These excerpts from The Verger by W. Somerset Maugham highlight some practical truths of entrepreneurship. Many a successful has been started based on careful observations, in particular seeing what’s missing.
For customer interviews we have a rule of thumb that if an hour or research saves a minute early in the conversation it’s a good investment. When you look at the list of questions you have prepared to learn about the prospect’s business and their needs, it’s easy to say to yourself, “I am really busy I can just ask these at the start to ‘set the table.'” But there are significant risks with this approach.
Preparations Cuts Risk Of Customer Interviews Ending Prematurely
While the interview may be nominally scheduled for 15 minutes or a half-hour and may run an hour if it goes well the first six minute or so are critical to communicating that you have done your homework on their situation and their needs. If you start to ask questions that are already published on-line you can appear lazy or unprepared. If you can do research on a prospect in advance, it’s worth spending an hour to save a minute in the conversation. You can even start the conversation by saying “when I prepared for this conversation here is what I learned about your firm” and give a brief summary of what you know about their situation.
It’s OK to say “I see on your website that you have hired four people in the last three months, how has that impacted …” or “I read a profile of your firm in the San Jose Business Journal Book of Lists, have you grown beyond the 12 people listed in February?” This shows that you have done your homework and don’t want to waste their time but need to confirm some of the key facts that may bear on their needs.
Information Sources To Consult Prior To Customer Interviews
- Do a thorough review of the prospect’s website.
- Search for any articles in the last two years at least to see what kind of press coverage they have received.
- Review the Linkedin profiles for the firm, the person you are talking to, and anyone with similar titles or in the same department.
- Review on-line postings in relevant forums for the industry.
- See if they have a blog, a twitter account, a YouTube account, and similar social media sits that are often used for business purposes.
Six Questions That You Normally Have to Ask In The Conversation
- Prospect’s description of the problem in their own words. This is rarely more than a sentence or two and capturing the essence in their own words is key.
- High level description of current work process or work flow in their own words. This forms the basis for any delta comparison or differentiation of your solution.
- Any constraints they mention: if you hear the same ones multiple times you will more than likely have to satisfy them.
- How they will tell that a new solution will leave them better off: this is different from asking them to specify the solution, it’s asking for “future state” or the end result they would like to achieve.
- What else they have tried to do to solve the problem: probe for why they were not satisfactory.
- Key metrics or figures of merit they would use to evaluate a new outcome.
“A month in the laboratory can often save an hour in the library.”
F. H. Westheimer
Entrepreneurs seem to divide into two camps:
- those who want to have a conversation immediately, and
- those who are quite content to research for months as long as they don’t have to talk to strangers.
Striking a balance is the key to maximizing your learning from a customer interview. Effective research prior to the customer interview allows you to
- Ask better questions
- Provide evidence of your commitment to developing a mutually satisfactory business relationship
- Detect when your prospect is leaving something out or perhaps coloring the situation too much. You are not a stenographer there to capture whatever they say without reflection, but if your only source of information is what they tell you then you risk “garbage in, garbage out” in your product plans and MVP.
Three interesting answers from Tristan Kromer’s interview with the folks at Startup Commons
Startup Commons: What’s the best way to get started?
Tristan Kromer: Find someone you really want to help. Someone in pain. That’s your vision. Helping someone and solving a real problem. Find team members with complementary skill sets who are able to challenge your perspective and add their own. Go talk to customers.
I think this is the best anchor for starting a new firm: focus on a need or a pain experienced by a particular customer. Pick a problem you are willing to work on for a while because nothing new ever works and it’s going to take a while to figure out all of the elements of a successful business. A few firms with a serious problem are a better start than many firms with a small problem, although the latter may be easier to find, the former are far more likely to take action.
Startup Commons: How to find a good mentor for your startup?
Tristan Kromer: Look for someone who doesn’t give you their opinion but instead challenges you with questions that makes you think.
I agree with Tristan it’s in the questions but like Conor Neill’s formulation: it’s “80% Diagnosis and 20% Prescription.” A good mentor will suggest some courses of action to consider after they have helped you to explore the constraints and implications of the situation–or insurmountable opportunity–you are wrestling with.
Startup Commons: Who are your mentors?
Tristan Kromer: My team is my mentor. The customer is my mentor. My friends are my mentors. I rely on other people to challenge my perspective. People like Sean Murphy, Spike Morelli, Laura Klein, Nick Noreña, Zac Halbert, Janice Fraser. People who are willing to question me or tell me I’m wrong.
