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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: Kellogg on Branding in a Hyper-connected World

August 25, 2019

Not all the names are the same. Some of them are brands. The difference is that only the latter have associations related to it. They can be positive, negative or mixed and they are the sum of all the things we think when hearing or seeing a brand.

Brands shape perceptions. They set expectations and give different meanings to their targets. A good quality brand sets the bar higher and may also yield more good will than a low-cost brand.

Marketing is full of lists and branding is no exception. Three challenges of branding are cash, consistency and clutter.

Cash is king in the short-term but the brand is a long-term asset. These two objectives are not always aligned and often the short-term results win at the cost of the overall brand image.

Branding down loop is an example of this where short-term financial objectives have negative consequences either by competitor actions or shifted consumer price expectations.

Consistency is a similar pitfall if the organisation does not believe in, own or understand the brand. How to ensure that every encounter with the brand is in sync through out the organisation in real-time?

Creativity and tactical excellence are ways to cut through the clutter and make the brand stand out among thousands of messages we receive every day.

Brand positioning strategy consists of four different components: a target, a frame of reference, a point of difference and a reason to believe. A brand positioning sets the brand in respect to other brands in the market. A brand purpose gives the reason why the brand exists. A brand positioning is the foundation for all brand-building activities.

Revenue growth seems to go hand-in-hand with brands that link all their activities to purpose. Strong purpose helps also in recruitment and employee engagement. It might not be a far-fetched idea to start to consider standards and reporting for a purpose audit in addition to the financial one in the future.

Pioneering has a high mortality rate. But the last 30 years of research shows that successful pioneers outsell later entrants across industries: the second entrant has in average 71 per cent and the third 58 per cent of the pioneer’s market share.

Market research shows that consumers systematically prefer pioneers, and this forces later entrants to spend more on differentiation or charge less in order to counter-balance the pioneer’s edge.

The first comer has the advantage of defining the category and benefits for the consumer. These stay over time and the positive attributes are associated with the brand the consumer learned about them first. A deeper learning curve and novelty drive concrete benefits for the pioneer. Later entrants need to adjust and respond to the pioneer’s definitions and expectations.

Fast copycatting can prevent the pioneer become an established and dominant player in the market. They also grow the fastest in the market compared to other players either earlier or later entering the market.

Brilliant strategies often stumble on implementation. Execution is a team effort across the organisation and involves many people. It’s less glamorous and therefore less credited as well as researched than strategy formulation.

The book consists of independent articles organised under different themes. The structure gives an updated overview to the topic.

The variety and quality of the content varies by the author but overall it’s a topical tome that can benefit both startup and established brand builders and managers alike as the above examples demonstrate.

Book review: The RegTech Book

August 22, 2019

FinTech has been around for ages and it is starting to shift its focus from digitalisation of money to monetisation of data in the financial sector.

After 2008, compliance has been a major issue for financial companies. Massive increase in regulation and reporting requirements have resulted in governance, risk and compliance (GRC) related costs racking up to 20-30 % of total costs in banks.

Nobody loves compliance. It’s horrible for customers and tedious for the financial institutions. If done in a wrong way it scares away existing and new customers.

Old legacy banking systems and isolated vertical data structures translate into manual labour intensive tasks and parsing of reporting data from multiple sources. This is the opportunity RegTech startups are starting to realise and materialise.

The old ways of doing things do not work anymore. Costs need to come down and productivity gains are expected. Yet, it is still early days and relatively little VC capital has been poured into the sector.

RegTech is a relatively new term that potentially can be used in respect to regulative processes in any sector, not just in the FinTech arena. Its earlier forms have been focused on streamlining compliance and reporting processes, often by means of digitalisation.

The latest trend is to start to see RegTech not just as a cost-centre but also as a means to provide business benefits and gains for the customer and revenue side of the business. Automation can provide valuable business data and improve customer experience if properly realised and understood.

Bank bashing is an easy target for politicians and public authorities since like compliance banks do not have many friends. Yet, even regulators have started to realise in some countries that they cannot just kill the financial companies with GRC without consequences to the overall economic activity and GDP growth.

Innovative companies have choices and they can move to more friendly business environments. For this reason some countries have started to introduce financial sandboxes where the full weight of regulations and compliance do not hit new ventures immediately.

UK, Singapore and Switzerland are examples of FinTech and RegTech sandboxing nations. The current $100 billion market of compliance spending is a good incentive for entrepreneurs to consider whether it’s worthwhile to enter the market despite its less than favourable appeal.