This week on the podcast, we’ve got M.J. D’Elia comparing and contrasting the various ways startups approach product and service development versus more traditional organizations. If you belong to the latter, this talk is designed to inspire you to think about how you and your team might approach and do your work differently.
If you’d like to see M.J.’s presentation slides, they’re available on SlideShare here.
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(Scroll down for a transcript of the conversation.)
Transcript
M.J D’Elia: Newer ventures focus more on the problem. "What are the people trying to do? How do we help them do that?" They don't presume the solution.
Zalina: Hi, I'm Zalina Alvi, the community manager here at BookNet Canada. And that was M.J. D'Elia from the University of Guelph, who is one of the co-organizers of the first-ever Startup Weekend, Library Edition in Toronto. As a specialist in creative problem solving, entrepreneurship, and all things startup, M.J. uses a compare and contrast approach to highlight how startups approach product, and service development differently than traditional organisations with conventional approaches. This talk is really for those of us who fall into the latter category. And it's designed to inspire you to think about how you and your team might approach and do your work differently. If you'd like to see M.J's presentation slides, you can find them at slideshare.net/bookedcanada. Now, here's M.J.
M.J: For me, as I said, as a librarian, this was my first introduction. You may never have seen this. It was a white paper published by a guy at Virginia Tech. Basically, it was connecting startup thinking to my industry, to libraries. And initially, that seems a bit like an oxymoron, right? Startups, libraries, don't belong together. What was also great about this white paper is it was well-designed and it had pictures. So, it already beat most of the academic literature that I have to read for my job. But in it, he introduces concepts like this. So, he says startups really help provide a framework for action, they build platforms for people, they condition people for change, and they really are about engendering a culture, which sounds great, sounds high, you know, sounds sort of abstract. But if you think about it, this is no different than any organisation, right? Who doesn't want to have an action-oriented organization, people with...building a platform that allows people, including your employees and staff to do what they need to do, or an organization that helps with resilience and foster resilience? Right? These are good things.
So, I should acknowledge, off the top, that this presentation was co-developed with Helen Kula, who's a librarian at the University of Toronto, who I actually first met when she worked here at MaRS. And she's in a car somewhere with her kids headed to Florida for March break. So, I think I have the better end of the deal here presenting on her behalf. So, we both have this interest, this connection to libraries, but this interest in fostering startup culture, startup thinking startup methods. And as well, you heard in the intro, it was actually about a year ago we put on this event as an experiment, this collision of libraries and the needs that libraries might have with designers and developers in a Startup Weekend. So, if you're not familiar with Startup Weekend, look it up. There's gotta be one near your city, wherever you're from. Fascinating, intense experience at trying to pitch an idea and build it by the end of the weekend, or build a prototype. The best by far the best professional development I've ever done. But this isn't about that.
I know most of you...a couple of you work in libraries, but most of you don't. And so I want you to think of libraries more as, in this case, an established organisation. And my talk is really trying to compare the established or traditional approach with a new startup or a venture and how they think about things. And what I mean here is not old and new so much as established organisations have customers, they have budgets, and processes, and plans, and they have all of these things in place to operate. Startups, most often don't have that. There haven't figured that stuff out yet. And so there's a certain energy that comes with that because of the unknowns. And what I'm interested in and similar to what Ed said in his intro, as an outside observer, I'm trying to figure out how do you capture that energy, that spirit, that urgency that's in the startup community and bring it into an organisation that already does things a certain way? Right?
And again, I don't know where you all work exactly, but maybe you've heard that. You know, that's not how we do things here. And so I'm curious, how can we make these things work together? For today, what I'm mostly gonna do is present a simple compare and contrast. So, I've got a series of things that I think established organisations typically approach it this way, startups try it a different way. And I will acknowledge right off the top, these are generalisations. They might not work, they might not fully describe where you work, but I think they might be instructive. And I hope what you can do is take some transferrables from what I say to where you work, to your organisation, to your industry. So, to make things I'll say easier, I hope easier. I've got nine sets, so nine strategies, nine comparison and contrast examples for you. And I've put them into three categories. So three categories of three.
