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Book review: Loops

September 9, 2019

There are two ways to build a product. Either you start with a solution in mind and launch it to the market or you start with a group of people with a problem and then solve it for them.

The latter approach uses market/product –fit as J Cornelius flips the regular expression to emphasize the importance of focusing on actual needs in the market. Problem solving venturing is the older way of doing things prior the Internet-age but it takes some adjusting and convincing to switch to the problem-seeking way of starting companies.

Loops is about the iterative processes of human-centered business design where you turn ideas into reality with a systematic approach.

After having an idea it’s good to validate whether it’s actually something that is inevitable, solvable, recognisable and verifiable. An idea is just a hunch before it is validated with actual market research and responses.

First you have to understand the needs, wants and fears of your customers.

Successful products have found the right balance and excellence between customer centricity, product quality and operational efficiency with the respective attributes of responsiveness, differentiation and competence. Usually mastering all of them makes you the category leader and the biggest revenue generator in the industry.

The problem discovery process starts with a problem safari. You hunt the market for information by any means necessary and continue by building a research framework. The usual persona creation can be replaced by using actors (who are they) and roles (what group they belong in) based on perceived user pain points.

It takes empathy to recognise and map users thoughts, pains and gains to visualise the problem area. Understanding users decision making require often in person interviews in order to get the psychographics and demographics right.

Prototyping is to validate your approach to solving the market need in a right way and not to green light your urge to build a certain solution. Therefore the focus is on solution design instead of product design. The process can start from user journey map and continue in creating wireframes, paper prototypes and finally by building digital prototypes.

The process goes in loops and you refine the prototype till it starts to resemble in detail the actual final end product based on testing and user feedback. A hypothesis canvas helps to structure assumptions and hypothesis with experiments and results to validate your hunches.

The final stages of Loops are building a brand and products with speed and scale. Branding is needed for consistency and it cannot be established without the understanding gained in the prior stages.

The best minimum viable products are not just viable but they capture already aspects of the full product: useful, usable and delightful. A better way to describe MVP would be to call it a minimum delightful product in order not to forget that products should be fun and enjoyable, too?

Loops is a practical guide to discover problems worth solving and building your product in steps. The iterative process uses common tested lean and agile tools which should make it easy to start looping in no time.

Book review: Startup Scaleup Screwup

September 1, 2019

Startups are fast learning laboratories where too many variables are at work in any given moment. The failure rate is high but success will be more favourable for those that use some systematic methods and processes along the way.

Serial entrepreneur Jurgen Appelo has put together a practical guide that gives you the latest tools and practical knowledge for a high growth venture. The book is packed with agile and lean community techniques and best practices.

You can build your business from an idea onwards by following the ten stages of growth. These stages are independent for each business model so in a larger company there can be more than just one business lifecycle simultaneously in different stages of maturity.

Initiation stage is the stating point where you have an idea that you develop further.

In Expedition stage you start to validate the hypothesis and formulate the business into an entity with bootstrap funding. Customer discovery and minimum viable product methods become relevant here in order to confirm a possible problem/solution fit.

Formation stage makes things official and it’s the time for a full time commitment for founders and initial team. Shareholder agreements, compensations and other growth structures become apparent. Vision/founder fit has been found and your team is ready to commit for the long journey.

Validation stage is the beginning for the product/market fit validation that usually takes minimum of three years. It’s the make it or break it for the next stages. Business model assumptions need to be validated and everything is geared towards proper traction.

Stabilation stage comes after the product/market fit issue has been somewhat solved. Scale too early and you may fail due to lack of traction. Scale too late and you may miss the market. Business/market fit becomes the focus and it’s more about the various business relationships around the product itself. Here the idea is fix things that did not scale before.

Acceleration stage defines your venture as a scaleup after the startup phase. Customer creation becomes the theme and it’s time to execute since things are working now after experimentation. Focus is on revenue and market share growth and trying to outsmart copycats and other competitors. As the organisation increases its size the complexity require more attention and different methods of management.

Crystallisation stage makes running the business more a “biz as usual” routine and it’s a sign of lifecycle maturity. This can take the form of an IPO or M&A trade sale for the founders.

Expansion stage is about trying to make most of the opportunity left and keeping the business model fresh with new initiatives and renewals.

Conservation stage is the cash cow moment where the end of the line is at sight.

Finish stage ends the business model and decisions need to be made about its existence.

The book is beefed up with interviews from various startup ecosystem players around the Northern Europe. These insights give a fresh and authentic touch for the multitude of ways to build and experience the startup growth.

Startup, Scaleup, Screwup is the best startup handbook I have seen for a long time.

