What moved did not leave an address
Only what moves can improve
Valentin Nowotny. Photo: NowConcept.
Do you think you are not a start-up because your company is 200, 300, 400 years old? You are wrong. Because yesterday's truths have lost their sustainability. On the thin ice of volatile markets, it helps to be quick so as not to collapse. in the IT channel from buchreport.de explained Valentin Nowotnywhat speeds up business.
When you have to conquer the terra incognita
The lean start-up begins where design thinking ends. As a young entrepreneur or as an innovation manager in a large corporation, the lean start-up principles apply wherever new product ideas are to be successfully introduced in new and old markets. For Eric Ries, Author of the pioneering and recommendable book "The Lean Startup" (2011), every activity that is in the market before a real test is superfluous, since in retrospect it is a pure waste of resources. The lean start-up approach bridles the horse from behind. Only what a real customer actually buys has the potential to become a successful product. And not what a market researcher claims has the potential ...
Why do you need the lean start-up approach?
In his own career as an entrepreneur, Eric Ries has observed himself and others again and again and found that people tend to invest an incredible amount of energy in concepts that in the end no one can or will buy. Psychologically we could speak of the principle of self-deception!
And if you now say: We are not a start-up at all, so this chapter has nothing to do with me! Then I say to you: Yes, then you should read on here. Because Eric Ries, the inventor of this concept, says that established companies in particular are often subject to the fallacy that the growth drivers of the past can be applied one-to-one to the future. Or believe that they are on to something decisive: secrecy, perfectionism and technical playfulness mean that the idea is then tested on the market far too late.
According to Eric Ries, the main thing is to learn quickly from your own customers, not just to recognize what is trendy and what may no longer be popular. “The Lean Startup” also calls for the product to be continuously developed with new customer ideas. To a certain extent, your product flies because it is constantly being supplied with new fuel in the air.
How lean start-ups develop products. Graphic: Business Village.
Eric Ries has worked very intensively with Toyota busy and repeatedly came across the term “genchi genbutsu”, not only in production, but also in sales, logistics, marketing or product development. "Go and see for yourself". In a figurative sense, this means being willing and able to leave your desk at any time and look at things for yourself on site and not trust any reports or be fooled or fooled in any other way.
When Toyota wanted to conquer the US market with new small cars in the 1960s, the Japanese chief engineer sat down in a first prototype and drove it from the US east coast to California on the west coast, and at every stop he met countless interested parties and to a certain extent absorbed everything that could then be used again for further product improvements.
That was certainly a good idea, but lean start-ups go one step further. If the Japanese had implemented this concept here, then they would have found a real buyer, sold him the car, at the same time built a good relationship and then accompanied the buyer for the near future, supported him in his daily chores and would have been with him again and again Special features and details of the product came to be discussed.
Eric Ries calls this concierge service. Find a first paying customer for your product and then visit them regularly, bring some flowers and see what your customer is doing with the product. How he or she really uses it. And what opportunities for further development are there.
Just don't fall into the perfection trap!
According to Eric Ries, the greatest danger is perfection. To perfect the technology until after years of being introduced to customers at some point, according to Ries, leads directly and immediately into the dark abyss of self-deception.
Self Apple, well known for perfection, has taken the liberty of creating a by no means perfect in terms of functions and running speed Apple Watch to bring to the market. With a new operating system and corresponding software updates, adjustments were made and the customers were nevertheless extremely satisfied!
In cognitive psychology, the so-called confirmation bias has been intensively investigated and described. This is the tendency to choose and interpret information in such a way that it meets one's own expectations. Since you want to protect your idea, you will automatically hide other perspectives. However, this means that the idea cannot develop any further, later failure seems inevitable.
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An old Hanseatic merchant saying goes: “Hope is the merchant's death!” A haunting saying that makes it clear that wrong decisions and outdated strategies have to be corrected quickly, even if they result in losses. The alternative would be to wait and suffer a total loss, from a business point of view bankruptcy.
