Making Linear Thinking “chic” again

Making Linear Thinking “chic” again

Last week we published the CloudTeams Playbook, a guide for Product Managers to become customer-driven. I tried to contact  people of my network to collect feedback – apart from the dedicated workshop – and I got very useful and practical input, such as “we are definitely not lean, closer to scrum”, “steps 7-12 are omitted” or “I work on step 10”. For me that feedback was fantastic! It meant that we had really built a guide where people were able to distinguish the steps, recognize their operations on the map, communicate more easily what they do and don’t do at work, and where each team member focuses.

Those interactions reminded me to point out that the CloudTeams methodology may be modified when adapted by a software team; Actually, it should be modified to fit the team’s culture. The core methodology is  an effort to separate validation from verification, and engage the team in more frequent feedback loops with its customers and users,while a user persona is the main document to transfer the generated knowledge throughout different steps (see picture below ).

The CloudTeams methodology with agile development on the bottom
The CloudTeams methodology unfolded

What we many times forget is that based on the maturity of product and the market, as well as the mentality of the team, there are steps that may be skipped. As seen on the example of the picture below, a Waterfall approach would focus on complete, well defined and executed cycles. A Lean approach would try to run early experiments to experiment mostly on pricing, even without actual builds of software, and then implement focused but verified software. An Agile approach would focus more on user feedback before going to the customer, in a more design-thinking approach where the team believes that a good product will drive sales.

The CloudTeams methodology adapted by existing methodologies
example: The CloudTeams methodology executed by a Waterfall, an Agile and a Lean team

Agile, Lean, even Rigid methodologies may be valid and effective as long as they are used in the proper context. Nevertheless, if a team follows the CloudTeams methodology, it should just adjust the suggested (12) steps accordingly to meet the business needs and goals where it operates; team members will not need to “learn new tricks”, the product manager will “just” orchestrate the steps and the tools to “make the engine work smoothly”, and thus the business will be more flexible moving from Lean for experimentation, to Agile for usage growth, to Rigid techniques for market growth, and back to Lean to (re)innovate.

We are told to run in cycles while we have a linear thinking. Thus I believe that if we work on the CloudTeams methodology we may have a common standard for product management. Please go and read the playbook, and let me know what you think about it.

 

 

 

Get practical: Business Ideation in the Digital Era

Get practical: Business Ideation in the Digital Era

You master a technology but you don’t know what business to start?

“Here’s the formula if you want to build a billion-dollar internet company. Take a human desire, preferably one that has been around for a really long time … identify that desire and use modern technology to take out steps.”

Ev Williams

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Hopefully you have a good idea, and you may start your marathon… good luck!

Lean Everywhere: How I initiated a Sprint in an EU-funded project

Lean Everywhere: How I initiated a Sprint in an EU-funded project

When I came across the Sprint book, I immediately had the desire to run a “week of Sprint” and see how effective it could be. The problem of how we could develop innovative solutions faster and more effectively was there, but the challenge was even greater as I worked for a University, doing research on EU-funded projects. So,  I had to find the perfect timing for introducing the concept of a 5-day prototyping session, and run my experiment.

My first attempt was to prototype the second release of an existing product we developed, called Anlzer; a tool for social media analytics. The prototyping week was booked, but when the week was approaching, the project deliverables were prioritized and we dropped the idea of prototyping. I knew there was no meaning for catching up one month later, as the tool would have been in the development process based on the plan; unfortunately developing a tool under a project has lot of bureaucracy to overcome.

Nevertheless, the seed was there, and when our team got a new project on maritime big data called BigDataOcean, I was asked to organize the sprint. Still I knew that booking 5 days in a period of intense work for us – a project-oriented research lab – was impossible. Thus, I decided to propose the least effort from our side. I asked for one day, fully booked, and I asked from my team to do some preparation in advance. We made it to complete one and a half “days” in one day. Apart from tired, the team was so excited about the outcomes that we booked another day of prototyping without thinking of it. At the end the team came up with the desired customer map, its focus on a certain step, and multiple interesting ideas for possible solutions. The detailed outcomes are available here.

