Paying Customers are the only Experts when it comes to Idea Validation
This blog post is based on the session on vision and validation that I gave as a mentor for the Founder Institute Berlin. Watch it HERE.
Whether you are a brand new founder or a corporate startup, I will show you how to include your customers in the making of your product, using systemic tools. This will both help you drive sales from the start and make customer care a whole lot easier.
Slides 1 to 10 are about vision. Slides 11 to 22 contain actionable validation tools.
And I began..
I am here to show you how to do both customer and team development using systemic tools.
What does systemic mean?
Regarding customers, it means that I do not do 1-on-1 interviews for my clients. Instead, I invite diverse sets of customers at a time or an entire customer team if I am in an existing organization.
Regarding teams, it means that I work with the entire team at the same time: designers, growth hackers, founders, developers, even investors.
And I also work with those sets of customers and the team at the same time.
I engage all these populations in structured processes using markers on the floor.
Why do I do that?
For three reasons:
- The high complexity of today’s problems.
In systems theory, the darkness principle says that each team member or customer only has one mental model of the customer problem. By inviting all those mental models to the table, you can make data-driven choices and better choices.
2. The number of products that we are building today has grown exponentially, there is no such thing as the Ford T model that everyone wants to have and that you can replicate millions of times. Today you need to involve the customer because each one of them has a specific set of needs.
3. Working systemically while involving the customers is a way to begin thinking about sales from the very start of your business.
What does working systemically look like?
In the picture you see me working with a client in real-time. Designers, growth hackers, customers, and founders move across a blue grid that I marked on the floor. Everyone moves across the grid while answering strategic questions around the product. The quality of the questioning determines the quality of the outcome.
I work in this way because when it comes to idea validation, paying customers are the only experts. You want to identify your early adopters as quickly as possible because they are the ones who will be driving your business model. Only then can you build your product.
When I ask entrepreneurs about their value proposition, they say things along the lines of we want to be the best iPhone app for filters on Instagram. Or even, we are just going to build stuff and see what happens, right?
No. That just won’t cut it.
If Instagram disappears, you'll still want to exist. Technologies, social networks, trends, etc, all come and go, and as a company, you want to stay relevant regardless of what happens around you.
That’s why you need a robust vision for your business for years at a time. It will help you with that relevance.
See here the vision of three different businesses.
Notice how Google doesn’t mention searches, Amazon doesn’t mention books, and Twitter says nothing about apps or tweets.
This is long term thinking. You can’t base your company around current technologies, trends, or other companies.
A vision is big, it is aspirational. It takes the obsession with product building away so that you can focus on what you are doing for your customers, whether that is being the pulse of the planet or organizing the world's information. That’s what the vision is about. That is what Twitter and Google are truly doing for their customers.
In the same way, a vision will sustain your pivots over time.
Because, here comes a hard truth about startups, challenges will arise, but the key is to see them as opportunities to pivot instead of as an insurmountable brick wall.
Instagram started as a local-based social network competing with Foursquare. Flickr started as an online game. Twitter started as a podcast. Groupon started as an online petitioning website.
A long term vision has allowed them to stay in business for long by pivoting to something else.
I want you to think about the vision as your protection, it gives you air cover in the long term, making you flexible and adaptable.
Which is important even in small teams.
A vision helps you understand what activities are beneficial and which ones are valueless distractions. It tells you when to say no, and when to say hell yes!
If you look at the pyramids, when you have a vision, you can set clear goals.
And for each goal, whether it’s '10% in market share' or '100K users', you can plan a strategy for achieving it.
That strategy lets you choose tactics, that is, different ways you can go about achieving it.
And each tactic lets you pick your activities, the actual work to make it happen.
Let me use myself as an example of a business with a vision.
On the left you see me performing complex music on the stage with an ensemble. I am also the producer of those performances, complex projects involving algorithms to trigger visuals and soundscapes with our instruments.