I think this is the next step in the evolution of the Lean Startup movement, it has to become a community of practice where entrepreneurs at differing skill levels can compare notes , challenge each other and hold each other account. It’s a mistake to look at the early writing by Eric Ries and Steve Blank as scripture, it’s a good start that we will be refining and extending for decades. There is also earlier work by Peter Drucker, Edward McQuarrie, Rita McGrath, Saras Sarasvathy, Mark Leslie, Clayton Christensen, Russell Ackoff, Dave Snowden, and Gary Klein–just to name a few–that for the most part is not as well appreciated by entrepreneurs as it should be.
“A prudent question is one-half of wisdom.”
- Entrepreneurs Need a Community of Practice, Not a Movement
- Other Customer Development Models
- Saras Sarasvathy’s Effectual Reasoning Model for Expert Entrepreneurs
- Discovery Kanban Allows Firms to Balance Delivery and Discovery
- Articles, Ideas, and Books That Have Changed My Life As an Entrepreneur
Here are four checklists we often take entrepreneurs through
- First Seven Questions Any New Product Plan Should Address
- Startup Maturity Checklist
- Tom Van Vleck’s Three Questions Complement Root Cause Analysis (5 Whys)
- 21 Great Questions for Developing New Products
More useful for second products or once you are established in a niche
Steve Hodas packs a lot of insight packed into this 15 minute talk from the Lean Startup 2013 conference. A recent conversation reminded me how much I enjoyed this talk and the savvy approach Hodas outlines for enterprise or large organizations who want to encourage innovation by partnering with startups and re-invigorating intrapreneurs and internal change agents:
- define an API to share data;
- elicit support from change agents on the front lines;
- allow for a lot of experimentation;
- only pick winners based on results achieved after months of perseverance.
This forces you to create platforms for experimentation, it sends a strong message you are committed to improvement based on results, and forces the entrenched bureaucracy to defend on many fronts instead of attacking the incoming executives new “anointed” solution.
Articles/Blogs/Commentary on the talk or related content:
- Ex-‘Outsider’ Chips Away at School Procurement Process in N.Y.C. by Michele Molnar
- Solving the Innovation Alignment Challenge With an Ecosystem Approach by Doug Herbert
- With New Technology, N.Y.C. Paves Way for Open Data by Benjamin Herold
- When Lean Startup Arrives in a Trojan Horse by Bronwen Clune
- Lean is Serious and Here to Stay by Rose Powell
- What It Takes For Startups to Work with New York City’s Schools on EdSurge
- Why New York City schools need your help by Steven Hodas
I came across this presentation from LLKD13 (#LLKD13 / storify) by Patrick Steyaert (@PatrickSteyaert) of Okaloa on Discovery Kanban after following some links off a Kanban discussion group last year:
It’s a complex and challenging presentation that connects a number of different concepts–including fitness landscape models, the Cynefin framework and its concept of probes, the OODA loop, optionality–into a coherent synthesis: Kanban models can be used not only for managing execution or delivery flow by minimizing the amount of work in progress, but also for managing the discovery process of curating a portfolio of risks and options.
At a high level an execution focus yields a prioritized network of interdependent tasks; exploration yields a portfolio of risks and options.
I had the good fortune to meet Arlette Vercammen of Okaloa a the Lean Startup Conference 2013 and we had a conversation that has sparked an ongoing collaboration around helping Okaloa evolve their Discovery Kanban model both for startups and change agents in larger firms.
Patrick will be providing an updated version of the presentation June 16 in Leuven, Belgium: “More Agility and Predictability with Visual Management and Kanban.”
Related blog posts and articles
- Patrick Steyaert “Discovery and the Whole Systems Kanban“
- Patrick Steyaert “Using Cynefin to Make Sense of Projects“
- Patrick Steyaert “Cynefin, Panarchy, PCDA, OODA, and Value Creation Curves“
- David Anderson “Understanding Process Knowledge Discovery“
- David Snowden and Mary Boone (HBR / registration required) “Cynefin: A Leader’s Framework for Decision Making“
- David Snowden and Cynthia Kurtz: “Strategy and Sensemaking in a Complex and Complicated World” [PDF]
The video from my “What is Lean–Lean Innovation 101” talk is up:
Here is the description for the talk
“Lean” provides a scientific approach for creating a product and developing new businesses. Teams can iteratively building products or services to meet the needs of early customers by adopting a combination of customer development, business-hypothesis-driven experimentation and iterative product releases. This talk covers:
- Why more and more companies are using Lean
- What is Lean, what it is not
- Key concepts
- Get Out Of Your BatCave
- Use an initial product (MVP) as a probe to explore the market
- When and how to pivot
- Rules of thumb for successful lean innovation
We use this definition in our “Engineering Your Sales” and “Validating Your MVP” workshops and our MVP clinics. Our focus is on developing and selling products to businesses so that biases the definition a little bit but it’s important to remember what’s under your control in crafting your MVP:
- The particular type of customer: you can select who are you targeting and messaging. In many B2B markets the best message is a dog whistle: highly appealing to your target and of little interest to those who are not.
