Post on 05-May-2023
Agile innovation
management
Build - Measure - LearnHow to evaluate
customer problems,
test your hypotheses,
evaluate and learn
from them
FR
OM
VI
SI
ON
TO
MA
RK
ET
SU
CC
ES
S.
Innovation Paper
Born in Ried im Innkreis. Matura at the Federal College of
Agriculture and Forestry in St. Florian near Linz. He then
completed his bachelor's degree in Economics and Social
Sciences and his master's degree in Strategy, Innovation and
Management Control at the Vienna University of Economics
and Business and the Indian Institute of Management
Ahmedabad. After working in the sports goods and food
sectors, he worked for LEAD Innovation initially as an
Innovation Manager, specialising in fuzzy front end and
business model innovation. Now, as Head of Innovation, he is
responsible for the entire project management.
+
The author.
A P A P E R F R O M F R A N Z
E M P R E C H T I N G E R .
Agile innovation
management
Lean processes, work like in a start-up - that
is the motto of Eric Reis's method. The aim of
the approach is to create innovation with as
little investment as possible. This is achieved
by replacing long-term planning with a
learning-by-doing approach that focuses on
testing hypotheses and customer feedback.
This way of working is also suitable for
established companies. While developments
of controllable innovation types and degrees
of innovation can usually be handled well in a
classic stage gate process, an adaptation is
necessary for innovations with a high degree
of innovation, since the rigid, linear process
often has a counterproductive effect. Agile
innovation management brings flexibility and
speed to your development projects through
its iterative and customer-centric approach.
In this paper you will learn how to apply
agile innovation management in your
company.
Build - Measure - Learn.
The validation process
2. Problem Solution Fit1. Problem Validation 3. Product Market Fit
If the identified
problem really exists
Validate the
importance for your
customer.
Does your idea solve the
problem? Generate
multiple solution variants
and validate which benefits
for your customers.
Is sustainable
monetization possible?
Validate whether you can
sustainably and
measurably represent this
value proposition.
Innovation Paper
AEvaluate in a first step whether the identified
target group actually has the collected needs.
Understanding the customer what he wants is
decisive for success or failure. The better you know
your customers and their needs, the easier it is for
you to create a solution that creates benefits.
There are many ways to evaluate customer needs.
The most common variant is to speak directly with
the customer.
Innovation Paper
Validate problem
Why is this important?
Validate the customer's problem
1. Problem ValidationIs there a problem?
1. Understand your customer's challenges
Find out how the problems are currently being
solved
Identify the most frustrating problems with
the current solution
Understand how much your potential
customers want to have the problem solved.
Get to know your customers' willingness to
buy
Choose those customers who have the greatest
desire for a solution. These are usually people who
tend to test products or technologies before anyone
else - which makes them early adopters.
Keep in mind that the goal of a qualitative survey is
to find out how your potential customer solves
problems. It is also important to understand why
there are certain problems. Open questions are
therefore best suited for the survey.
Let your customers know who you are and what the
reason for the interview is.
"Hello, my name is Franz Emprechtinger. We are
currently working on a project with Wiener Linien.
We would like to find out more about how people in
Vienna come from A to B. Getting to know your needs
helps us to create a service offering that adds
significant value for you and others. If that is all right
with you, I would like to start the discussion. This
will take about 15 minutes."
2. 3.
Innovation Paper
1. Define the hypothesis to be validated
clearly and unambiguously.
2. Select the relevant customers for
calls.
Create a list of questions
3. Create an interview guideline.
The order of the questions influences the result
significantly. Be sure to start with general
questions and give your customers the
opportunity to share their thoughts and
experiences with you. Afterwards, it is advisable
to go into more detailed questions before the end.
Don't give your customer the feeling of an interview,
but rather a conversation. Create a relaxed
atmosphere and focus on active listening. Do not
influence by your own thoughts and allow free
opinions and thoughts. Your client should speak at
least 80% of the interview.
Follow his answers, ask for examples and motivate
customers to tell more about it. Make sure you
understand your customer.
Organize your questions
During the interview
Create a summary
Summarize the interview with a concrete activity to see
if your interlocutor is really interested in your
project:"Would you be interested in registering for our
free trial month? Who in your network could you
recommend us to?"
Innovation Paper
Search your notes and summarize the most
important findings. If you have gathered sufficient
information, use the validation forms to make a
decision. Mark your hypotheses as confirmed or
unconfirmed. 4. 4. What did you find out?
Reflect on the discussion with your customer and
revise your guidelines if necessary.
One of the main reasons why ideas fail is that the
solution is over-engineered. The new product or
service contains many features, but they are not
useful in solving the problem.
