Lean Product Development

Great design has that “wow” factor that makes products more desirable and services more appealing to users. The 1969 seminal text on design methods by Herbert Simon – “The Sciences of the Artificial” outlined one of the first formal models of what we now know as a “Design Thinking”.

Simon’s model consists of seven stages and was influential in shaping the most widely used Design Thinking process models today.

Numerous variants of the Design Thinking process exist, with different numbers of stages, but they are all based on the same principles featured in Simon’s 1969 model.

“Engineering, medicine, business, architecture, and painting are concerned not with the necessary but with the contingent…not how things are but how they might be”
Herbert Alexander Simon, Nobel Prize laureate (1969)

Design thinking can be described as a creative approach to the resolution of problems. Its a form of solution-based thinking with a goal of producing a constructive future result.

Typically with lean approach to product development we begin by stating a hypothesis, create a prototype, gather feedback – then iterate toward a solution. With design thinking differs from that by including consideration of the emotional content of the situation.

Lets say we build an MVP of our new app; we look at our analytics data, hunt for observable “facts”. In contrast – design thinking feedback also considers our users emotional state regarding the problem and their stated and latent needs.

A lean product development method with emphasis on functionality, emotional elements are often ignored. Using design thinking your team should focus on the problem from a consumers perspective.

A quick survey to understand the pain points of your audience could be one way of discovering what your product is lacking. Or ask a group of users to use the app in their everyday lives and deliver their feedback.

The old way is that you come up with a new product idea and then try to sell it to customers. Design thinking is looking at a problem from the inside out, rather than outside in. Its about thinking from your users perspective what are their needs? Imagine you have an ecommerce store. Cart abandonment rates are high. You meet with your team to discuss likely causes, study the analytics and decide on a short list of solutions.

You start to push possible solutions out to users, in an iterative manner. Unfortunately none of your solutions solve the problem. The reason? You didn’t involve your users in the process. That’s the big issue design thinking addresses.

Design thinking minimizes the uncertainty and risk of innovation by engaging our users through a series of prototypes to learn, test and refine concepts. Design thinkers utilise customer insights gained from real-world experiments, not just data and market research.

“Design thinking can be described as a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.”
– Tim Brown CEO, IDEO

Human-centered innovation begins with developing an understanding of users unmet or unarticulated needs. The most secure source of new ideas that have true competitive advantage, and therefore, higher margins, are customers unarticulated needs. You must develop “Customer intimacy” — a deep knowledge of your customers and their problems helps you to uncover those needs.

Product Management is often an analytical role. Product managers spend most of their time pouring over data in an attempt to drive new products forward. Unfortunately, in our endeavour to stay lean and decrease our time to market, a purely analytical approach often doesn’t cut it. An analytical approach combined with a creative approach that focuses on customer needs will deliver greater success.

Imagine you are developing a new product; You need to either…

Better an existing experience
Create a new experience altogether

Research and analysis will help you make sense of the world as it is today. Design thinking brings in a more empathetic, flexible and iterative approach to product development – to imagine the world differently tomorrow.

A great product manager combines of domain knowledge, imagination and conviction. These 3 characteristics are similar to the 3 dimensions of design thinking: desirability, feasibility and viability.

Desirability
The interface of your product that taps into a user want or need.

Feasibility
Understanding of the product to market fit

Viability
Understanding the economic value of your product and the reason to do something.

Embracing these skills combined with Design Thinking can help us to become better rounded product managers.

IBM, like many ‘old school’ companies, is battling against the relentless advance of digital technology. For these organisations, the key question is: Can we grow new business opportunities faster than the old business is declining?

IBM has hired more than 1,000 professional designers, and much of its management work force is being trained in design thinking. “I’ve never seen any company implement it on the scale of IBM,” said William Burnett, executive director of the design program at Stanford University. “To try to change a culture in a company that size is a daunting task.”

You need to make sure your products are 10x better than your competitors. Why? Well first, youre likely exaggerating how much better your new products are. In addition, as youre innovating – producing that order of magnitude improvement – so are your competitors. If you shoot for 10x better you might hit 3x better, and if you achieve that – you win.

“Incremental improvement is guaranteed to be obsolete over time. Especially in technology, where you know there’s going to be non-incremental change.”
Alphabet CEO Larry Page

Lessons from watchmaking

There are many examples of 10x jumps in history. For centuries Swiss watchmakers yearned to improve the accuracy of their mechanical watches. Even with exquisite craftsmanship and precise tools – accuracy improvements were minimal. To 10x accuracy – a revolutionary new approach was needed.

The winners – with the first quartz watch – Seiko. The Astron was the world’s first successfully marketed electronic quartz movement watch. These electronic watches were 10x more accurate than the best mechanical watches, and cost 90% less. Still today you can buy a £10 Casio watch that’s more accurate than a £10,000 Rolex.

“It’s often easier to make something 10x better than it is to make it 10% better”
Astro Teller, Google

Volume can beat precision

One day a ceramics teacher decides to run a split test – not for one class but for a whole year. Team A will have their pottery graded based on “quality”. Team B would be graded purely on the “quantity” of pots created – just churn out as many pots as you can this year.

At the end of the year, the best pots, both technically and artistically came from Team B – the quantity group. By making a high volume of pots they were learning and adapting. Their goal wasnt to create the best pots – yet they did.  By 10x’ing their production Team B outperformed Team A.  The quantity group won.

Is there room for another competitor?

Some entrepreneurs enter the wrong markets. In many markets success is usually binary. Over-optimizing for dilution usually ends badly.  So far the Internet has created a “winner takes most” marketplace. The largest player is highly successful and the rest are nowhere. YouTube vs its competitors is a good example.

