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

 

At HIVERY, we combine Design Thinking, Learn Start-Up thinking with Machine Learning techniques to develop and release “new to the world” solutions that are intuitive yet power by applying deep science to help solve complex business problems.

 

HIVERY applies artificial intelligence to complex business problems. We do this through our methodology of DISCOVERY, EXPERIMENT and DEPLOYMENT.

 

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I was reading Steve Blank’s post here and it got me thinking about how do you really assess an early stage startup to in order to make business decision (ie invest, buy out, integrate etc)?  What tools or methods are used that offer a common process and consistency?   We can use the Business Model Canvas and assess each of the 9 boxes or use something like VC Fred Wilson’s simple litmus test of 5 drivers (I’ve used Snapchat to illustrate):

  1. Right Person: Who are the people running the startup? Why are they passionate about this idea?  What past experience do they have? Do they have some special competitive advantage or domain expertise? Are they willing to leave their full-time work today to pursue their startup? With Snapchat for example it was Evan Spiegel and Bobby Murphy in 2011 both from Stanford university, who where working on a startup called Future Freshman designed to help high school kids get advice on colleges, career etc.  They later pivoted realizing kids key concern was over their life being recorded permanently and how this would hinder their career prospects.
  2. Right Idea: Is the idea solving a real problem?  Is the solution a vitamin (solving a trivial problem) or drug (solving a serious problem)? With Snapchat it was a big problem amongst teenage: teens don’t want their daily lives permanently recorded
  3. Right Product: Is the product designed well enough to consider the target customers usage and behavior?  Is it simple to use or apply? With Snapchat users can control who and how long any communications was sent. Best of all, it was all on their mobile –  target customer’s prime communication method
  4. Right Time: What market, government or social trends suggest it is the right time to launch such a product? With Snapchat, as more and more teens record their life digitally using social media, they needed another way to communicate freely and safely without permanence.
  5. Right Market: What is the market being targeted? Is the market growing?  Who are the competitors? With Snapchat,  the product centered around mobile-native teens and social media activity  –  both trends expanding rapidly with limited alternatives.

The point I’m trying to make here is there no common language when assessing early stage startups.  This is why I like Steve Blank’s Investment Readiness Level (IRL).   I would like to devote more time on this because its a relatively new concept taken from a relatively establish method.

 

The IRL is based on the Technology Readiness Level (TRL) which is a measure to assess the maturity of an evolving technologies.   The TRL was used in 1980’s by NASA as a  way to describe the maturity and state of “flight” readiness of their technology projects and to help track projects (and budgets).  Steve has adapted this method (similar to that he did with the Business Model Canvas when Alexander Osterwalder created it in his book Business Model Generation) to assess early stage startups.  Providing more of an evidence-based way to determine where the startup is.

 

Here is the NASA  “thermometer” version to assess readiness of their projects:

 

NASA's Technology Readiness Level

NASA’s Technology Readiness Level

 

With the IRL, for the first time, you have common language to describe the reading this level for early-stage ventures.  This method can not only be used by VCs or Accelerators etc, but also inside large companies to help convince an existing business unit its worth integrating or clarity over making it a spin-out.

 

The following slides have been take from Steve Blank’s presentation found here, but here are the key points:

 

  • Level 1 and 2:  Is the main (riskiest assumption) hypotheses understood?  Are all the hypotheses on the business model canvas listed/determined? Have is the startup articulating their customer value proposition?  Is this clear?
 Investment Readiness Level: 1 & 2

Investment Readiness Level: 1 & 2

  • Level 3 and 4:   Have the startup discovered a real problem worth solving and is the solution going to deliver on the customer value proposition they promised?  Does the startup have valid MVP that proves there is a strong Problem/Solution Fit?
Investment Readiness Level: 3 & 4

Investment Readiness Level: 3 & 4

  • Level 5 and 6:  Has the MVP been validated to determine Product/Market Fit? Is the right side of the business model canvas validated?  That is, does the solution delivering on the promise to the target customers?
Investment Readiness Level: 5 & 6

Investment Readiness Level: 5 & 6

  • Level 7 and 8: Is the left side of the business model validated? That is, have they got the right business partners to help them deliver the customer value proposition?
Investment Readiness Level: 7 & 8

Investment Readiness Level: 7 & 8

  • Level 9:  Do they have any investable metrics that matter? These including acquisition rate, activation rate, retention rate, referral rates or revenue?  That is can we assess their A.A.A.R.R?  You can learn more about AAARR here
Investment Readiness Level: 9

Investment Readiness Level: 9

 

Here is a summary of the Investment Readiness Level:

 

Investment Readiness Level

Investment Readiness Level

 

Here is an example of an early startup being assessed using IRL.  You can see this assessment in action in this video here.

