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Startup
Lean Startup
Product Management

You Can't Fake Value


Aug 16, 2016
By Suzanne Abate

fake-smile When it comes to communicating value, there’s more to it than just talking the talk.

These days everybody wants to “start a Startup.”

If you follow publications like Tech Crunch and Wired, you might have the impression that the only thing standing between you and Series A funding or a billion-dollar buyout is getting your product built.

What you won’t read as much about is how 9 in 10 startups fail.

Hidden inside that statistic is an even more astonishing notion:

Most startups don’t fail because they lack a product, they fail because they lack customers and a proven financial model  Steve Blank

Product on its own is not a business. And product businesses fail because they cannot prove their value.

The two most important experiments to conduct

The Lean Startup methodology is about learning the most you can — about your customer, your product, your market — with the least amount of waste (read: time and money mis-spent).

Lean methodology is about experimentation, and experiments are about testing hypotheses.

A growth hypothesis tests how new customers will discover your product.

A value hypothesis tests whether a product really delivers value to customers once they are using it.

Testing value is a way of making sure customers want your product or service before you build it.

Developing your solution

One simple framework for beginning to develop your product idea is a Needs Assessment Matrix.

needs-assessment-matrix This simple “Needs Assessment Matrix” is a great tool for developing your initial solution.

Needs refer to the problem your customer has that you’re trying to solve.

A customer need can be a macro problem such as “I need a way to manage my accounting online.”

Or it can be a list of (seemingly) disparate micro problems like “I need a way to track the time I spend on client projects, and I need a way to connect my time spent to my client billing.”

Sometimes a macro need has subset needs that we can list out to help us further understand the problem. For example, “I need a way to organize my accounting online, but it’s important that it can be accessed from any device and always stays synced between devices.”

Once we understand and validate our customer needs, we can start to think about Features — the specific functions of our product that allow our customers to accomplish certain tasks.

The features column is at once the most exciting and dangerous place to play. As designers, engineers and builders it’s naturally the place we gravitate to because we can see what the solution could look like.

The problem is that most product builders start here and languish here — overlooking problem-solution fit entirely and never connecting features with the most important aspect of all: Benefits.

A whale is no more a fish than a horse is

A value proposition is a clear statement that explains how your solution solves your customer’s problems.

Values can be quantitative such as price, speed or percentage-based gains and losses (cost reduction, profitability increase).

And values can also be qualitative. Descriptions of design, usability and innovation are highly subjective value propositions that are not measurable.

So in order to leverage qualitative values they must resonate as valuable with the customer segment you’re targeting. This is referred to as message-market fit.

But perhaps more importantly: value propositions are not just about marketing.

Marketing relies on value propositions as a way of communicating product value the way the neocortex of our brain tries to communicate what we feel with our limbic system.

And just like with the brain, spoken words can belie our true feelings.

True value is felt. It cannot be faked.

If your stated value propositions are effective in acquiring traffic or converting users, you’ve successfully proven part of your growth hypothesis. This is no small feat, but alone it’s not enough.

Value is a key ingredient that must be baked into your product recipe, not frosted on afterwards.

If you cannot prove value, if your customers can’t perceive your product’s worth, everything else is just words.

Originally published at medium.com on June 29, 2016.

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