Discovery for Businesses & Startups: Stage of Exploration

Discovery for Businesses

Reduce uncertainty about WHO your customers are and WHAT they need — and ensure you’re building the RIGHT PRODUCT/SERVICE for them.

Credit: Alex Covic

Product discovery is a critical stage in the life of any startup or new corporate venture. Without discovery, you have no way to prove or disprove assumptions about your customers. Without that, there’s a significant chance that you’re basing your product decisions on wrong assumptions.

As a consequence, you may waste time building features, products, or services nobody needs. And that usually takes more time and resources than you would invest to discover the right ones.

Research is not Discovery

“There are no facts inside the building so get the heck outside.” — Steve Blank

If you’re obtaining information from already available “secondary” sources you’re doing desktop research. That can tell you stuff about the size of the market, competition, pricing.

That’s helpful to determine the viability of the idea in the broad sense.

Discovery for Businesses

But the information you can get from case studies and reports will always be someone’s interpretation of actual data. While that can be useful, it may or may not apply in your specific context.

Outside the right context, secondary research won’t tell you what your users actually need. It can’t help you discover if the idea is desirable.

YCombinator tells its founders that early-stage startups have two jobs: writing code and talking to users.

Yet, there’s a tendency for organizations to neglect or even completely skip Discovery — even when developing new products or aiming for new customer segments.

Many founders and product leaders spend less than 5–10% of the resources and time to learn about their users. In contrast, most product professionals I’ve spoken to agree that developing a Minimum Viable Product (MVP) will require 25–35% of the product leader’s time spent on Discovery.

If we all know that there’s no innovation without exploration, why don’t we do it?

We don’t like being wrong

Exploring is moving through the unknown territory without a map. There will be missteps. Yet, no one likes being wrong or having their ideas second-guessed — especially inside a meeting room.

The culture inside many organizations is still set up around the execution of a known business plan — and as such, discourages “not knowing”.

On a personal level, it can be very unpleasant to discover how much of what we think we know we actually don’t. And discovery will uncover how much of what we hold as facts are wishful thinking or a huge leap from the conclusions of whichever report was at hand.

Validation is not Discovery

Founders and corporate leaders are often future-focused & goal-directed. We tend to focus more on the solutions and how they will impact the future than the existing problems.

business discovery

No-one likes not knowing stuff, especially inside a meeting room.

That mindset is probably one of the things that make innovators innovative and most definitely good to have in life. But being too focused on your solution when you should be thinking about the problem puts you in confirm mode when you should be in the learning mode.

If you go in discovery looking to “validate” your product idea, the whole effort becomes a yes/no question — your solution either works or it doesn’t.

And if you invest in developing the MVP without discovery, you are really making a significant bet on the positive answer.

Validation is a yes/no question, while Discovery should be an open-ended conversation.

Open-ended conversations allow you to learn what you don’t know, not only prove or disprove what you think you do.

Worse yet, falling in love with a solution sets you up to fall victim to one of the myriad cognitive biases homo sapiens are susceptible to.

Our minds do play tricks on us

Evolution selects for Energy Conservation, and the brain needs a lot of energy — more than 470 Calories per day). To save on gas, the brain has developed a series of heuristics. These are mental shortcuts or information-processing rules that enable the brain to make quick estimates about the possibility of uncertain occurrences.

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The code is still a bit buggy. Photo by Natasha Connell on Unsplash

These are simple and quick for the brain to compute and right often. They are also error-prone and can induce “severe and systematic errors” when applied in the wrong context. That leads to wrong interpretations, mistakes in judgment, and general “irrationality”.

We all do it.

One common cognitive bias is the recency heuristic. That’s the phenomenon of a person remembering something that has happened recently better than something that has happened a while back.

That’s obviously useful when you need to remember where you put your keys last night. But putting too much emphasis on the most recent bit of information can lead you to wrong conclusions.

Similarly, humans tend to rely on immediate examples. Often the ones that are easiest to find, or the first to come to mind when evaluating a specific topic or decision.

Scientists call this the availability heuristic and we do it every time we use the facts which are at hand as the Single Source of Truth.

So maybe that Gartner report that’s been on your desktop for a few months isn’t the best source of information.

My favorite? The confirmation bias. That’s the name for our tendency to favor information that confirms our existing beliefs and biases.

So let’s say you believe left-handed people are more creative and happen to meet a left-handed artist.

Just another left-handed artist.

Your brain will remember this occurrence as important, further confirming its existing belief. And the next time you encounter a left-handed person, you will expect them to be, and maybe even perceive them as creative.

So what can we do about this?

How to think like an Explorer

The easiest way to get into the Discovery mindset is to start focusing on the problem, not the solution.

Starting Product Discovery with a solution in mind is like playing darts in a dark room. You’ll eventually hit the dartboard, but it will usually take a lot of darts.

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Maybe you’ll get lucky and hit a unicorn.

Starting with the problem doesn’t necessarily turn the lights on, but it will tell you in which direction to throw.

Customer/Problem Hypothesis

One of the tools I use to help founders fall in love with a problem & embrace uncertainty is the Customer/Problem Hypothesis.

Customer/Problem Hypotheses are simple statements about who our customer is and what they are trying to accomplish.

These can take any form you’re comfortable with (Scenario, User Story, etc). I personally like to use the following format:

When _____ , I want to _____ , so I can _____ .

“When I’m traveling, I want to stay close to laptop-friendly cafes so I can do my work.”

“When shopping for groceries, I want to buy organic produce so I can feel good about myself.”

The situation, Motivation, Desired outcome.