And on the right, I am helping a customer with a complex business and organizational goal.
What helped me with my pivot was my vision, making sense of things, especially if complex or complicated by thinking differently and challenging the status quo. That's what I do for my clients, just like Google organizes information.
The hexagon at the bottom of this slide is a graphic score, music notated visually as a grid. It is a serious game, a one-pager that helped us modern musicians organize an efficient collaboration.
Right above it and to the right, what you see is markers on the floor, a systemic tool to help stakeholders with modern collaboration as well.
In other words, a graphic score and the blue grid on the floor are the same thing. They help an ensemble and a team respectively, organize around a goal.
I too pivoted my business. To paraphrase Jeff Bezos, I used my lemonade stand skills to start a hamburger and hotdog stand. And my vision, making sense of complexity in simple ways is what helped me support the pivot.
How did I interview potential customers to validate that they had a problem before actually pivoting?
I became member of two business networks while still in the arts. For 5 years and while still a pianist, I attended dozens of events in corporations in the Netherlands. It gave me the opportunity to see my future clients and their problems.
So, let's talk about validation.
You don’t want to be a Juicero. That was a solution without a problem, a business fail.
Instead of putting your money into building a product, use your money to do as many experiments as it takes before you put a product out there. If you are going in the wrong direction you want to know it as quickly as possible, so you can pivot. And if you are going in the right direction you want to know it as quickly as possible as well, obviously, because then you can grow quickly.
So yes, validation, whether positive or negative, thank you very much!
When going out the door to execute your experiments and test your MVPs, don’t despair. As a founder and entrepreneur, you are an artist. You are going to create something that doesn’t exist yet. I want you to think of yourself as someone who goes back and forth several times inside the why-how-what (or vision-strategy-product if you prefer) spiral of creation on the left of the slide.
Let's now look at my tools departing from some of the questions that founders ask me most.
How do I conduct interviews to validate the problem?
What I see in the market is a lot of 1-on-1 interviews.
My approach is different. I interview sets of customers at a time, and the interviews are embedded in my tools.
One such tool is Anthropology On Steroids.
The goal is to learn from the customers, to be taught something by them that we don’t know. The skill lies in the questioning, without leading the customer or offering feedback and using a lot of active listening.
Picture your team and the set of customers. Just as in the picture on slide 11, I designate an area on the floor for each group and another empty one. I then initiate a process in which the different populations get to visit each other's space, much like we do when traveling as tourists.
An example is Xtreme Technologies.
They build IoT solutions to guarantee that medicines arrive at the right temperature and that patients have taken their medication. They put loggers on shipment containers, medicine bottles, and even single pills.
They have built their products by engaging key customers and suppliers in the development process.
What are other techniques to research customer problems?
Another one of my tools is the Customer Selfie, which I would have used if working with Tinder to test a risky assumption with a single-feature MVP, left-right swiping.
Picture 3 rounds with a paper in the middle of the room containing 3 different questions: how concerned are you about the convolutedness of dating sites? How much would you like someone doing something about it? How happy would you be if someone implemented swiping?
Customers position themselves close to the paper if the question resonates with them or further away if not. From there, my work as a facilitator centers around the question, why are you standing where you are standing and what is that like?
Here's another question and another tool.
I often get asked, how do you identify a viable customer problem to build your business upon?
You don’t do this beforehand, you have to test it, which is why you want to use the money that you have for experiments, your pivots, not for building a product.
However, there is a hack that you can use to measure viability upfront. It is called picnic in the graveyard.
If we take Google Glass as an example, Google Glass failed, but we did discover that they were onto something. There is a need, it was just the wrong product.
Therefore you can now focus on building something better. For that, I would use a tool called Deep Robin, which has two steps, a Round Robin and a positioning exercise in space to further qualify the harvested results.
An example would be Vuzix Blade AR
Picture a Round Robin around What should Google have done better? to build an MVP.
