Handcraft your Product or Service using a Lean Design Approach
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What is Lean Design Approach and Handcrafting?

If you want your company to truly scale, you first have to do things that don’t scale. Handcraft the core experience to shit! This means you need to get your hands dirty and serve your customers one-by-one. In this podcast, Reid Hoffman talks to Brian Chesky, CEO of Airbnb, and goes through his early work on handcrafting solution. We called it an MVP or applying a “Lead Design Approach“. A way to discover, learn and validate ideas and design a possible product roadmap. It’s actually what we do at HIVERY. But more on HIVERY later.

 

In the podcast, Brian shares the imaginative route to crafting what he calls an “11-star experience.” I often call this “Thought Experiments” and it is an important design concept in applying Design Thinking/Human Centred Design (HCD) thinking to your product/service innovation.

 

Here are my key points of the podcast is this:

 

  •  Find passionate users – they can map your product roadmap. I often call them your “Extreme users.” These are those who are passionate enough to give you honest straight up feedback. The idea is to turn these feedback facts into real insights, these, in turn, are your Design Principles for your future product. It is the minimum you need to design into your solution to address their core pain points.

 

Remember I said “design principles” you are not implementing all their feedback as is. You should not see them as a list of features.

 

  • These are the users who feel the pain the most. These are the users who your product really matters so use to them co-design what is desirable, feasible and viable. The aim is to build your product roadmap for the future but with a focus on what you need to do/build today.

 

Powerful design question to use: “What could we do to surprise you? What can we do, not to make this better, but to make you tell everyone about it?”

 

  • By getting your hands dirty and “handcrafting” your MVP you gain insight never possible. By handcrafting, I mean you are basically going to “concierge-ing” the shit out of your MVP and later on automate (ie add technology, processes etc) what is important and what you need to do to scale and drive efficiencies.

 

  • This means you need to serve your initial users/customers one by one to gain this insight. Sit with them side by side, shadow them, observe them and build empathy and understanding. How else can you gain this insight to the problem?

 

  • With Airbnb, their first 10 customers were based all in NYC, yet they had their office in San Francisco, so they moved and visited them. Not to feel too creepy about entering their customer home, they say they are wanting to learn more about their users and in exchange, they provided them free professional photos to gain access to their users and insight to their service. They go a lot of feedback and ideas.

 

In fact, one of the extreme passionate customers had a booklet of notes for the Airbnb guys. This is what I call serious co-designing with your customers. 

 

  • Use “Thought Experiment” ( Thought Experiment is a process of the imagination used to investigate what may happen). Einstein is most famous for using this mental technique and help them came up with this his theory of Relativity.

 

  • The Airbnb guys used the concept of “11-star experience“. The “Nirvana product/service“.

 

  • The Airbnb guys went door-to-door, meeting Airbnb hosts in person – and shares the imaginative route to crafting what he calls a “1-star experience” to “11-star experience“. Need to think “extreme product/service” as your Nirvana, but build for today and think to scale up in the future. Example: Elon Musk wants to go to Mars (11-star product). How I get there? Need spacecraft, how do I fund spacecraft? Make it and funded by launching satellites for telco in the short term and build components for Mars.

 

  • In the podcast, they (Airbnb) talk about what “a 7-star experience” Through Experiment looks like…You knock on the door. Reid Hoffman opens. Get in. “Welcome. Here’s my full kitchen. I know you like surfing. There’s a surfboard waiting for you. I’ve booked lessons for you. It’s going to be an amazing experience. By the way here’s my car. You can use my car. And I also want to surprise you. There’s this best restaurant in the city of San Francisco. I got you a table there.”

 

As mentioned about, this is the framework is actually used at HIVERY. When we start any Artificial Intelligence (AI) initiative with our customers, we go through a Discovery-Experiment-Deployment approach. We essentially, we combine Science with Design and Design with Science.

 

DISCOVERY

Unpack business needs, data availability and success metrics conducted Thought Experiments a build data and user empathy.

EXPERIMENT

Co-design small experiments to validate system value

DEPLOYMENT

Map out the operational plan for full deployment and support

 

It’s in HIVERY’s DNA.

Enjoy the audio

 

According to IBM, 90% of worlds data was created just in the last 6 years – 90%! Fuelled by the internet generation, each and every one of us is constantly producing and releasing data. Be it ourselves to companies to capturing customer information and sales transaction. The volumes of data make up what has been designated ‘Big Data’. This massive data sets are piling up year on year.   The problem is how to leverage this data to make better decision?

There are three (3) simple stages one needs to unpack to:  Define the Problem, Solve the Problem, Communicate Actionable Results Clearly.

 

 

 

1. DEFINE THE PROBLEM

 

 

The first, DEFINE THE PROBLEM. Speak with any startup or design thinker and they would say fall in love with the problem not the solution. In fact, Albert Einstein was said If I had only one hour to save the world, I would spend fifty-five minutes defining the problem, and only five minutes finding the solution. Coming up with solutions is easier. Solving the right problem and defining can be challenging. This is no different with big data projects and trying to leverage it to make better insightful decisions.

Framing the problem is about defining the business question you want analytics to answer and identifying the decision you make as a result. Its an pretty important step. If not don’t frame the right problem, no amount data or analysis in the world is going to get you the answers you are looking for.

Defining the problem is split into two parts, framing the problem (what your solving to frame) and reviewing previous findings (what worked or didn’t work) to help you refine the problem.

Framing the problem involves asking yourself “Why is that a problem?” . Toyota famously created the “five why’s” technique. Its about understanding the root cause of the problem. Designs companies like IDEO use phases with the words “How Might We…” to help frame the problem.

reviewing previous findings, involves finding out what worked in the past and why things didn’t work before. This also helps refine the problem.

 

 

 

2. SOLVE THE PROBLEM

 

 

The second stage is SOLVE THE PROBLEM. This often thought to be the primary one. This stage where you starting collecting the right variables (i.e. data fields), collecting sample data to test/play with, and doing some basic analysis to test assumptions quickly. This is also similar process as Cross Industry Standard Process for Data Mining, commonly known by its acronym CRISP-DM.

CRIP-DM is a data mining process model that describes commonly used approaches that data mining experts use to tackle problems.

 

 

800px-CRISP-DM_Process_Diagram

 

 

We at HIVERY we use similar simplified version called DEP – Discovery, Experiment/Pilot and Deployment.

 

 

Screen Shot 2016-03-27 at 3.12.50 PM

 

 

3.COMMUNICATE ACTIONABLE RESULTS CLEARLY

 

 

 

The third and final stage is COMMUNICATE ACTIONABLE RESULTS CLEARLY.  If you want anything to happen as results of stage 1 & 2, you got to communicate your results effectively. If a decision maker do not understand the analysis done or what the results means, he or she won’t be comfortable making a decision based on them. With our “communication-challenged” world, communicating sophisticated analytical results effectively and simply makes the world of different.

 

 

A good data visualisation books on this topic is called Storytelling with Data: The Effective Visual Communication of Information by Cole Nussbaumer Knaflic.

 

 

Data needs to be to engaging, informative, compelling. Human often use stories to communicate effectively and help create memorable knowledge transfer.

Below is a quick summary of things to consider when setting up a partnership such as joint development agreement or licensing.

 

  1. First determine the “Principles of  our partnership”  – who brings what, why and expectations?
  2. Determine what structure is the business to proceed with (i.e. Joint spinout vs licensee agreement)
  3. Determine the business terms (i.e. Term sheet) we would like to operate under
  4. Determine the commercial terms based on terms sheet.

With #2, determine the business terms, you need to determine few things such as.

 

1. Key business terms over IP:

  1. Right to manufacture the product as we see fit
  2. Right to distribute in x geographic territory
  3. Right to use the IP in x field of use
  4. Right to  negotiate licensee at time x and time z
  5. Right to use IP over x time/years
  6. Right to access documentation, service and support for the IP from licenser
  7. Right to sublicense IP to x partners (i.e.  manufacture and design firms)
  8. Right to future versions of the IP (i.e. Any updates or advancements)
  9. Agree to a non-compete provision
  10. Others –  what else do we need to consider ???

