Opportunity Solution Tree Template

 

About the Opportunity Solution Tree template

The Opportunity Solution Tree template helps product teams to improve the way they solve problems and reach their desired outcomes. Designed by Teresa Torres, a product discovery coach, this tree aims to methodically move teams through the steps needed to reach a final solution. Teresa Torres's opportunity solution tree breaks down a desired outcome into opportunities for the product to meet user needs and then suggests potential solutions to meet these needs.

Why use an opportunity solution tree?

Product teams may find this template useful if they are able to produce a lot of ideas, but can’t prioritize which ideas are actually of quality. An opportunity solution tree is a tool that product teams can use to assess if they are considering all potential solutions to reach their desired end. It then provides clear solutions at the end of the exercise that can be compared and contrasted for most value.  

What is an opportunity in the opportunity solution tree?

Brainstorms tend to lead to a lot of solutions off the bat without any clear logic to whether the solution is a valuable one. Opportunities are a way for product teams to add in the layer of customer needs in order to better connect solutions to what will really help a user. By adding in the step of identifying opportunities, the ideas your team generates will be based on identified needs rather than an arbitrary solution. 

What is product discovery?

Product discovery is a framework to help teams create useful, usable products that don’t overlook true user need. Using the Opportunity Solution Tree template is one way to start improving your product discovery.

How do I build an Opportunity Solution Tree?

Step 1: Define your outcome or measurable result

Simply put, what does success look like? If you use OKRs, then you can use one of your Key Results to answer this question. If you don’t, then you’ll need to pick a metric that you’d like to improve. Of course, many teams are striving to achieve many goals each quarter, but it helps to create a separate tree for each goal.

It’s important for your team to agree on this goal before you proceed to the next step. If you’re misaligned from the beginning, then it’s going to be harder to build the rest of the tree.

Step 2: Identify possible opportunities

For goal-oriented people, the temptation to jump from “problem” to “solution” is sizable. But resist that temptation. Instead, it’s time to pause and do some research.

Building an Opportunity Solution Tree is all about identifying key opportunities in your market. That means learning: about customers, about what they need, about the problems that they are trying to solve. Focus on answering these questions before you fill out this portion of the tree. 

Armed with insights about your customers, you can begin to find opportunities. Use your research to fill out this second branch of the tree. Don’t be fooled: although this branch isn’t about your solutions, it’s still vitally important. Each branch of the tree builds on the previous, so if your research isn’t robust, your opportunities and solutions won’t be robust either.

Step 3: Generate solutions

Now it’s time to think of solutions. This is where the Opportunity Solution Tree template really comes to life for your team. When you go around the room to share ideas during a meeting, myriad dynamics are in play. People might be more or less likely to share based on their rank, role, or who’s in the room. The Opportunity Solutions Tree is an unbiased, agreed-upon source of truth that everyone can own and contribute to.

Invite cross-functional partners to contribute to this part of the tree. Let the ideas flow! However, be wary of including anything that doesn’t fit in the tree. It’s important to stay focused so you don’t end up with more ideas than resources. Write down those extraneous ideas and save them for later. If your team gets lost or stuck, return to the tree to ground you.

Step 4: Iterate and experiment

Choose one solution and once you have some ideas, you can start testing them out. Build a row on the tree specifically for experiments. Start brainstorming experiments that will enable you to test the chosen solution.

FAQ about the Opportunity Solution Tree template

How do you use a solution tree?

The opportunity solution tree helps you to visualize the best path to your desired outcome. Use the solution tree to map out the possible opportunities to solve your problem and keep track of the actionable experiments that will lead to your desired outcome.

https://cutt.ly/b42iVtx

Технологии менеджмента. Уроки 12-13.

 

Урок 13

КАК РАБОТАЕТ СИСТЕМА УПРАВЛЕНИЯ?

Уважаемые мои подписчики, мы продолжаем изучать основы менеджмента. В нескольких предыдущих уроках мы рассмотрели различные виды управления: внешнее и самоуправление, открытое и скрытое, структурное и бесструктурное. Все виды управления должны быть встроены в систему управления компанией.