Focus on people not products

Steve Jobs rarely talked about the features of Apple products. He knows the average consumer doesn’t care. The geeks who do care can find that information on the website.

Jobs focusses on how the product affects you. He mentioned how dumb it is to carry both a phone and an MP3 player – with an iPhone, you now have just one device. Apple are the best on delivering simplicity, productivity, style — all things he knows the public are truly interested in.

Jobs built products to help people achieve their dreams. Apple’s marketing strategy is, in many ways opposite to most other organisations – Apple starts with their vision, their beliefs and their ‘why’ – then bring in the product. The result? Customers want to buy their products.

Allow your people to take risks

The people you hire are professionals – they want to do great work. When they make mistakes, its usually the result of good intentions. Most companies talk innovation but don’t live it. As an organisation grows, it starts to insulate itself from failure. The goals are more about protecting the downside than optimising the upside.

The best are persistent problem solvers

Steve Jobs famously said; “When you start looking at a problem and it seems really simple, you don’t really understand the complexity of the problem. And your solutions are way too oversimplified. Then you get into the problem, and you see it’s really complicated. And you come up with all these convoluted solutions….That’s where most people stop.”

Not Apple. It perseveres. “The really great person will keep on going…and find the key underlying principle of the problem and come up with a beautiful, elegant solution that works.”

Test monetisation of your product early

You can easily fool yourself into believing that there is inherent value in your product. However, you only really know if your product is worth paying for when customers vote with their cash. You have to be sure your product is solving a problem that buyers are willing to pay to solve. You should never assume there is a problem that needs solving.

Power Positioning

Positioning is the set of things your organisation does to place your product clearly in the minds of your buyers. If your positioning is unclear, your buyers will be confused. A confused mind doesn’t buy. Remember your product doesn’t have to be 10x better in all aspects. But where does it excel?

You can have the greatest idea in the world however if you can’t get users excited about it – it will fail. Communicate with passion. Steve Jobs turned product launches into an art form.

Create insanely great experiences for your users. Connect with them and look for ways to enrich their lives.

Use data, not opinions

As a product manager there are things you can do to promote 10x thinking.

“If you have facts, present them and we’ll use them. But if you have opinions, we’re gonna use mine.”
Jim Barksdale, CEO Netscape

Use data to drive your decisions, not opinions. Favour truth over intuition.

We like to think we’re hired for our brilliant instincts. When you switch from opinions to data – you move faster. Don’t argue for weeks; test your assumptions and see what works .

The biggest barrier to 10x thinking is a stakeholder saying “that will never work”. If you rely on opinions – you’re always going to be on the back foot. Use data to prove doubters wrong.

For a new product or startup – focus only on business specific code. Dont make things people wont use. If theres an option to rent or buy a tool – do that – dont build it yourself.

Launch with an armada

You want to launch with a big bang not a whimper. You want the news of your product launch to spread like wildfire to maximise leverage and minimise marketing cost.

Your armada should consist of the people in your company, partners, industry experts and thought leaders Think big. Who would you include in your armada?

Alex Osterwalder is the creator of the Business Model Generation canvas. It gives us a range of planning and marketing strategies for business success. Further refinement has come from this model – namely – the Lean Canvas by Ash Maurya.

The Business Model Generation canvas applied the methodologies used by Skype and Apple to attain product success, the Lean Canvas concentrated on the way our product timeline affects the revenue stream of our business.

A typical business plan will take weeks or months to create, with a Lean Canvas you can outline multiple possible business models in a day.

A single page business model is easy to share with others meaning it will be read by more stakeholders and likely updated more frequently.

The Lean Canvas

A Lean Canvas is more actionable and entrepreneur focused than the Business Model canvas. One rule before we start – never write on the canvas! Use Post-it notes!

1) Problem

The most frequent cause of startup failure; theres no market for our product. Put another way most startups fail because they waste time, money, and effort building the wrong product. We can attribute a significant contributor to this failure to a lack of proper “problem understanding” from the beginning.

With each Customer Segment (CS) its vital to understand the problem first. List one to three high priority problems that you CS has.

2) Customer segment

The problem and Customer Segments are intrinsically connected — without a CS you cant think of their problems – and visa versa.

Get Out The Building is  a phrase coined by Steve Blanks. The reality is the solution is not in your office, its out in the streets. Interview your customer segment and really understand them on a deep level.

3) Unique Value Proposition

A value proposition is a promise of value to be delivered – the primary reason a prospect should buy from you. Why are you different and why should your customer buy from you?

4) Solution

Once a problem has been defined we need to find a compelling solution. A solution box with the Minimum Viable Product “MVP” concept is included. We are not going to get a perfect solution straight away.

5) Channels

Channels are the mechanisms for us to reach our CS. Which channels will give us enough access to our CS to give us sufficient learning? eg email, social media, CPC ads, webinars etc. Paid advertising can be the most useful here as you can be very specific with your targeting.

6) Revenue Streams

To estimate pricing and therefore revenue it can help to define the ‘minimum’ and ‘maximum’. potential prices. For a minimum price; How much is it going to cost to bring your product to market? How much will it cost you to produce it and distribute it to 1000 or 100000 people?

The easiest way is to define a maximum price is find your competitors. What they are offering and at what price?

7) Cost Structure

List all the operational costs for taking this business to market. How much will it cost to build / landing page? What is your burn rate ie your total monthly running costs? Use these costs to calculate a break-even point.

8) Key Metrics

A startup is better off to focus one or two key metrics and build on it. There will only ever be a few key actions that matter. eg For a new support ticketing system it might be; Tickets created per day.

9) Unfair advantage

This is your competitive advantage. A startup should recognise whether or not it has an unfair advantage over its competitors. A true unfair advantage is something that cannot be easily copied or bought.