- The specific problem or need your focus on: it’s better to pick a very narrow pain point initially so that you maximize your chances of providing value.
- What you provide: the feature set and packaging of your offering.
These are normally the three areas that you tinker with during marketing exploration and MVP introduction. It’s also important to understand what’s not under your control:
- The customer decides if the need is important enough, or the problem severe enough, to devote any time to conversation or learning more about your offering.
- The customer decides if your solution offers enough of a difference over the status quo and other alternatives available to them to actively consider. Value is in the customer’s mind and it’s created in the customer’s business when they successfully deploy your offering. Your MVP is not valuable in the abstract; it must always be evaluated in the context of a particular customer. It does not matter how much time and expense you have invested in creating it, it’s the effect it will have on the customer’s business.
- The customer decides the nature and size of the initial purchase. You can decide not to pursue an opportunity that is “too small” but if the customer wants to pilot in a team or one department before deploying your solution more widely it’s often better to take that deal and get started than continue to argue for a larger initial deal. Breaking your offering into phases and smaller components will always make it easier to digest.
The following chalk talk illustrates this last point in more detail:
See “Chalk Talk on Technology Adoption” for a transcript.
Empires build a Death Star,
Rebels build X-Wing fighters
If your startup’s minimum viable product is a Death Star you are doing it wrong.
We have been invited back the SF Lean Startup Circle to present our “Validating Your MVP and Value Proposition for B2B Startups” workshop on June 4, starting 5:30pm. This interactive workshop will address:
- How a B2B startup should think about message, MVP, and launch.
- Understand who buys your product and how they calculate its value and total cost.
- Where to find people to validate your MVP.
- Systematic approach to validating your MVP and your value proposition.
- How to track and measure your efforts.
- When to pivot.
When: June 4, 5:30-8:30
Where: Runway, 1355 Market Street, Suite 488, San Francisco, CA
Cost: $60 (or join the volunteer mailing list to get in free.)
Tristan Kromer‘s (@TriKro) vision for the SF Lean Startup Circle is to offer a testbed for developing workshops for entrepreneurs. So with this iteration we are adding a new module where participants will build a LEGO representation of their business. We believe that this will offer a useful metaphor for analyzing a customer’s business and the value that your MVP offers.
Other LEGO related blog posts:
- Empires build Death Stars, rebels build X-Wing fighters
- Associating, Pattern Matching, and Sensemaking
- It’s the Picture on the Box that Sells the LEGO Set
John Finneran recently wrote a postmortem on a startup that aspired to be “the 37 Signals of non-profit software entitled “Fat startup: Learn the lessons of my failed Lean Startup.” My concern is the he did not learn the right lessons from failure.
Join us in San Francisco for an interactive workshop “Validating your MVP & Value Proposition.” We will cover a variety of proven techniques for validating your MVP & value proposition for B2B startups.
When: 5:30-8:30 PM Tue-Apr-2-2013
Where: 1355 Market, Suite 488, San Francisco
This interactive workshop will provide:
- Systematic approach to validating your MVP & your value proposition
- Understand who buys your product and how they calculate its value and total cost
- Explore different options for reaching them
- Learn how to track efforts and measure results
- Determining when to pivot and when to persevere
We will cover:
- What is MVP?
- How much do I need to talk to people about my MVP?
- Techniques for Validation
- Where to find people to validate Your MVP?
- Iterating your MVP for problem validation, customer validation, market niche exploration, and product launch
What follows is a sequence of E-mails with an entrepreneur bootstrapping an EdTech startup around the challenges of doing customer interviews that have been recast as a conversation, with the original content edited for length and clarity.
