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The Four-Way Fit — Chapter 7: The “Heads Up” Motion in Phase I (Part 2)

The purpose of the Four-Way Fit method is first to help you to progress to a value breakthrough (Phase I), and then to optimize that value and build sustainable competitive advantage (Phase II) — with the minimum waste of money and time. Made up of a “heads up” motion and a “heads down” motion, this method is a propulsion system that moves you through the two phases (and within the phases, from stage to stage) on the journey towards enterprise greatness.

In this chapter, we look at how the “heads up” motion it expresses itself in Phase I. It comes into play in the later three of the four Phase I stages — specifically, the Minimum Viable Concept, Initial Product Release, and Minimum Viable Product stages.

At each relevant stage, once you have completed this “heads up” motion you will have in hand:

  • A completed framework canvas composed of a comprehensive, integrated and internally consistent set of claims that, if proven true, will result in your business moving from your current stage to the next
  • Clarity as to which claims on the canvas can be considered settled assumptions, and which need to be tested
  • Plans for how to act on the settled assumptions and conduct the tests

The plans you develop in this “heads up” motion set you up to complete the “heads down” motion, in which you will execute the plans derived from your settled assumptions, along with any test plans for not-yet-validated claims.

The “heads up” motion is not a part of the first stage, the Immerse and Ideate stage, because some “heads down” work is first required to gain the knowledge necessary to complete the “heads up” motion. You first need to understand the opportunity in front of you, which requires you to immerse and ideate. In this first stage, your job is simply to observe, ask, learn and conceptualize possible solutions: to search deeply and learn cheaply.

In the second stage, Minimum Viable Concept, you will draw upon your initial insights to sketch out a comprehensive business concept, posted in the canvas. This is mostly “heads up” work, lightly peppered with “heads down” work as you concept-test your claims with visionary customers and other market actors.

Once your minimum viable concept settles, you’re ready for the third stage, the Initial Product Release stage. Since it was captured in the canvas in the Minimum Viable Concept stage, your business concept (formed in a “heads up” motion) can now inform development of your first working product. Working closely with alpha (non-paying) visionary customers, you will build out a small set of first features — paper prototypes first, concierge product next. At each development step, customer feedback will help you to confirm or invalidate claims. These insights will bring you back to the canvas, so that you can update disproven claims with new ones.

Once you’ve launched your initial product you progress into the fourth stage, Minimum Viable Product. In this stage, you must refine your product to the point that it delivers sufficient value to sell to and retain beta (paying) visionary customers. The stage begins with another “heads up” motion, in which initial customer feedback is leveraged so as to update all canvas claims. You will then oscillate between “heads up” and “heads down” work as you iterate your product and business model towards minimum viability, as proven by your capacity to sell and retain customers.

Remember the four top team “thinking competencies”, first introduced in Chapter 5? They are: design thinking, lean thinking, strategic thinking and systems thinking. These are key competencies needed in the top team if your company is to progress from inception to greatness.

To accomplish the “heads up” motion in Phase I, all four of these “thinking competencies” are required. But two are absolutely vital: design thinking and lean thinking.

In this chapter we’ll explore these two thinking competencies, and show how they advance the “heads up” motion. (Later, in Chapter 9, the chapter that addresses the “heads up” motion in Phase II, we will similarly explore the other two). Then we’ll briefly review how to actually execute “heads up” motion in the three relevant Phase I stages (Minimum Viable Concept, Initial Product Release and Minimum Viable Product).

Design Thinking and the “Heads Up” Motion

Design thinking is a human-centered, outside-in approach to problem solving. Design thinkers focus on customers and, more specifically, users. They bring a mindset and a process. Design thinking is a mindset in the sense that the priority is always to understand the customer / user’s problems and needs with enough depth and nuance to devise superior solutions. It’s a process in that work progresses through five steps (relevant stages shown in brackets):

  • Step 1: Empathize — immerse in and research user purpose, jobs to be done to advance the purpose, and problems and needs encountered as they seek to do so (Immerse and Ideate stage)
  • Step 2: Define — state users’ most gaping problems and screaming needs (Immerse and Ideate stage; Minimum Viable Concept stage)
  • Step 3: Ideate — challenge assumptions and create ideas (Immerse and Ideate stage; Minimum Viable Concept stage)
  • Step 4: Prototype — begin to devise solutions (Initial Product Release stage)
  • Step 5: Test and Iterate — try solutions out; gain customer and user feedback; iterate (Minimum Viable Product stage and beyond)

