In the Lean Startup, Eric Ries shares about a tactic that startups can use to solve internal problems and build an adaptive company. It’s called the Five Whys. Here’s Eric:
“The system takes its name from the investigative method of asking the question “Why?” five times to understand what has happened (the root cause). If you’ve ever had to answer a precocious child who wants to know “Why is the sky blue?” and keeps asking “Why?” after each answer, you’re familiar with it. This technique was developed as a systemic problem-solving tool by Taiichi Ohno, the father of the Toyota Production System. I have adapted it for use in the Lean Startup model with a few changes designed specifically for startups. At the root of every seemingly technical problem is a human problem. Five Whys provides an opportunity to discover what that human problem might be.”
Eric Ries goes on to examine Five Whys as it’s used to diagnose an app update glitch all the way down to its root cause: a deficiency in training new engineers due to an issue with one manager in particular. You can learn all about Five Whys in Chapter 11 of The Lean Startup. Continue reading Why? Why? Why? Why? Why?
This is Pareto’s Principle. 80-20. Very often 80% of your outputs come from 20% of your inputs. For a non-profit, 80% of all money raised comes from 20% of donors. For a coach, 80% of scoring comes from just 20% of your players. Or for a business (as this question suggests), 80% of sales come from 20% of your total customer base. These are your champions. They love you and your product. Dig down and identify who they are and make sure to treat them differently than you treat everybody else! Continue reading What 20% of customers are giving us 80% of our sales? (And are we treating them differently?)
Eric Ries asks this one-two punch of all the startup teams he meets with. To the first question, without fail everyone says yes. To the second question, that’s where the rationalizing starts. Ries cautions against making up a story that links recent product changes to cherry-picked positive metrics. (“Well, more people added themselves to our mailing list this month. Probably that means the new homepage pictures are working.”) Instead, he makes the case for “innovation accounting” which you can read all about in Chpt 7 of The Lean Startup. Continue reading Are we making our product better? How do we know?
For those of you who are hesitant to ask existing clients to refer friends/colleagues to your service, it becomes much easier if you yourself have a clear understanding of how your business improves people’s lives. Once you can articulate this benefit and you internalize it, asking for referrals isn’t slimy; it becomes a way to serve more. Continue reading How could referring your business make your client’s life better?
A business does best when everyone involved (highest leadership all the way to hourly employees) understand that the company exists to fill a higher purpose than just selling widgets or increasing shareholder value. As John Jantsch puts it, answering this question can lead you to a “documented sense of higher purpose for your business.” Maybe you want customers to think “peace of mind.” Or “more time with family.” Or “community.” Continue reading What perception, perhaps even one word, do you want your customers to hold when they think of your business?
Business thinker, marketing guru, and super blogger Seth Godin asks this question in his book, The Icarus Deception. Seth is constantly reminding us that connection matters, that if we market something it does no good to think only of the sale; we need to think about the impact we have on the flesh and blood people that make up our “market.” Selling a product changes everyone involved. What kind of change do you want? Continue reading Who will our customers become after they interact with us?
This “post-mortem” exercise is magic. When you and your team start explaining IN DETAIL how your company/product failed, it reveals the holes in your business model, your market, your funding strategy. The conversations cut right to the chase. Take up to 2 hours with this question. And then when you’re done, it’s still today, not 5 years from now. Plenty of time to get out in front of your known weaknesses. Continue reading It is 5 years from today. Our company/product has folded. Step by step, how EXACTLY did it happen?