Lean LaunchPad NYU ITP 2.3.2014

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Information about Lean LaunchPad NYU ITP 2.3.2014
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Published on February 4, 2014

Author: JenvanderMeer

Source: slideshare.net

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Lean LaunchPad NYU ITP - Value Proposition, with additional design and enthrography tools for how to talk to customers, observe, and get underneath the obvious pain points.

LEAN LAUNCHPAD AT NYU ITP Class 2 / 12 February 3, 2013 Jen van der Meer | jd1159 at nyu dot edu Josh Knowles | chasing at spaceship dot com Rockets Sketches borrowed from Harry Allen Design

TODAY: 6:00 – 6:40: Customer Development + Value Proposition Guests: Ajay Revels and Anthony Viviano 6:40 – 7:25 : 3 Teams present (5 minutes present, 10 minutes feedback) 7:25 – 7:35: break 7:35 – 8:00: 2 Teams present (5/10) 8:00 – 8:55: Tarikh Korula, Founder, Seen.co

WE ARE HERE . 2/3 Value Proposition UX Tools, Frameworks 1/27 Business Models Customer Development UX Tools Intro 3/17 Spring Break 2/17 President’s Day 2/10 Customer Segments Research Tools 3/24 Customer Development Product Development 3/3 Customer Relationships Partners, Product Development 2/24 Revenue Streams Distribution Product Definition 4/7 Customer Development Product Development 3/31 Customer Development Product Development 3/10 Resources, Activities, Costs, Product Development 4/21 Product MVP 4/14 Customer Development Product Development 4/28 Lessons Learned

CUSTOMER DEVELOPMENT What is your product or service? How does it differ from an idea? Why will people want it? Who is the competition and how does your customer view these competitive offerings? Where’s the market? What’s the minimum feature set? What’s the market type? What was your inspiration? What assumptions drove you to this? What unique insight do you have into the market dynamics or into a technological that makes this a fresh opportunity?

WHAT IS A STARTUP? Eric Ries: A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty. A startup is a temporary organization designed formed to search for a scalable repeatable business model. – Steve Blank. *Most startups change their business model multiple times. A scalable startup is a special class of startup – world class team, large vision, large target market, passionate belief and a reality distortion field. A startup is a company designed to grow fast. –Paul Graham. Y Combinator. -For a company to grow big, it has to make something a lot of people want. -Reach and serve all of those people.

TYPES OF BUSINESSES STARTED 2012 Retail Store 13% Service: Business Service 13% Consulting 29% Real Estate 14% Services: Other 17% Technology: Internet 14% Source: Kauffman Foundation Legal Zoom Startup Environment Index 2012

KINDS OF BUSINESSES Small business or Main street: barber shop, gluten free bakery, grass fed butcher, farm-to-table pizza, deli, grocery, dry cleaner Lifestyle business: strategy consultancy, PR film, jewelry-making, film production, digital media studios, and advertising agencies Social enterprise: social or environmental purpose, may be willing to limit scale opportunities to meet more local goals, or directly serve the need. B-corp is a type of social enterprise Social business (Yunnus): a for profit business that re-invests to meet a social need Not-for-profit: an organization designed to solve a social/environmental need, that does not retain profits, nor distributes ownership Intra-preneur startups: building a business inside of an incumbent company to prevent a Kodak moment Buyable startups: designed for acqui-hire, or value to acquiree Scalable startups: designed to scale, repeat What are we doing HERE: experimenting to see what is possible with the teams we have in the room, figuring out the opportunity space, and most importantly your motivation

CUSTOMER DEVELOPMENT Iteration Customer Discovery Execution Customer Validation Turn hypotheses Identify scalable And repeatable Into facts Sales model Customer Creation Company Building

CUSTOMER DEVELOPMENT Iteration Customer Discovery Execution Customer Validation Customer Creation Company Building The first part of class: develop a hypothesis about each component of the business model. Customer discover = a set of experiments to test each hypothesis. Our goal: find a market to fit your vision, with a large enough addressable market to fit your aspirations.

CUSTOMER VALIDATION Iteration Customer Discovery Execution Customer Validation Customer Creation Company Building What happens after customer discovery: The business is tested and iterated to find a scalable, repeatable business model The goal: deliver the volume to build a profitable company Test the ability to scale: Product, acquisition, pricing, channel, sales plan

CUSTOMER VALIDATION Iteration Customer Discovery     Execution Customer Validation Verify core features Verify market’s existence Locate customers Tests the product’s perceived value and demand  Idenfity the economic buyer  Establish pricing and channel strategies  Check out proposed sales cycle and process Customer Creation Company Building ESCAPE VELOCITY

ESCAPE VELOCITY (IT’S NOT JUST FOR THE BAY AREA)

CUSTOMER CREATION Iteration Customer Discovery Execution Customer Validation Customer Creation Company Building Step on the gas Spend to create demand

COMPANY BUILDING Iteration Customer Discovery Execution Customer Validation Customer Creation Company Building Scalable repeatable business model is found – startup becomes a company

VALUE PROPOSITION

16

WHAT IS IT Product? Service? Ecosystem? All?

