Cerberus, guarding the gates of hell while their hands are full with other things like compliance. Getting into that queue is a bear. Rather than try, it is often easier to buy or partner with innovators who have built great technology but need distribution and who would love nothing more than to do a deal with a FI. It makes the pace of moving innovation from the drawing board to the marketplace in the FI world a heck of a lot faster not to mention cheaper.
Innovation has to solve a real problem. Technology makes a whole bunch of stuff possible today but that doesn’t mean that it’s worth doing or that consumers will jump on board. Remember Blippy – the platform that posted your transactions to your Facebook news feed? Yep, technology and the Facebook API made that possible and the company CEO was convinced that young people would adopt it because they live such transparent lives. Blippy no longer exists, because even young people thought it was too creepy and it didn’t solve any real problem for them. What problem exists that posting transaction activity to Facebook would solve? Same gig with P2P. Sure, P2P is possible, but the often-described use cases for splitting the lunch check never made any sense because it is not the sort of problem that people lie in bed at night wishing for a solution. Ditto with the dual stripe plastic cards that are credit and debit cards in one. Technology makes it possible but consumers find it confusing. Consumers have to pull a card out of their wallet anyway at the point of sale, is it really that much harder to pull out THE card that she wanted to use? FIs should resist the siren song of innovation for that which really helps consumers solve a problem and for which they would trust their FI to help them solve.
The financial crisis and the difficult regulatory environment that followed really put FIs on the ropes for the last couple of years. So much of their world was in flux, that the last thing anyone thought about (or was rewarded by Wall Street for thinking about) was being innovative. Survival was the name of the game. We’re through that now and the environment for FIs to innovate is now pretty awesome. They have had the chance to evaluate what others have done to see what has worked and what hasn’t. First mover advantage, all of the empirical studies show, isn’t all that it is cracked up to be. It’s often much better to watch what others have done and adapt those learnings to your own market and customer base. That is the opportunity that FIs now have. They still have an amazing customer base, and a sticky one – for better or worse, it is still not all that easy to switch FIs right now. That won’t always be the case as the economy gets stronger. So, now is the time to thoughtfully innovate so that customers are not only well served while they are a somewhat captive audience, but satisfied enough not to switch if and when the time comes when they aren’t.
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