At the end, I had to “think Lean” to change my team’s mentality. I believe my team is now more prone to run a 5-day, full prototyping session; The next time we will want to come up with solutions, a “Sprint” will be our first option. We can still master it, but the first step to change our mindset has been done, and I am proud about it. So, don’t forget that you can be Lean everywhere

The reading list of a Product Manager

The reading list of a Product Manager

During my recent presentation on a CloudTeams workshop we organized about Product Management, I came up with a slide that boosted audience’s interest. I have written before a list of the 10+1 top books for entrepreneurs, but this list focuses on Product Managers, and I consider it is useful to describe the idea behind it.

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Maybe the greatest trend lately in business is the concept of Design Thinking. I have tried to go deeper in that theory with various online articles and books. Design Thinking is a culture for modern teams on how products should be developed, how teams should be organized, and organizations should communicate. We may consider it as an “umbrella theory” that few have mastered.

The first (in my opinion) step to master Design Thinking is the Theory of Jobs to be to Done, introduced by C. Christensen. In order to engage the team in meaningful innovation activities, team members should focus on real customers’ needs. This brainstorming and collaboration framework allows people to see a broader space of meaningful solutions.

However, even if a team masters this theory, specific ideas should emerge and be prioritized; not to mention how difficult it may be to be implemented. This is where the “Sprint” methodology may be used to put the team on the track of detailed solutions, and the fast validation of them, through techniques of prototyping. Even if booking a 5-day prototyping session looks weird, the tools and steps described in this book are effective and engaging. At the end, at least you will know how prototyping may be implemented and not remain “yet another buzzword” for you.

If a PM is lucky to find a promising idea, it is time to deliver it. Much has been written about the “Lean Startup methodology, thus the only think I may add is how important it is for a PM to understand the difference between an MVP and a prototype (see picture below). If the team is in a Lean mentality and wants to run a fast experiment to validate the market, this is the proper time. Otherwise, if the team wants to be “Agile” and complete a functional product before testing, more reading and effort is needed.

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If you want to become Agile – rather than Lean -, you should master the book “Lean Analytics. The two things you have to do is to choose your business model and  the one metric you measure in each iteration, based on the stage where your product is.

What Lean and Agile usually miss is the need to tune up and master the channels of a company. This is why you need the help of the “Bullseye Framework.

So, we are at the end of the journey, but everyone needs a revision. The best framework for doing that is the “Four Steps to the epiphany. I liked the initial edition better, but you may go for the “Entrepreneur’s Guide”.

Last but not least, there are some books that you need to read and are extremely useful. “Running Lean will teach you how to interview customers, BM generation will help you talk a common language even with business students, and “Ten Types of Innovation” is the ultimate handbook for people who want to innovate on business models.

I hope you liked this “progressive reading list”, it took me some years to put everything together. If you like it, share it with others. If you think I missed something, let me know. Soon, we will also release the “CloudTeams Handbook” where you will see a more detailed manual on how practicing those theories, tools and frameworks. Stay tuned!

What Tesla does better than Apple

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While I was watching the pitch of Elon Musk for the new Model 3 by Tesla, I saw a similarity with the latest iPhone SE presentation. What I realized was that both companies seem to have a similar strategy, even now with the launch of their latest products.

Both companies followed a similar strategy in their lifecycle: they both started niche with very expensive products to fuel their innovation activities, while they put their bet on a strong brand name, on high-end design, even on an influential, eccentric CEO.Then they developed an ecosystem of important technologies (e.g. supercharge vs touchscreen) and solutions that supported their main offering (e.g. Tesla battery vs iPhone).They even faced similar financial crises, getting close to bankruptcy. On the other hand, Tesla did not the mistakes of Apple and was more open to partnerships and stakeholders early on, with open patents and SDK on their cars (almost), as they needed the community on their side to convince their customers to do a more risky and greater transition from gas to electric energy.

What Tesla did faster than Apple was the democratization of its technology.

In 2016, both companies have a huge step forward for their strategies; Tesla does with Model 3 only 13 years after its foundation what took Apple 40 years to do: They choose to make technology affordable to masses:

  • Tesla launched Model 3, a high-tech supercar that you can purchase with $35K, a bit more expensive than the boring hybrid Prius but still cooler and faster; Model 3 a car much more affordable and less equipped than existing Tesla models, but still a brilliant car.
  • Apple launched iPhone SE, a smaller phone with better battery than iPhone 6s, better specs than iPhone 5s, and a lower price of 400$; if someone wants to buy a high-quality smartphone, now he has to choose among an iPhone SE, a Nexus phone and maybe some other flagships phones (e.g. OneNote) which are equally or even more expensive.

