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Software Design Class (Sessions 4): Setting Course- Designing Your Proposition

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These slides are for the software design class I teach (currently at UVA Darden).

The materials page is here: bit.ly/sw-class .

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Software Design Class (Sessions 4): Setting Course- Designing Your Proposition

  1. 1. © 2015 COWAN+ SOFTWARE DESIGN: SESSION 4 SETTING COURSE- 
 DESIGNING YOUR PROPOSITION Alex Cowan
  2. 2. © 2015 COWAN+ THE VENTURE DESIGN PROCESS SCALE? PIVOT? PRODUCT & PROMOTION USER STORIES & PROTOTYPES CUSTOMER DISCOVERY & EXPERIMENTS VALUE PROPOSITIONS & ASSUMPTIONS SHOW M E … ? WHATIF? Is the problem relevant? Is the proposition better vs alternatives? Do we understand this person? What makes them tick? Did the implementation deliver on the story? Was the implemented story relevant to the proposition? How did the customer /user react? WHO?PERSONAS WHAT? PROBLEM SCENARIOS & ALTERNATIVES
  3. 3. © 2015 COWAN+ WHERE YOU SHOULD BE NOW Personas, including Think-See-Feel-Do – Problem Scenarios – Alternatives – Value Propositions Do we understand this person? What makes them tick? WHO?PERSONAS WHAT? PROBLEM SCENARIOS & ALTERNATIVES – Interview Guide – 2 (or more) Interviews
  4. 4. © 2015 COWAN+ WHAT WE’LL WORK ON TODAY Finding the Right PROBLEM Finding the Right SOLUTION time alternatives divergence convergence divergence convergence source: adapted from ‘The Design of Everyday Things’ Personas Problems Alternatives Field Discovery Value Hypothesis & Assumptions Product Hypothesis Experiments on Motivation
  5. 5. © 2015 COWAN+ RECORDING ON THE BUSINESS MODEL CANVAS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments)
  6. 6. © 2015 COWAN+ RECORDING ON THE BUSINESS MODEL CANVAS Why do they buy? Who are they? Broad Selection Competitive Prices Convenience Do-it-yourselfer’s Casual Shoppers Contractors Example: Home Depot Customer Segments Value Propositions
  7. 7. © 2015 COWAN+ RECORDING ON THE BUSINESS MODEL CANVAS This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. (Cost Structure) (Key Partners) (Key Activities) (Key Resources) (Revenue Streams) (Customer Relationships) (Channels) (Value Propositions) (Customer Segments) This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:// creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.The templates here are made available on the same CC license terms as the original canvas. Cost_1 Cost_2 Cost_3 Partner_1 Partner_2 Partner_3 Activity_1 Activity_2 Activity_3 Resource_1 Resource_2 Resource_3 Revenue_1 Revenue_2 Revenue_3 Relationship_1 Relationship_2 Relationship_3 Channel_1 Channel_2 Channel_3 Proposition_1 Proposition_2 Proposition_3 Segment_1 Segment_2 Segment_3 1. List Prioritized Customer Segments/Personas 2. List Prioritized Value Propositions 3. Note Linkages 
 (if applicable) (5 min)
  8. 8. © 2015 COWAN+ WHAT WE’LL COVER TODAY Do we understand this person? What makes them tick? WHO?PERSONAS WHAT? PROBLEM SCENARIOS & ALTERNATIVES VALUE PROPOSITIONS & ASSUMPTIONS Do we understand this person? What makes them tick? WHO?PERSONAS WHAT? PROBLEM SCENARIOS & ALTERNATIVES CUSTOMER DISCOVERY & EXPERIMENTS VALUE PROPOSITIONS & ASSUMPTIONS WHATIF? Do we understand this person? What makes them tick? Was the implemented story relevant to the proposition? WHO?PERSONAS WHAT? PROBLEM SCENARIOS & ALTERNATIVES
  9. 9. © 2015 COWAN+ AND NOW THE ‘PRODUCT HYPOTHESIS’ … and they have a certain PROBLEMS(S) … … where they’re currently using certain ALTERNATIVE(S) … … and I have a VALUE PROPOSITION that’s better enough than the alternatives to cause the persona to act (purchase, use, etc.). A certain PERSONA exists… ‘HR and functional managers are in charge of technical hires and they struggle to effectively screen for technical skill sets, making the hiring process slower and more labor intensive and producing worse outcomes than they should reasonably expect. Currently they implement a patchwork of calling references and asking a few probing questions. By offering an easy, affordable, lightweight technical quizzing solution, Enable Quiz can acquire and retain these customer personas, delivering material value.’ Enable Quiz example: As a group, converge your product hypothesis (5 min)
  10. 10. © 2015 COWAN+ WORKING YOUR PRODUCT HYPOTHESIS … and they have a certain PROBLEMS(S) … where they’re currently using certain ALTERNATIVE(S) … and I have a that’s better enough than the alternatives to cause the persona to act (purchase, use, etc.). A certain PERSONA exists… PERSONA HYPOTHESIS QUESTIONS Does this person exist? Can you identify them? Do you understand them really well? What do they think-see-feel-do in your area? 