I’ve said before that to create an iconic enterprise requires (in a large market) solving problems that are gaping and needs that are screaming. When you solve such problems, customers are highly motivated to buy from you. Problems are different than needs. Problems are objective — the obstacles actors encounter as they seek to execute a given job. Needs are subjective. These are the human emotions and motivations that arise when people encounter problems. Needs drive behavior. Both are extraordinarily important to understand, if you want to build a product that achieves a value breakthrough.

One of the central tenets of the Four-Way Fit model is that it is not enough to “get out of the office”, as lean startup devotees advocate. A handful of customer interviews just won’t do. You must immerse yourself within the customer’s world for a sustained period of time — certainly many months; perhaps years. For this you first need to recruit visionary customers willing to let you immerse. Assuming you have done so, during this immersive period your mission is to observe real actors acting in their real-life settings.

A design thinker begins by observing customers and their behaviors in many contexts, with empathy and insight. She conducts analytical research where possible, and leverages heuristic decision methods when necessary. She is comfortable with ambiguity, and is collaborative and creative. She explores, experiments and values continuously improvement. A design thinker understands that to create a value breakthrough, the product / business model solution must be technically feasible, overcome gaping problems and screaming needs, and feature a financially sound business model — one that the customer will readily accept.

In his book The Ten Faces of Innovation, Tom Kelley (a partner at the famous design consultancy IDEO) identifies three broad design thinking personas:

  • The learning persona
  • The organizing persona
  • The building persona.

Each persona exhibits multiple “faces” — roles. Multiple roles may be performed by one person. The roles themselves, however, are distinct.

For Kelley, three roles comprise the “learning” persona:

  • Anthropologist
  • Experimenter
  • Cross-pollinator

The anthropologist brings active curiosity, beginner’s eyes, simple observation, an absence of judgment, empathetic listening, an ability to see the unnoticed and a capacity to learn. She understands the science of human behavior. She recognizes that humans can be rational in certain contexts, and irrational in others. Emotional factors, personal motivations and short-term effects can influence decision making in important ways.

Consider Jane Goodall, who spent her life studying chimpanzees. Can you see lessons in this account for your own customer discovery research?

“It took two years from her arrival at Gombe for Jane to be completely accepted by the chimpanzee group she set out to study. Jane’s method was to simply observe and imitate the animals, writing down copious notes in a field journal. One of her first discoveries was that chimpanzees are omnivorous, not vegetarian as had been supposed. On several occasions, she observed the chimps hunting and eating small mammals. Two weeks after she first noted them eating meat, Jane saw something stunning — the chimps employed modified twigs to “fish” for termites.

At the time, the use of tools was thought to be a defining human characteristic. Jane’s mentor, Louis Leakey, responded to her momentous discovery by saying, ‘Now we must redefine “tool,” redefine “man.” Or accept chimpanzees as humans.’ It was not the last time that Jane’s chimpanzees evidenced startlingly human behaviors. Jane’s work has documented a complex social system, including one ‘war’ between rival groups. She has seen ritualized behavior including use of the social embrace to comfort an animal in mourning. Altruism has been shown by the adoption of orphaned chimps by others in the band. She also argues that the chimpanzees show the beginnings of a primitive language system that includes more than 120 sounds with specific meanings.” ¹

That’s the kind of anthropological work demanded by design thinking.

The experimenter knows how to conduct human factors research, is effective at open-ended questioning and ideates collaboratively. The cross-pollinator is a boundaryless thinker, can see the associations between seemingly unrelated things and looks for metaphors in solution concepting.

In the Immerse and Ideate stage, the work to be done is concrete — involving both analytical observations and intuitive insights. At this stage, the job is to live inside of your customers’ spaces. This enables you to immerse in their routines. As you observe, your aperture widens — you experience divergence. Your sense of the problems and opportunities, which at first seemed simple (simplistic), now seems complex.

