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Copy file name to clipboardExpand all lines: learn-pr/startup/validate-idea/3-test-assumptions.yml
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prefetch-feature-rollout: true
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title: Test assumptions
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description: Learn how to identify which assumptions are most critical to the success of your company. See how to systematically test those assumptions.
Copy file name to clipboardExpand all lines: learn-pr/startup/validate-idea/6-knowledge-check.yml
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prefetch-feature-rollout: true
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title: Knowledge check
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description: Review concepts on how to test your startup assumptions. Subjects include experiments, interview strategies, and tools that measure value.
As a startup founder, you're actively exploring new business models. You shouldn't expect to know with certainty who your customers are, what product you should build for them, or how you're going to make money.
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As recently as 10 years ago, business schools taught businessplan writing as a core discipline for entrepreneurs. They would have aspiring entrepreneurs write lengthy tomes on what problem they intended to solve, who their customers would be, and what business model they would adopt. They even asked entrepreneurs to create detailed five-year cash-flow forecasts!
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As recently as 10 years ago, business schools taught business-plan writing as a core discipline for entrepreneurs. They would have aspiring entrepreneurs write lengthy tomes on what problem they intended to solve, who their customers would be, and what business model they would adopt. They even asked entrepreneurs to create detailed five-year cash-flow forecasts!
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The truth is that a business plan for a prelaunch startup is largely an exercise in creative writing. Most of what goes into the plan is pure speculation.
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Based on the work of thought leaders such as Steve Blank and Eric Ries, it's now accepted that startup founders achieve better outcomes by engaging with customers early to learn about their needs. Then founders create a lightweight business plan that can be easily adapted as the company progresses. This course of action is the essence of the [lean startup methodology](https://hbr.org/2013/05/why-the-lean-start-up-changes-everything?azure-portal=true).
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Based on the work of thought leaders such as Steve Blank and Eric Ries, it's now accepted that startup founders achieve better outcomes by engaging with customers early to learn about their needs. Then, founders create a lightweight business plan that they can easily adapt as the company progresses. This course of action is the essence of the [lean startup methodology](https://hbr.org/2013/05/why-the-lean-start-up-changes-everything?azure-portal=true).
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In this module, we're going to focus on putting the lean startup methodology into practice. We test and validate your startup idea quickly and cheaply with customers before you build a product. If you already started building your product, that's fine. This module helps you check that you're on the right track.
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In this module, we focus on putting the lean startup methodology into practice. We test and validate your startup idea quickly and cheaply with customers before you build a product. If you already started building your product, that's fine. This module helps you check that you're on the right track.
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We're going to use the Value Proposition Canvas by Strategyzer and the Lean Canvas by Ash Maurya. Two great (and free) tools that help you engage with customers. These tools can also validate your problem and solution hypotheses. You're able to use this information to decide what product to build.
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We're using the Value Proposition Canvas by Strategyzer and the Lean Canvas by Ash Maurya, two great (and free) tools that help you engage with customers. These tools can also validate your problem and solution hypotheses. You can use this information to decide what product to build.
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This subject is arguably the most important one we're going to cover. Of all of the things that cause startups to fail, building the wrong product is by far the most common.
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## Learning objectives
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By the end of the module, you're able to:
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By the end of the module, you should be able to:
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- Articulate your idea by using the Value Proposition Canvas.
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- Set out your proposed business model by using the Lean Canvas.
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- Use design thinking to identify critical assumptions.
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- Build user personas that represent your target customers.
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- Plan and conduct customer interviews.
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- Test your assumptions by creating experiments.
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- Make decisions about what product to build based on the results of your customer interviews and experiments.
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- Make decisions about what product to build based on the results of your customer interviews and experiments.
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Every startup has a value proposition at its core. A statement that describes what your product does for your users and what benefits they derive from using it.
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Every startup has a value proposition at its core: a statement that describes what your product does for your users and what benefits they derive from using it.
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When your startup is just an idea, the value proposition is basically a set of untested hypotheses. That is, you think you know which customers you serve, what job your product does for them, and how your product is valuable to them.
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In this unit, we use the Value Proposition Canvas. It's a simple one-page tool to capture and test each of these hypotheses and then use feedback from customers to refine it. This exercise is important. If you guess wrong and build a product that doesn't do the job your customers need or doesn't create enough value for them, they won't use it and you won't have a business.
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In this unit, we use the Value Proposition Canvas. It's a simple one-page tool to capture and test each of these hypotheses and then use feedback from customers to refine it. This exercise is important. If you guess wrong and build a product that doesn't do the job your customers need or doesn't create enough value for them, they won't use it, and you won't have a business.
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A value proposition has three elements:
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## Jobs to be done
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Any product can be viewed as a thing that gets a specific job done for customers.
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You can view any product as a thing that gets a specific job done for customers.
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It's tempting to think of a product in terms of features, but it can be more useful to look at the jobs that it's going to do. Customers are more interested in what outcome your product can achieve for them than what the product itself is.
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## Task: Create a job story
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Create a job story for your product by using the preceding format, imagining that you're the customer. Remember that these hypotheses are about why your customers want your product to do a certain job, and what that job is. You can test and validate these hypotheses only by talking to customers.
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Create a job story for your product by using the preceding format, imagining that you're the customer. Remember that these hypotheses are about why your customers want your product to do a certain job and what that job is. You can test and validate these hypotheses only by talking to customers.
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## Pain relievers and gain creators
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Pains can also be personal to the individual user, such as frustration, fear, anxiety, or loneliness.