 TOOLS Photos Think-See-Feel-Do Discovery Interviews Storyboards Day in the Life Boards
  11. 11. © 2015 COWAN+ WORKING YOUR PRODUCT HYPOTHESIS … and they have a certain PROBLEMS(S) … … where they’re currently using certain ALTERNATIVE(S) … … and I have a that’s better enough than the alternatives to cause the persona to act (purchase, use, etc.). A certain PROBLEM HYPOTHESIS QUESTIONS Have you identified a discrete problem/ need? How important is it to the target persona(s)? What alternatives do they use today? How? 
 TOOLS Problem Scenario + Alternative + Value Proposition Trios Discovery Interviews Storyboards
  12. 12. © 2015 COWAN+ WORKING YOUR PRODUCT HYPOTHESIS … and they have a certain PROBLEMS(S) … where they’re currently using certain ALTERNATIVE(S) … and I have a VALUE PROPOSITION that’s better enough than the alternatives to cause the persona to act (purchase, use, etc.). A certain VALUE HYPOTHESIS QUESTIONS How much better than the best alternative is your product? How obvious is that to the customer? 
 TOOLS Structured Assumptions Structured Experiments (including MVP)
  13. 13. © 2015 COWAN+ HYPOTHESIS-DRIVEN INNOVATION VIA ‘LEAN STARTUP’ Do I have real evidence from my buyer that this is compelling? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis What is our ‘value hypothesis’ and what are its key assumptions? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis How do I definitely prove or disprove the assumptions with a minimum of time and effort? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis Am I reacting or am I focused on validating my pivotal assumptions? ‘Pivot or persevere?’ VALUE HYPOTHESISsource: adapted from ‘The Lean Startup’
  14. 14. © 2015 COWAN+ HYPOTHESIS-DRIVEN INNOVATION VIA ‘LEAN STARTUP’ What is our ‘value hypothesis’ and what are its key assumptions? 6.a YES results disprove hypothesis 01 IDEA! 02 HYPOTHESIS 03 EXPERIMENTAL DESIGN 04 EXPERIMENTATION 05 REVISE? 6.b NO we appear to have a valid hypothesis VALUE HYPOTHESIS
  15. 15. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ Persona(s) Helen the HR Manager- responsible for sourcing and screening job candidates Frank the Functional Manager- hiring manager responsible for acquiring and managing talent Problem Scenario Helen: hard to screen for technical skills Frank: never has enough time for recruiting and doesn’t want to be a jerk during interviews Alternatives Helen: call references, take their word for it (on skills) Frank: ask a few probing questions Value Prop. A lightweight quizzing app that has Helen can use to do quick, effective screening. What is the core value hypothesis?
  16. 16. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ Core Value Hypothesis If Enable Quiz offers companies that hire engineers lightweight technical quizzes that screen job candidates for engineering positions, then these companies would trial, use, adopt, and pay for such a service.
  17. 17. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ As a group, draft your core value hypothesis If Enable Quiz offers companies that hire engineers lightweight technical quizzes that screen job candidates for engineering positions, then these companies would trial, use, adopt, and pay for such a service. As a group, converge your product hypothesis (5 min)
  18. 18. © 2015 COWAN+ UNBUNDLING THE VALUE HYPOTHESIS INTO ASSUMPTIONS If we [do something] for [persona], they will [respond in a certain way] Example Assumptions (Enable Quiz) If we get HR managers to a landing page with a demo, 10% will sign up for our email product announcements. If we create position-specific quizzes for HR managers, they’ll use them ~100% of the time and, after two positions, be willing to pay. If we offer the service at [x] price with [y] supplemental assistance, companies that hire a lot of engineers will pay [z].
