Lean Startup & how to test our most dangerous assumptions in an affordable and quick way?

Tuomas Mikkonen from company called Connection held a one evening course on agile product and service business development with lean startup method. I attended this course in the end of September as it was available in the series of events organized by IT-Ekonomit and Ekonomiyrittäjät.

We all in SID 2015 have recently gotten familiar with Lean Startup concept, as one of our basic DT courses (New Service Development) has the Harvard Business Review article by Steve Blank as compulsory reading. So, I will not present detailedly what Lean Startup as a methodology is based on but instead will pick the major insights of the training.

“If they come, we will build it.”

Building a new business model starts with understanding the customer and creating the right hypothesis of her/his problem. The problem has to be…

General

Repeating

Painful

Expensive

Specific

and not yet solved.

It is crucial not just to test the hypothesis and the solution with real people, but also to test whether they are WILLING TO PAY FOR IT.

“Do not pitch the solution yet!”

When in the stage of testing our hypothesis of a solution, we should define the most DANGEROUS ASSUMPTIONS about it and test them. The ones that can cause it to fail – and those ones usually relate to the ACTUAL BEHAVIOR of people, not on technical challenges or organizational problems.

We should not fall in love with our idea in this phase – so pitching the solution is not the way to go yet.

3 principles of MVP

Coming up with a minimum viable product presumes we are able to assume we are wrong in everything before we have tested and proved the solution works. The second principle guides to observing the real behavior – not what people say, but what they actually do. Third principle is that of virtue of laziness – testing the most dangerous assumption in the most affordable and quickest way.

So how to test affordably & quickly?

Smoke test: test the interest towards your solution with a web page. If people choose the solution, direct them into a newsletter or a waiting list for your solution. Measure the conversion rate – how many choose vs. do not choose the solution. (Tools: Wix, Unbounce, Launchrock, WordPress…)

Video MVP: create a video explaining the basic idea of the concept. Direct interested people to a waiting list or a crowdfunding site. (Tools: Moovly, iMovie, Windows Movie Maker, Youtube, Vimeo…)

Concierge: create a personalized automatisation to target group (or an illusion of automisation). Ideal for testing solutions that need a lot of coding or infra with small investment. Not easily scalable but works for learning – to validate which features are necessary and which not.

Wizard-of-Oz: automating or imitating service to the target customer. Service is embedded into other services or processes, not visible. Ideal for testing services needing plenty of automation.

Prototype / wireframe: physical product or software is prototyped, for exploring market potential and testing features. (Tools: Balsamiq mockups, Kinetisse, Axure…)

Lessons learned?

During the course we would work in groups on a hypothesis. Our group on my suggestion took the challenge of immigrant integration into Finnish working and civil life as a challenge to work on. At first we got along with the subject very well and the discussion was versatile, we could see that all the criteria of a relevant problem were fulfilled. The challenges started in the testing phase. The lean startup as a method is more suitable for ideas that have a strong web-service based element and for ideas that are very well and narrowly defined. But I did get a good repertory of ideas from the team!

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(This post contributes to the course of Current Topics in Service Design.)

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