In the Minimum Viable Concept stage, your design thinker invents. She draws upon observations and insights to ideate and narrow in on viable solution options. In this alchemy, she leverages your company’s capabilities to transform problems and needs into solutions. Leveraging Kelley’s construct, this includes the faces of the “learning” persona (noted above), but now adds the faces of the “organizing” persona, as follows:

  • The hurdler
  • The collaborator
  • The director

The hurdler is a tireless problem-solver, undeterred by failed hypotheses, who brings a relentless determination to overcome every obstacle. The collaborator leverages different perspectives to discover breakthroughs. The director keeps the team coordinated and focused on the big picture. For instance, the director might be the one to take the lead in building out the framework canvas during the Minimum Viable Concept stage.

At the Minimum Viable Concept stage the work to be done begins at a high level of abstraction, and moves towards the concrete. Having begun in customer’s world, work now moves into a creative space for ideation and iteration. Ideas emerge first from intuition, and then are narrowed through analytical thinking and heuristic methods. Your sense of the problems and their solutions moves from complexity and confusion towards greater clarity. Ideation heads down a narrowing path.

Once you enter the Initial Product Release stage, design thinkers begin to narrow in on viable solutions to known problems and needs through trial and error. This continues into the Minimum Viable Product stage. The design thinker’s unique contributions at this point are captured predominately by what Kelley calls the “building” persona. Here the three faces of interest are:

  • The experience architect
  • The set designer
  • The caregiver

The experience architect leverages human factors research to simplify workflows and aid the user experience with visual cues. Working closely and carefully with visionary customers, she examines each step of the customer journey. At each step, she seeks to discover the friction that slows the user down, and the motivation that encourages the user to proceed. She conceives of ways to reduce the friction and increase the motivation at each step, and knows how to test these design ideas.

The set designer tends to the creative workspace, enriching it to support inspiration, ideation and iteration. The caregiver brings high empathy for the user to every task.

In the Initial Product Release and Minimum Viable Product stages, the work to be done is concrete — involving testing, iterating and optimizing. What was once complex has been clarified. The product vision, once stuck between simplistic to complex, begins an iterative journey towards simple. Simple, of course, is hard — and is never fully achieved.

In the end, it all requires a mix of intuition and science, anchored in a deep care for the customer and user. In his book Zen and the Art of Motorcycle Maintenance, Robert Pirsig said:

“… there are an infinite number of facts about the motorcycle, and the right ones don’t just dance up and introduce themselves. The right facts, the ones we really need, are not only passive, they are damned elusive, and we’re not going to just sit back and ‘observe’ them. We’re going to have to be in there looking for them or we’re going to be here a long time …The difference between a good mechanic and a bad one … is precisely this ability to select the good facts from the bad ones on the basis of Quality. He has to care! This is an ability about which formal traditional scientific method has nothing to say.”

He’s getting to the heart of design thinking here. He goes on:

“In a laboratory situation, when your whole procedure goes haywire, when everything goes wrong or is indeterminate or is so screwed up by unexpected results you can’t make head or tail out of anything, you start looking laterally … Lateral knowledge is knowledge that’s from a wholly unexpected direction, from a direction that’s not even understood as a direction until the knowledge forces itself upon one. Lateral truths point to the falseness of axioms and postulates underlying one’s existing system of getting at truth … Drifting is what one does when looking at lateral truth.”

The point is that for design thinkers, product development is more than just a build / measure / learn science project. They need to think laterally and intuitively, as well as sequentially and analytically. The scientific method is necessary but not sufficient. Design thinkers empathetically immerse within the domain of interest. They observe, become one with the problems they see, care deeply for the people who encounter these problems, and wait for insights. For the competent, caring design thinker, epiphanies (intuition) come first; hypotheses (science) can then follow.

In Phase I the team is small. As such, the “design thinking” founder will need to wear many of Kelley’s “faces”.

Lean Thinking and the “Heads Up” Motion

The goal of lean thinkers is to minimize waste of time and money. The focus is on rapid discovery of product and business model viability via hypothesis-driven experimentation and iterative product releases. Ongoing data-driven customer feedback leads to validated learning and continuous improvement. Flexibility and incremental data-driven improvements are valued over planning.

