What Big Shoes Can Teach Startups About Jobs-To-Be-Done Marketing

People need shoes. There is a grand market for shoes. Zappos has proven it. Big Shoes dubbed “Store Sko” in Norwegian, a small shop in my neighborhood that sells (guess what) big shoes, has also proven it. The shop has been running profitable for years. Big Shoes is master of segmentation marketing.

Asymmetric motivation

Big Shoes has a positioning advantage – competitors, incumbents and mainstream shoe shops are reluctant to pursue the market of abnormal shoe sizes. First, the market is not perceived large and hence lucrative enough compared to mainstream markets. Second, customized shoes require customized inventory and production lines.

Reverse marketing

When a mainstream shop cannot provide for the customer that shoe size s/he is looking for, they refer to Big Shoes, a sales person told be. Big Shoes receives referrals from competitors because they are in fact not yet competitors – they target different segments. Rather, for the mainstream shop, it is a matter of customer service.

Customer service

Since Big Shoes is about the only big-shoes-specialist in Norway, customers come back. As customer retention is high, Big Shoes builds a stronger relationship to its customers who again share the news with new customers.

Jobs-to-be-done

People with extra large feet do not mainly need a spectacular design or shock-absorbing functions with their shoes. They need shoes that fit. Big Shoes excel at solving that problem for this particular segment. The shop has even started providing shoes that competes with regular shoes on design.

By getting the job done and solving a real customer need, Big Shoes are able to provide great customer service, keep clear of competition, and accordingly charge extra. The shop has added mail order as distributions channel and expanded into additional XXL product ranges. Big Shoes is on the disruptive track.

What are other examples of disruptive, jobs-to-be-done marketing startups?

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Minimum Viable Blog: What Blogging Taught Me About Startup Methods in 2010

As of now I have not yet shared with you a post on lessons learned in 2010. Not better, I believe that I have been neglecting this blog for the last couple of months. That will not be the case for 2011. Here is why.

Early and often

This blog was started at the very end of 2009. Prior to this, I had attempted to start blogging several times. Each time I’d configure the LAMP stack, source a cool WordPress theme, and fine tune look-and-feel. My mind was completely locked-in on the technicalities – I never got to write any actual content. Consequently, there was no room for feedback and motivation stalled. The pattern repeated itself in a continuous cycle.

Entering 2010, I figured that it was time to go quick-and-dirty. I had to break with the pattern; forget about that stunning domain name, forget about database design, forget about adding features. Instead, I’d just publish that first post and start collecting feedback (more in Foundora’s interview). Without going into that content is king thing, this has been more of a learning path understanding the value of interacting with real audiences. Nonetheless, one year later I’m still using standard WordPress.com hosting and theme, and subscriptions are growing.

Minimum Viable Blog v.2

Now, if you swap the word “blog” for “product” or “startup” in the short story above, you’ll find that the pattern has a thing or two in common with startup methodologies – the very thing I have been ranting about the past year.

Launching a Minimum Viable Blog did not only enable me to measure visitor, click and subscription metrics. It enabled me to test and validate value propositions with real audiences. Initially, I had this plan on writing about digital strategies. An idea grounded in a recurring problem I had experienced through consulting: existing strategy frameworks were not adapted to the web. However, first, I couldn’t resist scratching my own itch as a feature entrepreneur and decided to write a quick piece on trade-offs between deliberation and creativity. Soon I was having Skype calls with inspired bloggers in the field of technology entrepreneurship. I had discovered early adopters who encouraged me to continue down that track.

Following, this motivated me to revisit shelved ideas about early-stage business models, and methodologies of integrating marketing and software development. Since, I have learned about customer development, lean startups, minimum viable products, pivots, product/market fit, and metrics-driven marketing among other inspirations, which I brought into teaching at the University of Oslo. From theory to practice and back, I expect to give such topics a real try this year.

No longer in hiding

As of 2011 I am founding an Internet software startup (more to come). So far, I have studied, taught, worked in and ranted about startups, but have yet to go all in. Going forward, I will share here my pursuits in search of the product/market fit.

A special thanks to all subscribers for following me in 2010.

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7 WordPress Themes for Launching your Minimum Viable Product

By leveraging the web in creation of rapid prototypes for testing business model assumptions, and using customer feedback to develop them, companies will be able to advance in its’ search for a repeatable business model and reduce risk in new-product introduction.

In creation of such rapid prototypes the Minimum Viable Product (MVP) idea is key. Neverthless, open source platforms such as WordPress are key enablers to the Lean Startup. As my previous post on 9 Minimum Viable Product WordPress Themes received pretty good interest among aspiring enterpreneurs,  I decided to share some more recent WordPress themes that can help you in quickly launching your minimum viable product.

Inspire, a clean-cut theme from the rockstars at Woothemes. The theme leverages a clear value proposition and call-to-action alongside usable design. We are working on this for EasyPeasy’s tablet OS, and I must say it feels good (is that a disclaimer?).

