How to document a new product

During our last meeting we’ve talked about how startups operate differently than companies. While a company executes a business plan, therefore the more detailed the plan, the less risk, startups are being built to search for a business model.

So how do you document a plan that has to change, and how do you work with it?

According to Steve Blank the biggest risk for most products is not technical risk but market risk, i.e. building something nobody wants. 98% of the new products fail, and the high failure rate will only increase in the digital field, since the product is so easy to build. Arguably, the single and biggest reason behind this rate is the failure of taking into consideration the customer in a meaningful way, while building the product.

Think about understanding behaviours and needs, actionable insights and continuous feedback vs. outdated and superficial market analysis.

“Build it and they will come” only works for life-and-death products, everyone else who wants to have a successful product has to put by the product development methodology the customer development. Steve Blank proposed 4 phases of customer development, out of which 3 are relevant for a startup:

> customer discovery

> customer validation

> customer creation

These 3 steps are in place for discovering and validating the right market for your idea, building the right product features that solve customers’ needs, testing the correct model and tactics for acquiring and converting customers. Customer development teaches that rather than assume your beliefs about your business to be true, you should apply an engineering, or scientific method, to building a business, in order to validate your ideas.

Questioning your core business assumptions, you don’t spend money discovering what works, but rather save the money for executing and scaling what you have already shown to work. We’ll see later how customer development works.

The first step is documenting your business assumptions.

The true product of an entrepreneur is NOT just the product, but a working business model built around that product. As this business model starts with assumptions and has to quickly adapt as we interact with customers, we need a simple and agile tool, to keep us focused. That is how the business model canvas came to be. It visually captures the essential components of a business model in one page and it is an excellent tool for a functional business. For a product or startups in the early days, we need something more actionable, something that can guide us through the path from idea to building a successful product. Ash Maurya’s Lean Canvas is a proper tool for focusing on the problem, solution and the product that connects the two.

Because the business model will change as we interact with the customer, we don’t write on a canvas — we use sticky notes. Any untested hypothesis is a sticky note and the goal of the customer development is to (in)validate those hypotheses. Validation is done through experiments — things we do where the answer can be negative or positive — but at any rate helps us learn. There are 2 main ways to do these experiments:

> customer development interviews — that help us learn more about the customers’ needs and behaviours, problems, existing solutions and how our solution fits their universe;

> MVPs — minimum viable products (not crappy products, mind you) that are designed to put in the hands of the customer the essential promise of our solution and help us learn how the customer actually uses our product.

MVPs are designed to be the simplest ways to get the customer from A to B, not the simplest way the product can be built. Also, they are built for Innovators and Early Adopters — the <16% of your market who are willing to use your first versions and give you valuable feedback.

The whole process of building a startup can look daunting, but it needn’t be. We just need a management process that helps us eliminate uncertainty, provide validated learning and use resources the right way, eliminating waste. The Lean Startup is the proper tool in this case. By building experiments, measuring results and using learnings, we can clarify the business model in an agile way.

Putting it all together, this is how you can start a new product or startup, the smart way:

> documenting your assumptions on a lean business canvas

> planning experiments to (in)validate the assumptions

> do those experiments in agile cycles

> bring back what you’ve learned and adjust the canvas accordingly

Key takeaway: startups are designed to learn and adapt fast, therefore the plan is a single page canvas. From unknown-unknowns to known-knowns we go through customer development experiments (interviews and MVPs) in a lean/agile way. The result can be seen as the canvas content goes from hypothesis to validated learning.

In the next articles we will dig deeper:

> we will learn to use OKRs and open allocation to work like magic together;

> we will learn to design and prioritise experiments to get as soon as possible to building the product.