Market creation
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The document discusses market creation for startups. It states that disruptive innovation creates new markets where incumbents are not established, giving startups the best chance of success. The document outlines a methodology for startups that involves an ideology of experimentation, tools like the Lean Canvas for documenting experiments, and a workshop approach. It emphasizes the need for startups to solve problems customers are willing to pay for through a minimal viable product and iterative customer feedback to guide product evolution and market fit.
Market creation
- 3. DISRUPTIVE INNOVATION = MARKET CREATION
- 4. INCREMENTAL INNOVATION = INCUMBENTS RULE HERE
- 5. MARKET CREATION = BEST CHANCE FOR A STARTUP Act of making something that is more useful, affordable or better for someone - than existing alternatives
- 7. 3 PARTS: 1 IDEOLOGY 2 TOOLS 3 WORKSHOP
- 8. 1 IDEOLOGY
- 9. STARTUP DEFINITION “STARTUP IS AN EXPERIMENT FOR CREATING A SUSTAINABLE BUSINESS”
- 10. STARTUP REDEFINED “STARTUP IS A SERIES OF EXPERIMENTS FOR CREATING A SUSTAINABLE BUSINESS”
- 11. OPERATIVE CAPABILITY STARTUP SCORECARD - RECORD OF PROGRESS MARKET EVOLUTION
- 12. STARTUP SCORECARD - RECORD OF PROGRESS WHY? Grand Vision HOW? Resources, culture and skills OPERATIVE CAPABILITY WHAT? Scalable business model & Product- MARKET EVOLUTION market fit
- 13. PRODUCT WITH A MARKET - DEFINITION PRODUCT THAT SOLVES A PROBLEM FOR CUSTOMERS THAT ARE WILLING TO PAY FOR IT
- 14. PRODUCT WITH A MARKET - DEFINITION Complete,
- 15. right
- 16. features Targeted PRODUCT THAT SOLVES A PROBLEM FOR CUSTOMERS THAT ARE WILLING TO PAY FOR IT Makes
- 17. money Relevant Unique
- 18. right
- 19. features, packaging,
- 20. easy
- 21. to
- 22. hire
- 23. for
- 24. a
- 25. job IS RELEVANT Stuff
- 26. I
- 27. buy IS UNIQUE price
- 28. point,
- 29. channel,
- 30. value
- 31. proposition
- 32. PROBLEMS WE TRY TO SOLVE 1/3 Scarce resources needs to be managed.
- 33. PROBLEMS WE TRY TO SOLVE 2/3 Products are created too soon.
- 34. PROBLEMS WE TRY TO SOLVE 3/3 Products are created too late.
- 35. MOTIVATION EXAMPLE #1 Want-button for Wantlet vs. Pinterest Pin-it-button
- 37. MOTIVATION EXAMPLE #2 Ubi Oulu
- 38. GOAL Make every experiment count, when it counts.
- 39. 2 TOOLS
- 40. MISSION Find a Systematic Approach for Market Creation
- 41. LEAN MOVEMENT by ERIC RIES
- 42. “SCIENTIFIC METHOD” OBSERVE QUESTION HYPOTHESIZE EXPERIMENT CONCLUDE
- 43. STARTUP EVOLUTION: MARKET CREATION PERSPECTIVE PROBLEM / PRODUCT / SOLUTION SCALE MARKET FIT FIT
- 44. STARTUP EVOLUTION: MARKET CREATION PERSPECTIVE PROBLEM / PRODUCT / SOLUTION SCALE MARKET FIT FIT VALIDATED LEARNING GROWTH via OPTIMIZE via PIVOTS Experiment-driven
- 45. decisions
- 46. PERFECT EXPERIMENT Fast, Recoverable and Explicit
- 47. STARTUP SCORECARD: RECORD OF PROOF PROBLEM / PRODUCT / SOLUTION SCALE OPERATIVE CAPABILITY MARKET FIT FIT VALIDATED LEARNING GROWTH via OPTIMIZE via PIVOTS MARKET EVOLUTION
- 48. TOOLS #1 Lean Canvas #2 Progressive Learning Board Product Hacker Extras: “Jobs to be done”
- 49. #1: LEAN CANVAS by ASH MAURYA “FROM BUSINESS PLAN TO BUSINESS MODEL”
- 50. #3: LEAN CANVAS PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: CURRENT SOLUTIONS: METRICS: CHANNELS: EARLY ADOPTERS COSTS: REVENUE:
- 51. #3: LEAN CANVAS PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: Top 3 Problems Top 3 Solutions Can’t be easily bought Single, clear, compelling or copied Target customers message that states way you are different and worth buying CURRENT SOLUTIONS: Competitive solutions for solving the problem METRICS: CHANNELS: EARLY ADOPTERS: Key activities you Path to customers Who’s the first to adapt to your solution? measure COSTS: REVENUE: Customer acquisition costs Revenue model Distribution costs Life time value Hosting Revenue People, etc. Gross margin
- 52. #3: LEAN CANVAS (EXAMPLE: FACEBOOK) PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: Hard to reach specific Targeted ads people with specific Targeted advertising 1 Billion users Marketers demographics Share, Like, Newsfeed, Knows everything 1. Hard to stay in friends and profiles Connect to friends and Consumers at large touch with all friends family at once 2. How do I share my METRICS: CHANNELS: baby pictures? EARLY ADOPTERS CPC/CPM avg. bid Media agencies CURRENT pricing Facebook merchant SOLUTIONS: High schools # Served ads advertising program Online ads e.g. # of conversions Google Friend invitations (c2c, Postcards, Calls, .. DAU virality) Facebook like-partners COSTS: REVENUE: Development Highly targeted - CPC/CPM advertising (“e.g. pay to display Hosting an ad to 25 yo old men, that like World of Warcraft in Oulu”) Lobbying Free for consumers
- 53. #3: LEAN CANVAS (FILL ORDER) PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: 2 3 9 1 CURRENT SOLUTIONS: METRICS: 4 CHANNELS: EARLY ADOPTERS: 8 5 COSTS: REVENUE: 7 6
- 54. #2: PROGRESSIVE LEARNING BOARD “DE-RISKING PRODUCT CREATION”
- 55. 4 KINDS OF RISK IN MARKET EVOLUTION (NOT SOLVED LINEARLY, BUT KIND OF APPEAR CHRONOLOGICALLY) PRODUCT MARKET GROWTH / COMPETITIVENESS RISK RISK SCALE RISK AND PROFIT RISK
- 56. (applied from Mark Suster) COMPETITIVENESS AND PROFIT RISK GROWTH / Valuation SCALE RISK MARKET RISK PRODUCT RISK Time
- 57. PRODUCT RISK How important is the problem for the customer? Will your solution solve the problem? Can you build it? Does your solution deliver a unique value proposition?
