The Lean Product Playbook: How to Innovate with Minimum Viable Products and Rapid Customer Feedback

by Dan Olsen

The main reason products fail is because they don't meet customer needs in a way that is better than other alternatives.

The framework, which I call the Product-Market Fit Pyramid, breaks product-market fit down into five key components: your target customer, your customer's underserved needs, your value proposition, your feature set, and your user experience (UX).

The Lean Product Process consists of six steps: Determine your target customers Identify underserved customer needs Define your value proposition Specify your minimum viable product (MVP) feature set Create your MVP prototype Test your MVP with customers

“Product-market fit means being in a good market with a product that can satisfy that market.”

My definition of product-market fit—which is consistent with his—is that you have built a product that creates significant customer value. This means that your product meets real customer needs and does so in a way that is better than the alternatives.

A market consists of all the existing and potential customers that share a particular customer need or set of related needs.

When you develop a new product or improve an existing product, you want to address customer needs that aren't adequately met. That's why I use “underserved needs” as the label for this layer.

So the relative degree to which your product meets their needs depends on the competitive landscape.

However, with products delivered via the web and mobile devices, the distinction between product and service has been blurred, as indicated by the popular term software as a service (SaaS).

The real-world manifestation of software products that customers see and use is the user experience (UX), which is the top layer of the Product-Market Fit Pyramid.

Beyond software, this is also true for any product with which the customer interacts. The UX is what brings a product's functionality to life for the user.

They invented the “follow me home” concept, where Intuit employees would go to retail stores, wait for customers to buy a copy of Quicken, and then ask to follow them home to see how they used the software.

A key concept in Lean manufacturing, which inspired Lean Startup, is the concept of rework: having to spend time fixing something that you did not build correctly the first time. Minimizing rework is a key tactic for eliminating waste.

“What” is problem space and “how” is solution space.

That's why Steve Blank urges product teams to “get out of the building” (GOOB for short).

Lean product teams articulate the hypotheses they have made and solicit customer feedback on early design ideas to test those hypotheses.

It's likely true that customers won't invent a breakthrough product for you; but that doesn't mean it's a waste of time to understand their needs and preferences. On the contrary, a good understanding of customer needs and preferences helps product teams explore new potential solutions and estimate how valuable customers are likely to find each one to be.

You've got to start with the customer experience and work backwards to the technology. You can't start with the technology and try to figure out where you're going to try to sell it.…

As we have tried to come up with a strategy and a vision for Apple, it started with: What incredible benefits can we give to the customer?

…Not starting with: Let's sit down with the engineers and figure out what awesome technology we have and then how we're going to market that. An...

“Customers don't care about your solution. They care about their problems.”

You can develop hypotheses about your target market, but you won't truly know who your customers actually are until you throw your hook into the water and see what kind of fish bite. Once you have a product or a prototype to show customers, then you can gain clarity about the target market you're attracting.

Psychographics are statistics that classify a group of people according to psychological variables such as attitudes, opinions, values, and interests.

Innovators are technology enthusiasts who pride themselves on being familiar with the latest and greatest innovation.

Early Adopters are visionaries who want to exploit new innovations to gain an advantage over the status quo.

The Early Majority are pragmatists that have no interest in technology for its own sake. These individuals adopt new products only after a proven track record of delivering value.

The Late Majority are risk-averse conservatives who are doubtful that innovations will deliver value and only adopt them when pressured to do so,

Laggards are skeptics who are very wary of innovation.

Alan Cooper championed the use of personas as part of his “Goal-Directed Design” process. In his book The Inmates are Running the Asylum, he describes personas as “a precise definition of our user and what he wishes to accomplish.”

Personas should fit on a single page and provide a snapshot of the customer archetype that's quick to digest, and usually include the following information: Name Representative photograph Quote that conveys what they most care about Job title Demographics Needs/goals Relevant motivations and attitudes Related tasks and behaviors Frustrations/pain points with current solution Level of expertise/knowledge (in the relevant domain, e.g., level of computer savvy) Product usage context/environment (e.g., laptop in a loud, busy office or tablet on the couch at home) Technology adoption life cycle segment (for your product category) Any other salient attributes

To be useful, a persona should be pragmatic and provide useful information that can help inform product design decisions.

Developing a persona should not slow down your product process, and you should not spend an inordinate amount of time trying to perfect your initial persona. Instead, you should view it as a first draft that you will revise as you iterate through the process.

Unknown needs can arise as well; this happens when a customer doesn't even realize they value something until you interview them about it, or expose them to some new breakthrough product.

Customers are generally not skilled at discussing the problem space; they are better at telling you what they like and dislike about a particular solution.

As with everything in the Lean Product Process, customer benefits start out as hypotheses. You are saying, “I think that target customer X would find customer benefit Y valuable.”

As you talk with customers, you can keep asking them, “Why is that important to you?” until it doesn't lead to any new answers. This helps elevate the discussion from more granular, detailed benefits to higher-level benefits. This market research technique is called “laddering”;

The implication of the hierarchy is that a higher-level need doesn't really matter unless the more basic needs below it are met.

You'll find situations where customer benefit B doesn't matter if benefit A—which is at a lower level on the needs hierarchy—hasn't yet been met.

Olsen's Hierarchy of Web User Needs

First and foremost, the product needs to be available when the user wants to use it.

After that, the product's response time needs to be fast enough to be deemed adequate.

The next tier pertains to the product's quality: Does it work a...

We then arrive at the feature set tier, which deals w...

At the top, we have user experience (UX) design, which governs how easy—and hopefully how enjoy...

Importance is a problem space concept, separate from any specific solution space implementation.

Satisfaction is a measure of how satisfied a customer is with a particular solution that provides a certain customer benefit.

There is not much point in pursuing low importance ideas, regardless of the satisfaction level, since they just won't create enough customer value.

Incremental innovation occurs when you make minor improvements that add small amounts of customer value with each new version of your product. You can do so, for example, by increasing satisfaction for the established set of benefits or addressing additional benefits.

People often refer to a “10×” improvement as disruptive innovation. When a new product enables such a better way of doing something that people can't imagine going back to the old way, that's disruptive innovation.

A bipolar scale goes from negative to positive, whereas a unipolar scale goes from 0 to 100 percent of an attribute.