Monthly Archives: October 2017

The Scientific Method In Business

The scientific method is a very powerful tool used by scientists around the world in the attempt to better understand the universe around us. Humans have been making questions about it for a very long time. For each question, some people come up with their own explanations of what might be at play in the background. This is what they believe to be the truth. This famous methodology has the power to separate the valid explanations from the invalid. Putting it in simple words, the scientist comes up with a hypothesis about whatever he’s studying. For the ones who don’t know, the hypothesis is nothing but a possible explanation for why/how something works/is. To validate this possible explanation about the world, one has to come with tests, that not only show that the hypothesis might be true but also tests for the predictions of that hypothesis as well as tests to disprove it. The last one is probably the most important of all. If after the tests the hypothesis is proven wrong, then it is discarded and a new one comes to replace it. If its proven right on the other hand, we build up our knowledge on it. It becomes one of many of the pillars of our common wisdom.

 

The scientific method in business

The scientific method is a tool to use in the search for the truth. If our assumptions fail the tests we move on and look for better explanations. For this reason it is also a good tool to use in business.

Looking deeper at the lean startup methodology, you can see the scientific method embedded on it. We assume that a certain feature will double the number of sales for a produt. We build it and release it to the market. If it does increase the number of sales we keep it. Assuming no other feature was added at the same time or any other factor was in play in the sudden growth of sales. On the opposite scenario, we simply make new hypothesis about the costumer’s tastes and habits and we go back to building and testing.

At the beginning of the lean startup methodology we build, and there we aim at a minimum viable product. On the middle we test it, in order to know if the product has the impact we envisioned. This can be done through the implementation of the scientific method. The third phase is learning from our experiments and that happens to be the topic of the next post :).

 

To learn more about the scientific method read: Scientific method
-Wikipedia

 

 

 

 

It is all about knowledge and experience;)

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What Is The Product Development Phase About?

In this post you’ll learn the answers for the questions: what is the product development phase about? and where does it stand on the lean startup methodology?

 

A startup is somewhere between the realization of a dream and just the mere dreaming about the dream. It is in a way the materialization of the vision of one or more people. The founders are not wondering how wold it be to put their ideas into practice anymore. They are now facing the problems that affect similar businesses in the industry and their commitment to the vision starts to be put to test. In order for this startup to exist and grow into something bigger, products must be developed and launched to the market. So, it’s no wonder that the product development phase should be studied and engendered in the way that best fits the goals/needs of the company.

 

What is the product development phase about?

The main goal of the product development phase/building phase is to build/develop a product. The way this is done, depends on the methodology the business is using. We tend to think of it to be the phase in which the vision of the founders is turned into something concrete that will in the end be sold to the market and make millions of dollars. With this approach the intention is to build the most close to “perfect” version of the product.

By using the lean startup methodology on the other hand, the goal is to build a minimum viable product. A version of the product stripped out of any unnecessary features and launch it as early as possible to the market. After it is proved that the market actually wants the product, new features are added. Each feature is introduced to the product, and with each release the reviews are studied in the same way a scientist tests a hypothesis. If the reviews are good the new feature is kept and if not removed.

 

The approach is not of trying to build the greatest product ever all at once. The approach is of a scientist trying to understand how the world works step by step. The world here is replaced by the costumer.

 

 

 

It is all about knowledge and experience;)

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The Lean Startup Book Review

The lean startup methodology as mentioned on the post What is a lean startup? is good for the ones who would like to start a new business but don’t have millions of dollars laying at the bank. Know that some products will be expensive to launch even if stripped out of any unnecessary features. If you’re trying to build an airplane factory for example, there is a pretty good chance that you’ll need a very, very large budget. It might be difficult to apply some of the principles of the lean startup methodology in some businesses, but for a good number it can certainly have some positive effects. So, if you’re not familiar with the lean start up method, a good read is certainly the book: The lean startup by Eric Ries.

 

 

The lean startup book review

The content is explained in an easy to understand manner. It certainly is a good for business newbies since there is no complicated jargon involved. There are lots to learn from each chapter, and although reading all of it is the best thing to do, reading any of them alone already bring lots of value.

