How are you creating new growth strategies in your organisation?
Lean thinking, customer development frameworks and business model innovation are transforming how new products are built and how growth strategies are developed writes Mary Cronin.
These frameworks help organisations design products that customers need and help reinvent their business models.
Lean offers ways to cut work time and eliminate waste whether you are an established or an early stage company. Customer development takes a customer-centric approach to understanding customer needs and problems. The term ‘business model’ means the design of a business. Business model innovation (BMI) looks at how a business reinvents itself in order gain competitive edge and stimulate company growth. An important part of business design involves being customer-centric.
Many organisations focus on products and solutions versus understanding the problem they are solving for customers. Competition is not just about your products but understanding your customers’ needs and your business model.
Steve Blank, the father of Lean start-up, talks about the big idea, which is really simple: “Get outside your building and talk to customers”. This framework is called customer discovery. Talking to customers is nothing new and is a simple concept, but we don’t do enough of it to validate and find new opportunities. Too many assumptions are made about customers needs.
These frameworks have different stages and characteristics including:
– Understand what is the problem you’re solving and for whom
– Establish a series of core hypotheses and validate
– Determine the product/market fit
– Build a minimum viable product (if viable)
– Feedback, insight and rapid iterations based on data and metrics are key
In practice, talking to customers is hard. Actions speak louder than words. There is a big difference between what people say they do and what they actually do. Customers may tell you they are excited about your new product. But in a buying situation their behavior might be totally different. Customers don’t always know what they don’t know, so it’s through observation that ‘insight’ is gained.
Henry Ford’s famous quote says — “If I had asked people what they wanted, they would have said faster horses”. As we know he created the car. Customers will ask for faster horses but we need to apply ‘insight’ to create new products.
The path for longer-term corporate survival will be in understanding continuous disruption and innovation in the form of new business. Hence embracing methodologies like lean, customer development and business model innovation are important. Why?
While corporates in the past focused on efficiencies, they now need to think about how to reinvent their business models and look for new opportunities. Corporates that cannot manage their existing business models while reinventing themselves will risk disappearing. Over the long term innovating new products and business models is about competitiveness and survival. Examples are;
• Xerox introduced the way photocopiers are rented today
•Gillette makes us buy razors differently
• Ryanair/Southwest/Easyjet allow us to fly cheaply
• Nespresso brings us great coffee (and George Clooney)
• Ikea brought us quality design furniture at affordable prices
These companies have brought new ways of doing business to their industries. They have redefined the way business is done. Companies that don’t constantly question themselves how they create value for their customers will have a difficult time to survive over the long term.
What’s your growth strategy?