In 2016, two high-end, luxurious technological products became more affordable to mainstream users. Tesla did it proactively to catch up competition and lead the electric-car market, even the presentation of Elon Musk was based on presenting their strategy. Apple did it reactively to respond to dropped iPhone sales for the first time after the launch of the product line, and even Jony Ive was missing from the frame.

The opportunity for Tesla to disrupt the car industry worths this transition.

The opportunity for Tesla to disrupt the car industry worths this transition, but is it equally important for Apple? Apple does control the (value not the size of the) smartphone market already which has been already disrupted by Apple , while it has multiple other product lines that are quite expensive (i.e. there was a reduction also in the Apple Watch). Why did Apple has chosen to do this lately?

Apple couldn’t stand missing the strategic role of iPhone in its ecosystem.

Apple is in a critical point of maturity. Many Apple fans complain lately about the lost hype of Apple. iPhone 6 didn’t impress many people but only followed the hype of larger screens; iPad has more name tags than Windows Vista; Same with MacBooks, which show no progress and still remain extremely expensive ($1,800 for a serious laptop is insanely expensive); Apple TV is still immature, Apple car makes no meaning lately, Apple Watch has one more chance to impress us. In the center of this ecosystem is the iPhone, everything connects and interacts with an iPhone, thus Apple couldn’t stand missing the strategic role of iPhone in its ecosystem, as well an entry point to its ecosystem of products and service.

If a more affordable iPhone is enough for Apple to keep growing – or if new product lines or more affordable versions of their existing products are required – will be realized by the end of 2016. For Tesla we have to wait a bit longer to see how its strategy goes in action…

Facebook vs Google: Who is going to be your next phone carrier?

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Today Google has announce Google Fiber has started enrolling customers, so it is a no-brainer  point to say that Google is interested to become your next phone carrier, both on land phones but also on your cell phone with Google Project Fi. What you may have not thought about is that Facebook tries to do the same, in a brilliant, indirect (i.e. thus more risky) strategy.

Facebook follows a reverse innovation strategy combined with the network effects power to beat the phone carriers in their own game.

Lately you may have read about Internet.org as a vehicle to give internet access to developing world where Facebook will be a basic internet application for users (and how India reacted on that), or about the Facebook Lite version of the largest social network as an application to give faster and cheaper access to users with small data plans or slow connections. Zuckerberg has even announced publicly that they have such intentions.

What you might have missed is Facebook’s acquisition of Ascenta, a solar, drone company back in 2014, and the announcement of test flights by Facebook in 2015. The acquisition of many compression algorithms like QuickFire Networks signal their interest to enter less technologically developed networks. Even Facebook’s greatest acquisition ever,  the outstanding $22b deal (at the end) with WhatsApp (somebody believes it is the best deal ever), apart from a mobile strategy and a defensing tactical move against the chatting apps, was an entry point to many devices around the world and of course in their SMS/chat applications.

The interesting thing is that few believe that Facebook is going to make it, and this is the most brilliant part of their strategy. In the Internet.org deal, some of the greatest infrastructure companies have signed in, like Ericsson. As an Ericsson manager told me back in 2014 when the deal was up, after a Barcelona mobile conference he attended, “Facebook is like a kid that tries to play with its toys, we do the serious work on the antenna-level with algorithms to improve services on the network level while they want to use our technology to expand“. What this point misses is that Facebook -like a smart kid- absorbs more information and learns faster than its teacher, while it uses them as a vehicle to enter an anticipated market of billion of users.

Telecommunications have by definition strong social characteristics

But still, you didn’t tell us why I may buy a service plan from Facebook” you might say. This is the best part in my opinion. Facebook follows a reverse innovation strategy combined with the network effects power to beat the service providers in their own game. In detail, as Facebook tests networking infrastructure in remote areas (like the Project Loon by Google)  but no one expects to see soon such a solution in developed world. But in remote areas where a smartphone is the only access point to the internet, Facebook wants to capture those users, give them an access to the Internet through its platform, reduce the cost of media loading and subscribe them to its Facebook application with a social profile. In other words, each application or technology in the broader Facebook ecosystem works in favor of a dominance strategy in those areas. When Facebook will improve the networking technologies, after tested in extreme environments, while Google operates on high-end technological networks mainly. Facebook will be then able to enter also the mainstream markets of technologically developed world with their innovations on wireless networks; the definition of a disruptive innovation. And together with the technology will bring a community of billion of users to its existing products. Just brilliant… if it works.