WHAT IS YOUR INTENTION? Your team values Your vision Why do you want to do this? Then find a segment, a market, and a value proposition that fulfills this vision.

VALUE PROPOSITION Value Proposition Canvas – Osterwalder

VALUE PROPOSITION CANVAS

PAIN DRIVEN DESIGN “Design is not art. Design should solve a problem for humans. We can find the problems that we’re causing for humans by looking for pain points. Usability testing helps us understand the very obvious pain that we’re causing for users, which is fantastic. But beyond discovering user pain in our products, we should be doing user research on various demographics and understanding what in their lives is causing them pain.” Laura Klein, UX for Lean Startups

WHY PAIN???? As a customer, it has to hurt enough that you would go out of your way to pay for it. It has to feel way better than staying the course, stasis, or inertia (which make people sometimes feel warm, and comfortable, and your thing scary, and risky).

THE PAIN IN PAIN-DRIVEN DESIGN How do you move beyond superficial needs? How do you know when someone is telling the truth? How do you get to unspoken, deeper needs?

VISIBLE: IN AWARENESS IN CONSCIOUSNESS PAIN DRIVEN DESIGN Expressed Needs Plans Artifacts Behavior Norms Traditions Attitudes Assumptions Beliefs Values HIDDEN, INVISIBLE: OUT OF CONSCIOUSNESS

WAYS OF EXPLAINING REALITY: SYSTEMS THINKING PAIN DRIVEN DESIGN EVENTS What just happened? PATTERNS What’s been happening? TRENDS What are the common forces at play? STRUCTURES MENTAL MODELS How do processes and organization impact? How does our thinking allow this to persist

HOW TO CONSTRUCT A VALUE PROPOSITION LEAN LAUNCHPAD @ NYU ITP DEVELOP EMPATHETIC MUSCLE MEMORY PRACTICE THROUGH CUSTOMER DEVELOPMENT ARTICULTATE PAIN POINTS + NEEDS STATED, VISIBLE, AND HIDDEN, TACIT

HOW TO CONSTRUCT A VALUE PROPOSITION LEAN LAUNCHPAD @ NYU ITP DEVELOP EMPATHETIC MUSCLE MEMORY PRACTICE THROUGH CUSTOMER DEVELOPMENT Diverge ARTICULTATE PAIN POINTS + NEEDS STATED, VISIBLE, AND HIDDEN, TACIT Converge

DEVELOPING EMPATHY From: D-School Bootcamp Bootleg: Observe: View users and their behavior in the context of their lives. Engage: interact and interview users through scheduled and short “intercept” encounters. Immerse: Experience what your user experiences. The problems you are trying to solve are rarely your own – and you won’t find a market until you can understand the needs that other have.

INTERVIEW FOR EMPATHY: STORIES ARE WHERE THE RICHEST INSIGHTS LIE From: D-School Bootcamp Bootleg Intentionally setting the context to get deeper into the truth. All of you are working on businesses designed to make human life betterstart their. Describe your intentions. Work to get into the emotional reasons when testing your key hypotheses. When does someone light up? When do they resist?

A – E – I – O – U FRAMEWORK AEIOU is an organizational framework when you get into the natural habitat of the person you are interviewing, and gives you a construct to look, listen, and observe (rather than talk, and hear): Activities: goal directed sets of actions. What are the pathways that people take toward the things they want to accomplish, including specific actions and processes? Environments: include the entire arena in which activities take place. Interactions: between a person and someone, or something else, and are the building blocks of activities. Objects: Building blocks of the environments, key elements put to complex or even unintended uses, possibly changing their function, meaning, and context. Users: people whose behaviors, preferences, and needs are bing observed. Who is present? What are their roles and relationships? What are their values and biases. From: Universal Methods of Design. Bella Harrington, Bruce Hanington.

GET OUT OF THE BUILDING, AND OBSERVE

GO HERE

AND HERE GO HERE

AND HERE GO HERE AND HERE

GETTING READY FOR CUSTOMER DISCOVERY

AND, GO OUT AND TALK TO PEOPLE: PREPARING FOR AN INTERVIEW Customer development IS different than ethnography or design research inquiry – You are NOT a neutral observer. While you can practice the art of neutral observation, you, as a founder, are making contact with your first potential customers. We’re going to start wide, and expansive, and go deep, getting to deeply unmet needs. But we will be quickly moving to understand the business model that will feed your vision.

THE BRAIN DUMP Convene a brain dump. Get what’s in everyone’s heads out on the table. Assumptions, expectations, closely held beliefs, perspectives, hypotheses. Contradictions are inevitable, and become great fodder for hypotheses to test on your business model canvas. “Think about it as a transitional ritual of unburdening, like men emptying their pockets of keys, change, and wallet as soon as they return home.” – Adapted from Steve Portigal, Interviewing Users.

