As I write this, I am watching a red-bellied woodpecker on the trunk of a tree outside my window looking for insects. He’s picking at the bark to see if the prospect of his next meal might be behind it. When he finds nothing, he moves further up the tree.
He has a vision – he starts with the end in mind and takes a disciplined approach to get there. He is aware of the context in which he operates. It’s one of uncertainty. He does not know exactly where he will find his next meal. He learns what works and what doesn’t work in his quest for food. And his exercise of picking at the bark before committing a lot of time and energy to drilling into the wood means that he will find food more efficiently.
I’m currently reading The Lean Startup by Eric Ries. His book focuses on entrepreneurial startups and new business models and new product categories within larger organizations. Part One of his book is titled Vision and lays out four steps exhibited by the red-bellied woodpecker this morning.
Step 1 – Start
How you start is critical to the success of a new venture or opportunity. The “just do it” approach is fraught with chaos and, often, failure. To be successful, a disciplined approach is necessary. “The goal…is to figure out the right thing to build – the thing that customers want and will pay for – as quickly as possible,” says Ries. Often, so much time and energy is spent in developing the perfect business plan that there is little room for iteration. There are numerous assumption built into the plan that will lead to unintended results if they go untested. It is important to tune and improve your business plan, product, marketing and operations as you go.
Step 2 – Define
Within the context of a new business or business plan it is important to understand what you mean by innovation, product and business model. For example, is a product something tangible or is it based on a customer’s experience? Providing clarity around these terms will help focus you and your team in one direction.
Step 3 – Learn
In the development process, it’s important to know which elements are working and which are not. Which ones are leading you closer to your vision? You may have a brilliant strategy or great idea; however, if it doesn’t resonate with potential customers, it will not be viable. Validated learning is necessary to demonstrate progress. Customers often don’t know what they want in advance. It’s important to do beta testing to discover customers’ real needs and what they are willing to pay.
Step 4 – Experiment
“Think Big, Start Small.” One of the examples Ries uses is Zappos. Nick Swinmurn, Zappo’s founder, thought there there would be a market for a central Internet site to house a great selection of shoes. Instead of starting with building the infrastructure, he ran an experiment. His hypothesis was that customers were willing to buy shoes online. He started by posting pictures of shoes from local stores with the understanding that he would purchase the inventory from them once he received an order.
By building the product, rather than relying on traditional market research, Zappos collected accurate data. Interaction with real customers taught Zappos what worked and what didn’t, and they made adjustments accordingly. They were able to test their hypothesis in real time and determine whether there was enough demand to to support their hypothesis before they built the infrastructure.
Why is it that more businesses don’t take this approach of experimentation? Do you focus on what worked in the past, hopeful that it will work in the future? Are you willing to tap the market, like the woodpecker, in order to learn?
Share your thoughts: How much beta experimenting have you done and what have been the results?