Really what I'm interested in is the difference between how these two types of organisations think, so the fundamental mindset behind them. I'm interested in their strategies of building. So how do they approach building a product? And then thirdly, value. So what is the approach to value, or capturing value, or creating value? And what are the differences? And what might be learned? So, I'm gonna start with the first three. Oh, and not spill drink all over there. Related to mindset. So my first comparison and contrast for you is testing the product versus testing the problem. So, what I tend to observe in my organisation, maybe yours, is that we are very focused on the product. So, we've imagined a solution that people want. And what we want to do is make sure that solution works. We're focused on the product. But in a lot of ways, newer ventures focus more on the problem. What are the people trying to do? How do we help them do that? They don't presume the solution.
And one of the problems you have in an established organisation is you have this set assumption. So, permit me to have just one example from the library community here. So, if you think of the library catalogue, right, this whole system of, basically, an inventory system that allows you to know who's got what book, and when it's coming back, and that sort of thing. In an established organisation, we assume the library catalogue is the solution for that sort of inventory control. And what we're trying to figure out is, if we have to replace it, will it work with all of our other systems? Right? We're testing the product. This is our solution, does it work, and then therefore, should we buy it and implement it and that sort of thing? But I might propose that a different organisation or a startup organisation would look at it and say, "Well, what are the people who need the catalogue trying to do? Are they really trying to discover new content? Or are they just trying to get access to that content?" And they might invent a different solution altogether. And so the concept I would leave you with here for this comparison and contrast is called customer discovery, which sounds really strange. And especially to my business students who, you know, for three years of their career are studying customer data. It's like, "What do you mean customer discovery? We already have customers." But, of course, that's the problem. With startups, there aren't customers in place. There's an idea, and there's a hope that there's customers.
And so customer discovery is really about trying to understand the problem at a deep enough level that you can imagine a solution that fits for a particular group of users. You're trying to discover. In some ways, it's like new market identification, trying to discover new opportunities, but it's a bit deeper dive. So, customer discovery. I should mention if you're curious about how this all fits into a larger framework, just look up Steve Blank from Stanford, it's called customer development. This is really stage one, understanding the problem to its deepest and to its core. Comparison and contrast number two, staying in the building versus getting outside the building. In startup literature, "Get outside the building," it's a very famous kind of phrase, I think also attributed to Steve Blank. But what I mean here is that in established organisations, we like to go to our usual sources. We like to understand what's happening from the people who like us already or who we have good relationships with, right? We like to do this data gathering from the safety of our offices, in a sense. And in a lot of ways, even coming to an industry conference is a way to share notes, for sure, but we're staying within the industry, right?
So, what a startup would say is actually the secondary data is good or whatever we're gathering. But what we really want to know is we wanna get out there and get the data ourselves. We wanna gather that primary data. We wanna get outta the building and connect it to that because we want to interact with customers.
So, again, I'm gonna propose some examples. If these examples don't work for you, replace with what would. But, you know, a simple example of gathering customer feedback, even for my organisation, we send out a survey. Who responds? The people who like the library, the people who have the time, the people who have good things to say, and then we have this endless loop of, well, we're doing the right things. And the people who don't respond, that's actually who startups would be more interested in, right? Or the people who've never heard of us. And so a startup's gonna dig into the extreme users. You'll hear this phrase, where they're not so interested in the statistical validity. And I know already today, we've had lots of data up there. And the data's super important. But what they're looking at here is because they're trying to get a deeper understanding of the problem by getting out of their building, getting out of their usual methods, they're digging into, like, why do people hate our product or never use it? Or don't like this eBook platform versus another. They want to understand the why.
So, the term I would leave you with here for this one is customer validation. It's really that not only have you understood a problem deep enough, but you validated or connected your solution to that problem so much so that you believe there's a market. So, there's an opportunity here, you know enough that you think there's some promise, we should go for it. So it's validation. It's also connected to validated learning. You posit a bunch of hypotheses. And even in Ed's previous presentation there, at the end, he's got a bunch of trends, some guesses about the future, okay, go out and test them. How would you test them? That's kind of the goal.
