By Peter Hanschke
I was a panelist at the latest Agile Ottawa meeting where we discussed our experiences with the process and concepts of Eric Ries‘ lean startup methodology. Today, I will share some of the points I made during the discussions.
By the time I got to reading Eric’s book, I was well on my way to using and advising clients and my employers on many of his teachings. Even though he focuses on startups, the principles in general are applicable to larger companies that need to bring new products to market with little investment. Note that larger companies have other challenges to successfully introduce new products quickly with little investment – Clayton Christensen‘s book The Innovator’s Dilemma does a good job of outlining these challenges.
The area I want to focus on is the balance between investment, Minimum Viable Product (MVP), and time to market.
Money is not plentiful these days. Startups need to prove themselves (or in some cases over-prove themselves) before external money flows their way. Through family, friends, and angels, startups juggle their investments to develop their MVPs, marketing, and selling. Having an office for a startup is a luxury that is in some cases delayed until much later. Larger, established companies are conservative when investing in new products, especially as more companies look to embrace mobile platforms for their products where revenue may not flow for a while. A modicum of creativity is required to be able to bring a new product to market. Everyone has to live within their means.
My blog post on creating your minimum viable product talks about the mechanics of defining the MVP. In this context, however, the MVP needs to match the needs of your early potential customers and/or users. In The Lean Startup, Eric talks about the need to “pivot and zoom out or in.” What this means is that if your MVP is not gaining traction with the potential customers you talk to, it needs to address more or less of the whole product or the value chain you plan to sell your product into.
Time to market
In other than a few instances, time to market can be very subjective. Quite often, through healthy paranoia, time to market is defined as ASAP. In other words, entrepreneurs need to have in the back of their minds that someone is doing exactly the same thing and will win the race to be first to market. Maybe it’s competitiveness, but time is always of the essence. The market and customers’ desires turn on a dime (save maybe the government and other large groups).
There needs to be a balance of all three of these factors. There is no scientific formula — if there were, it would be patented and there would be a lot more successes than failures! I am not espousing that each element must be equally weighted. In fact, the weighting changes over time as the business environment changes. The concern, however, is the impact that each item has on the other as weightings change.
With close to an infinite amount of available investment, the MVP can be built within the timeframes desired. But as I point out in my blog on the million-dollar cheque, there is a risk of bloating your MVP to the point where it satisfies more than what is needed in the market and that’s a waste. But an infinite amount available to invest is unrealistic. The reality is that everybody inherently wants to add more features to the MVP so the level of available investment provides a natural limit on what can be done. Tough decisions need to be made so that only what is absolutely required is built.
With a small level of investment, the MVP becomes restricted to address a small set of use cases and/or roles to meet the time to market requirements. The risk is that the MVP may not address enough of the required solution for customers to be interested and ideally willing to use it in any substantial way. And therefore the time to market is pushed out to accommodate the additional needs of the market. The complications with this situation are that (a) a competitor enters the market first, scooping the attention and early customers, and (b) the market and target platforms shift underneath as a result of changes in technology and/or customer desires. In both cases, a change to the MVP may be required, which requires more investment and/or pushing out the time to market.
So what’s the answer? There is no magic bullet, but here are some helpful tips:
1. Get feedback
You need to have a system in place to easily get feedback from users/customers. Launching a product without the mechanism to get feedback is useless. You may have hundreds of users and no way to know whether they like the product, hate it or if it meets their needs or not. In the B2B/B2G world this is relatively straightforward — you know who your users are. It’s far more of a relationship or one-on-one sale — you know them and you know how to get a hold of them. In the B2C world this is more challenging. Especially with mobile apps, which are primarily anonymously (to you) downloaded from an eStore like iTunes or Google Play. Early on, make sure you have a communication “pipeline” to the user in your product or on your website to engage them.
You need to have a development process in place that allows you to react quickly. It is essential to be able to gather feedback, analyze it, prioritize it, make product changes and re-deploy it as quickly as possible. Your users will be impressed with the service and it keeps you and your product at the top of your customers’ minds.
3. Stay informed
The worst assumption that anyone can make is that they won’t be scooped. Introducing a new product requires a healthy dose of paranoia. In other words, you have to adopt the attitude that you are not the only one with the same idea and that you are going to beat them to market. This attitude requires constant attention to changes in the market. Any new product announcement that hints of being a potential competitor needs investigation. Any changes to platform technologies and/or customer attitudes toward the market need to be analyzed. Become great at gathering information and triangulating.
Remember to achieve a balance between the investment you have, the MVP needed to get users engaged with your product, and the time you need to enter the market. Every situation will be different.