So the question is who is going to win this race for vertical solutions in the telecommunication game. We will see what carriers will achieve in response to this threat with the net neutrality pressure, and how hardware companies (e.g. Ericsson, Huawei) will team up in this game. Google has taken the lead with a bigger cash pile and existing operational projects both in developed and developing world. Facebook follows a different approach as it plays its bet on the game it knows best; enter unsaturated markets and win through the virality of its offerings. At the end, telecommunications have by definition strong social characteristics… Let the battle begin!

How to go through the Valley of Death

While I was writing my blog post on the 10+1 books an entrepreneur should (have) read, I realized how difficult it is for someone who wants to start with her business immediately to go through this reading list. But even after reading all these books, it takes some time to put all these theories in order and use them in practice.

Thankfully, the last semester I was called in the University – where I do my PhD  – to prepare two lectures on entrepreneurship. I wanted to create a meaningful step-by-step guide on how you start a startup, and how you may increase the chances of success. Thus, I chose to follow the concept of a (successful) startup financing cycle and emphasize on how you may work to overcome the “Valley of Death” phase.

In general, before going deeper on this “manual”, you should be aware of two very influential and useful concepts: the lean startup methodology and the design thinking product development approach. The mindset of these methodologies will help you make sense of what is presented here, while you may apply them on multiple stages and phases of any organization.  The roadmap I came up with is consisted of the following 5 steps and 3 phases (the incorporation may happen till the step of prototyping):

startup

Step 1: Choosing and Building your Idea

Generally, you should choose a topic you are good at, which has a market and of course you want to work on for the upcoming at least 5-10 years.

Your idea may (a) create a new market, (b) provide a new solution on a problem, (c) improve an existing solution, (d) use new channels for reaching customers or (e) improve costs. Typical, you should not bet on creating a new market, unless you have a great innovation.

Your idea will possibly change, the co-founders should be between 2 and 3 people, and the most important success factor is your timing on dynamics you cannot control; the PEST (i.e. Political, Economical, Social, Technological) environment, as well as existing competition, will affect your chances of success. The culture of your social network on accepting success and risk, is also something you cannot change and definitely affects your choices, especially on difficult situations.

Typically, your idea may be (a) problem-driven or (b) solution driven. On the first case, it is easier to find a market and make your customers understand you; you know that your customers have a problem or would like a better solution, and you look on business models and technologies that solve this problem (e.g. Services on Demand, Bait and Hook, Multi-sides platforms etc., you may read this). On the latter case, you are aware, you have a patent or you expect a revolutionary technology to rise, and you look for the market to disrupt (e.g. 3D printing, drones, BlockChain, Big Data, AR/VR etc.). In that case, you may look occasionally on the Gartner hype cycle.

The idea is suggested to be simple, and it may do over the Internet what is done already in real life (of course this approach created the .com bubble, because few took into consideration the PEST environment).

After you find your idea, you may map it to competition with the Idea Maze.

Step 2: Testing your Idea Fast(er)

Don’t forget that your idea is useless without implementation, and your implementation is useless without customers. Don’t also forget to search on well-known tech-blogs on similar startups/companies, but also to search for related patents.

On this step you have to do two things: (a) estimate the size and characteristics of the market, to see if it worths to cope with, and (b) try (smart) to understand your customers.

On the first part, you may use the top-down analysis to estimate the market. Initially you can refer to consultants’ reports on the size of the market, the trends of the market, and the tendency on increase/decrease of the size; a saturated, shrinking market is never ideal case to enter (you may run a Porter’s 5 forces analysis here too). You may use Google Adwords Keyword Planner to see how many people in the countries you target have a similar problem, thus they search with specific terms. Taking into consideration the market pie, and the competition, you may define the part of the market you should capture the first 3-5 years. Then you can end up with a target market. Don’t forget to take into consideration the geo-political environment from the PEST(EL) analysis.

