Customers Don’t Know What They Want, But You Don’t Know What They Want Either

This is part of my ongoing series on Lean, Lean Startup, Agile, Innovation, and Disruption.

This topic always gets a lot of press and it is truly covered in just about any business book these days. In fact the Disruption perspective offers the suggestion that a product is hired to do a given job, so you need to understand what the customer is trying to do and then start figuring out what how to best solve that problem.

Typically, people start with the solution. Engineers, designers, programmers have an idea for a solution a product that they think people will like because they find the solution to be a cool idea. So without consulting true customers through interviews they do other “market” research which may or may not really ask the right questions because they might not truly understand the problem that they are truly trying to solve. A solution might sound good and people might say they are interested in it, but if it truly doesn’t address their problem. This is why the Lean Canvas is powerful, because if forces you to truly confront the problem your solution is trying to attack.

The point isn’t that you or anyone else know better than your customers, you truly don’t. You might have an idea that could be something that your customers could use. You don’t truly know. Having confidence if vital for success, but you truly need to test that through interviews and planned conversations.

The iPhone wasn’t successful because it was truly novel It really wasn’t, the phone wasn’t able to handle 3G, it didn’t have copy and paste and many other features that Blackberries had for years. Things that standard businessmen needed. However, that wasn’t the market Apple was going after initially. They were going after high value customers that were not having their needs met with existing smart phones. They knew their customers would be willing to pay a premium because of the more and more advanced iPods the company was selling. Apple was able to look at the competition and see what was working well, what was not working well, and what features customers truly needed. The first iPhone was truly an MVP, but the problem Apple was trying to solve was different than Blackberry or what Nokia was thinking of solving. This is why they were successful. They understood the problems their customers had. They didn’t have the most innovative phone on the market from the hardware perspective. They figured out how to attract customers through an easy to use UI. The problem people had with with Smart Phones was that it was terrible to use. Solve that simply and elegantly, you can rapidly expand into different customer segments. Then quickly move into those other segments as businessmen bought the iPhone as a personal phone and wanted to replace their Blackberry.

Assuming arrogantly that you know what the customer wants will likely lead to failure as much as asking the customer what they want/need. Identifying a viable problem and validating through experimentation is the best way to determine if it’s truly something your customer wants.

Lean canvas, Lean Development, the Theory of Disruption

In yesterday’s article I talked about how you can use a product development approach called Set Based Concurrent Design (SBCD) to avoid some of the risks associated with developing a disruptive design regardless of how integrated or modular a given technology and its platforms are. Before that I had written about a concept called Lean Canvas to include questions associated with disruption to help push the initial design into a more disruptive place to maximize the likelihood of success.

In “Running Lean” the author, either knowingly or unknowingly emulated the benefits of SBCD whenever he fully described his approach for creating Lean Canvases. Ash Maurya recommended that for any given startup to initially start with multiple different views of the initial Lean Canvas which could represent different solutions, problems, customer sets, and metrics. Each one of these is to be discussed with potential customers in interviews.

However, once you understand your customer, you’ll need to begin developing your solution. In the case of a piece of software it may be easiest to simply caret multiple wireframe mock ups that emulate the SBCD. While with physical products, you’ll need to start with several mock ups and ideally multiple different specifications for components within the design. This is important as you may need to mix and match components of your physical design based on the niche customer set that you are targeting. The best result may end up forcing you to create a product that might be difficult to make if you don’t plan for the different specification interactions from the beginning.

While building your product as  you look at each different iteration it is important to continue asking if the actual solution continues to be disruptive or if it has slid into a less disruptive niche in the market. It is also vital that you still are aware if the interaction between the changes in your product and how it impacts your customers. If your potential customer decide that there are too many features you may have pushed yourself out of the initial niches  you were striving for. This will also mean you’re moving into a market space that will force you to compete head on with your competitors.

Using these three tools, questions for disruptions, lean canvas, and setbased concurrent design, will help speed the decision to continue pursuing a specific product, problem, and customer set. The point of this early process is to speed learning as quickly as possible and the B-M-L approach coupled with a set of Lean Cavnases and Products will help rapidly increase that knowledge set. Especially when using tools to help determine the trade-offs between your choices.