Granted, the MORE you add these “exclusive terms” to the license, the more expensive the royalty fee becomes.

You can either therefore:

  • Limit above terms to when we have “achieve certain minimum” product sales only
  • Limit the time to a shorter time period
  • Limit the field of use or  geographic territory etc.

2. Financials

If you agree on the above terms, you than need to consider the financial aspect of your agreement such as:

  1. Upfront fee:  How much should you provide as upfront (if any). For example, shall pay you $X US dollars upon execution of our agreement or is it once you release a beta version or if sales reach a minimum etc? Or others?  What is best for us?
  2. Royalty fee:  For example, should royalties be paid based on X % of “adjusted gross sales” or is it “net prices” or “revenues”?  You need to consider your partner’s  affiliates and sublicensees too.   What minimums on royalties (if any) do you propose? Should put a caps these royalties once sales reach x?  If cap, and they agree, when is it ideally do we to renew it? Annually or at milestone?
  3. Non-sale based fees on income:  what about things that are not directly related to sales, like data cloud usage and storage for your product  If you do, what additional x% do you pay for all non-sale based income?  Again do you cap this?  Is it a step scale?
  4. Minimum royalties:  do you need to be proactive and suggest an annual minimum commitment?  For example, you shall pay annual minimum royalties according a schedule:  2013 x%, 2014 x%, 2015 x% etc. A royalty may begin at say 2% (of the average sales price), but decrease to 0.5 percent over the life of the agreement.

3. Milestones

  1. Payment milestones triggers: Need to consider key milestones from when royalties are made (i.e.  When certain minimum average monthly sales are met or instalments may be timed to coincide with development milestones a beta release??)
  2. Working milestones triggers:  When MVP testing is completed successfully or we have submit a formal business plan, release a beta version or commencement of manufacturing or first 50,000 sale.

4. Questions

  • What leverage do you have that can be used to negotiate a desirable outcome?
  • Is there anything else you can use to leverage your position to get a “good deal”?
  • What specifically do you want to licensee? What aspect of the IP do you want to license?
  • How much should you pay for the IP licensee?  This will again depend on number of exclusivity you set, but need to consider:
    • How much can I afford to pay for this license?
    • What is the maximum % realistically can you pay to make reasonable profit if your product sells for $50?
    • What will our market bear?
  • What data and documents do we need from your business partner to help you develop your product and provide to marketing, manufacturing etc
  • What are performance/warranties/indemnities?  What happens if their is IP defect? Or legal action/claim against your IP partner?
  • What is our exist strategy should we decide, after 1 or 5 years its not meeting business objectives?
  • Cota uses wifi signals to supply wireless power. Meaning it can power your device (from phone to fire alarm) remotely and wireless.
  • The plan is to integrate the solution into existing form factors so devices are self powered using wifi
  • It transmits on the SAME signal as wifi
  • You can configure the system to recognize only a specific set of devices, or open if you want to power all Cota-tech enabled devices just like wifi with password.
  • Up to 30 feet and does need to be in “line sight” –  similar to wifi can go though walls.

cota_wireless_power

 

 

cota_wireless_power1

 

Read more

http://techcrunch.com/2013/09/09/cota-by-ossia-wireless-power/

http://www.ossiainc.com/

I was watching this vblog from Thomas Power (founder of ecademy.com) who put out this interesting question.

So, lets review some of the key points
  • Facebook will pass Google in terms of traffic over shortly.  Some reports that this has already occured Facebook will apporach billion users by the end of 2012.#
  • Facebook hold most detail personal perferences (eg interests, hobbies, likes, dislikes) of its users (essentilly, I self made CRM system) that
  • Facebook can mine and help its users get deals such as Groupon.
  • Providers like www.prosper.com and www.zopa.com already already provide borrowing exchange services between real people  –  sidesteping the banks to get a better deal.  While www.mint.com and www.smartypig.com offer its members the opportunity to for people to save for specific financial goals like a wedding, a vacation or a flat-screen TV etc
  • It won’t take much for Facebook social-led financial services that combine things like www.zopa.com with mint with Groupon