 

Assessing a StartUp via IRL

Assessing a StartUp via IRL

My top 10 things to consider when you talk to customers to help you validate your idea

 

1. Starting position. Before you start, have a few starting assumptions. Try to phase them as “falsable statement” (e.g. “Tigers have the largest roar on land ”). This will help you validate your ideas and learn.

 

2. Stop pitching. That’s right – you are not conducting a ”pitch” rather you are conducting an interview to validate and learn. Your in a fact searching for answers, not selling.

 

3. Problem first. Before you talk about your idea with customers, make sure you you get a wider perspective. At least initially, focus on problem rather your proposed solution, this way you can discover other opportunities you’d never consider.

Solution interviews are important once you understand and validated that the problem does exist and you can solve it in commercially viable way.

 

4. Script it.  Create a script to ensures consistency and repeatability in the delivery of your engagement (so you don’t bias your results). However, be open to refine it as you go. I often use my first few interviews as a way to “draft up” my script. Ash Maurya has a great structure below:

 

Credit: Ash Maurya, Running Lean

Credit: Ash Maurya, Running Lean

 

5. Extreme users. Find your early adopters. Be picky about who you talk to. Conducting interviews can be costly. It takes time to find, book, attend so you want to make it worth your while. Typically I look for those that feel the pain the most. I often called these the “extreme users” coined from the guys at IDEO. Its also good idea to start with the people you know. This not only helps you practice and refine your script, it’s a great way to get warm leads to interview other people.

 

6. Validate learning. During the interview you are trying to determine whether the problem exist? How do they solve it today? How big of a problem is it?  You also want to know who else has this problem or who else you should go and talk to?

 

7. Have a partner.  Have someone with you. Typically one asks the questions, while the other notes down the key points as well as list any questions. I often suggest at the end, ask your partner if they have any questions.

 

8. Those silent moments. During you interview, don’t try to “fill in those silence moments” with more questions. After you ask a question, be silent and just listen.

 

9. Be consistent.  Remember to use a constant tone and mannerism. You don’t want to bias the results by introducing your excitement on certain answers and disinterest in other answers.

 

10.  Record quickly.   After you have done your interviews (and you start to get repeated answers from your customers); that’s when you know you have reached a point to stop.  Record your thoughts, insight, ideas, pain points or observations straight after!

 

Here is Slideshare version:

 

I posted a blog called “Its so cool to be a Reverse Innovator” which I talk about Reverse Innovation – the process by which a company discovers new growth streams by utilizing its natural strengths to develop new products and services in developing countries and transposing it in developed countries with new competitive advantages.

 

I came across this social health innovation, called Embrace; where students at Stanford worked on a design challenge to create a baby incubator that would cost less than 1% of the price of a traditional, $20,000 incubator.

 

 

According to Jane Chen, CEO and Founder of Embrace; about 4 million low-birth weight babies die within the first 28 days of life because their bodies don’t have enough fat to regulate their body temperature. The problem was that traditional incubators are high in cost and require a constant supply of electricity.  Many people that live in rural villages in India for instance have low incomes and limited access to electricity.


 

Chen and her team developed (after much iteration), a miniature sleeping bag that can stays at a constant temperature for up to 6 hours by using an innovative wax-like material with tubes of hot water running through the sleeping bag.   With the baby’s natural heat and the wax-like tubes, the sleeping bag is able to maintain a constant temperature of 37 degrees Celsius (or 98 Fahrenheit).

 

 

Now, if it costs $20,000 for a traditional incubator, how competitive would this product be if it was sold in developed countries like USA? 

 

 

Embrace essentially created a new business model what will not necessarily impact the traditional incubator market.

 

Here is a video explaining the concept and the challenge by Jane Chen: