This is the second of a two-part feature on Eric Reis’ book (here’s the link for the first part). We previously saw how lean marketing helps validate the idea. We will now look at how those companies that reach the next stage can market, “The Lean Startup” way.
After Validation: Build-out Stage
The milestone for arriving at this stage, which I call build-out, is the release of a Minimum Viable Product, or MVP. Reis acknowledges the guts that it takes to do this: “MVPs require the courage to put one’s assumptions to the test.” Once companies offer a product that people are expected to buy, they will start testing Reis’ growth hypothesis, in which they are vetting whether they can find and bring on new customers fast enough to recoup the cash they are burning through. Questions to ask can be:
Is their marketing adequately reaching their target audience?Of the people who they reach, do enough of them become leads? Do enough of the leads turn into customers? Is this process happening as quickly as possible? How viral is the product/promotional message we use?
To make a good product, a company must be willing to give the product to early-adopters, as Geoffrey Moore calls these customers. Early adopters will use the product any way they see fit. I loved those Jeep commercials a few years ago, with a picture of a pristine dealership…with a mud-splattered Jeep parked on the showroom floor. Seems that Jeep owners only consider their vehicles to be ‘good’ when they can drive them off-road and get them all muddy. Marketers need the courage to watch customers do the same with their products…and forget their preconceived notions of why THEY think customers will like the product. The bottom line is to get your product out of the lab into their hands and learn how you should REALLY market it.
Lean Startup doesn’t assume we know what product improvements customers will want, nor does it espouse getting wide-open feedback. Instead, you should iterate using a Build-Measure-Learn process, starting with Learn and working backwards to Build. In other words, first figure out how you would know if customers liked an improvement. Your learning informs the second piece, the measurements/analytics you would put in place (analytics on product use will also give you much better questions to ask customers). Your measures will feed into the third and final piece – how you build it. If you iterate a product in this order, and it’s still a flop, you’ll at least have learned why it flopped and know where to take the product next. As long as we learn from it, it isn’t a failure.
Reis urges that improvements to your product and your marketing process be incremental. He uses the analogy of how a rocket ship travels versus how you steer a car down the road. The choreography of navigating as we do when we drive is a complex chain of real-time, microscopic adjustments. By contrast, a rocket’s actions must all be calibrated ahead of time. Many instructions must be given for when it will ﬁre, turn or change its direction, as the tiniest miscalculation will take it far off its trajectory. It’s a shame, but most startups wrongly use powerful but crude means like rocket ships to navigate through their environment. Reis feels that a business needs fine-tuned steering, not rocket power, to make its way through a changing landscape.
After Build-out: Optimized Growth Stage
When you finally have a well-rounded product, you reach the stage that deals with Lean Startup’s other hypothesis: that your company can grow at an acceptable pace. As you seek the fast-track to growth, you may need to pivot the business, just as you would physically change your stance to face a new direction, while keeping one of your feet planted on the floor. Reis cautions that “the more money, time and creative energy that has been sunk into an idea, the harder it is to pivot,” so if you don’t like the market you’re serving, the product you’re building or a mixture of both, pivot your model sooner, not later.
It’s up to your marketing function to ensure potential clients learn about your products. Companies have made products solving real needs…and still failed because of poor marketing! This is a travesty in my books, so avoid failure by having solid marketers on board. You may move through several internal resources or marketing contractors as your business moves through stages. To have sales and marketing that honestly applies a lean methodology means structuring teams that use expertise as we need it. That includes turning to outside experts as current needs dictate, so we can most quickly execute on priorities which are changing as the company grows.
Reis’ advice to optimize growth is to follow the belief that “Entrepreneurship is Management.” Though we can interpret this phrase a few ways, my takeaway for us who are technology enthusiasts, is to put our customers’ needs at the centre of our businesses. Lean Startup practices eliminate waste by focusing around a market’s real pain, working backwards to a solution and lastly, how we’ll build that solution. The more that entrepreneurs get obsessed with customers, the less obsessed they will be with the technology tools they use. Their tech businesses will be just as innovative, but there will be fewer companies that fail. Keeping innovation true to needs is the purview of your product management function. As growth outpaces your development cycle, product management sometimes has make a trade-off between lost sales & lost cycles. My friend Peter Hanschke, who I wrote about in another post, says “it’s better to lose some of these early sales and learn what the product needs to be than to develop the product with no validation and lose every sale!”
In conclusion, Lean Startup has many implications for how we approach our business and the marketing that we do along the way. Many people flinch when they think of using trial & error for their marketing, yet that’s how entire businesses came into existence. Reis bluntly states that “entrepreneurs need to face their fears and be willing to fail, often in a public way.” and my experience says that this applies to the marketing we do. There’s no other way to determine success except for putting an approach to the test. Nobody knows what marketing will work ahead of time, so the first company that’s willing to fail will actually succeed, because they will be the first to learn what works.
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