Bernd Klumpp, who works in the innovation area of Deutsche Telekom introduced agile teams and agile methods with around two thousand employees, says: “At that time, we had the impression that, in addition to Scrum and Kanban, another element was missing in our agile approaches for the validation of products or product features and therefore we have the lean start-up Approach added. That saved us a lot of money and failure. "
MVP - Minimum Viable Product
Probably the most important basic concept of the lean start-up is the minimum viable product (MVP). Literally translated, the MVP is a “minimal viable product”.
The MVP of a small car would therefore be something that can drive on its own, presumably has four wheels and can get people from A to B dry, no matter how safe, no matter what look, no matter how precisely designed. However, it is already equipped with the differentiating features of small dimensions and low consumption.
The challenge is to find the intersection of a minimal product and a viable product. So the question is: what is minimally functional, but still usable? Thus, it is a question of a range of functions with which a real user problem is already solved, on the other hand it should be created, built or manufactured in a simple way so as not to waste too many resources.
For Eric Ries, the MVP is primarily about validating a benefit hypothesis effectively. Because here is the point where there is often a denial of reality and thus self-deception. The American evolutionary biologist Robert Trivers says: "Anyone who moves outside of reality is playing a dangerous game." (Kullmann 2013)
This is particularly true for excessive self-confidence in connection with a lack of awareness of dangers. Trivers explains this using the example of a plane crash:
For example, in 1982, shortly after taking off from Washington, D.C., an Air Florida plane crashed into a bridge over the Potomac River. Seventy-four people were killed. Before take-off, the co-pilot had described the de-icing of the wings as insufficient, the pilot dismissed the comment. When instruments went crazy after the start, the co-pilot warned again. The pilot appeased. A little later the machine crashed (Kullmann 2013).
The next step in the process logic of the lean start-up is then a real product, which is first made available to a small group of users or early adopters and which already generates an initial cash flow. Eric Ries sees this as an opportunity for start-ups to become a little more independent of external financing.
And this approach is also attractive for medium-sized and even large companies, as it promises to use far less cash than in the classic product development process. This approach is also psychologically healthy, as the lean start-up actually has a much lower risk of final failure. And fears, for example of one's own failure, are often nothing more than mentally anticipated manifestations of real risks.
Problems, fears and fears with the MVP
There are often fears that the product still contains too many errors and negative effects on the brand or the image of the company are to be feared. There are also widespread fears that the unfinished product will not be used again, and there are occasional fears that competitors might get wind of wind too soon.
The basic rule is: do not put unusable products on the market! Usability is a necessary condition for an MVP. The fear of scaring off all customers once and for all is not really relevant if you don't hand out the product to all users, but rather limit it to a limited group of early adopters.
Due to their fundamental enthusiasm for new technologies and new concepts, they are usually significantly more fault-tolerant if they can recognize an additional benefit. The central question is and remains: Can you really see this benefit? This is exactly the type of concept validation that Eric Ries is interested in.
People hold onto bad ideas for too long
Founders and product managers often have many ideas; the few that are then specified are often cared for and cared for like their own babies and there are great expectations associated with this. And most people find it difficult to let go of a product on the market that, from their point of view, is not yet finished or just minimal. That is human and can also be paraphrased as brackets to the status quo. All in all, it seems that most people hold onto bad ideas for far too long.
Many people justify an existing system even when it appears to be doomed to fail. The psychological mechanism here: the more the specifications of a system affect us, the less we tend to oppose it.
A study by the two US researchers Kay and Friezes of the Duke University and the University of Waterloo comes to the conclusion that in four cases people have a particular tendency to support existing systems instead of advocating change. First: if the system is threatened, second: if you are dependent on it, third: if you cannot break out of the system and fourth: if you can only exert a minor influence yourself (Kay / Friesen: 2011).
At least points 1 to 3 are given in the vast majority of contexts of in-house product development. A rethink of one's own accord seems rather unlikely.
The MVP concept is able to draw real conclusions from real experiments and initiate further development. At the same time, however, it is also able to pull the rug out from under the feet of a simply dangerous dream dance. Publishing a product too late harbors the greatest risk: Certainly also that a product will be thrown on the market that nobody needs! But above all, that years of work turn out to be superfluous ...
