Product Management 101 - Customer validation is the key

Recently, I was having lunch with a co-founder of a startup in Bangalore. They have a vision which sounds good on the surface: Provide data loss protection on Cloud. Though this sounds as such a old & proven idea, they have a very good secret sauce which gives them a unique value proposition: Security, Cost benefits & much better RPO/RTO than competition.

Like most entrepreneur, he started out by validating his product idea with customers. Starting with customer survey, asking customers about their pain points and asking them:  "If this product solves your problem, will you buy it?"

Customer validation is a good point to start, but one must also be aware that such a survey can lead to several pitfalls.

1. Customer needs could change with time, and are no longer interested when the product is launched.
2. Customer just expressed his 'wants' and not his 'needs', and may not pay for the actual product.
3. Customer has no stake in the product. Just answering few questions was easy - there was no commitment or risks.

All this risks imply that customer validation may result in false positives.

False positive is a known risk factor in new product development and startups often take such risks. In case of my friend's startup, he took that risk and decided to invest in developing a prototype.

Several months have gone by and his company is busy building the prototype and his biggest fear is that customers may not embrace his product and is constantly changing what should be his MVP - Minimum Viable Product.

What is a Minimum Viable Product?

A minimum viable product (MVP) is the most pared down version of a product that can still be released. An MVP has three key characteristics:

It has enough value that people are willing to use it or buy it initially.
It demonstrates enough future benefit to retain early adapters.
It provides a feedback loop to guide future development.

The idea of MVP is to ensure that one can develop a basic product which early adapters will buy, use & give valuable feedback that can help guide the next iteration of product development.

In other words, MVP is the first version of a customer validated product.

The MVP does not generate profits, it is just a starting point for subsequent product development - which in turn results in rapid growth and profits.

Customers who buy the MVP are the innovators & early adapters, and no company can be profitable serving just the early adapters. But a successful MVP opens the pathway towards the next iterations of the product which will be embraced by majority of customers: 'Early Majority', 'Late Majority' and 'Laggards'.

MVP is also expensive for startups

For a lean startup, developing a MVP can be expensive. MVP is based on: Build -> Measure -> Learn process - which is a waterfall model.

There are two ways to reduce risks associated with developing an MVP. One way to reduce risks is to avoid false positives.

While conducting market research during customer validation process, one must ensure that customer is invested in this product development.

At the first sight, it is not easy to get customer to invest in a new product development. Customers can invest their Time, Reputation &/or Money.

By getting customers to spend time on the potential solution to their problem is the first step.

Second step would be get them invest their reputation. Can customer refer someone else who also has the same problem/need? Is the customer willing to put his name down on the product as the Beta user? Getting customer invest their reputation would most often eliminate the risks of false positives.

One good way to get customers invest their reputation is to create a user group or community - where customers with similar needs can interact with each other and new product development team - while helping new product development.

In case of B2B products, customers can also invest money in new product development. Getting customers to invest money is not so tough. I have seen this happen in several occasions. I call this co-development with customers (see my blog on this topic)

Kick Starter programs have now taken hold and today startups are successfully using kick starter programs to get customers invest money in their new product development.

Accelerating the Development Cycle & Lowering Development Costs

A lean startup should avoid developing unwanted features.

Once customers are invested in this new product, the startup will usually start developing the product and march towards creating the MVP.  However, it is common to develop a product and then notice that most customers do not use 50% of the features that are built!

Lean startup calls for lowering wastage by not building unused features. The best way to do this is to run short tests and experiments on simulation models. First build a simulation model and ask customers to use it and get their valuable feedback. Here we are still doing the Build -> Measure -> Learn process, but we are doing it on feature sets and not the entire product. This allows for a very agile product development process and minimizes waste.

Run this simulation model with multiple customers and create small experiments with the simulation model to get the best possible usage behavior from customers. These experimental models are also termed as Minimum Viable Experiment (MVE), which forms the blue print for the actual MVP!

Running such small experiments has several advantages:

• It ensures that potential customers are still invested in your new product.
• Helps develop features that are more valuable/rewarding than others.
• Build a differentiated product - which competes on how customers use the product, rather than having the most set of features.
• Helps learn how users engage with your product.
• Help create more bang for the buck!

Closing Thoughts

In this blog, I have described the basic & must-do steps in lean product development, which are the fundamental aspects of product management.

Customer validation is the key to new product success. However, running a basic validation with potential customers runs a big risks of false positives and investing too much money in developing the MVP.

Running a smart customer validation minimizes the risks while creating a lean startup or lean product development. A successful customer validation of a solution helps to get paying customers who are innovators or early adapters. This is first and most important step in any new product development - be it a lean startup or a well established company.