You can’t follow the Four-Way Fit method without this thinking competency. It is the seminal contribution of lean startup advocates. Does someone on your founding team possess it? Do you all possess it? It is a discipline that, like a muscle, is built through exercise. It is seen in the use of disciplined agile delivery methods within product development teams. It is seen in the decision methods of the top team — for instance, in the expectation to bring data to anchor any opinion. It is seen in respect for the scientific method in all contexts — from product development to business model development to marketing and messaging development to employee and team development. Lean thinkers establish KPIs, build metrics dashboards and track data — continuously seeking incremental improvement.

Lean thinking is especially key if your company has adopted a “Product Led Growth” (PLG) strategy. Companies that adopt PLG often feature a freemium business model, in which digital demand generation brings prospects to an initial landing page, where the customer is presented with a compelling value message and is led towards initial product use — so as to directly experience the product’s value, often at no initial cost. Products such as these are often referred to as “sales ready” products. For some, the entire prospect-to-customer experience is digital. Companies such as Canva, Zoom, Airtable and others featured in Part 3 of this book have adopted a PLG strategy. In PLG, technical domain teams work to continuously optimize every step by executing multiple tests per week. This continuous, data-driven optimization of everything, managed by domain-based product and engineering teams, is such an ingrained discipline that it becomes cultural. Even for those companies who do not have a freemium strategy, the disciplines that undergird PLG remain powerful. PLG requires lean thinking.

Lean thinking kicks in during the fourth stage of company-building: the Minimum Viable Product stage. It is here that enough customer usage data begins to stream in from your product to enable lean routines.

The Other Two Thinking Competencies

Strategic thinking and systems thinking are also important top team competencies in Phase I. Strategic thinking helps you clarify any early steps you might be able to take to begin building competitive advantage — such as the acquisition of some cornered resource (a top-five-in-the-world technical founder hired, or a prized and exclusive channel relationship), or a pricing scheme featuring a counter-positioning play.

Systems thinking also has value in Phase I. It will help the top team construct a canvas in the Minimum Viable Concept stage that most effectively addresses all Team implications. We will discuss these two thinking competencies in more detail in Chapter 9.

The “Heads Up” Motion in the Minimum Viable Concept Stage

The “heads up” motion first comes into play in the Minimum Viable Concept stage. It is here that your emerging understanding of the market and top priority segment and its personas first comes together in an integrated view, expressed within the framework canvas. From this point forward, every new learning will lead you back to the canvas — wherein you will replace every disproved claim with a new one so that all claims remain comprehensive, integrated and internally consistent.

As you work inside the canvas, it’s best to start by building out claims in the domains of Market and Product. It is here that the game is won or lost. Of all subdomains, none is more important than the one called “Gaping Problems / Screaming Needs”. This subdomain is the fulcrum on the customer-defined value lever. As you explore the customer’s jobs to be done, you will encounter gaping problems. This insight is key, of course. But it’s equally important to understand any needs actors experience as they deal with the problems. Are they frustrated? Confused? Feeling less than fully competent? The more clearly you understand human needs and motivations, the more likely you are to build a product that addresses both the objective problems and the subjective human needs. Products that do both do better.

Once your claims in Market and Product have been entered you’ll add in claims in the domains of Model and Team as well, until you the canvas on the whiteboard is complete. If its claims seem to hang together well — comprehensive, integrated and internally consistent — you will be ready to concept-test them with visionary customers. The reactions of these customers will help you find and fix the most obvious flaws.

To get more specific, in this Minimum Viable Concept stage, the job of the “heads up” motion is to:

  • Complete the first iteration of the canvas
  • Differentiate settled assumptions from testable claims
  • Prioritize testable claims
  • Keep updating the canvas until claims settle
  • Develop plans to act on settled assumptions and test top-priority testable claims

Initial Product Release

After your “minimum viable concept” has made it through the concept-testing gauntlet, you will get to the point where you feel ready to build your initial product. At this point, your minimum viable concept has been conceptually validated by visionary customers. You haven’t built anything yet, but you have received sufficient signal that you’re on the right track.

By now, if your concept is clear and compelling, and you have chosen a large market, you probably have been able to attract seed funding. Funding in hand, your first “heads up” motion at this stage will be hire for your product development team. Perhaps your founding team includes an engineer and product manager. You still need a few more engineers and a designer.

Once this team is in place, you’ll need to choose first features. What is the minimum set of features you can build that customers will value? This too is a “heads up” act. Once the building begins, you will oscillate back and forth — “heads up” and “heads down” — as you build, measure and learn. Customer feedback drives this process.