 

Summary

The overall idea or at least one of the core ideas of the book is that iteration since day one is probably a better way than attempting to build that one “perfect” product that will overnight, conquer an entire market and be a source of riches to its founders. By focusing on developing and launching a minimum viable product and from there continuously testing every new idea for the product in the same way a scientist tests his hypothesis’s, loads of money can be saved as well as emotional pain.
So, the big take out is test, test, test. Since it’s only through testing our assumptions that we can learn and even learn new and valuable insights.

 

It is all about knowledge and experience;)

What Is A Lean Startup?

In this post you’ll learn the answers for the questions: what is a lean startup? and what are a few advantages of it?

 

The world we live in has evolved in such a way that something that used to be a scary beast of 8 heads for many,like starting a business, became something that now at least every other person considers when they are alone with themselves. Starting a business didn’t become any less than what is used to be in the past. The only different thing is that now we have many resources from which to learn the deeper secrets of the business world. All of it with just a click of a button. There is also the fact that any person today who wants to start a business can have access to money borrowed from the bank/ investors as long as the idea behind it is compelling enough, the business plan well-formed and a good credit score. Sometimes the first one is enough. We are also in such an amazing place in time that sometimes there is almost no need to look for millions of dollars from investors to start a business. Sometimes you can start the business “lean style”.

 

What is a lean startup?

In a few words, a lean startup is a startup whose focus is to build a minimum viable product, and through the feedback gained from the first costumers(maybe early adopters of the product) improve the product in a way that better fits the costumer’s needs. The old idea that only a perfect product with all the possible features should be released to the market is thrown away. Here it’s OK to launch OK products with missing features.

As mentioned on the book The lean startup, a startup should focus on three things:

  1. Building
  2. Measuring
  3. Learning

The product is built with only the essential features needed to do what it’s supposed to do and then it is released to the market. The feedback from the first costumers is then measured, and from these measurements new insights are gained. The entire process is repeated over and over again, and on each iteration, the insights gained from the previous iteration are included on the building phase of the new.

 

The lean startup methodology has at least 3 advantages:

  1. Less time is spent on the building phase and because of that less resources(money, people, etc) are required.
  2. The product is tested before massive amounts of money are spent on building a “perfect” product that maybe nobody wants.
  3. Hidden insights/understandings about the costumer needs are uncovered on the learning phase without spending loads of resources.

 

 

Summary

One more reason to choose the lean startup methodology is that if you don’t have lots of money on the bank to spend, this methodology will give you the power to start small.
 

 

It is all about knowledge and experience;)

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What Is A Consumer Segment?

In this post you’ll learn the answer for the question: what is a consumer segment?

 

A business like pretty much anything else in life has that one thing that without it, it wouldn’t exist. For any person alive today, the one thing are its parents. For comedy, the one thing is comedy lovers/the audience and for businesses, that one thing is the costumer/consumer. No business can survive without any form of a costumer. The reason for this is simple: the costumer is usually the one who comes with the money, and without money a business can’t survive. So, since the consumer is such a big deal for a business, it’s no wonder that it should also be the main subject of study of the business owners. One subject of that subject is consumer segmentation, which when applied can have among many things, the power to reduce the amount of money lost in a marketing campaign.

 

What is a consumer segment?

A consumer segment is nothing but a group of consumers that happen to be similar to one another in a certain way put together. From one pool of consumers can come more than one consumer segment. They all like/love/use the product, but they are different from one another on their own way. Examples of consumer segments for a grocery store could be: pregnant moms, old women, teenagers above the age of 15, etc.

 

Why divide the consumers into consumer segments?

By dividing the consumers into consumer segments, one can come up with more type specific marketing strategies. Assume there are two big and broad consumer segments for a store: Men and Women. We all know that Men and Women have different behaviors, tastes, desires, etc. So, to attempt to come up with one marketing strategy to appeal to both at the same time would be a hard task. By trying to appeal to both with one message, the majority of the return would come only from the group that is naturally more attracted to that particular message. The other part on the other hand would be draining money. When we divide them into segments, we gain the freedom to change the message as well as the products we put in front of each prospect.
The profit is maximized by giving to certain groups only the things they are attracted to/like.

There is much more to it but that is the gist of it.

To learn more about it read: Market Segmentation
 

 

 

 

It is all about knowledge and experience;)

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What Is True Productivity?