Book review: Thank you for disrupting

August 15, 2019

Some individuals have a large impact on society and Thank you for disrupting is about their big ideas and underlying thinking.

Disruption is a well defined term now but many decades ago when it was introduced by Jean-Marie Dru that was not the case. The business culture was still wowed by continuous improvement methodology, and disruption had a negative connotation.

Lee Clow was Steve Job’s dedicated advertising partner and a friend from the very beginning of Apple. He was behind the famous 1984 “Think different” ad as well as the 66 “Mac versus PC” commercials.

According to Clow ideas accelerate change: they rule the world. He is not a believer of good ads but big ideas. Brands should associate themselves with powerful ideas that state what the brand stands for.  A big idea works as a source of inspiration but also as a filter. They focus and provide consistency to the digitally disperse and fragmented marketing space.

Previously advertising was about producing creative messages to the audience. Now it’s about strong stories that create audiences from scattered media: users want to share the message to each other. Only the strong ideas and stories survive.

And they also have the best results. According to McKinsey the more creative the campaign the higher the likelihood that the featured product will sell. Creatively awarded campaigns seem to ensure also better returns with a less risk.

One of the leading trails between different persons from Steve Jobs, Lee Clow and Bernard Arnault (of LVMH) to Oprah Winfrey is their dedication to pay careful attention to detail. They are very involved with every aspect of the brand experience and how it is presented in the everyday mundane business aspects. Everything represents the brand and therefore it’s important.

Herb Kelleher is a legend in the airline industry. His Southwest Airlines broke the assumption that low cost equals low quality. Southwest puts its employees first and hires on attitude vs. skills. With a right company culture it has achieved revenues of over 35 billion and it has never laid off a single employee since its foundation in 1971. The staff is also the best compensated in the industry. Kelleher has stated his vision and strategy simply as low cost, superior service and people first.

Leading entrepreneurs consider their organisation to be in a continuous state of flux. A decentralised decision-making combined with a strong vision can drive a large number of people in a coordinated but yet agile fashion towards ambitious business goals. Organisations become vulnerable to disruption the moment they start to protect their turf and focus on incremental improvements.

Great companies create markets instead of focus on gaining market share. They keep their attention on business models and not just on products.

Big ideas and strong values move people.

Book review: Total rethink

August 13, 2019

Entrepreneurs disrupt the status quo! David McCourt embraces entrepreneurial revolution that results beneficial change for the majority and disrupts the status quo for the incumbent players.

Technology allows for everyone to become new revolutionaries yet few realises and acts upon this realisation. As in history, it’s very likely that the biggest innovators come from the have-nots that have very little to lose and a higher tolerance for risk taking.

Historically this was the case with European immigrants coming to America and escaping dire conditions back at home. This time it’s the 5 billion people who are not as well off as the 2.5 billion enjoying the best lifestyle the planet has to offer.

McCourt describes his story coming from a large family and finding his way into entrepreneurial adventures from early age up to this day. During those years he have managed to be part of the cable television as well as fiber optics industry disruption and providing cheaper services for consumers at the expense of the oligopolistic competitors.

The book is full of colourful stories and mission impossibles where McCourt jumps to the water first and figures out later how to swim. This results him to learn quickly and unearth large opportunities that have enabled him to publicly list and sell many companies.

Berkshire Hathaway’s board member Walter Scott is McCourt’s mentor and he shares some of his wisdom and philosophies. For example, “never mistake a fad for a trend” and “take care of your people and your equipment”. The latter means that you can ruin your capex investment by not having the right people taking care of your equipment.

McCourt is a big believer in fair and honest relationships where business is made for the long term and this is reflected in the partnership deals as well.

As a curiosity McCourt mentions that he managed to raise $6.1 billion for his RCN Corp making that the world record for a start-up funding into any single project. He also managed to raise $1.65 billion from a single individual (i.e. Paul Allen).

Tellingly New York magazine ranked Allen’s investment the “best deal of the millennium” and the “worst deal of the millennium” in the same issue. The dot com bubble crashed capital markets and resulted Allen to take a deep hair cut in his investment.

One of the persisting messages of the book is how to provide solutions and value for the less connected and powerful (and quoted in the book):

”Those capable of channeling the power of the crowd must turn their energies to something more fundamental: redesigning society’s systems and structures to meaningfully include and empower more people. The greatest test for the conductors of new power will be their willingness to engage with the challenges of the least powerful”

The future is all about cooperation, win-win solutions, peer-to-peer and crowdsourcing. Corporations, nations and incumbent structures have too much to lose and therefore they are most of the time unable to renew adequately leading them to be disrupted and replaced. Entrepreneurs the world is yours!