  19. 19. © 2015 COWAN+ TESTING YOUR ASSUMPTIONS VIA AN ‘MVP’ M 
 V 
 P 
 inimum What is the fastest, cheapest way to validate or invalidate this option so we give ourselves more options on future success?
  20. 20. © 2015 COWAN+ TESTING YOUR ASSUMPTIONS VIA AN ‘MVP’ iable Will it give us a definitive result? What are the actionable metrics? M 
 V 
 P 

  21. 21. © 2015 COWAN+ TESTING YOUR ASSUMPTIONS VIA AN ‘MVP’ roduct Does it really require actual product? Can we use alternative brands, channels? M 
 V 
 P 

  22. 22. © 2015 COWAN+ TESTING YOUR ASSUMPTIONS VIA AN ‘MVP’ roduct iable inimum is not necessarily actual software/product (see concierge MVP) is a first and foremost learning vehicle … vs. a project plan (OK to do those things but always subordinate them to the learning mission) vs. a product development project M 
 V 
 P 

  23. 23. © 2015 COWAN+ UNBUNDLING THE VALUE HYPOTHESIS INTO ASSUMPTIONS MVP Archetype Notes Wizard of Oz Show or fake the customer experience Concierge Hand create the user experience Sales See if you can sell some.
  24. 24. © 2015 COWAN+ UNBUNDLING THE VALUE HYPOTHESIS INTO ASSUMPTIONS MVP Archetype Example Assumptions (Enable Quiz) Wizard of Oz If we get HR managers to a landing page with a demo, 10% will sign up for our email product announcements. Concierge If we create position-specific quizzes for HR managers, they’ll use them ~100% of the time and, after two positions, be willing to pay. Sales If we offer the service at [x] price with [y] supplemental assistance, companies that hire a lot of engineers will pay [z]. If we [do something] for [persona], they will [respond in a certain way]
  25. 25. © 2015 COWAN+ CASE STUDY: DROPBOX OPPORTUNITY Underlying demand and supporting infrastructure ready for a great file sharing app. CHALLENGE Building a great cross-platform app. required VC funding. VC’s saw a space with lots of existing competitors struggling to get traction.
  26. 26. © 2015 COWAN+ CASE STUDY: DROPBOX Persona Tom the Techie- early adopter who works on projects that require swapping a lot of files between a shifting network of collaborators. Problem Scenario It’s difficult to share files between a network of collaborators, particularly if they’re: big or numerous or change a lot. Alternatives Many existing products, but none of them super compelling and widely adopted. Also, custom setup’s which work but are cumbersome to set up and maintain. Value Hypothesis If Dropbox created a file sharing service that truly felt transparent to the user across all major platforms- OSX, iOS, Windows, etc., then a mass market of users would prefer it over the alternatives, subscribe to it and use it over time. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all?
  27. 27. © 2015 COWAN+ THE WIZARD OF OZ MVP Result: Excellent traction and conversion to sign-up’s. Strong validation signal. Created a synthetic web demo tailored for early market (techies), promoted it, and measured email sign-up’s.
  28. 28. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ OPPORTUNITY Hiring quality technical talent is critical for many companies, but screening for skill sets is time consuming and awkward. CHALLENGE The founding team wants to bootstrap without external funding so they need to focus on a specific technical domain, one that will get them strong early traction.
  29. 29. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ Persona(s) Helen the HR Manager- responsible for sourcing and screening job candidates Frank the Functional Manager- hiring manager responsible for acquiring and managing talent Problem Scenario Helen: hard to screen for technical skills Frank: never has enough time for recruiting and doesn’t want to be a jerk during interviews Alternatives Helen: call references, take their word for it (on skills) Frank: ask a few probing questions Value Hypothesis If Enable Quiz offers companies that hire engineers lightweight technical quizzes that screen job candidates for engineering positions, then these companies would trial, use, adopt, and pay for such a service. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all?