Как работает эта система? В самом общем и упрощенном виде систему управления можно представить как совокупность двух подсистем: органа управления и объекта управления. Орган управления – это руководители разных уровней. Объект управления – это сотрудники, отвечающие за определенные рабочие процессы и соответствующие им результаты деятельности. Для достижения этих результатов со стороны руководителей к сотрудникам поступают информационные управляющие воздействия в виде приказов (поручений, заданий, распоряжений), правил (планов, инструкций, положений, регламентов и т.д.), целей, задач, ценностей, полномочий. Так или иначе исполняя эти воздействия, сотрудники выполняют трудовые действия (рабочие процессы) и получают некоторые результаты действий (финансовые, рыночные, производственные и др.), имеющие значение для внешних или внутренних клиентов. Информация о процессах и результатах (в виде отчетов, показателей, отзывов клиентов и др.) поступает в орган управления (хотя на практике это происходит далеко не всегда), где она обрабатывается, и принимаются (если необходимо) решения о корректировке управляющих воздействий с целью устранения нежелательных отклонений от запланированных результатов (отрицательная обратная связь) или усиления желательных (положительная обратная связь). Потом цикл управления повторяется. И так постоянно до тех пор, пока организация живет и здравствует. И если процессы управления обладают высоким качеством и высокой эффективностью (что, как вы понимаете, не одно и то же), то ваша организация будет жить долго и счастливо.

Урок 14

ПРОЦЕССЫ УПРАВЛЕНИЯ, или ЧЕМ ДОЛЖЕН ЗАНИМАТЬСЯ РУКОВОДИТЕЛЬ?

Уважаемые мои подписчики, мы продолжаем изучать основы менеджмента. В предыдущем уроке мы рассмотрели общую логику работы системы управления компанией. В этой логике ключевую роль играет деятельность органа управления, т.е. руководителей организации. А чем должны заниматься руководители? Правильно. Руководить. А точнее, не руководить, а управлять. Управленческая деятельность реализуется через разнообразные процессы управления, которые и должны составлять содержание работы руководителей.

К ним относятся процессы планирования, организации, мотивирования, обучения и развития (это тоже функция руководителей!), координирования и контроля. В каждом из этих процессов у руководителей много «хлопот по хозяйству». Например, в процессе планирования важно не забыть сформулировать цели деятельности, спланировать действия, а также ресурсы для их выполнения. Процесс организации включает в себя различные задачи от правильного распределения функций и обязанностей сотрудников (это, кстати, не одно и то же!) до тонкой настройки межличностных отношений в коллективе. В процессе мотивирования важно провести точную диагностику мотивации подчиненных, создать мотивирующую среду и умело применять соответствующие методы стимулирования. Обучение и развитие – это постоянное саморазвитие и работа над собой, развитие подчиненных и совершенствование организационных ресурсов (технологий, оборудования и др.). В процессе координирования важно уметь давать обратную связь, обеспечивать сотрудников необходимой информацией и оказывать им психологическую поддержку. В процессе контроля необходимо вести наблюдение и сбор информации о работе подчиненных, измерять или оценивать показатели деятельности, вести управленческий учет. В общем, работы много.

Но кроме базовых процессов (или функций) управления есть еще и т.н. связующие процессы, которые необходимы всегда и везде. Это принятие решений, лидерство, коммуникация. Это процессы сквозные, так как они обеспечивают выполнение каждой управленческой функции. Без них ничего не получится или что-то получится, но криво, неубедительно и неэффективно.
Как-то так. Если очень кратко.

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The hardest Lessons for Startups to Learn

 

The startups we've funded so far are pretty quick, but they seem quicker to learn some lessons than others. I think it's because some things about startups are kind of counterintuitive.

We've now invested in enough companies that I've learned a trick for determining which points are the counterintuitive ones: they're the ones I have to keep repeating.

So I'm going to number these points, and maybe with future startups I'll be able to pull off a form of Huffman coding. I'll make them all read this, and then instead of nagging them in detail, I'll just be able to say: number four!

1. Release Early.

The thing I probably repeat most is this recipe for a startup: get a version 1 out fast, then improve it based on users' reactions.

By "release early" I don't mean you should release something full of bugs, but that you should release something minimal. Users hate bugs, but they don't seem to mind a minimal version 1, if there's more coming soon.

There are several reasons it pays to get version 1 done fast. One is that this is simply the right way to write software, whether for a startup or not. I've been repeating that since 1993, and I haven't seen much since to contradict it. I've seen a lot of startups die because they were too slow to release stuff, and none because they were too quick. [1]

One of the things that will surprise you if you build something popular is that you won't know your users. Reddit now has almost half a million unique visitors a month. Who are all those people? They have no idea. No web startup does. And since you don't know your users, it's dangerous to guess what they'll like. Better to release something and let them tell you.

Wufoo took this to heart and released their form-builder before the underlying database. You can't even drive the thing yet, but 83,000 people came to sit in the driver's seat and hold the steering wheel. And Wufoo got valuable feedback from it: Linux users complained they used too much Flash, so they rewrote their software not to. If they'd waited to release everything at once, they wouldn't have discovered this problem till it was more deeply wired in.

Even if you had no users, it would still be important to release quickly, because for a startup the initial release acts as a shakedown cruise. If anything major is broken-- if the idea's no good, for example, or the founders hate one another-- the stress of getting that first version out will expose it. And if you have such problems you want to find them early.

