The Lean Product Playbook – Dan Olson
The Lean Product Playbook, by Dan Olson, provides a comprehensive guide to developing a successful product, from initial concept to launch. It explains how to identify customer needs and create a winning product strategy, as well as how to define and design a Minimum Viable Product (MVP).
The book also covers how to monitor customer feedback to make sure that the product is meeting user expectations, and provides advice on how to scale the product and manage a team.
The book also contains actionable advice and real-world examples to illustrate key concepts. In short, The Lean Product Playbook provides an invaluable reference for anyone looking to build and launch their own product.
The Kano model
The Kano model divides customer needs into three categories: Must-have needs, Performance Needs and Delighters.
- Must-have Needs: Not having these needs met creates dissatisfaction while meeting them is seen as expected. Seat belts in cars are an example.
- Performance Needs: As these needs are more fully met the customer satisfaction increases. Speed or mileage in cars is a good example.
- Delighters: These features exceed customer expectations, create surprise and high satisfaction.
With time and growing competition, needs migrate from being Delighters to Performance needs to become Must-haves finally.
The needs in the Kano model are hierarchical: The Must-have needs must be met first. Performance needs come later, and Delighters come last. This model helps us better prioritize needs and create a differentiated product.
The lean startup process
The Lean Product Process helps to create a product-market fit by systematically working through each layer of the pyramid from top to bottom. This step-by-step process minimizes rework and creates rigor in product thinking. The Lean Startup Process consists of six steps:
- Identify target customers
- Shortlist underserved customer needs
- Define the product’s Value Proposition
- Select the Minimum Viable Product (MVP) Feature Set
- Build an MVP Prototype
- Test the MVP with customers
Step 6: test the MVP with customers
Working closely with a product can make the team impervious to critical issues in the product. User Tests can uncover these blind spots within minutes. User Tests are best-done one-on-one with five to eight customers focusing on deep interaction.
Before conducting a test, scripts must be prepared that detail which parts of the product are shown, the tasks the user must accomplish, and the questions to be asked. User tests typically run for an hour with fifteen minutes of warm-up and user discovery, forty minutes of feedback on the product, and five minutes to wrap-up.
It is essential to differentiate between feedback on how easy it was to use(usability) and how valuable the product is (product-market fit). User Testing must be done by carefully choosing customers from your target market. Otherwise, the data will be misleading.
Quantitative marketing tests
Landing Page Test: This technique involves creating a landing page or explainer video that describes the planned product features, pricing plans, and has a sign-up button. Traffic is directed to the page and the critical metric measured is the conversion rate.
Ad Campaign: This method uses online advertising tools like Google AdWords to place ads targeting your customer demographic and measuring which words and taglines they find compelling.
A/B Testing: Two alternative designs are tested simultaneously to see how they perform on a critical metric. This is done by having different versions of the test running in parallel with web traffic equally distributed to both.
Crowdfunding: Crowdfunding platforms are an excellent way to understand if the customer will pay for the product being developed.
Problem space and solution space
While designing products, it is crucial to separate Problem Space and Solution Space. The Problem Space answers the question of what are the customer needs to be met. The Solution Space answers the question of how customer needs are met, including the design of the product and technology used.
Poor Problem Space understanding gives rise to inside-out product development, where product ideas are based on what employees think is valuable. In contrast, an outside-in approach to product development begins with talking to customers to get a clear understanding of the Problem Space.
In the Product Market Pyramid, the bottom three layers of Target Customer, Underserved Needs, and Value Proposition deal with the Problem Space, while Feature Set and User Experience deal with the Solution Space.
Step 2: shortlist underserved needs
User Stories are an excellent way to capture customer needs.
Customer needs begin as hypotheses that can be validated through one-one-one customer discovery interviews. In these interviews, each need is shared with the user, and they are asked to estimate how much value they perceive.
Asking follow-up questions on why benefit matters can open up a deeper understanding of a core need beyond the superficial needs. A template for doing this is Toyota’s model of asking “Five Whys.”
The Five layers of the Product Market Pyramid
The pyramid has five layers grouped into a market section at the bottom and a product section on the top.
The Two Layers of Market: Target customers and Underserved Needs
The market for a product is the set of all existing and potential customers that share a set of related needs. Market size is measured in terms of the number of customers or total revenue generated.
The Product Market Pyramid maps the market into an underlying Target Customer segment and followed by an Underserved Needs segment. This is because needs that aren’t met can be identified only after selecting the Target Customers.