Entrepreneur (E): I am working with a couple of friends–we all have day jobs–on an idea for helping students improve their completion of on-line courses, for example from coursera.org or udacity.com. We have a persona for our target student, whom we call Hazel. Hazel is in college and very motivated to learn programming techniques that she aims to integrate into her current degree and later employment. She has taken several on-line courses but has had poor completion.
Sean Murphy (SKM): For Hazel to be willing to talk to you–much less try out your offering–she will need to recognize that she has a problem and believe you have a potential solution. What is her perspective on how well she is doing in her courses?
E: Hazel has enrolled in about half a dozen courses in the last nine months (since Spring Quarter of last year, mainly over the summer) but has completed only one. She feel badly about her lack of progress and has tried a few things to improve her consistency but so far nothing has worked.
SKM: Does she believe he has a problem or need to improve? Why?
E: She is painfully aware of her drop out rate, when she talks to her friends she complains about having to study alone compared to study groups she is able to take part in with her regular college courses.
SKM: What key capability is she looking for to improve her performance?
E: She wants the accountability and peer support she enjoys in her regular college classes.
SKM: I understand what you mean by “accountability and peer support” but are there some specific symptoms of poor performance that she would recognize and acknowledge that you can probe for to get an interview?
E: Have you registered for more than three on-line courses and failed to complete them? Do you take part in informal study groups for your college classes?
SKM: Those sound like good probes using the same language that a student would. I worry that since you are bootstrapping you might want to target folks who have more money or motivation than college students. You want your customers to get more value out of on-line courses; I would be tempted to target people who are already employed who are adding to skills to get a promotion or a new job.
E: We have another persona, Edward, who looks like that but we have decided to start with Hazel. We will ultimately interview people who fit both personas.
SKM: What are your challenges trying to find students who match Hazel?
E: Because we are all working it’s hard to schedule interviews with college students; do you think they need to be face to face?
SKM: I think you will learn a lot more in a synchronous conversation: face to face will tell you the most but a phone call or a Skype call also works, even a chat session is often more useful than an exchange of emails. My last choice would be a survey. How have you been reaching out to folks to interview?
E: We have been posting in the on-line course forums when we see someone post something that looks like they are having trouble completing the course:
“I read your message <Title> on <Forum> at <URL> and I’m very interested your take on <Course> in particular and your experience with on-line learning in general. Do you have 15 minutes for a Skype call to share your opinion on online courses? A few friends and I, after having some problems with a course we took together, started working on something we believe will improve online learning and we’d love to hear your take on it. If you don’t have the time for a call, would you be willing to share your insight over email? We also have this survey <URL> that only takes 3 minutes to complete if you’d prefer.”
SKM: 15 minutes is a big ask for a stranger and you don’t offer any specifics in your e-mail as to how you may be able to help or enable them to do some self-diagnosis to see if your solution may be something that they are looking for. It’s not clear how they will benefit from the conversation.
E: People can be pretty eager to tell you what they think about something they care about so I thought that in itself might be enough of a driver. But we have had a low response rate when we asked just for a Skype call. We have more people either giving us a short reply over e-mail or taking the survey. Would it be better to drop the other options and just suggest a Skype call?
SKM: I would offer Skype and E-mail. An exchange of E-mail can lead to a Skype conversation; I think it’s harder to move from a survey to a conversation. You might consider blogging about ways to improve your performance/results/learning from an on-line course: outlining methods or techniques that would complement your solution. This would offer some credibility that you can help students and give you something to point to in the offer letter.
E: Blogging sounds like it would take a lot of time, and time is a pretty big constraint for us. How high would you rank blogging compared to other activities related to customer interviews? How about offering a gift card? $20 for a gift card is totally worth an hour of my time to author a decent blog post. I understand a blog post might have less perishable value in the long run.
SKM: You can share the same “decent blog post” with many people who may each value it and who can each share it with friends they think it may help. A gift card is proof that you value their time but does not substantiate any expertise or offer direct assistance in addressing the problem or need your solution is targeting.
Let me suggest another way to look at your question. Would you rather interview?
- Ten college students for 5 minutes who read your blog post “10 tips for finishing an on-line course” and are interested in talking to you about their challenges in completing on-line courses
- Ten college students for 15 minutes who heard that you were giving away $20 gift cards as a reward for an interview.
I think many in the first group may talk to you for more than five minutes if they don’t feel that the first five was a waste of their time. It may be hard to talk to few in the second group without promising another gift card. Because I work primarily in B2B niche markets and have to cherish any prospects I come across I don’t look at informational interviews as transactions but the start of a potential business relationship.
