Startup ideas are elusive and they are very counterintuitive. You can't always trust your instincts. So the key is to be expert on your users and the problem you are solving for them. Customer discovery and delight (let's call it "customer love") is at the core of successful innovation, the "creation of market unmet need customer value". Y Combinator captures this in its motto - "Make
something people want" and Rahul Vohra, Julie Supan, JZ Zhang, Mar Hershenson and many others would add - "and love".
"You can either build something a large number of people want a small amount, or something a small number of people want a large amount. Choose the latter." "You don’t need to sell the problem to the high expectation customers. They are already living the problem and trying multiple hacks to solve it. It's someone who will acknowledge and enjoy your product or service for its
greatest benefit."
"Ensure that you are building precisely what customers need even if they didn't realize they needed it until it came into their lives. Think about the customer who'll get the most out of your product, so you can speak directly to them - and bet on their emotion."
"For startups, the need is all that really matters. It's the foundation of your entire business. It's how you position your product. It's the 'why'. It can trigger powerful emotions. Every need is contextual. It's felt by a particular person, at a particular time, in pursuit of a particular end-goal. It has a functional side and an emotional side.
Innovation Value DNA Hypothesis Elements
So, in short, creating innovation value begins with -
a problem being experienced by
customers with
needs - both emotional (wins) and functional (results) - that are unmet by
existing solutions, but which may be satisfied by a new innovative idea solution that creates
customer value add.
These are the value foundation elements - innovation value hypothesis DNA - for the entire innovation journey.
The Journey - Innovation phases and the Experimental Method
The first phase of innovation discovery is "problemation". This phase comprises the first four value elements. It involves questioning customers to discover the most important but least satisfied customer needs. These observations and insights are then the basis for generating an idea hypothesis - "ideation" - the 5th value element - to generate an innovative solution to the problem. This is the positioning statement for a new venture. Job story analyses then help design solution features that may be tested in minimum lovable-viable product (MLVP) "experimentation" to invalidate or validate the idea hypothesis.
"Problemation", "ideation" (hypothesis and job story), and "experimentation" comprise the same steps in the experimental method, where they are called "observation", "hypothesis", "analysis" and "test". So innovation discovery aligns with the scientific experimental method - which is well tested. Eric Reis noted this in his book "lean startup".
Problemation
The initial innovation process phase is "problemation". This involves data and insight discovery for each of the first four value DNA data elements. Choose a problem domain or problem you or colleagues struggle with. It is best to -
focus on things that matter and
problems that interest you.
The problem should be severe/urgent, frequent and widespread. Seek out customers/users that are high expectation and passionate about solving their challenge. They know what it is since they struggle with it constantly. Look for their needs and the relative need importance (low medium or high) for emotional needs - for example
avoid a loss;
personal gain, or
social gain;
and for their functional needs - for example
use;
technical specs; or
economic considerations, and try to find the emotional-functional need fit. Then discover their level of satisfaction/dis-satisfaction (low, medium or high) with existing solutions for each need.
There is a set of carefully crafted questions that facilitate discovery of customer value DNA data and insights for each of the first four value elements. We explore how to do this in a bit more detail via a survey and response analysis methodology in a separate "how to" brief.
Ideation - Hypothesis (Position statement)
Unmet needs insights gained from "problemation" provide the basis for devising a creative idea solution that may address the customer needs. This insight is the basis for the solution hypothesis and positioning statement for a startup addressing all 5 of the value DNA elements.
Ideation - Job Story Analysis
Idea solution features may be designed via job stories designed to address the highest priority unmet need insights - both emotional and functional, and preferably with emotional-functional fit. Job stories are a well known technique applied by agile software scrums for defining feature priorities for development.
Experimentation - Minimum lovable-viable product (ML-VP)
The most important/least satisfied unmet needs guide development of priority idea solution features. They are built for a minimum lovable-viable product (ML-VP) that may be customer satisfaction tested to determine if these features truly satisfy the unmet needs. A third set of questions are provided for this assessment guided by questions formulated by Julie Supan and Rahul Vohra.
Experimental Method Summary - Problemation, Ideation, Experimentation
A summary of value DNA element insight alignment with each step of the experimental method is next.
Towards Market-Product Fit
The startup MLVP is a repetitive process of several cycles of iteration - that Mar Hershenson calls "the drunken walk". When it resonates well with customers, the primary focus turns to validating "market-product fit". Note that we place "market" before "product" (and not product-market fit as is prevalent in the literature) since the venture should remain market-driven.
The unknowns are now slightly fewer but the customer need discovery task is not much easier. Rahul Vohra of Superhuman built a PMF engine based on the Sean Ellis PMF 40% score to provide a leading metric means of determining fit. The Vohra methodology progressively segments the responses by the three categories in the first question - very disappointed, somewhat disappointed or not disappointed. Then based on answers to the remaining three questions and some further segmentation he was able to advance the MPF score into a desired range above 40%. We detail this methodology in a separate article.
Value Pricing
There is also a set of good questions crafted by Van Westendorp that facilitate zeroing in on best value pricing. This methodology is also described in a little more detail in a separate article.
Transitioning from the Value Hypothesis to the Growth Hypothesis - Crossing the Chasm
The phases that we have described to this point are all parts of what Eric Reis called "the value hypothesis". In the initial stages most of the high expectation customers that will subscribe to a MLVP may be classified as early innovators. But as Geoffrey Moore explained there are several different types of customers once a venture 'crosses the chasm' that include early adopters, early majority, late majority and laggards - each of which display different needs and risk tolerance in a solution. So the market-product fit refinement must go on continuously throughout the innovation journey lifecycle to assure it meets the needs of all of these more mature market segments. This is where the CDDM converts to CRM as a normal part of sales and marketing processes.
HOW TO - Detailed Innovation Journey Methodologies
While this brief has provided an initial overview of key phases in the innovation journey, the full roadmap and useful methodologies in navigating the phases contain much more detail and many steps. We will address these in separate articles.