Third one, under mindset. You've got the "Build it, and they will come" approach versus the "Build it when they come" approach, right? So, I think, again, established organisations prefer this Field of Dreams strategy, where we know best, we'll build something awesome and they'll show up in droves. So we build that thing and then they don't show up. And then we think, "Well, what's wrong? Don't they see the value?" And I think what's interesting in a startup mindset because they have limited resources, they build something. It's not that they don't, but they don't make a bunch of assumptions that it solves every single problem. Only once people show up, do they invest the resources required to build it out, do they build the features and the functionality that the users actually want. Right? So, we heard, again, about analytics earlier today. I heard a talk recently, also in Toronto, actually around eTextbooks and analytics and very similar to the Kobo chat we heard this morning around, when do people stop? And can we track learning? And can we understand?
So, imagine if you try to build out this whole platform that helps people understand learning, but customers didn't want it, right? So, when you think of analytics, in this sense, what do the people who put eTextbooks in front of people want? Give them basic functionality, see how they use it. If it's popular, improve it. And the part that's never said is if it's not popular, kill it, it's a feature they don't want and don't need. So, don't build it because you think it's cool.
So, the term I would leave for you here is, this is the third stage in Steve Blank's customer development, which is called company creation. In other words, once the customers are lining up and begging for new features, new techniques, you actually scale, you build this business, you build in more formal processes, that sort of thing. So, company creation. Again, I recognise these are, I think, in some ways, these are awkward terms, but I like the concepts that you invest when people are lined up, not before. You don't make assumptions, that they'll line up.
The second group of three here, all focused on how we build or how we approach building. The contrast of build for the many versus build for the few. I think one of the problems you have when you've been in an industry for a really long time, is you can see the value for this new product, with all kinds of user groups, right? Or we say, we need to build something, and this would be good for this group, and this would be good for that group. And so we over feature it, right? Thinking that more features means broader appeal, means more sales. But startups can't do that partly because of lack of resources. So their constraints actually force them to build for the few, to find the customers that are most likely to be early adopters, most likely to be really interested in the product. And then they go after that relentlessly, right? Because the few will teach them what they need to do. And eventually, the many will come. They don't start with the many.
So, again, think of this as an example, we've talked a lot about eBooks or I've heard a lot about eBooks today. But I've also noticed and just browsing the web too, this whole trend towards like actually delivering that content on devices. But instead of imagining delivering, you know, book content onto phones, in particular, you know, instead of imagining a market that's just everyone with a phone... That's a lot of people. A startup might figure out, well, which particular user group is most likely to want this type of content on their phone? And, in fact, yesterday I took the bus here. And so it's about an hour ride from Guelph, and I was just watching what people did. And a good chunk of them were reading some sort of eContent on their phones. So, it made me think, you know, is there this small segment of commuters that spend a lot of time that do want that? And what could you learn from that segment alone?
So, your comment here and this won't be... Given the data I've seen already this morning, segmentation's not a new concept, right? Breaking down this large market into something, some identifiable groups. I think if there's any difference, you know, if you're taking notes, I think the main difference here is that we often segment according to demographics, right, age, maybe, you know, income, these sorts of things. But I think a startup tends to segment a little bit more around groups with the same or shared needs. So, they're trying to figure out, it's not maybe age that unites people, it's that they have this same frustration and this same problem. So, I challenge you to think of segmentation that way. Who are the people that share this frustration or this pain point, and what do we do about it? Chances are not everyone has that problem, but some do
Fifth one, learn then build versus build then learn. This one, I will say from academia, this is total...the left side here learn then build is how we do academia. This is like lit review before you do anything, right? This is the environmental scan. This is all of the effort in building the great report that's going to unlock the future. And we're gonna know what we need to build because we've read a lot of stuff. And I think, again, it's not that startups don't do their homework, it's that they decide the learning that they're more interested in is what comes directly from what they've built. That's the most relevant. And so they build first and learn from it. Again, you guys have heard about lots of different styles of platforms here this morning and this afternoon. But, you know, if you're building out a platform instead of just jumping in and building it or taking best practices from around the web, it's we will build something, but we will build it in order to learn something. And that's the key.