The challenge is to find a suitable solution as quickly
and efficiently as possible. The matching concept is
called "Minimal viable product (MVP)" and is
characterised by the fact that it solves the
customer's problem with few but essential
features.
Can you deliver what you promise to your customer?
To check this, it helps to create a prototype of your
product or service.
Innovation Paper
2.Why is this important?
How do you find the right solution?
Finding a solution
2. Product Solution Fit.What solutions do exist?
The average bathroom measures about 5-7 square
meters. It is usually not possible to place a
bathtub and shower on this area. In addition to
the "all-in-small" trend, accessibility was also an
important topic.
Artweger developed the solution for a
bathtub/shower combination using the LEAD User
method.
After brainstorming, Artweger worked on the
implementation and produced several prototypes
in different variants.
Bathing and showering is comfortably possible
with one product. Thanks to the space-saving
solution, it is also possible to place this solution in
small bathrooms.
Innovation Paper
Issue
Solution
Prototype
Value promise
1. Would someone buy the bath/shower
combination?
2. Is the price adequate?
3. Is the additional benefit given?
Learnings
Example: Artweger Twinline combination
bathtub
3.A
Make your activities measurable, expand your
business while continuing to satisfy existing
customer needs. Make this profitable and
sustainable.
The solution must make sense from a business
point of view. Consistent, data-based decisions
ensure objectivity.
Check the current cost structure and the existing
business model to see whether they are suitable
for new products or services. Identify, measure
and verify key figures such as customer acquisition
costs (CAC) and customer lifetime value (LTV).
The following applies: CAC > LTV.
Innovation Paper
Product Market Fit
Why is this important?
How to Get Product Market Fit
3. Product Market Fit.How do I market this solution?
It is important to know and understand your
customer funnel in order to gain the right key
figures. It reflects the Customer Journey from the
first contact to the purchase.
1. Create a draft of your Customer Funnel from the
first contact (e. g. website) to the completion of the
purchase.
2. Fill the funnel with first customers.
3. Follow your customers through the funnel until
you have 10 customers in the final phase (purchase
agreement).
This key figure shows how many of your customers
do not return to you to make further purchases.
Contact those customers you couldn't motivate for
another purchase and try to find out why they
stopped using your products.
What percentage of potential customers becomes
actual customers? This depends very much on your
business model - do you work with a Freemium
business model, pay-per-use, a monthly subscription
system or is your service free of charge?
This key figure describes how many of your
customers will return to you for another purchase
activity. How can you make your customers
happier?
Once you have calculated the key figures for your
company, screen them regularly - at best, weekly.
It is important to understand what influences
your key figures.
Innovation Paper
1. Design your customer funnel. Churn Rate
2. Measure your key figures along
the funnel
3. Optimize your process based on
your learnings
Advertising expenditure/month
New subscribers
Customer Acquisition Rate (CAC)
Average revenue per user/month
Average subscribers Duration
Customer Lifetime Value (LTV)
€ 750
15
€ 50
€ 25
10
€ 250
Example:
Customer Conversation RateLTC > CAC
Retention rate
Create a measurable business
First define your core hypotheses. What don't you understand
and what do you need to know to develop your business? This
list provides an overview and ensures that you keep track of
everything.
Always record your activities and learnings. Survey and
observe your customers, experiment and record them.
To confirm an acceptance, you should have collected sufficient
information. Do not make the results dependent on a customer,
but stop the tests as soon as you notice that you do not gain any
new knowledge. Once you have a clear picture of your
customers' needs, it's time to make a decision.
Innovation Paper
1. List the hypotheses to be tested
2. Performing the tests
3. Evaluation of Tests & Learnings
Build, Measure, Learn
in practice
List the test items to be
tested suppositions
affirmed
unconfirmed
We think that ...
Innovation Paper
affirmed
unconfirmed
We think that ...
affirmed
unconfirmed
We think that ...
affirmed
unconfirmed
We think that ...
affirmed
unconfirmed
We think that ...
affirmed
unconfirmed
We think that ...
affirmed
unconfirmed
We think that ...
Performing the tests
Customer talk
Notes:
Learnings:
Prototype testing Observation Other
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Evaluation of the tests
& Learnings
affirmed
unconfirmed
Hypothesis
We found out that ...
That is why we have decided to ...
Customer talk
Notes:
Learnings:
Prototype testing Observation Other
Innovation Paper
Agile innovation
management
Do you have any questions? Talk to
our expert:
Franz EMPRECHTINGER
Head of Innovation
+43 1 929 40 38 16
emprechtinger@lead-innovation.com
From vision to market success -
with the network of inventors.
Stay curious,
Your LEAD Innovation Team.
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