SaaS Web App. This one I liked so much that I kept it in my browser tab for days. The makers knows all about sizing and positioning elements for increased conversion. The Plans & Pricing is simply right-out-the-box.

Apz, also by Woothemes, is a simple theme aimed at iPhone application developers. Simple and landing page-ish, perfect for that Minimum Viable Product version zero-point-something.

Coming Soon is a dead-simple landing page theme. Change the picture and do some copywriting, and you’ll be up and running.

SaaS Web App II is based on the same ideas as the SaaS Web App above, but with some modifications. Myself, I like the 1-2-3 description at the bottom.

AppPress by ChimeraThemes, has crafted a promising framework. AppPress really makes use of call to actions and conversion mechanisms as well as a good pricing page.

Fullside is AppPress’ brother theme, having some different design options. Have a look at the 37 Signals inspired decleration module at the bottom of the page. Get ready for ramping your conversion funnel.

What I love about WordPress is its take on simplicity and modularity. It allows you to do rapid testing of features, design and value propositions, and easily integrate third party forms and survey modules for getting customer feedback critical to customer development.

Going forward I would really want to see one Lean Startup-specific theme that leverages the back-end dashboard with consumer-focused metrics for testing business model hypothesis.

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Test-driven Business Model Development for Web Startups

Business plans are out and business models are in. The waterfall method is out and agile development is in. Now an entrepreneur will iterate the business model through test-driven approaches using agile software development and customer development.

How would you use test-driven development in building your business model? A good start would be to iteratively identify and test key hypothesis for each component with your business model.

Previously I suggested a mash-up of the Lean Startup/Customer Development methodology and the Business Model Canvas. On the higher level, the “back-end” business model structure aligns with agile development principles, and the “front-end” structure with customer development principles. Causally executing product development alongside customer development would optimally lead to problem-solution fit, followed by product-market fit corresponding to your value proposition.

On the lower level, typical Lean Startup and Customer Development principles are segmented according to each of the nine business model building blocks. These are the techniques and tools that you would take into consideration when testing your business model hypothesis.

As all business model components have their own characteristics they also have their own hypothesis testing schemes. The following is an overview of techniques and tools to be used for testing each and one of your business model components from a Lean Startup and Customer Development perspective.

Customer segment is where you identify with customer prospects a specific problem that they agree upon. You would put the Customer Development methodology in order by getting out the building and mapping out a Customer Problem Presentation. For what questions to ask, the guys at Survey.io provide an excellent starting point.

Value proposition. Here you test to see if your solution fits the customer’s problem. The key is Minimum Viable Product. A Minimum Viable Product has just those features (and no more) that allows the product to be deployed and tested. Especially if you are in the online business you would consider putting up landing pages. Further, A/B testing, split testing and multivariate testing are super techniques for testing hygiene factors. This allows you to test and validate customer demand and positioning. Unbounce provides you with many of these tools.

Distribution channels. Do conversion optimization whether it includes your web page, social media accounts, Google Adwords or partner’s pages. Ask your self what is most cost-effective channel. Eric Ries wrote these awesome posts on how to use search engine marketing and Google Adwords in testing demand and value propositions.

Customer relationship. This one is bit more qualitative in nature than the distribution and product offering schemes. It is more about making an arena for collecting feedback from your early customer segments. You would consider using tools such as wikis, forums and social networks as a basis for collecting data. It may include making a beta testers’ community allowing for feedback, and distributing surveys and newsletters for measuring reach. Survey and form services such as KISSmetrics and WuFoo are useful tools for gathering feedback on-site.

Key activities. “Release early, release often” is a key tenet in agile software development. Question your self – how often you ship product. Do continuous deployment to learn and adjust. Testing should be a key activity itself. Automattic CEO Toni Schneider reported that WordPress.com averages about 16 product releases a day. Beat that!

Key resources. Arrange for the tools that you need in order to test the remainding components. For an example by signing up to Google, you can run Optimizer for split testing, Google Analytics for conversion optimization and Adwords for testing clickthrough on different value propositions. The good news is that this is cheap. Perhaps the most important resource – your co-founders and team members should embrace a learning culture and test-driven environment.

Partners. Here you would consider a similar approach to that of the customer segment. Your partners may also be the ones who provide you with key resources, such as Amazon for hosting or Google for distribution.

Revenue streams/cost structure is about defining the equation of your business model. If you are going for that 1 % of China’s users cliché you are pretty soon on thin ice. Instead, do it bottom-up. For an example, numbers of users times ad revenue per user. The point is to convert your assumptions into metrics that are actionable. Sooner you would be a low-burn startup. By removing what is broken, test-driven business model development enable you to do so.

The bottom line: In systemizing hypothesis by the business model components you will simplify testing methods and reduce risk in building a lean business model.