So, the key part of this one is what do you wanna learn? If you know what you wanna learn, what do you have to build to learn that? So, you may have seen this, it's a well sort of trodden phrase here, build, measure, learn. And it's this loop where you build first, you figure out what you're gonna measure. And based on what you've measured, you learn whether you were right or wrong. What's tricky about this, and what I often try to encourage my students when we're dealing with this particular concept is you actually have to put what you wanna learn first, you have to know your objective. And then it's working backwards, designing something to build. So, another way to think about it is this is like the scientific method. What are we trying to learn? What could we design or build that would help us get there? And how would we measure it along the way? Right? Think of designing an experiment, the build, measure, learn feedback loop
Number six. Again, I'm not sure if your industry's exactly like mine, but we love our pilot projects, right? Pilot projects is code for, we think it's a good idea, but we're gonna test it. But the problem with pilot projects is they still tend to require a lot of investment, and they're also short-term. It's really hard to learn something in this, you know, say six-month window when we're going to test the idea because it makes a bunch of assumptions that we already know everything we need to know, we just have to see whether people like it. Versus I think the startup strategy is a little bit more around iterative design. So, there's a launch of some product, or some solution, or some service, but there's also an acknowledgment right off the top that it's not perfect. And that that's actually okay. And because it's not perfect, there's a commitment to improve it as we go. But it's improvement based on what we learn, right? Going back to the build, measure, learn.
Again, imagine you're creating a secondary marketplace for used books, I don't know if that's a bad thing to do or not, for your business. But you know, building something instead of saying, we'll just try it out. We'll put all this effort into building this marketplace and see what happens. There's this earlier stage of let's get it started. Let's see if it gets momentum. If there's momentum, let's invest more, let's improve the design. Let's be okay, if you would, with imperfection. And I would say, I think for established organisations, that's a really challenging thing, right? You don't want to put something with your brand on it out there, that seems imperfect. So fine. That's a legitimate concern. But if the goal is to commit to improving it as you go, then eventually you're gonna snowball the momentum into a better product.
So, I actually heard this term, or I saw this term on Twitter earlier this morning. So, that was good. I like that. Minimum viable product is, again, one of those famous things out of...if you sort of know a little bit about lean or a little bit about customer development, the MVP is the thing you hear. But really the MVP is this product or service that you build that has just enough features, right? So, it's functional, it's working, people can test it out, they can test out your offer. But there's an acknowledgment that it's not perfect. There might be a few bugs, there might be some missing features, there might be some ideals we wish we had, but we've built it out purposely to see what happens, right? This is, again, part of your build, measure, learn. And so minimum viable products, just if you're kind of figuring out how does this work for me, there's two types. There's a low fidelity, which is really quite frankly, could be a couple of sketches about how the website should work and look that you test with people, or a PowerPoint, or something, some way to visualise and make an idea tangible, that would be low fidelity. A high fidelity MVP would be an actually functioning website, or web service, or product that people could test, could test with their hands or with their experience, if it's an online product, that sort of thing. So, an MVP. Building an MVP, and that's one of the core things you'll hear, especially out of tech startups in California, you know, the MVP is the important part. Once you get to that MVP, then your learning really takes off.
Last group here around value. And I hope to leave a few minutes for questions. So, we've heard a lot today about data. You know, data's piling up everywhere. Established organisations probably have more of it, right, because they have sales data, usage data, all of that. And so that data is important. It's not that it's not. But the challenge as you guys know is the data piles up. Where's the information? Where's the learning? Where's the understanding. That's not so easy and yes, big data and that has some ways we might solve that. But on the whole, this data just keeps piling up and we're not quite sure what to do. So, a startup approach, it's not that they don't collect the data, they do. But they actually monitor key data, key data points, key metrics that are about the health of the organisation. You know, they're in survival mode, essentially, especially if, as Ed said earlier, if, you know, they're on other people's dimes, right? You can't afford to not know what's happening. So, they pick specific metrics that talk about the health of the company.
