Lean Startup provides a framework from which a new business starts with a strong, central vision and grows into a sustainable, and profitable, business. This new business begins life with only the vision being known; customers and the product are unknown and must be ‘discovered’ through experimentation of hypotheses and assumptions found in the startup’s business plans. When the customers are identified (market segments), the minimum viable product is completed (MVP), the sales plan validated, the marketing plan validated, and enough customers exist to make for a profitable business, the startup will have achieved product/market fit.
In the post-product/market fit era, the efforts of startups with a new product or legacy businesses with a legacy product are virtually the same: continue to scale up the demand for the product by promoting strategies for encouraging and sustaining innovation. The first of these strategies, the vision and user stories derived from the vision, are discussed below. I also provide a brief background on the innovator's dilemma.
Innovators Dilemma
In his book, "The Innovator's Dilemma", Clayton M. Christensen summarises the innovator's dilemma as businesses focusing their efforts on immediate customer needs rather than adopting new technologies or learning and solving customer's future needs. For the new business that has recently achieved product/market fit, this can mean addressing only those customers that brought the business to product/market fit in the first place, early adopters, and not discovering new mainstream customer segments. For established businesses, those that achieved product/market fit some time ago, this may mean following market trends and technology changes rather than leading; being reactive, not proactive.
The "innovator's dilemma" occurs once product/market fit is made and the company focuses its efforts on maintaining the product/market fit rather than innovating. Businesses can use lean startup in a deliberate effort to ensure product and market innovation continues to occur in parallel with product/market fit maintenance.
The Profitability Trap
If a business, either new or well established, is profitable, it might not feel any urgency to find new customers for their product, build new features for their product, or investigate new, spin-off products their customer may want. Essentially the business has determined to maintain their product/market fit based on old data that gets older every day. Whether you're an established business or a new business that has achieved product/market fit, continuing forward with an innovate business strategy is important to survival and following the lean startup in the post-product/market fit environment can be a great help.
Post-Product/Market Fit Using Lean Startup
As with pre-product/market fit, post-product/market fit efforts start with a vision.
This vision differs from the initial startup vision in that it is more product/business specific and is short-lived. What does remain the same is the business/development team sharing the vision and being inspired to do great things by it.
The specificity of the vision will centre around customer value and business growth and encompasses product or business innovations. Product innovations include: making the product better, faster, easier to use, or cheaper. Business innovations include: better sales strategies, better marketing campaigns, better product support, and improved business best practices.
The vision is short-lived, usually to coincide with the product release cycles. If your release cycles are shorter than quarterly, you might not create a new vision for each release but have one vision with enough goals that covers several releases.
The product roadmap holds ideas from customer feedback, sales, marketing, support, development, product management, or from corporate management and is usually the source of the vision for a release.
From this vision will emerge the goals which are documented in the release plan, business plan, or project plan. I would suggest having a release plan as it implies a finite project that ends with a release. It also ties in neatly with Agile by using common terminology.
User Stories Reflect the Release Plan Hypotheses
User stories are how the business documents the goals of their vision. In the traditional Agile implementation the user stories reflect only product changes and acceptance criteria only validates that a customer (usually the product owner acting as the customer) accepted the product changes. What wasn't validated was whether the user story added value for the customer or growth for the business.
If the business is following the Lean Startup framework then each user story not only has acceptance criteria but also identifies the metrics and measures to be collected and analysed in the Measure and Learn phases of the Build-Measure-Learn loop. We want to know exactly how to know if the user story has added value. This is the distinction between running Agile and running Agile within the Lean Startup framework.
The user stories represent the hypotheses and assumptions that need to be validated. If you are to validate all facets of the product and those business areas that are linked to the product, you not only create user stories for the product but create user stories for marketing, sales, support, and other components of the business model and best practices that require validation.
Legacy businesses are very likely to believe that their the collection of best practices, sales and marketing plans have been proven because they’ve been active for some period of time. This may be somewhat true in a broad sense but individual bullet list items, procedural steps, and other line-items of the sales and marketing plans and other business practices may have yet to be proven or have not been re-validated in some time. To assess whether a line-item, say an ongoing e-mail campaign, requires validation, ask the marketing person what effect upon the metrics Acquisition, Activation, Revenue, Referrals, and Retention that specific e-mail campaign had last week or month (don’t make it too easy for the marketing person and watch out for vanity metric data). If they can show specific [positive] cause and effect for the particular line-item of the plan, then that item can be assumed validated. Everything else, where no empirical data exists, must be tested.
In Summary
Start with a unique vision for each release and then treat each release as a mini-startup business. From the vision, develop goals for the release and document these as user stories in a release plan. User stories document innovative product features and improvements. User stories also document innovations and improvements for marketing, sales, business model and business best practices. Each user story has acceptance criteria to validate the user story was implemented correctly. Each user story will also identify the metrics and measures required to validate the user story actually adds value for the customer and growth to the business.
Future Posts
I would like to solicit any suggestions for future articles. Please let me know if there's an area of lean startup that you feel needs further exploration. - Bob Boyd
References
These are the books and blogs used for this article:
- Ries, Eric. "The Lean Startup: How Constant Innovation Creates Radically Successful Businesses"
- Blank, Steve; Dorf, Bob. "The Startup Owner's Manual: The Step-by-Step Guide for Building a Great Company"
- Christensen, Clayton. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail
- Hoque,Faisal. "How Successful Companies Sustain Innovation," http://www.fastcompany.com/3002324/how-successful-companies-sustain-innovation (accessed February 2, 2013).
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