On the latter part,you will use the bottom-up approach to estimate the market. You either know the customer (and you are lucky), or you have to run questionnaires and face-to-face interviews to learn your customer. You should read this book, and don’t forget to ask them for the price they are willing to pay; then you can start segment your market. You may also try to build a landing page to start communicating your message. At the end, if you know what features your customers want and what price they are willing to pay, with the proper segmentation, you can calculate the size of the market you can capture. Then put the market growth aspect and you know where you can be in 3-5 years. If you are uncertain on your estimations, you may run three different scenarios (pessimistic, optimistic, probable).

Now you can put the numbers from both analyses together, and see if you have overestimated or underestimated something. If you have failed to identify your market, do it again or specify better your market related to your idea. This is the market you could reach if everything was perfect (you won’t soon). At the end you will feel some uncertainty, it’s an exciting factor of building a startup.

Step 3: Developing an early Prototype

If you really find a market that worths it, you now have to prove that you can execute what you promised; first of all to yourself and then to possible investors and customers. Many KickStarter campaigns use a prototype to raise funds.

A prototype is an early sample, model, or release of a product built to test a concept or process or to act as a thing to be replicated or learned from. It is  the Apple I, it is the Wii-U Gamepad prototype, it is the iPad prototype, it is the Microsoft Courier. It can even be a scenario concept, or for software it may be a script or a mockup design; as long as it is used to learn faster and make early decisions on the product design, anything can be a prototype.

A prototypes proves:

  • The feasibility of idea/concept
  • The capability of team to deliver
  • Popularity/acceptance from users

A prototype doesn’t prove:

  • Customers’ willingness to pay
  • The business model
  • The viability of an idea
  • The cost structure of the operations

To run a prototype you need typically at least a product manager, a designer and an engineer (or a ninja person with diverse background). Read Sprint book to see how to enable prototyping in your organization.

Step 4: Testing the market with an MVP

At this stage, this prototype has to take the form that will interact with the initial customers (the early adopters). So,you have to start working on various parts of the business model that you have ideated initially, mark the hypotheses that increase the risk and create a plan on exiting to the market. This is where the MVP applies.

Accordingly to Eric Ries, MVP is the product with the minimum set of features, and no more, required to make early adopters start paying and giving feedback. Thus the MVP is a version of the product that tries to maximize the process of learning, with the least possible effort.

Before you move forward, you need to clarify the difference between an MVP and a prototype.

An MVP:

  • Tests business model hypotheses
  • Tries to reach the customer, even if it is not profound to them
  • It’s a Lean Startup tool

A Prototype:

  • Tests design hypotheses
  • Applies on a controlled environment, on focus groups
  • It’s a Design Thinking tool

But both of them focus on fast feedback and fast learning.

An MVP considers that the product is the business model, and may require “hacking” or “mockuping” typical business processes. For example, many MVPs hack others’ business processes (e.g. Zappos, Amazon), others mock smart algorithm or AI with human power (e.g. Food on the Table), others launch a storyboard or video (e.g. Machete the movie, or Dropbox), many others use crowdfunding as validation (e.g. Pebble, Oculus VR), and many books started as blogs (e.g. Running Lean, The art of the start). Many consider also a landing page with subscription property as an MVP, personally I believe it is a prototype of an early idea.

Don’t forget that price is a vital part of the MVP, and should apply on day one to validate the business model. The price is a part of the product (the 4 Ps of marketing), the price defines the customer segment you target, while a paying customer is one of the best metrics of the business model.

Then, iterations start. Till this step nothing is linear, while you may need to run multiple cycles before validating an MVP. Many startups had to restart from step 1, and even change completely the market they addressed. There is even a handy list of available pivot types.

Phase 1: Polishing the Product

Now it’s the time to start polish our product. Brand, price, channels, packaging, company identity is good to be aligned and be addressed by professional designers. The question is if you can charge the customers enough to fuel the scale of the business on the next steps, or external funds will be needed.