So, I liked the talk about Kobo earlier this morning because, you know, there was a clear decision to choose metrics that would help them understand what was happening. Now, it's not quite the same. In this case, a startup is picking metrics that are important to the health of their organisation long-term, right? So, if, again, in a tech context, you're looking at number of users, number of new people, number of people creating accounts, that sort of thing. And you're monitoring that and you're making that very transparent to everyone in the organisation. So, maybe that's the other key is you've determined as a group, these are the key metrics. You know, if we don't get new users, if we don't get this many a month, you know, we're not gonna be able to be functional. We need the growth. And this is the growth we need, and this is what we're gonna watch, and this is how we're gonna test whether this growth keeps coming. And that becomes transparent to everyone.
So, again, this term in particular, I think you're probably familiar with, the sort of the dashboarding concept. But I would suggest to you that dashboarding doesn't have to be particularly complex. It doesn't even have to be a web product. It could just simply be, we have a whiteboard and we're tracking how many people are hitting this site by the hour, or by the day, or week, and what's happening on that site if that's a key metric for success. So, I think the point is using some upfront imagination to figure out what are the key points that you really need to be tracking? Number eight. This one's my favourite. So, execute the plan versus adjusting the model. So, when you're an established organisation, you probably have established norms for how things get done, right?
Maybe you take a project management sort of strategy, you've got Gantt charts and all of that, maybe you've got more of a project charter, proposal, budget planning, maybe it's all looped together. But you've got a way to get things done. And you take this big task and you break it into all these micro-tasks, and you're all about executing the plan. "We said we're gonna do this, we wrote it down, it got approved, we're gonna do the plan."
Startups don't have the luxury of that. It's not that they don't do plans, it's just their plans are more lightweight. They actually understand that their plans are stock and full of assumptions and that their job is to actually understand where those assumptions are in the plan and then change. So, they usually prefer the term, the business model. Are you guys familiar with "Business Model Generation" or Business Model Canvas? It's a very popular book from Wiley, I think, but you should check it out, even if it's a competitor's book, it's good. You know, the business model, it's this simpler, lightweight plan about what we're trying to do, but the acknowledgment up front is that it's full of assumptions. So, I must admit, I heard the content marketing talk this morning. I don't fully understand it entirely. And that's okay. But, you know, if this is a strategy, do you just put a plan in place because it seemed like a good idea? Or do you model out what it could look like, understanding that we still need to figure some stuff out, and then make the changes that are required based on your learning? That's would be the model approach. You don't spend all this time, locked in a room with a whiteboard building a 30-page document. You build a one-page document with a bunch of assumptions that you are willing to change when you get new information.
So, this is, again, another famous term out of startup strategy, which is called the pivot. Familiar? Some. So, the challenge with talking about startup strategies and then giving you terms is that sometimes the terms are buzzwords and buzzwords turn people off. But I think what's interesting about the pivot is that the pivot is an admitted change in strategy. But the key part is it's a change in strategy based on what you learned. So, it's a reasoned change. It's like basketball, you change your direction, but you're leaving... You know, when you're pivoting, you're leaving one foot planted in what you know. That's the important thing. It's not we scrap that idea and we pick something totally new that we have to start from scratch with. It's we learned this, we learned that customers don't like that. But in part of our investigation, we learned other opportunities. So, we're gonna pivot and see if this new direction provides promise. In a lot of ways, startups are about de-risking the whole process.
I think there's this myth that entrepreneurship is all about risk. And actually, these sorts of things are about reducing or limiting the risk or staying within your acceptable loss in the first place, and not wasting money. Last compare and contrast. We're good for time. So, there's a tendency, especially in an established market to focus on or promote the features, right? Think of the last cell phone you bought and how awesome it is because it has a 4.2-inch screen instead of a 4.1, right? There's this focus on features as sales, you know, sort of, yeah, I guess, it's really, the sales value is too much focus on what it can do instead of where startups start, which is the value, right? It's connecting... Again, we've heard the theme throughout the morning and throughout even this afternoon, about relationships. Well, relationships aren't about features, they're about value. So, where's the value? And if startups have an intimate knowledge of their customer base or their presumed customer base because of these conversations, they then create a better sense of the value they're offering.