Productivity is a very important part of our day to day lives. If you’re an employee, a productive year can mean the difference between getting a raise/promotion or not. For the business owners on the other hand, a productive year, or better yet, a productive culture can make the difference between the success or failure of the business. This is even more important in the highly competitive markets, where success really is a zero-sum game(the success of some means the failure of the rest). So, in addition to innovative thinking, productivity is one of those things that both businesses and people need to have as much as they can in order to be successful.

 

There are two problems each one of us faces at least once when the subject is productivity. The first is the struggle to actually do the work continuously, for as long as it takes to achieve our goals.

This problem is solved in many different ways by the self-help industry. The second and maybe more insidious one is the misunderstanding of productivity with busyness. We are often led to believe that just the act of keeping our schedules full is enough for us to be productive. Doing things all day long do not equal productivity, but busyness. In fact, its possible to have a productive day, only using a part of it. To be able to do that, you need to understand what productivity really is about.

 

So, what is true productivity?

It turns out that true productivity is easier to understand and sense than you might think. The simplest way to know if you’re being productive is by measuring your results. Are you achieving your goals? Are things going according to plan? Are you meeting your deadlines? These 3 questions might not be the best diagnostic of your productivity state, but they can paint a pretty good picture.

If productivity is not the same as being busy, then what is it? Well, according to the book “The one thing” by Gary Keller in the beginning of each day you should ask yourself the question : “what is the one thing such that by doing it, everything will be easier or unnecessary?” This question forces you to pay attention to one thing, and one thing alone. True productivity or productive work, is the kind of work that does that one thing that brings you the closest to your goal above all other things.

 

Summary

The problem with being busy and having lots of to-do’s on your to-do list, is that it’s pretty easy for the things that really matter to either get little portion of your time or nothing at all. The worst part of it is that because we spent the entire day doing things, it’s easy for us to get the sense that we were productive. When you focus on the one thing, it’s easy to think that the day wasn’t productive enough since you “didn’t to as much”. Sometimes the fact that we feel productive doesn’t mean we are.

 

To get productivity tips read: productivity improvement tips

It is all about knowledge and experience;)

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Advantages Of Niche Marketing

The understanding of the target costumer is a very important part of product development. It’s easy to get caught up on trying to develop a product that appeals to everybody. There are at least two problems with that: (1) Any product that focuses on each of the costumers segments you’re targeting uniquely will probably be more appealing to each respective type of costumer. (2) It’s an almost impossible task. For a given type of product there probably exists more than 50 different kinds of costumers with different tastes and desires. The resulting product would probably at a little appealing for each and every kind of costumer, but a “must have” to none.

 

Advantages of niche marketing

By producing and marketing a product to a niche instead of a market, most or at least a good part of the problems that come with trying to appeal an entire market are avoided. For the ones who don’t know the difference, a niche can be said to differ from a market in size. While a market would be made of each and every costumer that might buy a certain class of products, a niche would be a small and more focused part of that market. If the market is made of all people who like yogurt, an example of a niche could be the set of underage kids who eat yogurt. As you can see by now, a yogurt that tries to appeal to the entire market of yogurt eaters is less likely to be more appealing to the set of underage kids who like yogurts than the second yogurt option.
Costumer focused products are more likely to be appealing to their target costumers than products trying to appeal to an entire market.

 

Apart from quality, there are a few more advantages of developing and marketing products to a niche over a broad market:

  1. It’s easier to develop( since there are fewer people to appeal to).
  2. It takes less time to build and launch
  3. It costs less money

 

 

 

 

 

 

 

It is all about knowledge and experience;)

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Define Minimum Viable Product

In this post you’ll learn the answers for the questions: What is a minimum viable product? and why does it matter?

 

Product development is what all businesses are about. This is even true if the product is a service, since a service can also be seen as a product on the portfolio of the company. So, the way each business develops its products including the speed and the number of features, has a big impact on the success of the business. We are led to believe that the world we live in simply doesn’t tolerate imperfection and that the products must include every possible feature. One good way of erasing this belief is by looking at the behavior of early adopters in a certain niche. Another and possibly more powerful way is by understanding the power of a minimum viable product.

 

Define minimum viable product

In a simple words, a minimum viable product is a version of a product that comes stripped out of any set of features that are not necessary to appeal to early adopters. The result of this process is a product that is simpler than you might think, but that still does the job. Take an app as an example. A minimum viable version of that app is a version that only does what the app promises to do. If the app helps you to wake up early, extra features such as: the ability to choose the sound of the alarm or the ability to share your wake and sleep time with your friends are completely ignored. The result is an app that does what its supposed to do, but without the perks that more evolved apps(apps that have been around for years) have.

