How To get to problem / solution fit

Fredi
Schmidli
Zürich,
15
August,
2016
Hear from Fredi Schmidli - lean
investor - how to get to
problem/solution fit
Lean Startup Zürich
Meetup
1fredi@pragmatic-‐solutions.ch15.08.2016

Fredi Schmidli
• Economist
and
BA
• Management
Teams
in
various
functions
• Entrepreneur
• Business
Angel
and
Boardmember:
www.startangels.ch
• Partner
at
pragmatic
solutions
• Community
Builder:
meetup.com/Lean-‐startup-‐Zurich/

THE LEAN INVESTOR:
MAKE LOTS OF LITTLE
BETS. EXPECT MOST TO
FAIL.
Dave
Mc Clure @http://500.co

Goal:
To improve the success rate
Source:
Ash
Maurya «Running Lean»
• Develop
product
in
half
the
time
and
at
half
the
cost
(GE)
• Reduce
failure:
“wrong”
product
and
“premature”
scaling

Lean Innovation Framework

Problem Solution Fit => Value
Problem
Solution
Fit
You
validated
with
MVP
and

prospects
that
a
specific
solution
will

solve
a
know
problem
to
such
a

degree
that
customer
will
buy
it.

Brant
Cooper
Value
assumption
– test
whether
a

product
or
service
really
delivers

value
to
specific
customers
once

using
it.

Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation
Is
the
identified
problem
real?

Will
the
target
customer
pay?

Can
the
problem
be
solved?


From Idea to Problem/Solution Fit
7
Source:
Ash
fredi@pragmatic-‐solutions.ch15.08.2016

Key Principle
Get out of the
building and 1 2 3 4 5 6 7 8 9

Lean Canvas (by Ash Maurya / adapted from Osterwalder)

Why Lean Innovation?
See:
http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/

The 3 Phases of Customer Development
11
Source: Ash Maurya, Scaling Lean
What happens here?

Different
Stages,
10x
product launch
12
Source: Asy Maurya, Scaling Lean
Ideation Validation Execution

Source:
Ash
Workshop,
2015

Persona Development & Segmentation
understand
the “whys” by
looking at the
customers
behaviors
15
Facts
Factual
information

about
your
target

customer
Pain
State
the
problem
you

believe
your
target

customers
have,
that
your

solutions
solves
Behavior
Existing
behavior
they

exhibit
now,
because
they

don’t
have
your
solution
Goals
What
goals
are
they

trying
to
accomplish
with

their
behavior,
that
your

solution
will
do
better
See
also:
http://de.slideshare.net/LeanStartupMachine

What and why Early Adopters?
16
2.5% 13.5% 34% 34% 16%


Source:
Ash
Workshop,
2015

How to uncover problems
5
Why
root
cause
analysis
à “Why
is
this
a
problem?”
“Job
to
be
done”
concept,
Clayton
Christensen
(JTBD)
• main
job
&
related
Job
• Functional
&
emotional
aspects
• Personal
&
social
dimension

BML Feedback loop
Design

experiment
Proposal,
Pretotype,
,
MVP
…Results

Analyse results:
persevere,
pivot
or
quit?
weeks

not

years
Assumption/
Hypothesis
Run

experiment
20
Source:
Eric
Ries
«The
Lean
Startup»

Types of experiments
4)
Early
version
with
minimal
feature
set
that

can
be
“sold”
to
early
adopters

1)
Proposal:
a
document
describing
the
solution

3)
Fake
demo
of
any
kind
2)
Smoke
Test:
Landing
Page
to
test
interest

MVPPretotype

Validated Learning Experiment Template
Metric:
We
will
know
we
have
succeeded

when
[quantitative/measurable
outcome]
or

[qualitative/observable
outcome]
Janice
Fraser
Hypothesis:
We
believe
that
[customer
type]

have
a
need
for
[need/action/behavior]
Experiment:
The
smallest
thing
we
can
do
to

prove
that
need
is
[experiment]

• Welcome:
Set
the
scene
(2min)
• Interviewees
demographics-‐target
customer?
(2min)
• Describe
problem
(your
hypothesis)
(2min)
• Customers
must
rank
top
three
problems
(4min)
• Listen
to
their
world
view
(15min)
• Wrap
up.
Sum
up
feedback
to
confirm
understanding
(2min)
• Get
permission
to
follow
up.
Get
referrals
(2min)
Problem Interview
Ash
Maurya
• Document
results
23
Goal:
Have
I
identified
a
problem
worth
solving?


