methodology.md

Methodology

Design Sprint

• Phase:

  1. Understand - Discover the business opportunity, the audience, the competition, the value proposition, and define metrics of success.
  2. Diverge - Explore, develop and iterate creative ways of solving the problem, regardless of feasibility.
  3. Converge - Identify ideas that fit the next produce cycle and explore them in future detail through storyboarding.
  4. Prototype - Design and prepare prototype(s) that can be tested with people
  5. Test - Conduct 1:1 user testing with (5-6) people from the product's primary target audience. Ask good questions.

• Delivaerables The main deliverables after the Design sprint:

  • Answers to a se tof vital questions
  • Findings from the sprint (notes, user journey maps, storyboards, information architecture diagrams, etc.)
  • Prototypes
  • Report from the user testing with the findings (backed by testing video)
  • A plan for next steps
  • Validate or invalidate hypotheses before committing resources to build the solution.

Lean Startup

• Minimum viable product

A minimum viable product (MVP) is the "version of a new product which allows a team to collect the maximum amount of validated learning aobut custormers with the least effort". The goal of an MVP is to test fundamental business hypotheses (or leap-of-faith assumptions) and to help entrepreeneurs begin the learning process as quickly as possible.

• Continuous deployment (only for software development)

Continuous deployment, similar to continuous delivery, is a process "whereby all code that is written for an application is immediately deployed into production," which results in a reduction of cycle times. Ries stated that some of the companies he's worked with deploy new code into production as often as 50 times a day. The phrase was coined by Timothy Fitz, one of Ries's colleagues and an early engineer at IMVU.

• Split testing

A split or A/B test is an experiment in which "different versions of a product are offered to customers at the same time." The goal of a split test is to observe differences in behavior between the two groups and to measure the impact of each version on an actionable metric.

A/B testing is sometimes incorrectly performed in serial fashion, where a group of users one week may see one version of the product while the next week users see another. This undermines the statistical validity of the results, since external events may influence user behavior in one time period but not the other. For example, a split test of two ice cream flavors performed in serial during the summer and winter would see a marked decrease in demand during the winter where that decrease is mostly related to the weather and not to the flavor offer.

Another way to incorrectly A/B test is to assign users to one or another A/B version of the product using any non-random method.

• Actionable metrics

Actionable metrics can lead to informed business decisions and subsequent action. These are in contrast to vanity metrics—measurements that give "the rosiest picture possible" but do not accurately reflect the key drivers of a business. Vanity metrics for one company may be actionable metrics for another. For example, a company specializing in creating web based dashboards for financial markets might view the number of web page views per person as a vanity metric as their revenue is not based on number of page views. However, an online magazine with advertising would view web page views as a key metric as page views are directly correlated to revenue.

A typical example of a vanity metric is "the number of new users gained per day". While a high number of users gained per day seems beneficial to any company, if the cost of acquiring each user through expensive advertising campaigns is significantly higher than the revenue gained per user, then gaining more users could quickly lead to bankruptcy.

• Pivot

A pivot is a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth." A notable example of a company employing the pivot is Groupon; when the company first started, it was an online activism platform called The Point. After receiving almost no traction, the founders opened a WordPress blog and launched their first coupon promotion for a pizzeria located in their building lobby. Although they only received 20 redemptions, the founders realized that their idea was significant, and had successfully empowered people to coordinate group action. Three years later, Groupon would grow into a billion dollar business. Steve Blank defines a pivot as "changing (or even firing) the plan instead of the executive (the sales exec, marketing or even the CEO)."

• Innovation accounting

This topic focuses on how entrepreneurs can maintain accountability and maximize outcomes by measuring progress, planning milestones, and prioritizing. The topic was later expanded upon to include three levels of innovation accounting related to the types of assumptions being validated.

• Build-Measure-Learn

The Build–Measure–Learn loop emphasizes speed as a critical ingredient to product development. A team or company's effectiveness is determined by its ability to ideate, quickly build a minimum viable product of that idea, measure its effectiveness in the market, and learn from that experiment. In other words, it's a learning cycle of turning ideas into products, measuring customers' reactions and behaviors against built products, and then deciding whether to persevere or pivot the idea; this process repeats as many times as necessary. The phases of the loop are: Ideas → Build → Product → Measure → Data → Learn. This rapid iteration allows teams to discover a feasible path towards product/market fit, and to continue optimizing and refining the business model after reaching product/market fit.