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It can be enlightening to talk to customers and understand what pains they want your product to take away so that you can build the right product. Your objective in talking to customers shouldn't be to sell them on your idea, but rather to ask many open questions and understand as many of their pain points as you can.
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It can be enlightening to talk to customers and understand what pains they want your product to take away so you can build the right product. Your objective in talking to customers shouldn't be to sell them on your idea, but rather to ask many open questions and understand as many of their pain points as you can.
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Your next job is to prioritize those pain points so that you can address the most significant ones with your product. Customers are much more likely to use and pay for a product that relieves a severe, frequent pain over a product that relieves a mild, infrequent pain.
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Your next job is to prioritize those pain points so you can address the most significant ones with your product. Customers are much more likely to use and pay for a product that relieves a severe, frequent pain over a product that relieves a mild, infrequent pain.
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It's helpful to use a customer pain matrix that plots intensity versus frequency, as shown in the following chart. You should focus your attention on the pains in the upper-right quadrant.
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:::image type="content" source="../media/learning-path-pain-matrix-chart.png" alt-text="Chart that shows the relationship between the intensity and frequency of pain.":::
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Now let's look at gain creators. These products deliver something more to your customers by successfully doing a particular job. Examples of gains include:
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- Additional revenues.
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- Improved efficiency.
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- New skills or capabilities.
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- Additional revenues
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- Improved efficiency
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- New skills or capabilities
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Gains can also be personal to the individual user, such as relaxation, enjoyment, or self-actualization.
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## Case study: Tylenol
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To help us delve deeper into pains and gains, let's use Tylenol as a brief case study. Tylenol is literally a pain reliever. The job that it does for customers is taking away a physical pain. At its most basic, the value proposition for Tylenol is pain relief.
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To help us delve deeper into pains and gains, let's use Tylenol as a brief case study. Tylenol is literally a pain reliever. The job it does for customers is taking away a physical pain. At its most basic, the value proposition for Tylenol is pain relief.
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If you ask customers why they want the pain taken away, they often tell you that pain stops them from being productive in their day. Or, it makes it harder for them to be fully present with friends and family. Therefore, we could argue that Tylenol's real job is giving people back their day.
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If you ask customers why they want the pain taken away, they often tell you that pain stops them from being productive in their day, or it makes it harder for them to be fully present with friends and family. Therefore, we could argue that Tylenol's real job is giving people back their day.
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In the context of your own startup, make sure you're asking customers not just what functionality they want from your product, but also what outcome they want. Ask why they want the outcome, and how important the functionality is to them.
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## The Value Proposition Canvas
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The [Value Proposition Canvas](https://www.strategyzer.com/canvas/value-proposition-canvas?azure-portal=true) is a useful tool developed by Strategyzer. It's freely available for anyone who wants to visualize, design, and test business models.
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The [Value Proposition Canvas](https://www.strategyzer.com/library/the-value-proposition-canvas?azure-portal=true) is a useful tool developed by Strategyzer. It's freely available for anyone who wants to visualize, design, and test business models.
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The purpose of the Value Proposition Canvas is to help you understand the needs of your target customers with reference to jobs to be done, pains, and gains. It then helps you design your value proposition to accurately meet those needs.
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:::image type="content" source="../media/value-proposition-canvas.png" alt-text="Diagram that shows a gift box in a square with pain relievers, products, and gain creators. A circle next to the square has gains, pains, and customer jobs.":::
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To use the canvas, start by describing the customer segment that you're focusing on in the upper-right box. Then move down and populate each of the three segments with responses from customers. Record their comments about what jobs they need to get done, what pains they want relieved, and what gains they want to achieve.
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To use the canvas, start by describing the customer segment on which you're focusing on in the upper-right box. Then move down and populate each of the three segments with responses from customers. Record their comments about what jobs they need to get done, what pains they want relieved, and what gains they want to achieve.
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After you interview your customers, you might start to see some trends in the jobs to be done, pains, and gains they describe, and in how important they perceive each of these elements to be. These trends should give you insights that help you focus on the most important outcomes as you begin designing your value proposition.
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Now move to the left side of the canvas and design your value proposition. Populate each of the three segments by describing the product that you believe gets the customers' key jobs done. Describe how it relieves their most important pains, and how it achieves their most important gains.
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Now, move to the left side of the canvas and design your value proposition. Populate each of the three segments by describing the product that you believe gets the customers' key jobs done. Describe how it relieves their most important pains, and how it achieves their most important gains.
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## Task: Complete your own Value Proposition Canvas
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Let's put the Value Proposition Canvas into practice. [Download the Value Proposition Canvas](https://www.strategyzer.com/canvas/value-proposition-canvas?azure-portal=true) from Strategyzer.com.
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Let's put the Value Proposition Canvas into practice. [Download the Value Proposition Canvas](https://www.strategyzer.com/library/the-value-proposition-canvas?azure-portal=true) from Strategyzer.com.
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Many people find it useful to print the canvas and use sticky notes to capture key points from customer conversations. Do whatever works best for you.
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Now talk to customers or to people who represent the customer segment that you believe you should target. Find out what jobs they need your product to do, the pains they want it to relieve, and the gains they want it to create.
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Now, talk to customers or to people who represent the customer segment that you believe you should target. Find out what jobs they need your product to do, the pains they want it to relieve, and the gains they want it to create.
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> [!IMPORTANT]
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> This isn't an introspection exercise. You can hypothesize about jobs, pains, and gains, but the only way you'll find out what customers really want is by talking to them individually.
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> If you have multiple customer segments, create a Value Proposition Canvas for each segment.
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