The emerging science of entrepreneurship and modern techniques of successful company building such as lean startup still haven’t quite hit home for many Kiwi startups. In my time working with- and observing- them, it’s apparent that most still suffer from an overall lack of pace and time wasted building products that no-one wants.
The holy grail of an early stage startup is product-market fit — that unique intersection of solving a painful enough problem, for a big enough customer segment, with a unique enough offering to distinguish themselves from the competition that makes customers flock to the product or service in droves; but why is product-market fit a target that only the great startups seem to ever reach?
Progress in a Startup
The real reason overlooked by most startups, still searching for a business model, is that the “unit of progress” in these startups is not the number of active users they have, or number of customers on their books, or even how much money they’re earning — it is simply learning; learning about what product your customers will love; learning about what channels are most appropriate for your market; learning what specifically is your market and how you get, keep, and grow customers in it.
Unfortunately, most startups just aren’t architected for this pace of learning, and that’s why they often fail to adapt before they run out of money, learning their lessons the hard way and often at personal financial costs to the entrepreneurs whose dreams were behind them.
I had to hit this lesson home hard to the first cohort of startups coming through Lightning Lab, the digital accelerator programme I helped co-found in Wellington, New Zealand in 2012. Everything is urgent in a startup and accelerators amplify this urgency tenfold by trying to squeeze two years of progress and learning, into just 3 months!
The accelerator experience gives startups a taster of the pace New Zealand startups need to run at to be competitive on the global stage and the only way to focus through this pace of execution is to hone in on learning milestones rather than traditional product milestones: ‘What are the key assumptions I’ve made about my business model?’, ‘What is the riskiest assumption I need to test and learn from today, to stop my business from dying tomorrow?’
The Validation Board provides a simple method to systematically test your core assumptions so you can them to turn them into fact faster, allowing teams to upgrade weekly learning cycles into faster daily cycles. When blown up to poster-size, this canvas along with post-it-notes became a central board that drove the entire team’s early decision making processes.
The added benefit of putting structure around this early stage is that every piece of advice you receive can easily be translated into a core assumption or risk you may have overlooked — the Validation Board gives you a way to record this advice and come back to test this at a later date.
We also found that tools like this, and Ash Maurya’s Lean Canvas, are really helping our startups articulate their learnings, which is critical in answering key questions about where they have been, where they are going, and most importantly, where they need to go next.
It’s important to realise that this learning doesn’t just stop on paper — learning milestones apply to new features for existing products just as much as they do whilst searching for the right business model — how much time can be saved by questioning new features in a similar way, asking ‘am I adding a new feature that people want?’ or wasting time developing a feature that no-one will use.
Why is this learning so important for startups? Simply because competitive pace and an intense focus on rapid learning are the two keys weapons of your startups’ nimbleness and unfair advantage — how can you put more of both into what you’re doing today to get there faster?
Dan Khan | @leancto
(This article was originally published in an abridged form in Unlimited Magazine, April 2012 edition — this is the original article updated and printed in full).