  30. 30. © 2015 COWAN+ THE CONCIERGE MVP Metrics: Do the HR managers use them? How often? Do they want one for their next open position? Do the functional managers care? Work with a set of HR managers to produce position-specific quizzes by hand on paper (or Google Forms, etc.).
  31. 31. © 2015 COWAN+ EXAMPLE: ENABLE QUIZ A QUESTION? There are dozens of technical/engineer topics Enable Quiz could offer. How can they assess which topics are most marketable?
  32. 32. © 2015 COWAN+ THE GOOGLE ADWORDS MVP Metrics: Which topics have the highest click-through rate (CTR)? Which then convert to sign-up’s to newsletters, etc.? Pair their qualitative research with topics trending online and then run a series of Google AdWords campaigns with different topics.
  33. 33. © 2015 COWAN+ CASE STUDY: LEONID SYSTEMS OPPORTUNITY (2007) Major disruption and new product opportunities among telecom providers with introduction of voice-over-IP and cloud communications. IT systems need to be rethought. CHALLENGE As a one-person startup, Leonid had actionable ideas but not enough resources to execute an end-to-end solution.
  34. 34. © 2015 COWAN+ CASE STUDY: LEONID SYSTEMS Persona(s) Chris the CTO- has funding and mandate to transition the business towards hosted services; many bases to cover Problem Scenario IT is the most expensive, most risky area when making changes to the business. Alternatives 1) Place large, risky bets on major new system upgrades. 2) Make small incremental updates (but risk not keeping pace). Value Hypothesis Leonid will offer modular, integration-friendly applications in two critical areas: 1) services provisioning and 2) end user self-service portals. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all?
  35. 35. © 2015 COWAN+ CASE STUDY: LEONID SYSTEMS Started with consulting as a ‘concierge’ vehicle to create tactical solutions, focus problem scenarios, evolving to full-fledged product. Result: Steady step-wise growth with consistently better understanding of key customer problem scenarios. CONSULTING ‘PRODUCTIZED’ CONSULTING PRODUCTS
  36. 36. © 2015 COWAN+ CASE STUDY: ZAPPOS OPPORTUNITY (1999) An observed problem scenario around the difficulty of finding the right shoe at local retail and a giant (but nascent) market in online retail. CHALLENGE Consumers still in the early stages of adopting and habituating to online retail. Founder (Nick Swinmurn) wanted to bootstrap.
  37. 37. © 2015 COWAN+ Result: It worked and the rest is history. Photographed shoes and put them online to observe whether anyone bought them. CASE STUDY: ZAPPOS
  38. 38. © 2015 COWAN+ Persona(s) Sam the shoe-hound- knows what he wants but not where to get it. Problem Scenario Sam is unable to find the shoe he wants at local retailers, wasting time and getting frustrated. Alternatives Possibly mail order or wait until he’s in a bigger market to go to the store. Value Hypothesis Make the shoe Sam wants accessible online and make sure he has a great experience so he’ll come back and not have to think about where to find the shoe he wants anymore. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all? CASE STUDY: ZAPPOS
  39. 39. © 2015 COWAN+ CASE STUDY: SPRIG Startup looking for early traction for investors: Whole Foods (deli) meets Uber. OPPORTUNITY Large opportunity to re-segment and disrupt food prep. and delivery business. Desire to move fast and learn fast. CHALLENGE Some existing competitors and slow fundraising process. Food prep. and delivery requires infrastructure. source: as told to Lean Startup Circle, SF (Jan 2014)
  40. 40. © 2015 COWAN+ CASE STUDY: SPRIG Persona(s) Paula the Professional- health conscious, short on time, moderate to high income, already uses similar services like Uber. Problem Scenario I want to have a nice, healthy dinner with no hassle and at a price I can afford (like $12). Alternatives Going to the store or an expensive, take-out, or a slow delivery service (>20 minutes). Value Hypothesis If Sprig offers Paula a healthy meal like you would order a cab (on Uber), then she would use and reuse the service. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all? * This is me interpolating/guessing on an item; not part of the Sprig team’s explanation.
  41. 41. © 2015 COWAN+ THE CONCIERGE MVP Result: Excellent traction and conversion to sign-up’s. Strong validation signal. Created a synthetic web demo tailored for early market (techies), promoted it, and measured email sign-up’s.