Finally, with continual engagement with your customers and products that are narrowing down towards a completed solution, you may find that your sets of products could become a family of products. This means that your learning may even be more valuable than before.

Disruption and Lean Startup – improving the Lean Canvas

One of the more interesting tools I’ve discovered lately was the Business Model Canvas. This was created by Alex Osterwald with a huge group of people. I thought it was incredibly useful for putting issues that companies have into a specific context. However, I did feel that something was missing. Something important. The picture linked above is extremely useful for an existing company that wants to put everyone on the same page, but I felt that it would fall a little flat in helping a new company start. There are simply too many unknowns to answer a lot of the questions that are in the frame work.

This is where the book Running Lean comes in. The author decided to adapt the business model canvas into something that a lot of entrepreneurs could use the Lean Canvas. In entrepreneur circles today, the most important thing to focus on is the problem trying to be solved. If you don’t have a clear articulation of the problem you’re trying to solve you’re going to fail. As such, there is more of a focus on the problem, the metrics associated with the problem and less focus on the planned solution. Secondly, Ash Maurya, argues that the best way to use the Lean Canvas is to look at both the problem and customer segment concurrently. Ignoring any potential solution, but looking at the problem you’re trying to solve and the people you’re trying to solve it for. This helps keep in perspective the real goal with your product, solving a problem for a customer that they’d be willing to pay you to solve.

However, I believe that this solution is still missing something which is something of an analysis of the existing competition and the planned solution. While Maurya does highly recommend including existing solutions under the problem, there is no effort to really use them – other than to make sure your product is different than their product. With the Lean Canvas the goal is to interview customers to identify if your existing solution is worth pursing more through rapid continual feedback – leveraging the MVP that I discussed in my last article. There are a few questions that can be asked to help shape the direction of the solution before talking to any customers.These questions come from the Theory of Disruption which argues that there will be less competition over time for the customers you’re pursuing because incumbent firms truly don’t want them as customers.

Does this product compete with Non-consumption? If you can answer yes to this, then you are expecting to undercut an existing incumbent that does not serve an existing market segment. In the case of Radios this mean extremely low quality devices that most people wouldn’t buy. In the case of video games now, you could argue that consoles are competing against non-consumption, this argument makes even more sense in terms of games on a smart phone. If the answer is No, then you need to ask the next two questions.

Does this product represent a sustaining technology? If you introduce this product to the market does it go after the same customers that the existing firms are already attempting to serve? Furthermore, does it go after the highest most valuable customers in those customers segments? If you answer yes to this, you will face extremely stiff competition from incumbent firms. They want those customers and will fight you tooth and nail for them. You will lose against those businesses and should look for a different solution to the problem you’re trying to address. If the answer to this is no, then you need to ask yourself the next question.

Does this product represent a disruptive technology? If you introduce this product would only the least valuable customers decide to purchase it? These would be customers that are being over served by existing solutions. For example, Pandora and Google Play Music both represent solutions for people that are over served by Apple’s iTunes. For customers that find iTunes to be part of their iDevice there’s little reason for them to look outside Apple’s Ecosystem especially since there are solutions for Apple users in that ecosystem. However, for non-iDevice users, iTunes represents a product that has many features that are undesirable. So Pandora and Google Play Music represent a smaller music collection where you never own the actual music you’re listening to even if you pay a premium for the updated services. This is disruptive to iTunes for that very reason.

Including these three questions at the minimum, with a clear understanding as to what they each mean, will help shape the solution to the problem you are trying to solve. Additionally, it will help you understand what customer segments you should pursue from the very beginning. As you are successful in capturing the lower tier customers you will continually improve your product and begin to move farther and farther up market. Which allows you to then truly disrupt the market.

Combining these theories into the Lean Starup approach will help understand the best route to pursue. Furthermore, you might not be able to answer these questions honestly. You will likely need to get customer feedback pertaining to these questions. Don’t as straight forwardly if the customer thinks it’s sustaining or disruptive, they won’t understand what that means. You will need to ask them if a competitor is already offering this service and if they aren’t using it why. If they are using a similar service make sure you try to differentiate between the competing product and high light the differences. Try to understand if your competitor would release this and if their customers would use the service.

That’s where the Lean Startup Build Measure Learn cycle comes back into the fore, you ask questions, learn build again, learn, and continue the cycle.