Fundamentals detailed

1. You need to think from your customers’ perspective and not from the perspective of your business

   School teaches you to see the world from the eye of a company. Basically you move from classes to classes learning about the functions inside a company: marketing, finance, logistics, customer support, management… It’s great if the goal is to integrate robots inside departments and get them to do exactly what the department is meant to do. It’s the reality of what most folks do. They get a position inside a department and they just follow procedures, be it a secretary, a marketing officer or a trader.

   I want to give you the keys to you fundamentally understanding what you do and what folks do inside a company. 99% of the folks inside the company think from a company perspective. We have all these human resources. We have all these assets. What do we do with them? Well, let’s do this and let’s do that. That’s roughly how it works. Coupled with the fact that most companies are a spaghetti of tools, processes, jargon, norms, … . It means that they have very low flexibility for change. It means that their options are limited.

   The problem is that most decisions taken inside a company are not based on the customer but on what resources the company has. That’s not how things should work. Initially, when these companies started to encounter success, they used to be laser focused on their customers’ needs. That’s how their first product or service took off. It was very good at doing a job for a customer segment. But, as the years went buy focus shifted on the resources the company accumulated. In the meantime, the needs of the customer evolved and thus you end up in a situation where the startup that became a large company is no longer thinking from the perspective of the customer. It is then very costly to try to reorganize the company to increase its flexibility because most folks don’t know how to do this. They pay consulting firms millions of dollars for mainly failing on this task.

   My advise is to keep your focus on the customers’ needs at all time. It means that you will structure your company on this principle. Your teams will be organized on the customers’ need. Meaning that you are very unlikely to go for the traditional structure of a company such as accounting, marketing, finance, management, logistics, … . This is BS. This is not how you structure companies in 2020/2030’s.

   I will pause here on this fundamental point and you are free to reach out if you need more advices.

2. See the value your product or service creates from the eyes of your customers

   If you are offering a product or a service to People either People buy use and/or buy it or they don’t. Nothing complicated so far. Trivial facts. Let’s go further, shall we? Let’s adopt the eyes of your customers.

   “I’m Paul, i use product GYLO because it helps me to do this task. I can’t do this task as quickly with any other product i tried.” In a nutshell, product GYLO creates value for Paul. Paul may pay or not for your GYLO. You see the point? No matter who you are inside the company and what you do, you should understand how the user or customer see the product / service. Pick any product / service on the market and try to see it from the eye of the user / customer. Pick a BMW X6 or pick a task automation app. Why do the People use or buy these? Don’t assume. Go ask the real users / customers of these products or services. Once you understand the value that the product or service creates you have an edge over 99% of the People. Why? Because most People assume they know why People use or buy products / services but do not know. This is why most People inside companies build projects and initiatives on wrong assumptions (they think they know but their knowledge is incorrect). Great transition to our next principle: assumption.

3. You will likely fail your business, project, organization because of a core assumption you made and did not verify

   This principle is mostly for the folks creating their own business but is also valid for any project and initiative. When you build something you will naturally make assumptions. Let’s build a sand castle together on the beach. Alright, we start building it. First assumption we have made? We assumed stacking sand will hold. Did we verified this assumption? Well, we did not have to. We know that wet sand is pretty compact. Second assumption? We assumed that no wave will come and destroy our castle. Did we verify this hypothesis? Well, we didn’t. We actually don’t even know that on this beach there is a tide and that the water has already started to come back. In 12 minutes our castle will be under the water. Not cool. Hopefully, this is just a sand castle. But what if that sand castle was a new car involving 350 People across 25 teams in 6 countries. Would you just go ahead and not even check the assumptions we are making such as “People will love this new design”, “Our mileage is pretty limited at 240 km per charge but that should be ok”. Not checking your assumption can be catastrophic for a company.

   Of course, it’s way easier to think that users will love our product or service. That’s what most folks creating new products or services do. They assume. Their ego prevent them from daring to check that their hypothesis may be wrong. I have met countless People doing this mistake, including myself at some stage, that i know pretty well what i am talking about.

   So?

   So check the assumptions you are making on your product or service. Check the assumption you are making from a user / customer perspective. “I am making the assumption that the user will love the new design”. Alright. Who is the user? Let’s go ask him/her. Why not? Do you want to spend 18 months building this new car to find out whether or not the user / customer like the design of this new car or do you want to print a few design or even print a real life model of the car so that we can know for sure whether the design creates value for the user / customer?

   Writing down, checking and keeping track of the validity of your hypothesis is fundamental. It will save you a massive amount of time. Of course, you cannot be lazy. You need to use your brain to identify hypothesis being made. Do this as a team, much more fun.