The pivot - long live the pivot!
No, the pivot isn't a new species of bird that you may not have heard of. It is an admittedly quite rare English word that can best be translated here as "pivot point". Similar to a tack (or jibe) when sailing, the question here is: When is it time to change direction?
Studies show that around 90% of all successful start-ups have changed their business model in the course of their development. Facebook was called once for example The Facebook and was a kind of dating platform for fellow students at American universities.
This also applies in a very similar way to the development of new products. Often, however, it is simply a question of the formulation that makes a huge difference psychologically: Are we talking about failure or a necessary change of direction?
When sailing, it would never occur to anyone to speak of failure when faced with an obstacle. No, what needs to be done here is obvious: get ready for the turnaround !, and that over and over again. This is the only way to make a route, and not by waiting until the wind has turned, as every amateur sailor knows.
Disneyland - a giant pivot!
Also Walt Disney After decades of success with animated films, he has once again invested all of his fortune to make Disneyland, a new amusement park at the time, a reality in 1955 in California. Quite a big pivot!
These changes of direction, the pivots (or pivoting, as we call it a little awkward in German), can relate in business to both the earnings model and the technology used (Blank / Dorf 2014). However, the question always remains the same: Where is the market and what exactly does the end customer actually want to spend money on? And am I able to change my original plan to be successful?
The lean start-up concept encourages people not to practice ideological trench warfare, but simply to put everything that has been made to a real test bench, to simply test things out and then to draw the conclusions from them. A consolation for those who find it difficult comes from the following saying, which recently laughed at me from a stand with postcards: "If Plan A doesn't work - don't panic, the alphabet has twenty-five other letters." At least.
Business model canvas - a visual business model
A business model canvas (BMC for short) is literally translated as a "business model canvas" that shows at any time how the entire company works by and large. A BMC is typically laid out as a large sheet of paper laid horizontally with nine standardized components, in which the entire business model can be grasped at a glance (Osterwalder / Pigneur: 2011).
The Business Model Canvas (BMC). Graphic: Business Village.
If you work with a BMC, you will repeatedly work through the following questionnaire:
- Customer segments: Who will benefit from our product / service? Which customers are particularly important to us? What needs, characteristics and behaviors do they have?
- Value offers: What benefit / value does our offer offer the customer? For which problem do the customers want a solution? Which customer needs do we want to meet? What combination of products and services do we offer?
- Customer channels: How do customers find out about our offer? What are the best channels for us to reach our customers? How does our offer get to the customer?
- Customer relationships: What kind of relationship do we have with the target groups? Do we want a long-term or one-time relationship? What measures do we use to win new customers? How do we strengthen the relationship with existing customers?
- Sources of income: What benefits are our customers willing to pay for? And how much money? Are there any comparable products or services? With which sources of income? How much does each source of revenue contribute to total revenue?
- Key resources: What key resources do we need to meet customer benefits? What physical resources do we need? What personal resources? What financial resources?
- Key activities: What activities do we have to carry out in order to meet the customer benefit? Which activities are necessary for the sales channels? Which ones for customer relationships?
- Key partner: Who are our key partners? Who are our main suppliers? For which key resources / activities are we dependent on third parties?
- Cost structure: What are the largest and most important cost factors of our current business model? Which key resources / activities are the most expensive? What are the most important expenses without which our business model would not work?
Incidentally, the BMC is also working psychologically skillfully with the famous formula from learning psychology "7 +/- 2".The idea of the Business Model Canvas (BMC) is that you can make new findings visible in your business model canvas at any time and have the effects right in front of your eyes.
Just as it makes a difference for an author whether he can see how his future text will roughly be set (WYSIWYG), the meaning of every new experiment with an MVP (see above), for example, should also be visually comprehensible. If, for example, customers are willing to pay 20% more for garbage bags with a citrus scent, for example, then the margin can be adjusted (point 5) and further promotional activities planned at the same time (point 6).