- 58. MARKET RISK Who has the pain? How do they solve problems today? Will they pay for the problem? If not, who will?
- 59. GROWTH AND SCALE RISK How will you find customers? How will customers find you (at scale)? How will your growth engine operate (viral, paid, sticky, ..?) How will you scale to demand?
- 60. COMPETITIVENESS AND PROFIT RISK Are you getting paid? Do you have a viable business (LTV!)? Do you have a way to build unfair advantage?
- 61. LEARNING/DE-RISKING ON LEAN CANVAS PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: 2 PRODUCT RISK: 3 PRODUCT RISK: 2 9 COMPETITIVE PROFIT RISK: 3 MARKET RISK: 1 1 CURRENT 1 SOLUTIONS: METRICS: 4 PRODUCT RISK: 3 CHANNELS: GROWTH EARLY ADOPTERS: GROWTH 8 5 RISK: RISK: GROWTH 2 1 RISK: MARKET RISK: 3 2 COSTS: REVENUE: MARKET RISK: 7 COMPETITIVE PROFIT RISK: 2 3 6COMPETITIVE PROFIT RISK: 1
- 62. EXAMPLE: LEARNING IN LEAN IN PRACTICE
- 63. PROGRESSIVE LEARNING BOARD Before each experiment: Define Choose the fastest your hypothesis and ways you way to test as an validate learning experiment Lean Canvas Experiment 1: Experiment 2: Experiment 3: Experiment 5: e.g. Experiment 4: e.g. MVP Module e.g. “Problem Interviews” e.g. Interviews e.g. Prototype v1.0 Problem/Solution Fit - Product Risk There is a customer segment with the problem CUSTOMER Problem is important to the customer PROBLEM segment Product delivers UVP (is unique and relevant to UVP customer) Product/Market Fit - Market Risk There is a way to build the product to solve the SOLUTION problem There is a way to connect with early-adopters CUSTOMER Customers are willing to pay for the solution to REVENUE the problem Growth / Scale Risk We are able find customers CHANNEL Customers are able to find us CHANNEL Engine of growth is operative (viral, sticky or CHANNEL / REVENUE paid) We are able to scale on demand SOLUTION / COST / METRIC Market / Monetization Risk We are getting paid REVENUE We are able to generate revenue from each REVENUE / COST customer We have an unfair advantage UNFAIR ADVANTAGE
- 64. PRODUCT HACKER EXTRAS: JOBS-TO-BE-DONE by CLAYTON CHRISTENSEN
- 65. STORY ABOUT A MILKSHAKE: WHAT JOB DO YOU HIRE A MILKSHAKE FOR?
- 66. JOBS TO BE DONE EXPERIENCES COMPLEMENTING INTEGRATED SERVICES OFFERING
- 68. 3 WORKSHOP
- 69. #3: LEAN CANVAS (FILL ORDER) PROBLEMS: SOLUTION: UNIQUE VALUE UNFAIR ADVANTAGE: CUSTOMER PROPOSITION: SEGMENTS: 2 3 9 1 CURRENT SOLUTIONS: METRICS: 4 CHANNELS: EARLY ADOPTERS: 8 5 COSTS: REVENUE: 7 6
- 70. CURRENT HYPOTHESIS PLAN TO EXPERIMENT BUSINESS MODEL AREA PRIORITY CURRENT HYPOTHESIS PLANNED EXPERIMENT
- 71. PROGRESSIVE LEARNING BOARD Before each experiment: Define Choose the fastest your hypothesis and ways you way to test as an validate learning experiment Lean Canvas Experiment 1: Experiment 2: Experiment 3: Experiment 5: e.g. Experiment 4: e.g. MVP Module e.g. “Problem Interviews” e.g. Interviews e.g. Prototype v1.0 Problem/Solution Fit - Product Risk There is a customer segment with the problem CUSTOMER Problem is important to the customer PROBLEM segment Product delivers UVP (is unique and relevant to UVP customer) Product/Market Fit - Market Risk There is a way to build the product to solve the SOLUTION problem There is a way to connect with early-adopters CUSTOMER Customers are willing to pay for the solution to REVENUE the problem Growth / Scale Risk We are able find customers CHANNEL Customers are able to find us CHANNEL Engine of growth is operative (viral, sticky or CHANNEL / REVENUE paid) We are able to scale on demand SOLUTION / COST / METRIC Market / Monetization Risk We are getting paid REVENUE We are able to generate revenue from each REVENUE / COST customer We have an unfair advantage UNFAIR ADVANTAGE
- 72. MISTAKES ARE PROOF THAT YOU’RE TRYING. THANKS! kristian.luoma@gmail.com @kluoma