Welcome to the ninth article of our Entrepreneurial Wednesdays series. In this series, I share my thoughts on lean entrepreneurship as I take my first steps in my journey. I will be sharing my lessons learned with you.
Do the research
Let me jump in straight to cycle of experimenting. Let’s clarify what it is and organize our thoughts about it. You use the cohort analysis which helps you see the exact numbers and where your project lacks necessary support. The results of cohort analysis might force you to admit some type of failure (which is not bad at all, without it there is no moving forward), but on the other hand, it will create space for more research, this time with the right focus and the knowledge of what has to be done. The research will come out with new hypothesis and experiments which need to be validated. The validation of these experiments can make way for pivots. Pivots can then create more space for new experiments. This whole cycle repeats until you define the product your customers need and are willing to pay for it. This was just a short instruction to what will be happening if you decide to stick to The Lean Startup game plan. It will be hard, but it will be worth it.
Nervous person makes mistakes
The point is, you should not rely on the fact that you repeat the cycle for a few times and the product will simply pop out of nowhere. There are hundreds of examples of companies that had huge potential right from the beginning but were not able to launch their product successfully even though they got through several cycles. The team works hard from one cycle to another without any progress. There are absolutely no signs saying what is wrong with the product. Why people do not buy it. The whole team is frustrated, but what’s more, the managers are starting to be frustrated too. And you know managers. They also start to think that the team is not working hard enough and that’s the reason why there hasn’t been any change. Needless to say that their work becomes inefficient under pressure. As if it wasn’t enough, the investors start to fear for their future income and the fire is on the roof.
Let’s be clear about it!
”The Lean Startup” by Eric Ries gives a great example of a company having similar problems. For a period of time, the company was unsure of where the product development is headed. What is their direction and under which criteria the ideal direction should be chosen? The problem is their inability to scale and clarify how the product is doing in the hands of the customers. In the previous article, I mentioned a phenomenon of ”broad metrics”. These are metrics which are, unfortunately, used almost everywhere. They show what I like to call ”thick numbers”, or numbers that are not clarified and assigned to an element in the business. The problem here is that the broad metrics can show your company as a success, but in reality the company is struggling. Confusion is the right description of broad metrics. Old-fashioned ways of managing companies focus strictly on such metrics and that is the cause of the high level of inefficiency. The broad metrics do the sweet talk, but without any reason behind the company’s struggle with the product.
Cohort analysis might seem more “painful” for the company. But that is the way forward without wasting time and money. In the book, it is said that as soon as the company realized that they were being blinded by the broad metrics, they chose cohort analysis as the new scaling method with an immediate success.
Money and Mind
With the results of the cohort analysis, you will have a clear idea of the attitude of your customers towards the product. It is then up to you to make the right decisions so that next time, the analysis will show you the expected outcome. But before that, there are changes that have to be done. Mr. Farb from a company named Grockit gave a great and useful example of how they created and added new features to the product. Instead of giving his development team specifications of the new feature, he started to write user stories. User stories contained customer’s experience and emotions from using the new feature. I find this approach extremely useful and something I want to use. Not only you try to understand your customer better this way, but you can actually see your product through their eyes and gain useful information by changing your view. For me, it is yet another proof that business has strong connections with psychology and with enough knowledge you can use it to your advantage.