Tag Archives: Lean Startup

Searching for Product-Market Fit? Four Common Pitfalls and Ways to Avoid Them

By Karen Utgoff

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Death Valley (© Dan VanHassel. All rights reserved)

Finding product-market fit before investing in full-fledged product or venture development can save money, prevent missteps, reduce risk, and execute effectively. An effective search for product-market fit is essential to realize these benefits. This process involves identifying, testing, and adjusting key assumptions to find the right product for the right market. In my experience four common pitfalls can undermine that search and the resulting outcomes.

Overlooking key assumptions

It is all too easy to overlook key assumptions for future success and thus generally better to start with too many than to miss critical ones. If need be, separate the wheat from the chafe by asking “How would it impact our business if X is not true?” It is also important to recognize and test additional key assumptions that arise during the search process.

Designing hypotheses that aren’t testable

Many searches start with vague hypotheses, often because that is the best that can be done based on current information. As more is learned, hypotheses should quickly become more substantial and measurable. For example, “Clean drinking water is needed in disaster areas” becomes “Lack of clean drinking water causes two or more days of illness in more than 25% of the people living in disaster zones.”

Pivoting too much or not enough

It’s easy to overreact or underreact as you gain evidence to support or refute key assumptions. Pivots should happen when one or more key assumptions are invalidated based on an accumulation of evidence and insight. How much evidence is enough can be tough to gauge. Resist the urge to pivot based on a single or very few data points. Conversely, resist the urge to cling to assumptions for which there is little or no confirming information despite your best efforts.

Fooling yourself

It is easy for entrepreneurs and product champions to misread information gathered in the search for product-market fit. Thick-skinned optimists may be too mindful of how hard they have worked hard on their idea and draw strength when friends and colleagues express casual interest. They may dismiss potential customers’ difficult questions with “they just don’t get it.” Worriers and overly sensitive souls may fool themselves in the opposite direction; hearing every constructive question as a rejection. If either of these sounds familiar, consider that you may be turning a blind-eye to the very evidence that could lead you to product-market fit and future success.

Minimizing missteps

Be aware of blind spots and biases that can interfere with your seeing the situation clearly. We all have them; being mindful of these weaknesses will make you stronger.

Use a team approach to the search for product-market fit. Assemble a team with different perspectives to work together on the search. Be sure to include people with different skills and outlooks to reduce the risk of group think. Empower each team member to disagree without being disagreeable. Whether you are defining key assumptions, designing hypotheses or deciding on a pivot, consider assigning devil’s advocate duties to a team member or adviser who will ask tough questions and doubt conventional wisdom.

Don’t depend on your team or yourself to instinctively sense product-market fit. Instead, define it based on meaningful and measurable metrics in advance so that everyone on the team agrees on what success will look like and be able to recognize it if and when it happens. As you learn more through your search efforts, these indicators will change but this will be grounded in an informed business decision made after thorough discussion rather than a seat-of-the-pants change that slips through unnoticed.

 

© Copyright 2017 Karen Utgoff. All rights reserved.

Six Misunderstandings about the Lean Startup

By Karen Utgoff

Use of Lean Startup techniques is becoming ubiquitous in entrepreneurship circles these days and rightly so. Along with the closely related Lean Launchpad methodology, this highly effective approach puts one essential success factor — fit between customers, markets, products and company — front and center for founders who might previously have defaulted to “If we build it they will come.”

In late 2012 I was privileged to serve as a mentor for a National Science Foundation Innovation Corps team and to be immersed in the Lean Launchpad method first-hand as part of that program. For more information on the team experience and methodology, visit Steve Blank’s blog; the link is in the list of resources at the bottom of this post. Recently, in preparation for a workshop I’m giving, I reread Eric Ries’ The Lean Startup and noted his observation that:

“Throughout our celebration of the success of the Lean Startup movement, a note of caution is essential. We cannot afford to have our success breed a new pseudoscience around pivots, MVPs, and the like.” (Eric Ries. The Lean Startup, p. 279)

This rang true to me and prompted me to write here about several significant misunderstandings that I’ve observed.

Misunderstanding One: Lean Launchpad methodology avoids failure. Actually the Lean Launchpad method and the Lean Startup movement focus on failing faster, at lower cost, and under controlled conditions that enable the team to learn rapidly and pivot effectively.

Misunderstanding Two: The tools and techniques are only for brand new startup ventures. Confusion on this point seems to be around the definition of a startup. I’ve written before about the need for entrepreneurial activity in established businesses and I was glad to rediscover Ries addressing the issue:

“Entrepreneurs who operate inside an established organization sometimes are called “intrapreneurs” because of the special circumstances that attend building a startup within a larger company. As I have applied Lean Startup ideas in an ever-widening variety of companies and industries, I have come to believe that intrapreneurs have much more in common with the rest of the community of entrepreneurs than most people believe.” (Eric Ries. The Lean Startup, pp. 26-27)

That said it’s important to recognize that a new external venture is different from an internal venture within a successfully operating business. Here is an interesting post by Henry Chesborough and my take on the subject as well.

Misunderstanding Three: We’re already customer focused and therefore in sync with the philosophy even if we don’t talk about minimal viable products (MVPs) and pivots. Perhaps, but it isn’t necessarily so; the key is the organization’s capacity to systematically learn. Are activities designed so that customer and market response will lead to insights? Is the team aware of leap-of-faith assumptions? Are your entrepreneurial teams truly cross-functional? Is your culture tolerant of setbacks and supportive of learning?

Misunderstanding Four: It’s about product development. This sells the methodology short. Sure, product development is one aspect but equally important is identifying receptive customer segments (customer discovery/development) and business model development. All three may be subject to change as the team learns.

Misunderstanding Five: It’s about iteration. Iteration is necessary but not sufficient. If you don’t organize and measure in a way that allows you to learn, iteration is just spinning your wheels.

Misunderstanding Six: The Lean Startup approach frees us from needing to worry about mission, vision, competition, intellectual property and so forth. Not so! Your initial hypothesis and pivots will be informed by and inform the evolution of each of these.

I hope this blog serves to clarify the Lean Startup and that it encourages you to try, and then embrace, it. It has a lot to offer ambitious entrepreneurs and intrapreneurs.

Books

  • Steve Blank and Bob Dorf, The Startup Owner’s Manual
  • Alexander Osterwalder et al, Business Model Generation (72 page preview available)
  • Eric Ries, The Lean Startup

Web Resources

© Copyright Karen Utgoff. All rights reserved.