There is a trap that some entrepreneurs fall into: they look at prospects they are interviewing as a consumable–somewhat akin to the way a scientist might budget for lab rats–instead of potential customers who will require several conversations of escalating mutual disclosure to establish a business relationship with.
E: I understand your point, but it seems that it may be worth it in some circumstances to shortcut that process. I wouldn’t think that one blog post with some useful tips would be enough to repay the person for the time I’m asking for. Yes, it’s certainly better than nothing, but does it really help to move the needle? I can see that providing great content and supporting Hazel could help me to understand her needs better and led to us doing business. But is trying to close her and get her to become a customer the goal here?
SKM: I work in niche markets and cannot afford to look at any potential relationship as disposable. Try both, pay some people and see if you can write something that offers enough insight that folks feel like giving you five minutes of their time. What you do in that five minutes may encourage them to give you another five minutes. That’s how relationships are built. Not everyone you talk to turns out to be a fit and many of those that are don’t care to continue the conversation. But I like to engage in a way that does not preclude further conversation.
E: I know I don’t have a lot of experience yet doing interviews so I’m looking for guidance. But on paper it would seem worthwhile to try and get some feedback as quickly as possible on the potential validity of the idea and then start to build some more “content” and stronger relationships. Where is the risk in that approach?
SKM: If you are in a hurry it can work against empathy and appreciative inquiry, both of which are critical to forming a deep understanding of a prospect’s situation and needs.
E: One of our values as a business is to be grateful to anyone who tries to help us and to treat them with respect. And even though it can hurt when people decide not to have a conversation, it’s still a useful signal so we respect that decision as well. We don’t treat anyone as a lab rat and try to help him or her as best we can, but this doesn’t seem to preclude the possibility of an initial shallow conversation. Now whether that lack of depth is an issue in building my business or not that I’m not really sure.
SKM: I had two additional thoughts for you:
- I don’t think Hazel views her problem as an inability to finish on-line courses. She is signing up for those courses to meet some need or to enable an opportunity. I would dig a little deeper into what she will do once she finishes the course.
- An on-line class provider may view their “dropout rate” as a problem and they may be the real customer.
[We adjourned for two weeks and then had a second shorter exchange.]
E: We decided to opt for the “blog post” option. We also managed to go to some evening Meetups and tried to add value for people right there while talking to them. That worked surprisingly well. Hopefully it’ll continue that way. I still feel like there’s a place for the paid interviews, maybe even as an intermediary step between face to face interviews and flat out surveys.
SKM: When you can find a way for your discovery conversations to offer value to a prospect, then they are more likely to share information and more willing to agree to continue the conversation or agree to a second conversation. One test for interest is that it becomes less of an interview (or worse an interrogation where you are asking all of the questions) and more of a dialog where you are both asking questions of each other.
E: As far as your additional thoughts, we now believe that you were correct on both accounts and based on the last few rounds of interviews we have a better idea of Hazel’s reasons for not finishing the course. We are now trying to determine how that intersects with the course provider’s perception of that problem: the course provider is interested in drop out rate but Hazel is not really focused on dropping out.
We are now trying to get a better understanding of Hazel’s goals in taking the course so that we have a shot at helping her succeed. In parallel we are trying to figure out how to have some conversations with the course providers. If we decided that selling to the course providers was the way to monetize this, would you talk to them first? Even if we are not sure we can find a way to help Hazel improve her odds of finishing the course?
SKM: If you plan to sell to course providers I would try and gain a better appreciation for their perspective and their business model: e.g. what are cost and revenue drivers; what do they view as the key risks in launching a new course or making a profit on a course.
One possibility to consider is that they may be less interested in helping Hazel and more interested in how to predict who will complete the course, in particular at or before signup, and how to attract more of those students. In other words: if the course provider is your customer I would figure out if they would pay me to help Hazel complete the course before I invested effort figuring out how to help Hazel complete the course.
If Hazel is the paying customer then you have to determine if she would pay you something to help her complete a “free” course: again I would focus on this question before trying to dig too deeply into how to help her complete the course. Prospects are often more interested in outcomes, costs, and timeframes than the details of your solution. One good book on this is “Great Demo” by Peter Cohan, who suggests that you open very quickly with the “ta da” or final result and see if the prospect wants it before diving into the details.