Perhaps the most important reason to release early, though, is that it makes you work harder. When you're working on something that isn't released, problems are intriguing. In something that's out there, problems are alarming. There is a lot more urgency once you release. And I think that's precisely why people put it off. They know they'll have to work a lot harder once they do. [2]

2. Keep Pumping Out Features.

Of course, "release early" has a second component, without which it would be bad advice. If you're going to start with something that doesn't do much, you better improve it fast.

What I find myself repeating is "pump out features." And this rule isn't just for the initial stages. This is something all startups should do for as long as they want to be considered startups.

I don't mean, of course, that you should make your application ever more complex. By "feature" I mean one unit of hacking-- one quantum of making users' lives better.

As with exercise, improvements beget improvements. If you run every day, you'll probably feel like running tomorrow. But if you skip running for a couple weeks, it will be an effort to drag yourself out. So it is with hacking: the more ideas you implement, the more ideas you'll have. You should make your system better at least in some small way every day or two.

This is not just a good way to get development done; it is also a form of marketing. Users love a site that's constantly improving. In fact, users expect a site to improve. Imagine if you visited a site that seemed very good, and then returned two months later and not one thing had changed. Wouldn't it start to seem lame? [3]

They'll like you even better when you improve in response to their comments, because customers are used to companies ignoring them. If you're the rare exception-- a company that actually listens-- you'll generate fanatical loyalty. You won't need to advertise, because your users will do it for you.

This seems obvious too, so why do I have to keep repeating it? I think the problem here is that people get used to how things are. Once a product gets past the stage where it has glaring flaws, you start to get used to it, and gradually whatever features it happens to have become its identity. For example, I doubt many people at Yahoo (or Google for that matter) realized how much better web mail could be till Paul Buchheit showed them.

I think the solution is to assume that anything you've made is far short of what it could be. Force yourself, as a sort of intellectual exercise, to keep thinking of improvements. Ok, sure, what you have is perfect. But if you had to change something, what would it be?

If your product seems finished, there are two possible explanations: (a) it is finished, or (b) you lack imagination. Experience suggests (b) is a thousand times more likely.

3. Make Users Happy.

Improving constantly is an instance of a more general rule: make users happy. One thing all startups have in common is that they can't force anyone to do anything. They can't force anyone to use their software, and they can't force anyone to do deals with them. A startup has to sing for its supper. That's why the successful ones make great things. They have to, or die.

When you're running a startup you feel like a little bit of debris blown about by powerful winds. The most powerful wind is users. They can either catch you and loft you up into the sky, as they did with Google, or leave you flat on the pavement, as they do with most startups. Users are a fickle wind, but more powerful than any other. If they take you up, no competitor can keep you down.

As a little piece of debris, the rational thing for you to do is not to lie flat, but to curl yourself into a shape the wind will catch.

I like the wind metaphor because it reminds you how impersonal the stream of traffic is. The vast majority of people who visit your site will be casual visitors. It's them you have to design your site for. The people who really care will find what they want by themselves.

The median visitor will arrive with their finger poised on the Back button. Think about your own experience: most links you follow lead to something lame. Anyone who has used the web for more than a couple weeks has been trained to click on Back after following a link. So your site has to say "Wait! Don't click on Back. This site isn't lame. Look at this, for example."

There are two things you have to do to make people pause. The most important is to explain, as concisely as possible, what the hell your site is about. How often have you visited a site that seemed to assume you already knew what they did? For example, the corporate site that says the company makes

enterprise content management solutions for business that enable organizations to unify people, content and processes to minimize business risk, accelerate time-to-value and sustain lower total cost of ownership.

An established company may get away with such an opaque description, but no startup can. A startup should be able to explain in one or two sentences exactly what it does. [4] And not just to users. You need this for everyone: investors, acquirers, partners, reporters, potential employees, and even current employees. You probably shouldn't even start a company to do something that can't be described compellingly in one or two sentences.

The other thing I repeat is to give people everything you've got, right away. If you have something impressive, try to put it on the front page, because that's the only one most visitors will see. Though indeed there's a paradox here: the more you push the good stuff toward the front, the more likely visitors are to explore further. [5]

In the best case these two suggestions get combined: you tell visitors what your site is about by showing them. One of the standard pieces of advice in fiction writing is "show, don't tell." Don't say that a character's angry; have him grind his teeth, or break his pencil in half. Nothing will explain what your site does so well as using it.

The industry term here is "conversion." The job of your site is to convert casual visitors into users-- whatever your definition of a user is. You can measure this in your growth rate. Either your site is catching on, or it isn't, and you must know which. If you have decent growth, you'll win in the end, no matter how obscure you are now. And if you don't, you need to fix something.

4. Fear the Right Things.

Another thing I find myself saying a lot is "don't worry." Actually, it's more often "don't worry about this; worry about that instead." Startups are right to be paranoid, but they sometimes fear the wrong things.

