Embracing uncertainty to create innovation

The unknown is the driver of innovation. The magic of innovation happens when the unknown becomes the norm. So you can say we witness the most innovative times with the “new normal” changing our lives. Time to get creative! Is there a recipe for successful innovation? For me, it consists of combining the opposite, standing on the edges of different businesses or technologies, and being open to new experience.

Our core goal at Moqod is to help our clients resolve their business problems with innovation. We deliver innovative solutions for both enterprise and startup clients. Over the recent decade of building software projects of different scale and form, eventually, we see quite often the customer with a question – “OK here is my app. Now what?”.

It’s just the beginning of a long and bumpy road to the unknown. 90% of startups with a successful exit have started with a completely different product. On the other hand, established successful businesses face another “luxury” problem, as Eric Ries says, “The hardest part for most organizations is knowing what to do when they succeed.”

Seeing these two contradictory worlds of startups and enterprises, we can take the best and avoid the mistakes for both. This helped us build our innovation framework. It was also polished after reading the recent works of Eric Ries in his “The Startup Way”. In a nutshell, our innovation framework contains a set of product management best practices we took from the startup world with a pinch of corporate processes and structure. Here are the core elements:

Definition of success

We start from the end. The end goal of any venture is to become successful. But how do you define success in your particular case? It is essential to visualize and feel the success. These simple questions help us to determine that:

  • What is your ultimate project goal? Why? Why? Why? Why? Why? The principle of 5 whys reveals the reasons, intentions, and motivations the client has behind the project. We do this to get the true meaning of what we intend to build, which will give us more motivation and engagement, not simple client-contractor relationships.
  • Which numbers are you going to achieve within 1/5/10 years?
  • What is your exit strategy?
  • What is your ideal customer? Who is your OK customer? Which customers do you want to avoid?
  • Visualize your success! Describe how you will feel it, what it will smell like, what will you tell your wife/mother/partner/best mate about it?
  • What will be the press release to announce your product? Starting development with a press release is a known proven technique of Amazon and other tech giants.

“The team writes a press release (similar to the Amazon process) and FAQ document for the customer, including information like the product launch date and cost. Then the team sits down with customers who’ve been given the release to get feedback. “We try and get as much information as we can from the customer on the final product before we’ve spent any time building it,” says Patrick Malatack, ex-VP of Product at Twilio. Sometimes customers will say they aren’t at all interested in an idea. Other times, they’ll say they can’t wait to start using it, at which point the team will dig deeper. And sometimes, the response includes requests for features that the team hadn’t even considered.”

Success is an entirely uncertain, somewhat magical event. Is there a crystal ball to increase the chances and decrease uncertainty? One of the best phrases to describe success was in my favorite book The Click Moment, “Success must be a result of dozens, even thousands, of possible forces that change with every action and interaction.” We call these forces “assumptions”, they are unpredictable, yet we can assume they might work out the right way.

Assumptions

Let’s take a real business case. As our business went into Corona-slowdown, we decided it’s never been a better time to get creative and do something new. Despite the world being put in hibernation, people were still experiencing household problems, like water leaking or electric shortcuts. So we assumed the following:

  • 80% of the household problems can be manually fixed with expert advice.
  • We mainly experience problems related to plumbing, electricity, cars.
  • Single working ladies of 30s-40s living in their own houses will struggle the most: they are always busy, while used to technology.
  • People are reluctant to schedule physical appointments with plumbers or electricians because:
    1. They don’t want strangers in their houses to avoid unnecessary contacts.
    2. It takes too long to schedule appointments.
    3. Most fixes are simple like finding and pressing that reset button (arghhh!).
    4. In many cases, an expert comes to your house for a 20-minutes visit to perform that quick urgent fix.
    5. Physical appointments are too expensive!

Our possible solution was a video-conferencing service where a user would be automatically connected to an expert (e.g. in plumber) who would help to fix the problem on a video call.

After a few brainstorming sessions, we came up with something. That’s how Zelfix came to life.

Brainstorming

The goal of our brainstorming sessions is to crystallize the assumptions and most importantly the approaches how to validate them. It takes 2-3 brainstorming sessions to reach that goal. These are the key questions for discussion:

  • Under which assumptions will you reach your goals?
  • What do you assume people need?
  • What do you assume is necessary to build to fill the need?
  • Why do you assume this will solve the problem?
  • Who do you assume is your ideal customer (the ones bringing 80% revenue)?
  • What is the simplest version that can be built to begin learning?

Making these assumptions is the first step to unveil the mystery of uncertainty. Be bold, make stupid predictions, think of crazy ways! Each of them will increase the chances of success.

Now as we had our list of assumptions regarding Zelfix it was time to have fun! Experiment! Prove your assumptions right or wrong!