Now, again, there's a talk, I think it was actually just before on transmedia content, not entirely sure how that's different from regular media content. But regardless, assuming that you want to introduce more media content into a product, or a book, or build on an ebook platform, what's the approach here? Do you just say, "This is great, we've got this kind of media, we've got audio and video and this number of hours."? Or do you actually understand why that particular content is better delivered in that particular way? And can you communicate that to the person who needs the book? They may not be that impressed that there's three hours of video content or interviews with so and so, they actually want to know what's the added value for them in that space. So, again, the value proposition, I'm sure this is a more familiar term. It's less focused on startups and a little more on just general business. But really, I find, again, this is... I'm speaking from my experience, but I think established organisations sometimes because they're established, there's a set of core assumptions about the value that they offer to the customer, but they're never sort of explicit.
So, it becomes internalised in this group, but they're not always checking it. Where in this case a value proposition would be a clear statement of the products and services and the value that they bring. Do they help the customers save time? Do they add enjoyment? Are they more convenient? Where's the value from the customer side? And I know this sometimes can sound like just marketing, right? "This is why you love us." But I think, ultimately, it points to startups are trying to drive to that deeper need, right? Because they know if they don't get customers, they don't get early adopters, their days to, you know, disbanding or becoming bankrupt, or needing more cash, are numbered. And so there's an urgency to be explicit, and clear, and selective about the value that they know and offer.
So, if I were to summarize really quick here, I would say, you don't have to be a startup to think like one. One of the challenges of even putting startup thinking in the title of a talk is it gets a few eye rolls, right? We don't want to be Facebook or maybe we do, but we're not. And, you know, but you don't have to be that. I think in a lot of ways, this isn't even new thinking. It's maybe newly packaged, but it's thinking that is spawned out of a lack of resources, constraints. And even established organisations, while you may have your processes, and you may have your budgets, and you may have better years than other years, the reality is you still want to be able to do more with less, right? That's a reality. And so adopting some of these processes, a loosening up on the sense of it has to be perfect right out of the gate. And acknowledging that startups are really about learning for a good chunk of their first few years and that new projects you might propose should also be that way. I understand the pressures and I've heard the questions earlier around what about the return on the investment? And absolutely you have to be careful about that. But I think it's important to understand or adopt the processes that these startups use to generate their ideas, to perfect them, to understand the market better. And I think they can be beneficial to established organisations as well.
So, I'll give you a bonus strategy. One of the other buzzwords that comes out of sort of business talk is pitching, right? Familiar? You guys would be, authors pitch books, you know, etc. But what's interesting about a pitch is it kind of brings everything together. It's that concise convincing summary that says here is the value I'm offering, and here's what I want you to do. So, the core parts of a pitch, at least a good one, demonstrate that you understand the problem, that you can validate the solution that you're proposing because you know, some facts. You've communicated that value proposition that you offer and you are clear and unequivocally clear about that. But ultimately, the pitch isn't any good unless it compels the listener, the audience, the customer to do something. So, in lots of ways, this is a distillation of the nine strategies you heard before, right? It's that pitch to the consumer. And if that pitch falls flat, now you have an opportunity to learn. That's what I think is missing. Sometimes we feel like when a pitch falls flat, we've failed. I tend to think startups don't think of it like that. They think of it as, "We found a way that didn't work, what's a way that will?"
Zalina: Next week on the podcast, we've got Derek Schultz giving his talk, Stone, Bronze, Iron, Ink, Silicon, or I'm the Laziest Developer out There. If you want to learn more about what we do, you can find us at booknetcanada.ca. Thanks to M.J. for speaking at Tech Forum and to everyone who attended or helped put it together. We gratefully acknowledge the financial support of the government of Canada through the Canada Book Fund. And of course, thanks to you for listening.