Iterate and pivot: Hypothesize design test learn loop
The essence of lean development lies in quick iteration.
In the Hypothesis step, the Problem Space hypothesis is formulated.
- Design Step is about finding the best way to test the hypothesis.
- After creating a design artifact, the Test step allows the team to verify their assumptions through customer testing.
- The Learn Step studies the results to understand the changes required leading to a better hypothesis.
At every point, the team should identify which part of the Product-Market Fit Pyramid the new insight falls in. Changes in the lower layers will require reworking in all subsequent layers.
The three layers of product: Value proposition, the feature Set and UX layer
- The third segment in the Product Market pyramid is Value Proposition. This is the set of specific customer needs that the product aims to address in ways better than the existing alternatives.
- This naturally leads to the fourth layer, the Feature Set. The Feature Set is the product features that are chosen to meet these customer needs.
- The topmost layer is the UX layer, which is the real-world product interface that customers will see and use.
Step 3: define value proposition
Focusing on a specific set of related needs is crucial to creating a great product. The Product Value Proposition helps select the needs to address and why it is better than the market alternatives.
The Must-have features are necessary for the product. Therefore, the core differentiators are the performance features to compete in and the delighters that are added.
A tool to create a Product Value Proposition is to make a table with the first column listing the must-haves, performance benefits, and delighters.
There must be columns for each competitor and one for the product. Must-haves and delighters are filled with a simple yes, while each performance feature is rated high, medium, or low. This table helps us clearly articulate the value proposition along with how it is differentiated from competitors.
Step 4: select your MVP feature set
To create a Minimum Viable Product (MVP), we need to select the minimum functionality required to validate the product design. This step marks a transition from the problem space to the solution space.
For each benefit in the Product Value Proposition, the team creatively brainstorms to come up with as many feature ideas as possible. This needs divergent thinking that allows for idea generation without judgments.
For each benefit, the top five features are identified. Features can be captured as User Stories to retain the connection with the corresponding customer benefit. Good user stories must be independent, valuable, small, and testable.
The importance satisfaction framework for prioritizing needs
Importance is a problem space concept that measures how valuable a need is to a customer. Satisfaction is a solution-space concept that measures how happy a customer is with a particular solution.
Low Importance Needs are not worth pursuing as they won’t create enough customer value.
High Importance and High Satisfaction Needs are cases where users are satisfied with the existing solutions in the market. A good example is Microsoft Excel, which has a stable feature set and no significant competition.
High Importance Low Satisfaction Needs are an excellent opportunity to create customer value. This is because the need for them is high, and current products don’t meet customer expectations. Disruptive innovations usually emerge from this segment.
Step 1: identify the target customer
The first step of the Lean Product Process is identifying the right customer segment. Companies define their target customers by capturing key attributes, including needs, demographics, psychographics, and behaviors. Demographics include group statistics like age, gender, income and education.
In the case of B2B, firmographics is used instead. Psychographics classify people according to attitudes, values, opinions, and interests. Behavioral data segments based on the occurrence and frequency of behaviors. In some cases, the person who makes the purchase decision is different from the end-user.
Therefore, it is useful to distinguish the two and identify their distinct needs.
Step 5: create an MVP prototype
Minimum in MVP is not an excuse to produce a poor user experience. While the MVP might be minimal in terms of feature scope, it must be high quality to create customer value and test for improvement.
MVP tests can be qualitative with direct customer interaction or quantitative to measure aggregate results at scale. While quantitative tests are good at answering “what” and “how many,” qualitative tests are crucial to understanding the “why” behind customer responses. Therefore, its best to begin with qualitative tests in the initial stages.
Qualitative marketing tests
Wireframes: These are low to medium fidelity designs that give an overall picture of how different components are arranged. They are devoid of details like images, colours and fonts.
Manual Hack MVPs: These give the feel and experience of the original product but are driven by manual workarounds.
Live Product: It’s a good idea to test the finished product with the customer as it has the highest fidelity and Interactivity. Testing can be done with developers present with the customer or by the customer alone.
Fake Door: Fake doors involve creating a button or page for an unbuilt feature to measure what percentage of customers click on it. If there is sufficient interest, the feature can be built.
Product Analytics: Product analytics are useful to understand where customers spend their time and what features most used.
The Product Market Pyramid
Most products fail because they don’t meet customer needs better than the alternatives available. Therefore, achieving product-market fit is the key to creating a successful product. product-market fit means building a product that creates significant customer value and meets needs better than every alternative.
The Product Market Pyramid is an actionable framework to achieve such product-market fit.
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