Lean Startup can make starting a business accessible for the new entrepreneur. But most miss the importance of white-boarding assumptions (aka guesses). Many make NO assumptions making it difficult to dismiss feedback or to capture nuggets of insight that impact the business. Others make assumptions but may not really know how or why that matters as they start to focus on questions they want to ask.
Let’s talk about leveling-up your Lean Startup practice with better assumptions.
- What is a good assumption? Good assumptions define parameters. Business assumptions align with high-risk elements of your business.
- What are the high-risk elements of your business? If this is a startup, the high risk is the search for a repeatable model that creates (solves a problem in new ways); delivers (delivers product/service to defined customers); and captures value (the ability to generate revenue that sustains the business).
Here are some high priority areas to define assumptions:
- Defining customers with clarity: Steve Blank defines a good customer as someone who has identified a problem; has sought solutions for the problem; and has a budget or spent money to solve the problem. In doing so, your parameters help you subtract options towards customers that may buy your solution.
- Defining value for competitive differentiation. This can be tricky as most define value based on what YOU do. But value is in the eye of the beholder (the customer). Value parameters include the customers’ needs and how they define what they care about; the competitive solutions, which includes doing nothing; and what YOUR team does extraordinarily well.
- Defining product/service features for a business model: Minimum viable products (MVPs) are your best way to get something tangible in front of customers. Technologies are not necessarily products. Product features are not necessarily valuable to your business model and/or to your intended customer(s). Set parameters about the product to meet customer goals will be critical to deliver a technology-infused product or process-driven service that captures value. For example, Y combinator encourages teams to search for a solution that can accomplish 90% of the customer’s problem with 10% of the work/effort/time.
- Defining scalability and growth. I think this category is one of the harder set of assumptions to define because it requires some team soul-searching. Scalability is subjective. Not every team wants to scale; and not every business model is investable. But both these teams can achieve success. Before you let others define your success, establish some assumption parameters about financing & partnering.
What’s the common theme? Assumptions are uniquely personalized to the team’s capabilities including their technical know-how; market experience; and ability to deliver against their values. Want to speak to one of our consultants about your assumptions? Request consulting now!