Why does it matter?

The number one reason why its important to develop minimum viable products and market them to early adopters is to know, before anything else, if the product really has a place on the market place. A minimum viable product will by definition be cheaper and quicker to develop. It might look underdeveloped and even leave something to desire, but it will answer the million dollar question: “do people want this?”
This priceless answer surprisingly or not can be answered without having to spend a fortune, since, again, early adopters can be more forgiving of imperfections.

 

It is all about knowledge and experience;)

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Marketing To Early Adopters

In this post you’ll learn a few ways to find early adopters and the answer for the question: why do they matter?

 

On the post Innovation adoption curve, we said that an innovative idea/product should before anything else, be exposed to early adopters. People who happen to be raging fans of the niche/class of products the product is coming from. The reason for that being that (1) They are more forgiving of imperfections and (2) They give you the chance to improve the product before it becomes mainstream. So, if you have a product already developed, the next one thing is to find the possible early adopters and present it to them.

 

Marketing to early adopters

As mentioned above, early adopters will provide you with one of the most valuable things: feedback. On the early stages of the product/service, these are the people who will probably be willing to give it a try and offer some feedback. So, how can I find early adopters?

 

Step #1

The first step to find early adopters of a class of products is to understand exactly who they are. The idea is to make a crystal clear description of who they might be, their tastes, age, sex, life-style, habits, etc. The reason for this is that it’s impossible for you to find anything if you don’t know what it is. You could literally be looking at it but not knowing it.

Step #2

The second step is to take the information from step one and deduce the possible places this particular set of early adopters can be found. If the step one is well executed, the answers for the questions made on this step will be partially answered. Let’s assume the early adopter you have in mind is a teenager, camera enthusiast who is probably already making money by taking pictures. One good idea of a place would be schools that have some form of magazine that happens to be managed by students. Magazines need pictures for their stories, and if the magazine is managed by students, there is a pretty good chance that at least one of them is a camera enthusiast.

 

Common places to find early adopters in general are:

  • Forums
  • Blogs
  • Youtube channels
  • Social media

Notice that each one of the sources above the source must be about the niche of the product you’re developing. So if your product is a new vitamin for gym goers, poossible sources of early adopters could be: fitness forums, fitness blogs, YouTube channels whose content is about fitness and social media accounts that post mostly about fitness.

 

 

 

 

It is all about knowledge and experience;)

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Innovation Adoption Curve

In this post you’ll learn the answers for the questions: What is the innovation adoption curve? and why does it matter?

 

 

The ability to innovate is one of the greatest advantages a business can have in a competitive market. This ability is so crucial that in any market, regardless of the number of competitors has the power to dramatically increase the market share who possesses it the most, making him the owner of a monopoly. Its easy to believe that innovative ideas/products will naturally become adopted by the mainstream public. The truth is that sometimes this is not true. Sometimes new and innovative ideas take some time before they become popular, and a good way to understand that is by understanding first the innovation adoption curve.

 

Innovation adoption curve

In a few words, the innovation adoption curve is a model that places groups of people(innovation adopters) into groups, specifying how likely are they to adopt an innovative idea/product. There is much more into the model, the core of it places the prospects of a certain product/service into two distinctive groups: early adopters and late adopters.

 

Early adopters

The early adopters are people who are always looking for the latest version of the product they are passionate about. These are the people who are willing to try the new and innovative ideas/products even if they are not perfect. The thrill of being the first ones trying the product is probably one of the reasons why the possible absence of perfection might not be a problem.

 

Late adopters

Late adopters are people who take some time to “adopt” a new product/idea. They usually wait for a few years before giving it a shot. A part of it is due to the fact that they are just more strict when it comes to perfection. The late adopters are more into time tested products that they can somehow be sure will work. Unless the product is well tested, they prefer to stick to what they are used to instead of trying the new idea.

 

So, for innovative products, one of the common practices is to attempt to appeal to early adopters instead of late adopters at first. Early adopters not only tolerate small flaws, but also give you a chance to launch the product early, and through continuous testing and improvement, grow the spread of the product to the late adopters side of the curve.

 

 

 

 

 

 

It is all about knowledfe and experience;)

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