INTRODUCE, BE HONEST, ORIENT, GIVE CONTEXT Introduce yourself and any associates (note takers, equipment operators, unseen observers) Obtain consent / agreement to be interviewed, recorded, photographed Discuss: use a note taker or an audio recorder. Be sure to tell participants about it. (Don’t conceal a recording devices). And know when to go off the record to get the backstory. 1. Why we're here: Introduce the purpose of the conversation 2. Explain freedoms (let’s stop at this time, ask questions, take a break, etc) 3. Explain time constraints (we have only 30 mins, 45 mins, an hour, today) 4. Provide an overview of what will happen (I will walk beside you, I will watch you do XYZ) 5. Explain briefly what you'd like to hear about (Tell me what you're thinking, doing, looking for, etc) -Ajay Revels, Polite Machines

SHOW ME AROUND: OPEN ENDED TOUR Who (who are we observing) What (what are they doing) How (how are they doing it) Why (are they doing it) From: Ajay Revels When (are they doing it)

HOW TO AVOID LEADING QUESTIONS Agree with me: Leading questions • Interviewer wants a specific agreement • Question narrows the focus of the conversation • Typically Yes / No or Agree/ Disagree or Choice #1 vs Choice #2 • Examples/ leading question: – The city is doing a great job of managing the subway aren't they? – Given that you're a stay-at-home-mom, you agree that women shouldn't work? – This app has a high rating so you'd expect it to work well, correct? -Ajay Revels, Polite Machines

CUSTOMER DISCOVERY IS NOT JOURNALISM There is no value in leading questions – you are trying to get underneath the cover story people tell themselves. (open) Charlie Rose: You’re doing well at it too. So what’s the mission? Where is this thing going? (closed / yes-no) Charlie Rose: Has the Groupon experience and has other things changed your sense of the timing of an IPO? (closed / agreement) Charlie Rose: But you’re already getting in each other’s businesses. You know that. They have something called Google+.

WHAT CAME BEFORE STEVE AND ERIC 42

FOR NEXT WEEK 2/10

NEXT WEEK PREP: .• Watch Customer Segments lecture. • Business Model Generation, 126-145. • The Founder’s Dilemma (HBR) and optional – The Founder’s Dilemma Noam Wasserman (Stanford Entrepreneurial Thought Leaders Podcast) • The Lean UX Manifesto by Anthony Viviano • Talk to at least 5 potential customers. Post discovery narratives on your team blog.

NEXT WEEK PRESENTATION: .• Cover slide WITH YOUR NAMES and your quick description. • What hypotheses related to your value proposition and segments did you test last week. What did you validate. What did you invalidate. Who did you talk to in order to validate these hypotheses. • Share the Latest version Business Model Canvas with changes marked • Share any updates to your Market size (TAM, SAM, Target Market) • Propose experiments to test your customer segments. What constitutes a pass/fail signal for each test?

APPENDIX

RESOURCES FOR FURTHER UNDERSTANDING Value Proposition Canvas: Business Model Generation Legal Zoom Kauffman Foundation Startup Environment Index 2012 Interviewing Users: How to Uncover Compelling Insights: Steve Portigal Universal Methods of Design: Bella Harrington, Bruce Hanington. DSchool Bootcamp Bootleg And this just in from Ash Maurya: How to Interview Your Users and Get Useful Feedback

A PALETTE OF CUSTOMER DISCOVERY TYPES: GATHER CONTEXT, COLLECT DETAILS: Ask about sequence: “Describe a typical day.” Ask about quantity: “How many diapers do you change.” Ask for specific examples: “What is the last movie you downloaded.” Ask about exceptions: “Tell me when you had to solve that problem without using our software.” Ask for a complete list: “What are all of the different toddler learning toys have you tried.” Ask about relationships: “How do you work with vendors?” Ask about organizational structure: “How do you work with the Board of Education? Adapted from Interviewing Users, by Steve Portigal

PROBE WHAT HAS BEEN UNSAID: Ask for clarification: “When you said everything changed after September, what happened then.” Ask about code words: “What does that acronym stand for.” Ask about emotional cues: “Why do you laugh when you mention Seven Eleven.” Probe delicately: “You mentioned that changes in your organization led to a different decision – can you tell me what that situation was.” Probe without presuming: “Some people have strong opinions about teaching children to read before they enter first grade, while other’s don’t. What is your take.” Adapted from Interviewing Users, by Steve Portigal

QUESTIONS THAT CREATE CONTRASTS TO UNCOVER FRAMEWORKS AND MENTAL MODELS: Compare processes: “How is applying for preschool different than applying for pre-k.” Compare to others: “Do you learning habits differ from your fellow grad students in your program” Compare across time: “How have your shopping habits changed from the time you lived with roommate, to living alone, to living with a partner.” Adapted from Interviewing Users, by Steve Portigal

ITP TEACHING TEAM Jen van der Meer, Adjunct Professor at ITP since 2008 ITP courses + workshops: Bodies and Buildings, Products Tell Their Stories, ITP VC Pitchfest, . Currently: Luminary Labs, Angel Investor, Health Data Challenges, Judge for startup competitions, + SVA PoD Josh Knowles, ITP ’07 15+ years as an independent developer/consultant, working with numerous brands and start-up clients (currently under the aegis of Frescher-Southern, Ltd.)

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