The Compass to Validate Correctly in Actual Lean Startup

In August, I organized Lean Startup session with one of my mentors, Guita Gopalan. What the audiences were excited about is how to get feedback from customers, simply and quickly. But, when you apply Lean Startup in real product development, there are a lot of following questions to make the method to reality. The first key question you must answer is;

When we can say “we already validated our product/feature”?

According to my experience in 20 products, I must say it’s too vague just to answer “Find paid customers.” or “Get feedback from customers.” from the viewpoint of the actual decision making in key activities or KPIs.

Here is the answer.

Why It’s Hard to Define The Timing When Product Validation Is Done

When we validate product with Lean Startup method, we use “Build-Measure-Learn” cycle. This concept also shares the principle with Design Thinking and Agile software development.

The problem of this model is that it’s hard to connect it with the whole validation process, which is explained as “Customer Discovery” and “Customer Validation”.

When we see the clear connection between “Build-Measure-Learn” cycle and the whole validation process, we can define the timing when product validation is done.

Better Way to Understand “Build-Measure-Learn” Cycle

For this viewpoint, Masa Tadokoro introduces a good answer. In order to map the whole validation process to “Build-Measure-Learn” cycle, he added more phases (*) and made it as new “Build-Measure-Learn” cycle.

1. Customer-Problem-Fit
   We check only customers and problem in this phase.
   (1) Build hypothesis of the issue and customer
   (2) Clarify premises of the issue
   (3) Validate whether the customer issue does exist or not
   The key here is, if the assumption is not right, we do this phase from the beginning again.
2. Product-Solution-Fit
   In this phase, we check only if solution/value proposition can solve the problem correctly by using prototype and interview.
3. Product-Market-Fit
   The rest of the cycle is defined as “Product-Market-Fit”. In this phase, we finally build MVP and improve it in order to fill other aspects such as business and operation. (In his definition, MVP is different from prototype in order to clarify the purpose.)

If you are familiar with Design Sprint, you can see Design Sprint does both “Customer-Problem-Fit” and “Product-Solution-Fit” as a super intensive program. The question here is why we should separate “Customer-Problem-Fit” from “Product-Solution-Fit” and why “Customer-Problem-Fit” comes first in Lean Startup.

Why “Customer-Problem-Fit” Comes First?

In order to understand the reason why “Customer-Problem-Fit” should be done first, let’s check each phase in the new “Build-Measure-Learn” cycle again.

1. Customer-Problem-Fit
   This is the activity to find the fact about customer and problem. Let’s define it as Xc.
2. Product-Solution-Fit
   This is the activity to design solution which doesn’t exist now. It can be done only when “Customer-Problem-Fit” is done. Because, without customers who have the problem, the solution doesn’t make sense. So if we define “Product-Solution-Fit” as Xs, it can be explained as Xs=f(Xc).
3. Product-Market-Fit
   This is the activity to polish the solution from the other aspects such as business and operation. It can be done only after “Product-Solution-Fit”. So if we define “Product-Market-Fit” as Xm, it can be explained as Xm=f(Xs).

And then, if we define the total product validation process as Y, it can be explained as Y=Xc*Xs*Xm.

After substituting the above values to this formula, product validation process can be explained as;

Y
=Xc*Xs*Xm
=Xc*f(Xc)*f(Xs)
=Xc*f(Xc)*f(f(Xc))

In conclusion, “Customer-Problem-Fit” is the only factor which affects to all the other factors so that it’s reasonable to fix separately and first.

In the real case when we check “Customer-Problem-Fit”, we may need a tentative product. For example, when we check “Customer-Problem-Fit” for the idea which targets small business owners and then we don’t have a good connection with them, it would be a good to have such tentative product in order to provide a reason for them to meet us. I call it “Bait” product.

But then again, the purpose of “Bait” product should be the support to understand customer and problem, should not be “Product-Solution-Fit” itself. Because the additional purpose forces us to develop meaningless additional functions.

Conclusion

The understanding about current phase shows us what NOT to do. It helps us design key activities or KPIs. This viewpoint can also be one of the good compasses for feature prioritization in any product management.

“Tell me about the story: what your customer does in the whole day when the person has (or doesn’t have) your product.”

If you cannot explain it with facts, it might not yet be the time to challenge “Product-Solution-Fit”,”Product-Market-Fit”, nor growth.

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(*) In this post, I didn’t mention the phase: “Idea Verification” which is introduced in the new “Build-Measure-Learn” Cycle. Because it’s rather the improvement of “idea” phase in the original “Build-Measure-Learn” Cycle under the context of this post.