Lean Startup Victoria 02 Testing Value Proposition

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The slides from the introduction to Lean Business Methodology from the Victoria, BC Lean Startup Meetup.

meetup.com/Lean-Startup-Victoria

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  • Market insight is becoming more and more a requirement
  • Example – work through video games; Pacemaker; Consumer solar rooftops
  • Example of partners – payment providers, academics, content providers (authors/musicians)
  • Only stayed in body for a limited amount of time and needed to be taken 3 times a day – leading to a lot of side effectsIt also could make your blood pressure drop too low
  • Lean Startup Victoria 02 Testing Value Proposition

    1. 1. E245 Value Proposition<br />Ann Miura-Ko<br />January 2011<br />
    2. 2. The Business Model Canvas<br />Test Hypotheses:<br /><ul><li>Product
    3. 3. Market Type
    4. 4. Competition</li></li></ul><li>Key Questions for Value Prop<br />Problem Statement: What is the problem?<br />Technology / Market Insight: Why is the problem so hard to solve?<br />Competition: What do customers do today?<br />Product: How do you do it?<br />
    5. 5. The Problem<br />The “problem” justifies why the product is valuable to someone <br />The Problem Statement:<br />For whom?<br />What issue do they face?<br />Note: Doesn’t reference the product<br />
    6. 6. Potency of the Problem<br />
    7. 7. Technology and Market Insight<br />Market Insight<br />Value chain disruption<br />Deregulation<br />Changes in how people work, live and interact and what they expect<br />Technology Insight<br />Moore’s Law<br />New scientific discoveries<br />Typically applies to hardware, clean techand biotech<br />
    8. 8. Examples of Market Insight<br />People want to play more involved games than what is currently offered<br />Facebook can be the distribution for such games<br />Masses of people are more likely to micro-blog than blog<br />The non-symmetric relationships will allow companies and individuals to self-promote<br />European car sharing sensibilities could be adopted in North America<br />People, particularly in urban environments, no longer wanted to own cars but wanted to have flexibility.<br />
    9. 9. Insight Characteristics<br />Right<br />Wrong<br />Biggest Potential Wins<br />Non-Consensus<br />Mindless Competition<br />Consensus<br />
    10. 10. Key Thought<br />What insight do I have that is not yet conventional wisdom?<br />
    11. 11. Market Type<br />Market Type determines:<br />Rate of customer adoption<br />Sales and Marketing strategies<br />Cash requirements<br />
    12. 12. Existing Market<br />Characteristics:<br />Customers are always hungry for better performance<br />Incumbents exist<br />Usually technology driven<br />Positioning driven by product and how much value customers place on its features<br />Risks:<br />Incumbents will defend their turf<br />Network effects of incumbent<br />Continuing innovation<br />
    13. 13. Resegmented Market <br />Low cost provider (Southwest)<br />Unique niche via positioning (Whole Foods)<br />What factors can you eliminate that your industry has long competed on?<br />Which factors should be reduced well below the industr’s standard?<br />Which factors should be raised well above the industry’s standard?<br />Which factors should be created that the industry has never offered? (blue ocean)<br />
    14. 14. New Market<br />Customers don’t exist today<br />How will they find out about you?<br />How will they become aware of their need?<br />How do you know the market size is compelling?<br />Which factors should be created that the industry has never offered? (blue ocean)<br />
    15. 15. Competition<br />Are substitute products and services available?<br />Are competitors threatening to offer better price or value?<br />How saturated is our market?<br />How likely are customers to defect?<br />
    16. 16. Minimum Viable Product (MVP)<br />A product that solves a core problem for customers <br />The minimum set of features needed to learn from earlyvangelists<br /><ul><li>Avoid building products nobody wants
    17. 17. Maximize the learning per dollar spent</li></li></ul><li>Testing Value Proposition<br />http://www.youtube.com/watch?v=E4ex0fejo8w&feature=player_embedded#at=695<br />
    18. 18. How Zynga Uses MVP<br />From Mark Pincus, CEO & Founder<br /><ul><li>Create a 5-word pitch for a new product or feature
    19. 19. Put it up on a high traffic webpage
    20. 20. If it gets clicks, collect the emails of interested customers
    21. 21. Build a ‘ghetto’ version of the product or feature
    22. 22. Test everything
    23. 23. Iterate constantly</li></ul>Source: http://grattisfaction.com/2010/01/how-zynga-does-customer-development-minimum-viable-product/<br />
    24. 24. Goal of MVP<br />Determine Product Market Fit<br />Don’t scale before Product Market Fit<br />Without it, attracting interest from partners and investors will be harder/lower value<br />
    25. 25. The Ecosystem (“Customers”)<br />Day to day users<br />May actually have zero influence in buying process<br />End User<br />Influencer / Recommender<br />Preferences and decisions influence or impact buying decisions<br />Economic Buyer<br />The person who controls the purse strings or is in charge of the budget<br />Decision Maker<br />The buck stops here<br />
    26. 26. The Ecosystem (The Rest)<br />Suppliers<br />Entity that provides parts or services needed to manufacture your product <br />Channels<br />Group or organization that installs, distributes or sells the product in your place<br />Government<br />Organizations responsible for monitoring trading and safety standards related to your product<br />Partners<br />Other entities that provide products related to delivery of your final product<br />
    27. 27. Testing the MVP (Non-Web)<br />Can you get customers to pay for a product that doesn’t yet exist (or barely does)?<br />Interview customers to make sure they have a matching core problem<br />Set up web site landing page to test for conversion<br />Set up a Lighthouse Customer Program where potential customers pay to get early access to product prototypes<br />
    28. 28. Testing the MVP (Web Example)<br />Can you get customers to pay for a product that doesn’t yet exist (or barely does)?<br />Interview customers to make sure they have a matching core problem<br />Set up web site landing page to test for conversion<br />See what offers are required to get customers to use the product (e.g. prizes, payment)<br />Use problem definition as described by customers to identify key word list – plug into Google search traffic estimator - high traffic means there is problem awareness<br />Drive traffic to site using Google search and see how deep into a registration process customers are willing to go through<br />
    29. 29. Testing the MVP<br />Smoke testing with landing pages using AdWords<br />In-product split-testing<br />Prototypes (particularly for hardware)<br />Removing features<br />Continued customer discovery and validation<br />Surveys<br />Interviews<br />
    30. 30. The Business Model Canvas<br />Test Hypotheses:<br /><ul><li>Product
    31. 31. Market Type
    32. 32. Competition</li></li></ul><li>The Pivot<br /><ul><li>The heart of Customer Development
    33. 33. Iteration without crisis
    34. 34. Fast, agile and opportunistic</li></li></ul><li>The Value Proposition Pivot<br />Textbook rentals<br />College students have unique sets of goods and services they need to trade, buy and sell at a local level<br />Craigslist for Colleges<br />College students have unique sets of goods and services they need to trade, buy and sell at a local level<br />
    35. 35. The Value Proposition Pivot<br />UK-92480<br />Problem: Angina (chest pains)<br />Selectively blocking an enzyme called PDE5 could expand blood vessels and treat angina. <br />Nuf said<br />
    36. 36. Test these hypotheses for next week:<br />Problem Statement: What is the problem? For whom?<br />Technology / Market Insight: Why is the problem so hard to solve?<br />Competition: What do customers do today?<br />Product: How do you do it? Is this valuable or unique? What is the MVP? <br />TEST THE MVP!<br />

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