4. Customers pay for an outcome, not for a product or a service. Your product or service is often just one of the ways a customer can reach the outcome she/he targets

   Paul, why did you buy a brand new Mercedes-Maybach GLS 600 SUV? “I needed a car”. You look at Paul and start laughing. You know him well. Alright Paul, why did you really buy this monster? Paul: “Ok, it’s fast, i love the feeling of driving that beast every morning on the highway and i feel good socially”.

   Paul paid roughly USD 170k for an outcome and not for a car. This is what most folks don’t get. Be it Paul or anyone else including yourself very likely, we do not buy a product or a service for itself. We use it, we pay for it or not, for the outcome that we think we can reach with it. Understanding this is fundamental because it helps you to position your product or service. How many ads do you see describing one by one the feature of product A? Countless! A proof that most People inside companies think from a company perspective and not from a user / customer’s perspective. The best ad get the customer to understand that product X or service X is the best way to reach outcome B. So what do awesome ads? They talk to the users or customers about the outcome! This is what resonate with the user / customer, not feature S, T, U. Agree, some users buy a product / service for a very specific features but at the end of the day it is because this feature allow the user / customer to reach the outcome he is after. Mike wants that headphone because the bass feature is totally awesome. It is dynamic and does not damage your eardrum.

   The best way to start understanding this fundamental is to talk to users / customers. Listen very attentively. Dig. Don’t stay at the level of Paul’s initial superficial answer.

   I am more than happy to sit down with you and discuss this with you for your own product / service. Doing this regularly across multiple industries all me to understand what outcomes People are after.

5. A customer pays for your product or service because it perceives value in it

   The value creation topic. Value is very subjective and context dependent. What’s the value of a bottle of water if you are next to a source of water in the mountain. I would say zero. You can simply drink the water from the water source. What’s the value of a bottle of water if you are doing a ultra marathon across the state of a desert of New Mexico? Could be hundreds of dollars if you are already dehydrated. What’s the value of a stamp to a stamp collector versus someone who never used stamps? Could be a pretty different value.

   All this to show you that value perception is indeed dependent on the context and subjective. If a product or service does not create value for me i won’t buy it. You could still buy it if you don’t know what you are doing or you are coerced to use / buy it.

   When you have a product or a service you want to assess how much value creation your product / service creates and for who. You have a new folding chair that can be deployed in 3 seconds, weight 0.6 kg and fit in a handbag. Who would find the most value in this product? Elderlies? Kids? Maybe.

   And you want to find this out before creating your product / service. Don’t spend months or years creating a solution only to research who is likely to find value in it afterwards. I agree that some scientific discoveries happen in this manner: build a solution and then find out how this can be used and buy who.

6. People buy on an emotion. This means that decision making in relation to purchase are mostly non rational

   A way to understand this fundamental is to observe how you use or buy new products and services. True, there may be a whole bunch of rational reason why you buy this product / service but if you really narrow down to why you got this thing 99% chance it is an emotional reason.

   What usually happen is that folks buy on an emotion (for an emotional reason) and then post rationalize the purchase. They often make up a story for themselves to believe in!

   An interesting activity to do is to find out the emotional reason why folks use or buy your product / service.

7. Any activity that a user / customer does to consume your product or service either create value, charge for value or erode value

   Let’s give back credit where it is due. This fundamental comes from Thales Teixeira in the book “Unlocking the Customer Value Chain” (chapter 3). I invite you to read Thales’ book but in a nutshell, any activity i perform to consume product A is either creating value, charging value or eroding value for me. Going to the post office? Alright, walking there erode value from me (it takes me time and energy). Posting the letter is charging me value. I need to pay 6 euros for sending that letter to Japan. The letter being transported to Japan and being delivered at the address i mentioned creates value for me.

   I invite you, as Thales does, to look at all the main activities you do to consume a product or a service and then categorize these activities either as a value creating, value charging or value eroding activity. This activity is fundamental because you will realize where a product or service creates value erosion and value charging. These areas are areas where you can potentially provide solutions to existing users / customers whether or not it’s your product / service or the one of another company.

   This fundamental has a high value for companies so i am more than happy to run a workshop centered on this activity.

8. More isn’t better. Simplicity is the ultimate complexity. You most often reach a high level of simplicity after going through a high level of complexity

   Unfortunately, the concept of more is better is deeply engrained inside several generation and as this idea is engrained inside numerous People’s mind, their action are aligned with this idea. Thus you see restaurant menus with 100 dishes. You even wonder how is this possible that they can serve so many dishes! You see products and services with dozens of features. Even features that no one actually use. Why do you see this? Because the folks who created this menu, this product or service think and are certain that more is better. This is what the system told them.