Each business model canvas is visually structured like a scale: on the left the input including the cost side and on the right the output including the revenues. Our consciousness analyzes and compares, also optically. It is thanks to the peculiarities of our psyche that we break down our everyday perceptions into details and constantly make comparisons and assessments. You say yes to the one and no to the supposed counterpart. And yet the yes and the no belong together, because only together do they form a whole, here a balanced business model.
Working with the business model canvas becomes really agile when teams go on a journey and develop their BMC together and bring it to maturity. This can be done, for example, by other teams taking a look at it and bringing in their experience. This should not happen on the computer, but ideally on large physical posters in which only the nine-part basic structure of the business model canvas is optically given, but all content can be flexibly assigned with the help of Post-its or the like and can be changed again at any time can.
A nice description of the basic components of the BMC using the example of Facebook and a template for the BMC poster can be found at Swiss (2015). You will find a link to this here.
Thinking and psychological traps in lean start-ups
For many people, perfection is definitely worth striving for, but perfectionism is not. From the perspective of the lean start-up, however, the often positively charged claim to perfection is in itself a trap.
Psycho trap # 1: "It has to be perfect, otherwise it is out of the question!"
The perfectionism trap is one of the biggest psychological traps of all. What to do if you are a perfectionist If you want to do everything right and be very ambitious? When nothing is good enough, nothing is fast enough? Then you should learn to focus, for example on what really matters. Or what sets your approach apart from everyone else. Follow an idea and endure that not everything is perfect at the beginning. Make a first throw and just take a close look at what König Kunde makes of it. Previously unthinkable, mandatory for a lean start-up.
Typical prevention thoughts are: "Our customer does not forgive us!", "We are ruining our brand!", "If we go like this, we can leave immediately." In addition, the quality assurance department generally assumes that the end product will always has to be impeccable. However, this sometimes obscures the real drivers of success. A book should be free of spelling and content, of course. But would you only buy a book because it is free of errors? Barely.
What characteristics does a product then need in order for a customer to buy it? Is it the quality? Certainly, quality must be given to a reasonable extent. A distinction can be made here between external (perceptible by the user) and internal (perceptible by the developer or producer) quality. The customer usually sees the external quality directly.
The internal quality of products in the food sector is becoming a purchase-relevant characteristic through organic certification and fair trade concepts. The product itself may not always be visibly different, but you as a consumer know something about the internal quality of the product and adjust your purchasing behavior accordingly.
Good beta testers are a success factor today
However, the process can also be of high quality, with which, for example, together with interested and qualified users, I achieve a really exciting and innovative new product and improve it until it is also convincing across the board. The number of beta testers is growing and more and more established companies are taking up the critical and constructive tips and advice from their fan base.
Good beta testers tend to act in the background. They do not criticize publicly, but tell the product developers in a professional and objective way what works and what does not on a product. The crowd of volunteer beta testers are the test pilots of the 21st century, and the IT industry would not be where it is today without beta testers. The three big IT giants Apple, the Google-Mother alphabet and Microsoft were worth more on December 30, 2015 than all DAX companies put together!
Often customers buy an idea and the details come later. This thought is not new: Boeing only built the 747 (Jumbo) because of the PanAm- CEO Juan Trippe promised at the time that the aircraft would be accepted in larger numbers, regardless of how individual details would be designed (“If you build it, I'll buy it.”). Everything else is history. If one had started with the details, the largest passenger aircraft in the world for many decades would never have been built!
Conclusion: You can do without 200% perfection. Often even faster and slimmer than if the icing on the cake had been there from the start!
Psycho trap # 2: "Of course we will change if it should be necessary ..."
It's not big or small: Even Eric Ries, the inventor of the lean start-up concept, likes to tell you again and again that he himself stuck to a technically ingenious but uninteresting variant of a product for three years he and his team realized that to be successful they had to take a radically different approach.
In 2008 the well-known drugstore did Schlecker Europe-wide with more than fourteen thousand branches and around 50,000 employees an annual turnover of over 7 billion euros. Schlecker's rise to become the largest drugstore chain in Europe could then be described as a success story in European retail. Anton Schlecker, the patriarch and former master butcher who made the drugstore chain Schlecker big, had an impressive fortune of around 1.95 billion euros in 2011, like that manager magazine reported in October 2011.