I let the customer set write down in a piece of paper the 3 most important features they think the new glasses should have in order of importance. I open by asking one person to tell me the number 1 on their list. I ask the rest if anyone has that on their list as well, regardless of the place. I count the total. That feature gets a score of 6 if 6 people have it on their list. I move on to the next person and do the same thing. By the end of the exercise, everyone’s features will have been harvested and ranked in relation to the group, not their individual ranking.
Working in this way would yield the new features for the Vuzix Blade AR: display and power source need to fit within the frame, lower in price and has Alexa integration.
To further qualify the results, I would then put those features on pieces of paper on the ground and have the group position themselves in space in relation to those features.
Another question I get asked often is, how do you determine that you are uniquely qualified to pursue a customer problem?
You do! You are the entrepreneur! No tool for that!
And if you can't manage, you surround yourself by a team who can help you.
Because remember the darkness principle?
How do you know if the customer problem is large enough to pursue?
You test it!
And you decide with your team what you consider a success metric.
Picture a line on the floor with percentages on it. I ask team members to stand on the percentage they consider a success. If everyone is on the same spot, that's a clear go. Otherwise, it is an opportunity for healthy debate until deciding on a metric. Then you are ready to build your MVP. For instance, a website to test the conversion rate
That's what my business partners and I did with SevenSense.
This Walt Disney quote is the case for a systemic customer and team development approach. The information to build your product is in your team members and in your customers.
What I do is, by the way, comparable to Design Sprints. I also help customers put an MVP out there in just a few days.
Systemic work is qualitative, turbo customer and team development by inviting many mental models into structured processes, so you can make both data-driven decisions and better decisions.
What other experiments can you use to gather information from your customers?
With a Comprehension Test, you are testing the understanding of your value proposition, not whether there is interest in it.
In order to come to the value proposition 'Save money. Live better', Walmart tested it by writing down their value proposition in a couple of sentences, showing this to participants for a few seconds, just enough to read it, and then taking it away and asking the participants to explain it in their own words.
Zappos started by purchasing shoes as needed from local shoe retailers and shipping them to the customer, instead of stocking their own inventory. This is called Imposter Judo. It allowed Zappos to test their idea fast and cheap, before investing in their own inventory.
With a Wizard of Oz, you make customers believe that the infrastructure is already in place with someone being the man behind the curtain simulating the functionality of a fully built product.
This is what my business partner Larry Cornett did with Voicekick, a video app that created a slideshow of your photos with music and your voiceover.
The very first prototype was built in Keynote and loaded as an 'app' on a phone with Larry uploading the clients' voiceovers manually.
With Pre-Sales, you gauge interest by testing willingness to pre-order.
Pre-sales allow you to present your product to potential customers and convince them to pay for it before fully building it. You have two options: installing a 'pre-order' button on a landing page or directly talking to customers. This second option, even though less scalable, allows for more qualitative insights by seeing customer reactions first hand.
Before you go, here are 5 things I want you to take with you:
- Never build a startup that fixes a nice-to-have problem. People will use it but won’t pay for it. Involve instead the customer as quickly as possible and make something that the client really wants and wants to pay for. In that way, you will be doing sales from day one.
- Building a product is not about you, you want to make data-driven decisions. You don’t create a product and then find the market for it, but today, you create a product for your customers with your customers.
- At the start, use the money you have for your experiments, your pivots, not for building a product
- Experiment to test the riskiest assumptions, something that is probably wrong and that is important to the core of your business. To give you an example, Trevor Owens from the Lean Startup Machine wanted to develop electric Vespas only to discover that those who drive a Vespa are not concerned with the environment but with looking sleek. He had to pivot.
- Love your early adopters because they will drive your business model. If you can’t find them, nobody wants your product.
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Sonsoles Alonso
Misfit helping CxOs and Founders Build Highly Efficient Happy Teams in 6 Months or Less with the Right Hires. Also virtually.
sonsoles@sonsolesalonso.com
