NEW YORK–“Life’s too short to build something nobody wants,” says Ash Maurya in his talk last December 8 at We Work in Wall Street.
Maurya is the acclaimed author of “Running Lean,” a concise guide that helps you take action in using lean startup and customer development principles. He was at We Work to present his ideas for scaling business–clearly a prelude to his upcoming book, “Scaling Lean.”
For Maurya, the root cause of a startup’s problem is when solution is perceived as the product. “Your solution is not the product. Your business model is the product.”
“We build needless time building the wrong product,” he stressed. “We need a systematic way for identifying risks– one that doesn’t require guessing.”
Maurya briefly discussed what we can look forward to in his book, Scaling Lean, which he categorized in the following ways: defining progress, seeing waste and achieving breakthrough.
Progress here means traction and how it “matters above everything else, although he also cautioned against gaming it. For him, one has to create and capture value first then you charge and deliver value, knowing “monetizable value is not current revenue but future of revenue.”.
For Maurya, business models cover three things–direct models (one supplier and several customers); multi-sided models (adding value to users first followed by monetization) and the marketplace model, certainly the buzzword this year for the way it has taken AirBnb and Uber to a mainstream audience.
Citing a company that has provided valuable direct-model service and traction, Maurya said Starbucks’ rebranding efforts based on consumer insights made them acknowledge what brings customers to coffeehouses. It certainly works as the third place for home and office. .“They realized the more people spend time (there) the more they are likely to buy,” he said.
Calculating customer lifetime value between $14,000 and $20,000, he points out how the time people spend at the coffeehouse is connected with its revenue and how happy customers drive referral.
Going back to the meta principles of Running Lean, he points out how to document Plan A, identify the riskiest parts of your plan and systematically test plans,
As a proponent of his own business model canvas, does he have anything against a business plan? “I’m not against business plan but its format. But it’s a document that investors want you to write but don’t read.”
Maurya also touched on how to see waste correlates to how we see the customer factory floor. Talking about how every business has a weak link, he reminds us how to avoid premature optimization. It’s important to focus on a single metric.
For more on Ash Maurya and his lean principles, visit http://leanstack.com/about/