Source:
Ash
Workshop,
2015

Test your concept early
Don’t be afraid to be
“embarrassed” when
customers see your “product”
for the first time, you will
be embarrassed anyway. Eric
Ries

26
Learning is hard and often frustrating

Source:
Ash
Workshop,
2015


Source:
Ash
Workshop,
2015

Types of experiments
4)
Early
version
with
minimal
feature
set
that

can
be
“sold”
to
early
adopters

1)
Proposal:
a
document
describing
the
solution

3)
Fake
demo
of
any
kind
2)
Smoke
Test:
Landing
Page
to
test
interest

MVPPretotype

Pretotype Example (Explainer Video)
Test
vision of
cloud service
offering –
Dropbox
32
https://www.youtube.com/watch?v=7QmCUDHpNzE

Solution Interview
Ash
Maurya
• Tell
a
story
-‐ frame
the
product
(2min)
• Show
Concept/UVP,
Demo/Pretotype/MVP
(15min)
• Wrap
up.
Sum
up
feedback
to
confirm
understanding
(2min)
• Get
permission
to
follow
up.
Get
referrals
(2min)

• Document
results
• Welcome:
Set
the
scene
(2min)
• Collect
demographics
– right
customer
segment?
(2min)
33
• Test
the
pricing (15min)
Goal:
Will
I
build
sth.
people
want
at
the
price
they
will
pay?

LEARN:
Persevere
I am convinced that half of what
separates the successful
entrepreneurs from the non-
successful ones is pure
perseverance 34fredi@pragmatic-‐solutions.ch15.08.2016

35
Four sequential experiments
Experiment
1;
10% success
Refine
target
segment
Experiment
2;
20% success
Refine
target
segment
Experiment
3;
33% success
Experiment
4;
33% success
qual. quant.
Positive Negative
From Sébastien
Sacard
#
interviews
10% 20% 33%
33%

LEARN:
Persevere
I am convinced that half of what
separates the successful
entrepreneurs from the non-
successful ones is pure
perseverance 36fredi@pragmatic-‐solutions.ch15.08.2016

Experiment Report
Why is it relevant?
Quantify your goals
set scope/timebox
Plan
how to execute
experiment
Results =
Data
Document the learning (validated,
invalidated or inconclusive)

Test
value and growth hypothesis first
Move
to next experiment

Lean Dash Board (Lean Stack)
Flow
39

Lean Dash Board: Example
Customer
Example:
Insurance
Company
www.pragmatic-‐solutions.ch 4015.08.2016

Problem Solution Fit => Value
Problem
Solution
Fit
You
validated
with
MVP
and

prospects
that
a
specific
solution
will

solve
a
know
problem
to
such
a

degree
that
customer
will
buy
it.

Brant
Cooper
Value
assumption
– test
whether
a

product
or
service
really
delivers

value
to
specific
customers
once

using
it.

Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation
Is
the
identified
problem
real?

Will
the
target
customer
pay?

Can
the
problem
be
solved?


The
growth
assumption
– test
how
new
customers
will
discover

a
product
or
service.
Through
what
engine
will
you
acquire
new

customers
at
affordable
cost.
Product Market Fit => Growth
Product
Market
Fit
Customer
is
willing
to
pay.

Cost
of
acquiring
new
customers
is

smaller
than
profit.

Evidence
that
market
is
large
enough

Brant
Cooper
Scale
Product

Market

fit
Problem

Solution

fit
Customer

Discovery
Customer

Validation
Customer

Creation

LEARN: … or pivot
Pivot: A change in strategy
without a change in vision

Savings Potentials with Lean
• Lean
Canvas instead of Business
Plan
• Identification &
priorisation of risks instead of
testing the whole Business
Model
• Solution
interviews instead of Market
Research
• Pretotype/MVP
instead of perfect Product
• Speed
has biggest impact on
profit

Hands on books

agility
accelerates
...
FEEDBACK DOOR

47
Feedback
Door
1.
How
likely
is
it
that
you
would
recommend
this

Presentation
to
a
friend
or
colleague?
Source:
NetPromoter Score
2.
What
changes
would
we
have
to
make
for
you

to
give
us
one
point
more?

……………………………………………………………………………………………………………

How To get to problem / solution fit

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