Schlecker then filed for bankruptcy in January 2012. True, both of his had children Lars and Meike Schlecker, who were preparing to take over the fortunes of the company, presented a thoroughly convincing “Fit for Future” future and investment program to modernize the outlets in January 2011. The first pilot tests had also already been successfully initiated.
Anton Schlecker, however, stubbornly and for far too long held on not to close any of the nearly fifteen thousand branches, as he had more or less built them up himself. The negative cash flow contribution of all unprofitable shops then dragged the entire company into the abyss like a torrent. The rethinking just came too late and buried the good new ideas under itself ...
The not-invented-here syndrome strikes
So it is again psychology that played a decisive role here. Just as what you did not invent yourself is not considered valuable, much of what has been practiced in your own home over years and decades is sacred. The Not-Invented-Here-Syndrome struck again: "I didn't come up with the new concept, so it's not worth anything!"
In such a situation, it usually takes a lot of persuasion or reflective effort to throw beloved beliefs and habits overboard. Anyone who throws down new concepts despite a changed situation and a good idea shouldn't be surprised when the world collapses over them!
Conclusion: People often go the easy way and stick to their old ideas and ideals, even if they ostensibly signal a willingness to change. If hypotheses are not validated using facts and the new findings are not processed and discussed with one another, then, as a rule, simply nothing happens!
Psycho trap # 3: "Of course we adapt our course to relevant changes at any time!"
There is a desire in people to want to lock things up. In psychology this has become known as the “Zeigarnik effect”. The one from the Russian psychologist Bluma Zeigarnik The described effect means that unfinished business is better stored in the memory of the person than done. According to legend, it began with the observation that the waiter in a pub could process complicated orders without written aids, but after completing them, he could no longer remember any details (Franke / Kühlmann 1990: 180).
Conclusion: The desire to want to lock things up is sometimes overwhelming. Therefore course changes are not possible at all times (and even dangerous when sailing!). However, there should always be meaningful dates and specific occasions on which the course can be rethought and perhaps redefined together.
Psycho trap # 4: "We don't have to keep the business model in mind every day, we are successful!"
Today's success doesn't necessarily have anything to do with yesterday's success. In Germany, many will still stick to the big brands such as source ("First see what the source has") remember. In 1977, Quelle AG had sales of a good 7 billion D-Marks and more than 43,000 employees. With around 25 million parcels per year, Quelle was the largest customer of the now privatized German Post in 1997. On October 20, 2009, the insolvency administrator announced the end for Quelle (Bräunlein 2015: 87).
What happened? As “Germany's largest catalog mailer”, Quelle had not reacted to the changed media usage habits of the Germans. Instead, they wanted to keep the formula for success of the bulk buyers, the Quelle shops and the Quelle technology centers unchanged. The unconditional protection of the existing had its price: Quelle simply missed the future.
If the Quelle managers had mapped their catalog-based business model in a business model canvas (see above), for example, and had it right in front of them, then they would have noticed much earlier that with the customer channels in the direction of e-commerce, Art the customer relationship changes and that this has a dramatic effect on the revenue side. This would have resulted in the urgent need to identify new key customers, realign the key resources accordingly and completely re-orchestrate all key activities.
The changes and shocks are more dramatic than we can imagine. Much of what was thought nationally in the past now has international dimensions, for example intercultural differences are becoming more and more important, both at home and abroad. Old target groups are disappearing, new ones appear on the horizon. Changes like these should be mappable at any time, for example using the Business Model Canvas. In this way, it is possible to quickly draw the right conclusions in a changing business environment.
With the kind permission of BusinessVillage GmbH.
Valentin Nowotny, agile company.
From Valentin Nowotny Agile companies - focused, fast, flexible. Only what moves can improve.
BusinessVillage 2017. 396 pages.
Paperback EUR 29.80. ISBN 978-3-8698-0330-2
E-Book (PDF) EUR 24.80. ISBN 978-3-8698-0331-9
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