Step 5: Improving your proven Business Model

If you have reached this step, you have a first finalized version (v.1.0) of your business model. Now it’s time to start improving it and make it scale. To achieve this, first you have to see the broader picture, and identify the general category where your business model belongs to. Thus it will be easier to identify the workflow of your customers through your company. The most common (digital) business models accordingly to Lean Analytics are:

  1. E-commerce: one sells to many, e.g. Amazon.
  2. SaaS: a solution as a platform for many, e.g. Dropbox or Gmail.
  3. “Free” Application/Hardware: A free or cheap initial purchase, with later purchases for usage, e.g. Candy Crush, Printers, Gillette.
  4. Content Producer: Selling high quality content, e.g. news sites, even Netflix and Amazon productions.
  5. User Generated Content: Users are the producers and the consumers, while you make profit from ads, e.g. Google Search, Facebook.
  6. Two-sided markets: Facilitate the transactions between two market segments, e.g. eBay.

Having identified your business model, you have to describe your customer lifecycle based on Lean Analytics and then track the one metric that matters in each phase; by putting realistic goals (i.e. lines in the sand), you can improve progressively your business while you also learn what works and what doesn’t work on your business.

If you still feel your business model is quite flat, you may adjust some Business Model Innovations, meaning you may apply business models from other industries in your own in order to develop a competitive advantage. If you need a practical guide go for 10 types of innovation, or go to FutureEnterprise blog for some recent examples.

Phase 2: Building a strategy for Growth

Without an unfair advantage it’s difficult to move forward; this is an international game. So check if you have any of the following unique advantages:

  • Inside info of your market
  • An expert in your team
  • A dream team
  • The proper network of people around
  • A community (for me this is a winning point)
  • Existing customers
  • Good SEO ranking
  • Intellectual property/patents

Then, based on your competences you should choose the proper strategy. You may have heard of many strategies, like the Blue Ocean strategy, but at the end everything is summarized in the three main strategies based on Porter’s generic strategies:

  • Cost Leadership (broad market, low cost)
  • Differentiation (broad market, differentiated characteristics)
  • Niche (narrow market)

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Don’t try to mix any strategies (you may see IKEA or Zara who became hybrid in time), don’t try to cover everything, don’t try to build a clever strategy. At this step you need to clarify and focus on one strategy.

In execution level, try to start local, think global. Step by step you have to grow.

Phase 3: Preparing to Scale

Now you are ready to grow. Before entering a growth organization lifecycle, with your stricter management structure and your expected crises, you need to deal with two more things: your culture and funds that will grow your organization.

For your culture you need a vision, a mission, strong objectives and a passionate team. You may choose among this styles of culture.

For fundraising, the best quick guide to understand funding is this fantastic infographic. But when you look for fundraising, do not forget the pecking order theory ; the order you look for funds should be the following:

  1. Your own funds (e.g. from revenues)
  2. Debt without risk
  3. Debt with risk
  4. Convertible loan
  5. Giving equity away

The principle where this theory stands is that if you are a good manager, you know what you do, and you do the best you can. Thus you wouldn’t like to sell much part of your business. In practice that also is signaling to your investors, the fact that you share the risk and you believe on what you are doing. Additionally, think how much time it needs to pitch your idea around investors, and how much time it needs to close an investing deal compared to a using your own funds or getting a loan (in a proper economy, not Greece of course 🙂 ).


 

FAQ

Q: How much time each step should take?

A: A rough estimation is available in this course, but as long as you may enter in multiple iterations this can only be estimated on money you have to burn in each pivot you make.

Q: Is that all? Is this methodology complete?

A: No, in practice there are many issues, like building your brand day by day, building the right corporate entity, choosing the proper team, choosing the type of customer support, and many more. What I learned from my experience is that there is always a book, a blog post or a Quora reply that replies your specific pain.

Q: Is success guaranteed? 

A: No. If your idea sucks, if you don’t execute, if the team doesn’t collaborate or/and you learn nothing from feedback collected, (you may be a revolutionary but most possibly) you will fail miserably. It’s not the problem of any methodology or guide; Stats are still heartbreaking (90% of tech startups fail, 75% of VC-backed startups fail), and you play againts the odds to get through the Valley of Death. If you want to know the chances and understand the landscape, read Zero to One.

Q: Did it work for you? Why do you share it?

A: Not yet. I have read a lot of books, news and blog posts. I have practiced many more methodologies and tools, I have been wondering a lot how a step-by-step guide would be. But as long as I spent some of my time on filtering information out and put everything in order, I considered it nice to share it with you; I would love to have a roadmap when I started my journey back in 2012.