   It may take you some time to realize that more isn’t better. On contrary, it’s often worst. What is one of the first thing that chef Ramsay does in Kitchen Nightmare when he encounters a restaurant with a book size menu? He trims down the menu and doing so is often the right move. Less products for higher quality. For more focus.

   This fundamental is there to remind you to ask yourself: should i do more? Yes or no. Should i also deliver all these features or should i just focused on these 3 and do them well? And what is my user thinking? Does he need feature F, G, H or is he ok with feature A and B?

   Based on my experience the path to extreme simplicity actually went through a very high level of complexity. It may be because you need to reach a vision (going towards complexity) that you enable access to simplicity (synthesis of complexity).

9. Always ask yourself, what is the minimum amount of resources I can use to reach this outcome?

   Super important fundamental. This goes beyond the “more isn’t better” fundamental. For anything you do, ask yourself, what is the minimum amount of resources i need to use to reach an outcome? Imagine someone needs to lose 15 kg to reach the following outcome: “feeling better" physically”. Great. What is the minimum amount of resources in terms of time, money and effort that you need to use to reach this outcome through losing 15 kg? Is it paying USD 2,000 to remove fat surgically or is it to run every morning 10km from 7am to 8:30am before heading to work?

   What i invite you to do here is to pause, look at your option and their associated cost in terms of time, money and effort and maybe opt for the option that use the minimum resources from your perspective. For instance, you consider that your time from 7am to 8:30am is free because you are not working and you don’t mind starting running (using your effort) so why not going for this option rather than paying USD 2,000 to lose 15kg surgically?

   From a business perspective, what is the minimum amount of resources that you need to use to enable the user / customer to reach the outcome s/he is after? What is the minimum amount of resource you need to use to increase the happiness of your user / customer?

10. Know the metrics of your activity

    You have no idea how many business People i talk to and they do not measure their business. It’s actually pretty common except if you work for Amazon logistics services where metrics is a critical thing. Here is what usually happen… i get on a call with a guy who describe me his business. I ask questions to understand what is the business about and then i drop the “how do you measure success?” question or “what are your metrics?” or “what do you look at? Which indicator matter to you?”. Often, i get a blank or half of an answer.

    Metrics are fundamental and if you are in business you need to measure things. One of the key thing to measure is the ability of your product or service to lead its user or customer towards the outcome he is after. Who measure this? Barely anyone! This is super insane to me but that seems to be ok for most folks. As long as we are in business, that should be ok, right? Well, i don’t think so. Not if you want to be a successful business in the way that you lead your users / customers towards the outcome they seek.

    Imagine, you and i venture in the circus business. We buy a circus. What would be the key metrics of our activity? Quantity of clown we hire? Unlikely. Size of our lions? Unlikely too. Emotional response of our audience? Yes, likely. Number of empty seat during performance? Yes. You see, you want to spot the metrics that matter and especially from a user / customer perspective. You will have 2 sets of metrics, one from the user / customer’s perspective and one from your company’s perspective.

    There are metrics that are easy to compute such as number of empty seats during performance in our example above. If we have a lot of empty seats then we should ask ourselves why. And there will be metrics that may be harder to compute such as emotional response from People attending the circus performance. How do we measure this? Sound meters? Survey after the performance? It’s for you to find out but that metrics may be very useful to know how well you can deliver on enabling your users / customers to reach the outcome they seek: being entertained, dreaming, disconnecting from their daily work.

    Running a business without knowing your metrics is a bit like driving a car without any dashboard or knowing where you are. Now, having metrics doesn’t mean that you are looking at the right thing. Running a business while not looking at the relevant metrics is like flying a place while only looking at the fuel gauge.

11. Users and customers almost always have the answers you look for

    As a consultant for organizations i have seen this pattern countless times. The guy in the organization doesn’t know how to solve a product or service related question or issue. For instance, how should i bill my clients? How should i present this service to fundraise? The solution is 90% of the time about listening and/or observing your users / customers. They will provide you the answer(s) to your question(s). The problem is usually with you. You are so stuck and embedded inside your organization and your various tasks that you cannot step back. What’s happening is that you endlessly loop inside a box where the answer isn’t located. The answer is located, most of the time, outside of your organization, inside the user / customer’s head, inside the analysis of his/her behavior.

    Let’s take the value charging issue for instance. Typical question i am often being asked: how should i bill my customers? Alright, you are surely knowledgeable about the different way to bill a customer. But if you don’t know what to opt for ask your customers! How would you like to be billed? What would be the most convenient way for you to be billed? Alright, is that doable? We go back to fundamental number 1 “think from your customers’ perspective” and to be able to do this you should talk to your customers and observe what they do and how.