  42. 42. © 2015 COWAN+ CASE STUDY: PAUL HOWE & ASSOCIATES OPPORTUNITY Funded startup team rapidly iterating through B2C concepts with lightweight experimentation. One idea: Some people would like to know how much their stuff is worth. CHALLENGE Iterate to a successful concept while the time and money permits.
  43. 43. © 2015 COWAN+ Persona ? Problem Scenario I have a lot of stuff around that I might want to sell and/or I’m just generally curious about how much it’s worth, how much I’ve spent.* Alternatives Going through credit card statements or receipts. Value Hypothesis If Paul Howe & Co. offered a service where you could quickly, automatically know how much your stuff is worth, users would engage with such a service in large numbers.* What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all? * This is me interpolating/guessing on an item; not part of the Sprig team’s explanation. CASE STUDY: PAUL HOWE & ASSOCIATES
  44. 44. © 2015 COWAN+ Result: They don’t care. Time to move on to the next concept. Get a few sign-up’s with access to email and bank account info. Review by hand on a concierge basis and compile a statement for them. Do they care? CASE STUDY: PAUL HOWE & ASSOCIATES
  45. 45. © 2015 COWAN+ CASE STUDY: STEALTH PHOTO-SOCIAL STARTUP OPPORTUNITY Lots of exciting things happening in the photo- social space. CHALLENGE The team had several ideas but few resources.
  46. 46. © 2015 COWAN+ Persona Existing poster of photos. Personas: Martha the Mom, Pat the Party Planner, Teresa the Teen Social Butterfly Problem Scenario [I want to do something interesting with my photos so that my social graph rewards me with interest and acclaim] Alternatives Manually enhance photos, use alternative enhancers/amplifiers like Instagram Value Hypothesis If we offers Facebook users a way to [do something novel] with their photos, they will try the service and convert to a paid version of the app. What Minimum Viable Product (MVP)? That you can bootstrap? That doesn’t require software at all? CASE STUDY: STEALTH PHOTO-SOCIAL STARTUP
  47. 47. © 2015 COWAN+ CASE STUDY: STEALTH PHOTO-SOCIAL STARTUP ASSUMPTION
 If the user shares a photo with this treatment, the user’s social network will like and share the app’s output What MVP? That you can bootstrap? That doesn’t require software at all?
  48. 48. © 2015 COWAN+ CASE STUDY: STEALTH PHOTO-SOCIAL STARTUP ASSUMPTION If the user shares a photo with this treatment, the user’s social network will like and share the app’s output MVP
 Create the target output by hand (concierge style) Does anyone care?
  49. 49. © 2015 COWAN+ ABOUT SOFTWARE, TESTING MOTIVATION, AND MVP’S You have to put the magic in the software. (Not the other way around) Concierge and other non-software MVP’s can be pretty magical. Find 100 people that are really into it and you can probably grow.
  50. 50. © 2015 COWAN+ UNBUNDLING THE VALUE HYPOTHESIS INTO ASSUMPTIONS MVP Archetype Example Assumptions (Enable Quiz) Wizard of Oz If we get HR managers to a landing page with a demo, 10% will sign up for our email product announcements. Concierge If we create position-specific quizzes for HR managers, they’ll use them ~100% of the time and, after two positions, be willing to pay. Sales If we offer the service at [x] price with [y] supplemental assistance, companies that hire a lot of engineers will pay [z]. If we [do something] for [persona], they will [respond in a certain way] Individually, begin decomposing your core value hypothesis into testable assumptions Pair them with ideas for experimentation (including MVP’s if applicable)
  51. 51. © 2015 COWAN+ ASSIGNMENTS 1. Do/Group: Converge Your Working Product Hypothesis (0-5 minutes) 2. Do/Group: Converge Personas, Problem Scenarios, and Interview Guides (60-90 minutes) 3. Do/Individual: Draft a Working Set of Assumptions Against Your Value Hypothesis (15-30 minutes)
  52. 52. © 2015 COWAN+ bit.ly/vdesignExperimentLearn Hypothesize @cowanSF acowan@alexandercowan.com bit.ly/cdhandbook bit.ly/sw-class FINI Check out 
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