In my last blog post I explained how we run Agile at CloudSigma by using customer feedback as a check on our theories about new product features. Many investors and entrepreneurs criticize this approach by saying that you can’t have a vision if you are only listening and reacting to customer’s demand.
Henry Ford said that “If I had asked people what they’d want, they’d said faster horses.” We can do Agile on the development side, but not on the commercial side. Lean is simply not a good fit running the commercial operation.
That is the emotional reaction I have been confronted with by many CEOs, entrepreneurs, as well as many non-executive member of various boards.
It’s the reaction borne by fear, that comes immediately after I coach people on Agile and Lean methodologies. You cannot predict the future and therefore it’s a safer bet to manage product-market fit risk by continuous re-iteration.
This reaction is a symptom of a mistake most entrepreneurs and business owners do (myself included until recently) in logically mixing up product with value proposition.
Value Proposition is Vision
What value you propose to your consumers is a vision. What product that value comes packed in is your mission and day-to-day operations.
One of the interesting things about homo sapiens as a species is that the value we buy into and like to be proposed – value propositions that work – haven’t changed that much throughout our entire history.
The packaging it is wrapped in – the product – has always changed throughout time and will continue to change dramatically from decade to decade sometimes even from year to year.
Let me give you a couple of examples of value propositions that work – and have always worked – followed by some of the products that capture these value propositions and make them operational as products.
Value Proposition: Make it easy to become socially respected (i.e. famous)
Vision: “Give people a way to feel socially respected, famous and rich by showing the world their wealth be it their network, clothes, talents or thoughts”
Reflected in many different products with good market fit at different times:
Ancient Greek: Spend your money to run for senate!
Roman: Spend your time to join the army and become a Centurion!
Medieval: Spend your life to join the church – read the book!
Renaissance: Join the university – write a book!
Industrialization: Become a capitalist or a musician!
Today: Get a LinkedIn profile and show your network, a blog and show your thoughts, a Facebook fan page and show off your audience!
Underlying human nature below it all: Vanity.
There are of course 1,000s of similar products all going for the same value proposition throughout time.
Value Proposition: Make me smile and laugh – entertain me
Vision: “Give people a special time where they let go of their worries, thoughts and stress and enter into a fantasy world.”
Products at different times:
Ancient Greek: The theater
Roman: Gladiators
Medieval: Music at the inn – stories about paradise in churches where priests doesn’t recite in Latin
Renaissance: Back to the theater
Industrialization: Movies, concerts, mass tourism
Today: iPhone, iPad, HD & 3D movies, clubs, adventure trips and sports
Underlying human nature: We are also playing animals.
What I hope to show with these oversimplified examples is that a single value proposition can take the shape of many completely different products at different times due to technologies available at that time, knowledge and education of the consumer, money available and many other factors.
Delivering the vision is the product and the product needs to be able to morph quickly, which is where the Agile methodology fits in as described in my previous blog post.
The morphing of the product is depending on changing factors such as new technologies, knowledge of consumers, wealth in society etc. in order to deliver a package around the vision which consumers want (the product/market fit).
What it takes to be an innovator
True innovators are able to:
- Bring together several value propositions never seen in a mix before
- Each value proposition needs to capture the essence of human nature or human behavior
- This mix needs to be delivered as one product, at the right time, at the right price
For example, the iPhone:
- Connect me (product: phone, email, web)
- Entertain me (product: music, movies, games)
- Make me more productive (product: professional apps, email on the road)
- Make me more creative (product: camera, video recorder, sound recorder)
- At a list price of 5-10% of my monthly salary
It is the ability of mixing up value propositions and quickly executing them as a Minimum Viable Product (see my previous blog post), to check if consumers like and understand:
- The value propositions
- The product
This makes some entrepreneurs and companies get ahead of the curve and be innovators.
What it takes to be an innovator without failing
It is the companies that are humble enough to take the data from the check and re-iterate their product in an Agile cycle of Plan-Do-Check-Act, who will stay ahead of the curve and avoid failure.
Think about Myspace. They were one of the first online to offer the Value Proposition of making it easy to become famous and socially respected into a product (a music promo website if you don’t know it).
They forgot to re-iterate the product and therefore, though they had a product-market fit initially, the market moved on as new technologies and time passed leaving Myspace behind and overtaken by new music promo websites such as SoundCloud, and a plethora of other companies.
Wrapping technology around human behavior – the path to excellence
Now let’s take this idea of value propositions to the next step.
What is a good value proposition? Something that really and will continue to work for a long time?
I propose it is value propositions that are tightly connected to human nature or human behavior. The days of marketing departments creating demand for products that don’t address a value proposition with an underlying human behavioral need will pass – put it into perspective: Public Relations was invented by Freud’s nephew Edward Bernays in the late 1940s to early 1950s. It has thus existed for about 60 years now compared to the thousands of years human beings have spent their capital buying into value propositions as products.
Lack of Vision?
Therefore it isn’t lack of vision when we react to customer demand on the product side – that is just a risk mitigation of making sure our vision is wrapped in the right compelling way at any given point in time to deliver the value propositions consumers want.
It is simply lack of vision if we don’t know what value we are trying to offer to consumers and how that value is connected to either human behavior or human nature; a lot of product centric so called visionaries fall exactly into that category becoming blinded by their product idea and subsequently are unable to formulate what value they are trying to deliver.
Making it operational
It is a huge cultural change to implement Agile and Lean into a project or company that isn’t used to the way of thinking (and in many cases not possible). It requires that the team members, entrepreneurs, investors and board members let go of their fear and start to admit:
- No one knows the future
- 3 year financial forecasts and business plans are nonsensical
- A product idea isn’t a vision
- Only by listening to customer needs can you get your core value propositions packaged as product to get product/market fit
The methodologies themselves are not rocket science. Changing and re-educating your team unfortunately is.
It starts by letting go of fear.
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