Contrast this with your typical User Story format:

As a _____, I want to _____, so I can _____.

Persona, Motivation, Desired outcome.

If you’re familiar with the Jobs to be Done theory this approach will not be new.

I like this format better than conventional User Stories because it defines the user in a situational context, rather than as an intersection of demographic categories.

It provides context for the problem and in the research context is king.

There are however situations where User stories might be more suited for the job — like when the user’s demographic has more to do with the problem that the context it’s coming up in.

Map out your assumptions

The Value Proposition & Business Model canvases are probably the first tools intrapreneurs and entrepreneurs will learn and use to think through and define the most important components of their offering.

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The Value Proposition Canvas can help you think about your customer, their needs, problems, and benefits they desire from a solution.

The Business Model Canvas takes a wider view. Apart from your customer and your solution, BMC makes you think about the market, the actions you need to take, the resources you need to put in.

Both are great tools with many use cases. I use them to map what we know and discover what we don’t about our business, customers, and market.

Use your tools as a way to pose questions, not assume answers.

You can do this as a group exercise with your team or clients. Get together, put up a canvas and get some Post-It action going. Once you fill up the canvas with statements, go through them one by one and ask yourself and your team:

  • How do we know this is true?
  • Can we even answer this question?
  • Where’s the evidence for this?
  • What’s the source of this knowledge?
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Discovery is a team sport.

If you’re like most early-stage teams, you’ll find that you lack real proof for many of your assumptions.

Often, if there is evidence it’s circumstantial and open to interpretation (as secondary research tends to be).

This doesn’t always come easy. But teams that are honest with themselves find that this exercise forces teams into action by shaking the status quo.

Better yet, it turns a bunch of assumptions we took for granted into a list of questions that can be answered.

Some guesses are bigger than others.

Once you take inventory of what you know you need a way to decide what questions you need to ask next. Fortunately, not every assumption can make or break your business. Some are critical leaps of faith that everything revolves around. Others might be less impactful, or will matter at some point in the future but don’t right now.

We need a way to rank these by the degree of certainty we have in a hypothesis and how much impact it has on our business.

At untangle digital, we use a simple Impact/Certainty Matrix to help founders decide what to focus product discovery on.

Impact/Certainty Matrix

Much like the Impact/Effort Matrix we use in Product Development to prioritize product feature requests and decide what to focus on next, an Impact/Certainty Matrix is a tool that helps you decide which hypothesis you should test next.

Stuff with more impact has precedence over stuff with less. And those of lower certainty are riskier.

The lower right corner is where you should focus. That’s your “Leap of Faith” zone.

Your users are the ultimate source of truth.

Once you know what your Leaps of Faith are, you need a way to remove some of that uncertainty and risk.

Once again, context is king and the approach that works for one set of assumptions and users won’t always work in other contexts. At untangle digital, we developed (and appropriated) an array of tools and techniques to help founders discover & validate facts about their businesses. But our bread and butter are customer discovery interviews — and they should be yours too.

Everything you need to do Product Discovery.

Interviews beat surveys because they allow you to ask open-ended questions and thus find out stuff you didn’t know you don’t know. Surveys don’t allow you to read non-verbal cues and make leading questions almost impossible to avoid.

Even if you’re pressed for time interviews are the way to go. With each interview, you still get insights you can use immediately. With anything that requires more work, you only get insights at the end of the process.

Even if you only did 2 interviews today, you’d still have more actionable insights today than any survey that would take 2–6 weeks to complete.

Your customer’s words are gold. They are the ultimate source of truth about their needs & goals. You can use them to direct your product decisions, market positioning, pricing, and channels.

The trick is to get to the right words.

Getting Actionable Facts

If Henry Ford asked the users what they want, they would ask for faster horses — or at least that’s how the apocryphal goes.

Ford may not have said that, but his point stands. Humans can be very inaccurate with their memories, often not aware of their motivations & notoriously optimistic about their future.

They will even tell you what they think you want to hear just to make the interaction pleasant.

To avoid getting led astray by your customer’s words, here are a few rules of thumb I use:

Ask for help, not an “interview”

If you approach your customer conversations as “interviews”, there’s a big chance your response rates will plummet. Establishing an interviewer/interviewee dynamic will often make your users less open and willing to share.

And you might discover that the users who do respond will do it only for the incentive.

Instead, ask for help. Reach out to people in your network who fit your customer profile or can introduce you to people who do. Tell them you’re working on a project (without describing the product — we don’t want to bias them). Tell them they can help you and ask for 20 minutes of their time.

You’ll be surprised how likely users are to help when being asked for help, not being sold to, and not feeling under examination.

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Everybody likes free coffee and being listened to.

Talk about their past, not your future.

Ask your users about facts about their life, not their opinions about the future.

Humans are biased and optimistic. What they think they know can be wrong. They can change their mind. If you put them on the spot, they might come up with an opinion they don’t really hold just to “play along”.

So, it’s better to ask:

“How much did you pay for those shoes?”

than:

“How much would you pay for a pair of shoes?”

One has happened, the other hasn’t. One is a fact, the other is an opinion.

It’s better to be shown than told

This one’s easy — If you have an opportunity to observe the user trying to accomplish their goal in the appropriate context, take it.

You might discover goals and obstacles even your users aren’t aware of.

Mach 1 Digital helps startups and corporate ventures launch new products and services with a focus on using digital platforms to gain valuable discovery, Business Modeling, Lean Startup processes, and Running Lean principles. Mach 1 Design executes “Rendanheyi” or Zero Distance to the Customer. Connect with [email protected] for a free consultation or call us at (469) 536-8478