Experiments

They began presenting their ‘plan’ as a series of experiments to be tested, rather than a traditional ‘execution’ plan. They were essentially acknowledging the inherent uncertainty of their proposed ideas, while simultaneously providing a plan for reducing their uncertainty through experiments” Bennett Blank, Innovation Leader @Intuit

We launched the landing page using Tilda.cc. It is very popular and easy to use no-code solution that is well fit for the purpose with multiple out of the box plug-n-play components. This gave us the fastest and cheapest solution to start learning. On the landing page, the visitor can select or search for a “problem” they want to fix. From there they are forwarded to the page to leave their email to get notified when the service would be fully operational. All interactions of the users and data were collected with the help of Tilda tools and integration of Google and Facebook analytics. So we were actually selling the service without a single line of real code or sales effort. Our total investment for the landing page was around 500 EUR which included a few hours of our designer and marketing manager.

Once Zelfix was live we started to target the audience we defined earlier on Facebook and Google. Our initial assumption was that Google and Youtube display ads would bring more traffic as the people would be actively searching for a solution on how to fix e.g. a running crane.

This is how the campaign looked like on Facebook. We targeted people interested in household topics, like home renovation, design, gardening, Praxis, Gamma…and on Google, targeting search topics and pages related to home renovation, design, gardening.

Both Facebook and Google Ads give us a huge variety of options to experiment with using different approaches, demographics, interests, etc. 

We set our marketing budget for both campaigns at 500 EUR. So our total investment for this project was 1000 EUR. Huh, so you don’t actually need a pile of money to start?! Be creative and have fun with your idea!

Eric Ries in The Startup Way refers to this in the following way “Think like a scientist. Treat each experiment as an opportunity to learn what’s working and what’s not. We call this “unit of progress” for startup’s validated learning.

We learned a lot! Curious to hear the results?

Learning

In today’s marketplace of uncertainty, whoever learns fastest wins…Take the learning from each experiment and start the loop over again. This cycle of iteration is called the build-measure-learn feedback loop.” Eric Ries, The Startup Way.

The experiments on Zelfix generated insightful data to prove our assumptions right and wrong. Thus, we reached the goal of this project – LEARN. Here is what we have learned:

  • Visitors: 1500
  • Relevant requests: 18

The most interest in the area of fixing their household appliances, particularly dishwashing machines (obviously, corona lockdown, everybody is at home, nobody wants to wash dishes manually).
●  Conversion rate: 1.2% (vs 0.35% benchmark in the consumer services industry)
●  The average cost per click is rather low but brings a fairly high amount of visitors, thus the marketing cost for such a project would not be high.
●  We were not able to find any direct competitors for this product, so we could take the market leadership immediately.
●  We consider DIY YouTube videos as the main competitor.

MVP

For metrics to support a valid inference, they must follow the three A’s: actionable, accessible, and auditable.” Eric Ries, The Startup Way.

The learning cycle gave us the insight to understand what would be valuable for the MVP and the way to go forward. We realized that we already saved a lot of future costs and marketing efforts by targeting the proper audience and more relevant problems.

Our next thought was like, “if this idea is so obvious and real, how come nobody has yet launched it?”. We went onto the next validation cycle by speaking with possible competitors. So we approached Dutch large household services platform with our insights. Our initial idea was to partner up with a bigger player. The response we received was astonishing! Actually they have already considered launching a service like this, but it wasn’t fit for the business model of the service providers. They are used to get paid at least 50 EUR per hour and are completely uninterested in micro-gigs. This is probably our best lesson learned:

Talk to your competitors, share information, treat them as partners. They may be the source of insights, as most likely they have already tried to do what you want. It could have failed for a reason.

As a conclusion of our MVP, we are back at the assumption validation cycle. The key question is how to disrupt the market and make the business model more attractive for the service providers. Our current assumptions for the project are:

  • The service should be targeted towards resolving problems with home appliances and electronics.
  • This could be a video support service for manufacturers of household appliances (e.g. Bosch, AEG). We assume it would save them time and effort to provide support via video calling instead of traditional ways. Plus it’s a great benefit for the users.
  • This could be a value-added service for sellers of home appliances like Mediamarkt or Coolblue. E.g. they could advise to buyers what’s the best model that would fit their needs without leaving their houses or searching over the internet.
  • The service could be organized as a virtual office, so the support of e.g. Bosch or AEG doesn’t even need to have a real office. This could be organized by working remotely.
  • We still believe in the micro-gig economy, so there should be a market for this service.
  • We believe that possibly a suitable audience for service providers for household problems like water or electricity issues could be disabled or retired professionals who are still looking to make some money with their knowledge.

These assumptions could go into the new loop of experiments, become a basis of potential client panels and customer development procedures, etc. The endless field of research is right in front of our eyes.

Learnings and take-aways

Our main lesson from this activity is not money saved to launch a new product. Our main result is the framework we have developed that can be used to innovate for corporate clients by helping them enter new highly uncertain markets as well as for startups with “yet-another-wannabe-killer-app-idea” to validate their product. As Eric Ries would explain it “ a rigorous process that allows for experimentation with low risk

This framework creates energy in organizations. It allows risk, creativity, and fun to enter into the corporate cubicles. It facilitates curiosity and entrepreneurship which is the magical recipe to build, scale, disrupt. It brings something new – a road to the unknown likely with a highly rewarding result.

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