Your initial product might be a concierge product — in which customers enjoy a digital experience but behind the scenes, the work to fulfill the value may be done in the background by humans. This can reduce development costs until you’ve proven a value breakthrough.

Back in 1999, Tony Hsieh and his co-founders launched Zappos as an e-commerce portal to sell shoes. At first, every time a new order came in, Hsieh would run down to a local shoe store to purchase the shoes. He’d then package them up and mail them out. Eventually, Zappos built its own inventory of shoes and set up its own delivery systems, but in the beginning they created a concierge product. I took the same approach in the startup I founded (now called Digital Air Strike). We first tested our initial automotive lead response solution via manual back end efforts. Lead response templates were pre-designed (including vehicle descriptions and current pricing), but to respond to a lead required manual steps — to customize the template. Once we proved our thesis (that the rapid price quote with vehicle details would improve auto dealer sales conversion), we did the extra work to automate everything.

As your alpha customers attempt to use your initial product, your job will be to watch, learn and iterate. Their difficulties and frustrations will be grist for the mill; you’ll apply design thinking and agile practices to iterate towards something these customers find at least minimally useful. Whenever a significant claim proves flawed, you’ll need to update it on the canvas — a “heads up” motion.

Minimum Viable Product

Slowly but surely, your first features will coalesce into a solution alpha visionary customers find valuable. At that point you will be able to begin selling to beta visionary customers. Soon small streams of data will begin to flow from your first customers: some landing pages will show more traffic than others. Some points along the workflow will show big conversion drop offs. Now the competency called lean thinking becomes important. Lean thinkers will introduce data-driven decision making — emphasizing the “measure” part of the build / measure / learn cycle so central to agile development methods. Continuous improvement will become a weekly routine as landing page heat maps and A/B tests enable features optimization.

Once you observe customers using your products with regularity, and once you hear validation that your skinny feature set is helping address at least some of the problems and needs it was intended to address, you will be ready to sell it to more customers. This is an important part of the MVP stage — to sell and retain early adopter customers. Now the business model becomes key. Who will you charge? By what unit of measurement? Will you base your price on objective ROI considerations only, or will you consider subjective factors?

A company that did the latter is Lemonade, the B2C insurance company. Its founders knew that trust was a major problem for insurance companies. Consumers know that the carrier’s self-interest is to maximize premiums and minimize claims. These companies are all too happy to take our money, but will they pay it back when we’re sick, burglarized or in a car crash? Deep mistrust hobbles the relationship. Lemonade chose to address this problem head on, by changing the business model. It was and is their biggest innovation. The company established a set fee for its insurance products. It then created a claims pool, and stipulated that if the claims pool had excess funds in it at the end of a given claims period, those excess funds would be paid out to the customer’s charity of choice. Since Lemonade gained no benefit from underpaid claims, there would be no hidden incentive to underpay them. This business model design addressed the consumer’s “screaming need” for trust. It became the source of customer-defined value that powered the company to iconic enterprise status.

Lemonade’s business model was decided on early in the company’s development. It was built into its MVP. The example of Lemonade reminds us why Market / Product fit is an insufficient standard for a true value breakthrough. A breakthrough only occurs once a company achieves Market / Product /Model fit.

Once you have identified your business model, you need to build a sales message. This too is a “head up” step. So too is your customer acquisition method. Your price will impact your customer lifetime value, which will guide your go-to-market approach. As you think through these issues, you’ll return to the canvas time and again, updating your claims in the Model domain.

Summary

To make it through the first phase of company-building takes certain core competencies — especially design thinking and lean thinking. Once your founding team is assembled, you must transform your company into a learning engine. You will search out the gaping problems and screaming needs experienced by known personas inside your chosen segment and market. You will conceive of solutions, conceptualize a business, and then build, measure and learn your way towards a minimum viable product. All of these things require you to step back, think things through and plan things out. That’s the “heads up” motion.

But of course, these conceptualizations are not fixed in stone. They are replete with testable claims which must be tested, and settled assumptions which must be acted upon. Testing and executing — that’s the job of the “heads down” motion, the subject of the next chapter.

Notes

  1. Bagley, Mary. 2014. Jane Goodall Biography. LiveScience.com

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