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The Startup Samaritan’s Dilemma

Helpers of early stage startups – incubators, accelerators, angels and advisors – sleep good at night. There is something samaritan about what they do. They serve the bottom of the economic pyramid on which our society rests.  They facilitate jobs, and in turn taxes. Some get wealthy and part is poured back in to new ventures, jobs and taxes. A virtue indeed. Yet there is a dilemma. While high-end markets yields and numbers make the deal, the Startup Samaritan migrate towards helping “grown-ups” at the expense of startups. The cure: startup methodology.

While I was studying and working my own market research practice, I had the pleasure to work with a couple of fine venture finance agents. I did customer interviews, and created business plans and investor presentations. It was first when I got the assignment to carry out a method with the goal of evaluating risk in early-stage ventures that I understood the dilemma.

What I quickly learned was that there is a minimal quantifiable track record within a startup. Accordingly, analytic models get dismissed in favor of qualitative variables such as team, customer insight and technology. For a couple of reasons I believe that this creates a dilemma to the Startup Samaritan.

• The time utilized in facilitating a startup is pretty much equal to that of facilitating a grown-up. Risk is lower and more predictable at the later stages. The stake and respectively the compensation is often higher. For logical reasons the Samaritan’s focus gradually migrates towards grown-ups. High-end markets yield.
• With the theory of Disruptive Innovation, authors argue that most companies force teams to develop detailed financial estimates way too early, when their accuracy will necessarily be low. That using metrics such as net present value (NPV) or return on investment (ROI) as rank-ordering tools to make decisions is counterproductive [i]. Technological knowledge and qualitative unpredictability might cause a great headache to MBA scholars. Naturally such samaritans seek to utilize their knowledge and go after what is quantifiable.

Instead, early startup formation requires an understanding of entrepreneurial patterns – talking failure as well as success. Methodologies such as Customer Development and Lean Startup identify and learn from common challenges that occurs in startups and then describe methods that aid in overcoming such challenges. In exchange for meter-long spreadsheets, they embrace so-called Startup Metrics that are trackable, actionable and drive better product and marketing decisions. Of course you can not ignore financial data, but focusing on the assumptions behind the numbers is meaningful when there is no such track record. Dedication is more likely when motivation, knowledge and methods are aligned.

The bottom line:

• Focusing on patterns [through startup methodologies] instead of numbers enable entrepreneurs to better manage uncertainty and their good samaritans to sleep even better in the future.
• Principles of Disruptive Innovation can help explain why startup investors as well as entrepreneurs would want to educate in startup methodologies.

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[i] Mapping Your Innovation Strategy, by Scott D. Anthony, Matt Eyring, and Lib Gibson

How Lean paradigms go beyond gorillas’ assembly lines

Lean Manufacturing, Lean Production, Kaizen and Continuous Improvement (dear child has many names) have created buzz for many years. Originated with Toyota’s production system, “Lean” was primarily created with manufacturing businesses in mind. Now as manufacturing businesses are increasingly rendered by service and network businesses, how does Lean paradigms go beyond gorillas’ assembly lines and keep up with the new economy?

In one of my favorite articles, Casting of the Chains (pdf) from 2003, authors Ø. Fjeldstad and E. Andersen make a fruitful observation.

The world has changed. From 1960 to 1999 manufacturing companies’ share of GNP in the US, as well as its workforce, fell from 30 per cent to 15 per cent, with the consequence that such businesses are now a minority of the S&P500. Banks, transportation, building, healthcare, research pharmaceuticals and other services companies have taken over. Strategic models of the world, however, have not changed. When managers develop strategies for their companies, they still use the tools and language of the manufacturing organisation.

In brief, the authors found limitations in applying Porter’s Value Chain to other than traditional assembly line-based manufacturing businesses. Consequently, the authors extended the Value Chain to two more models; the Value Shop and the Value Network. The Value Shop creates value by scheduling activities and applying resources in a fashion that is appropriate to the needs of the client’s problem (typically management consulting, lawyers and doctors). Value in a Value Network is created by linking clients or customers who wish to be interdependent (typically banking, social networks and dating venues).

When I joined my current employer to work with the web and startups, I did at the same time choose from working on Lean methodology alignment with one of Scandinavia’s leading media companies (see also Bharat N. Anand‘s Harvard Business Review case). Regardless of my interests in innovation methodologies and owing my conviction to entrepreneurship, I wanted to work with growth ventures rather than cutting down “corporate bacon” (is that innovation?). Later I discovered the Lean Manufacturing Startup, which basically adopts Lean Thinking and Customer Development to early-stage ventures and startups.

Although Lean Startup principles are argued to be generally applicable, it has mainly been applied to Enterprise- and Consumer Software cases. However, as far as Microsoft Windows creates value by linking consumers with third party software developers, and Google links consumers with advertisers, the software business generally acts as a value network. Hence, I believe that we start to see cases with the lean paradigm being adopted to the new economy.

In this manner, I assume that new schools of Lean methodologies not only help traditional management thinking avoid cramming business models with manufacturing approaches, but also preserve new-product introduction and disruptive innovation alongside continuous improvement.