Effective workplace for Digital Startups

Earlier this week, I met with a CEO of a startup in Bangalore who wanted to setup a smart office for this startup. I had a very interesting discussion on this subject and here in this blog, is the gist of our discussion.

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Startups need a work environment that fosters collaboration, productivity, and innovation, it is able to attract and retain the best employees.

Office spaces are now turning into intelligent spaces - where office space can engage with employees to maximize effectiveness, connect seamlessly and securely anywhere, anytime.

How to build such a work place? 

Today, we have ultra-fast Wi-Fi, mobile "anywhere" communications, and Internet of Things (IoT) connectivity that connects physical building work places to employees. For example having a mobile app - which gives information about available meeting rooms, directions to meeting rooms and an easy one-click interface to book a meeting room - helps save 5-10 minutes off an employee's time in setting up a meeting. This alone translates into 42-85 man hours of productivity per employee per year! Freeing up time for innovation and collaboration.

In the world of intelligent work spaces technology becomes a key enabler. Every employee has fast and complete access to the applications and data they need and can use any mobile device to schedule space, operate electronic white boards or projectors, or set up video conference calls. Employees can be productive, seamlessly and securely, anywhere, anytime, whether in a quiet work space, a conference room, a boardroom, or even an outdoor space such as a rooftop café.

In a startup office, basic Wi-Fi and video conferencing are now so very common that they are taken for granted. The closed-door offices and cubicles have given way to open-space designs, casual meeting areas. Cafeterias & pantries are now seamlessly integrated with work spaces - to encourage open idea sharing and other collaborative exchanges among workers.

Understanding the requirements

Startup offices often share offices spaces with other startups (typically non-competing - Of course!)

A startup workplace must also be truly innovative. In most of the legacy workplaces, there is too much friction and inefficiency that hampers office productivity. Talented & creative employees are still shackled to desks on which sit hardwired computers that act as their main and sometimes only access point to the applications, software, and data they need to do their work.

Startups do not have a hierarchical organization structure. Instead they tend to have a team-based organizational structure. Teams are formed and disbanded depending on the project at hand. Cross-functional teams are dynamically created when necessary. This means employees need the right tools to work in a fluid environment where they and their colleagues can collaborate whenever and wherever the need arises.

Good news is that, today we have mobile-first, cloud-first and IoT technologies that enable such intelligent spaces. Facility managers will have to dorn an IT hat and ensure that:

1. Secure, untethered, and consistent connectivity anywhere.Security is of paramount importance in a multi-tenant workplace. Employees are no longer tethered to a wired deskspace, they need to have complete mobility within the workspace - and yet have safe and consistent high bandwidth connectivity.
2. Consistent workplace productivity solutions across all devicesWorkplace productivity tools such as Slack, Skype, Google Meetups etc are essential. These tools can work on various devices: iPad, iPhone, Android Phones, Windows Laptops, Apple Macbook etc.
3. Collaboration solutions built on cloud
    Note that for a consistent workplace collaboration tools are all connected to cloud. Its not just the productivity tools, even booking conference rooms or meeting rooms are handled via cloud. In a multi-tenant workplace where conference rooms are shared, the solutions must be able to generate pay-per-use billing systems for all shared resources.
4. Location based services
   Based on number of people per floor or per zone or area, smart facilities are turned on or off based on actual need. This means all lighting, cooling/heating and Wi-Fi connectivity are all based on number of people in that area. This implies use of intelligent sensors and smart analytics on the edge to minimize energy usage.   

Build Analytics into workplace  

Industrial IoT devices opens up a whole new way of seeing how an existing facility is being used. Heat/motion sensors can track which areas of the office are highly used and which areas are least used. This data over a period of time can be of immense value - to optimize the way  office spaces are designed. This data can be used to optimize the cooling & lighting requirements and HVAC systems planning.

The use of smart building technologies - sensors on the floor, motion sensors, thermal scanners, CCTV, Biometric scanners etc., generate vast amounts of data which can be used in lot of ways to a better workplace.

Closing Thoughts 

When technology and facility design is done right, we can create workspace that allows organizations, small or large, to orchestrate workflows for maximum efficiency and productivity. This will unleash the kind of innovation, creativity, and productivity needed to compete in the new digital economy.

Such a building would be a truly digital workplace where technology becomes a strong hidden foundation for a true user centered work place.

Invest in IT enabled facilities to make employees happier, attract and retain the most talented workers, it must provide employees with a modern, digital environment where they can work efficiently and seamlessly.