Most visible disasters are not so alarming as they seem. Disasters are normal in a startup: a founder quits, you discover a patent that covers what you're doing, your servers keep crashing, you run into an insoluble technical problem, you have to change your name, a deal falls through-- these are all par for the course. They won't kill you unless you let them.

Nor will most competitors. A lot of startups worry "what if Google builds something like us?" Actually big companies are not the ones you have to worry about-- not even Google. The people at Google are smart, but no smarter than you; they're not as motivated, because Google is not going to go out of business if this one product fails; and even at Google they have a lot of bureaucracy to slow them down.

What you should fear, as a startup, is not the established players, but other startups you don't know exist yet. They're way more dangerous than Google because, like you, they're cornered animals.

Looking just at existing competitors can give you a false sense of security. You should compete against what someone else could be doing, not just what you can see people doing. A corollary is that you shouldn't relax just because you have no visible competitors yet. No matter what your idea, there's someone else out there working on the same thing.

That's the downside of it being easier to start a startup: more people are doing it. But I disagree with Caterina Fake when she says that makes this a bad time to start a startup. More people are starting startups, but not as many more as could. Most college graduates still think they have to get a job. The average person can't ignore something that's been beaten into their head since they were three just because serving web pages recently got a lot cheaper.

And in any case, competitors are not the biggest threat. Way more startups hose themselves than get crushed by competitors. There are a lot of ways to do it, but the three main ones are internal disputes, inertia, and ignoring users. Each is, by itself, enough to kill you. But if I had to pick the worst, it would be ignoring users. If you want a recipe for a startup that's going to die, here it is: a couple of founders who have some great idea they know everyone is going to love, and that's what they're going to build, no matter what.

Almost everyone's initial plan is broken. If companies stuck to their initial plans, Microsoft would be selling programming languages, and Apple would be selling printed circuit boards. In both cases their customers told them what their business should be-- and they were smart enough to listen.

As Richard Feynman said, the imagination of nature is greater than the imagination of man. You'll find more interesting things by looking at the world than you could ever produce just by thinking. This principle is very powerful. It's why the best abstract painting still falls short of Leonardo, for example. And it applies to startups too. No idea for a product could ever be so clever as the ones you can discover by smashing a beam of prototypes into a beam of users.

5. Commitment Is a Self-Fulfilling Prophecy.

I now have enough experience with startups to be able to say what the most important quality is in a startup founder, and it's not what you might think. The most important quality in a startup founder is determination. Not intelligence-- determination.

This is a little depressing. I'd like to believe Viaweb succeeded because we were smart, not merely determined. A lot of people in the startup world want to believe that. Not just founders, but investors too. They like the idea of inhabiting a world ruled by intelligence. And you can tell they really believe this, because it affects their investment decisions.

Time after time VCs invest in startups founded by eminent professors. This may work in biotech, where a lot of startups simply commercialize existing research, but in software you want to invest in students, not professors. Microsoft, Yahoo, and Google were all founded by people who dropped out of school to do it. What students lack in experience they more than make up in dedication.

Of course, if you want to get rich, it's not enough merely to be determined. You have to be smart too, right? I'd like to think so, but I've had an experience that convinced me otherwise: I spent several years living in New York.

You can lose quite a lot in the brains department and it won't kill you. But lose even a little bit in the commitment department, and that will kill you very rapidly.

Running a startup is like walking on your hands: it's possible, but it requires extraordinary effort. If an ordinary employee were asked to do the things a startup founder has to, he'd be very indignant. Imagine if you were hired at some big company, and in addition to writing software ten times faster than you'd ever had to before, they expected you to answer support calls, administer the servers, design the web site, cold-call customers, find the company office space, and go out and get everyone lunch.

And to do all this not in the calm, womb-like atmosphere of a big company, but against a backdrop of constant disasters. That's the part that really demands determination. In a startup, there's always some disaster happening. So if you're the least bit inclined to find an excuse to quit, there's always one right there.

But if you lack commitment, chances are it will have been hurting you long before you actually quit. Everyone who deals with startups knows how important commitment is, so if they sense you're ambivalent, they won't give you much attention. If you lack commitment, you'll just find that for some mysterious reason good things happen to your competitors but not to you. If you lack commitment, it will seem to you that you're unlucky.

Whereas if you're determined to stick around, people will pay attention to you, because odds are they'll have to deal with you later. You're a local, not just a tourist, so everyone has to come to terms with you.

At Y Combinator we sometimes mistakenly fund teams who have the attitude that they're going to give this startup thing a shot for three months, and if something great happens, they'll stick with it-- "something great" meaning either that someone wants to buy them or invest millions of dollars in them. But if this is your attitude, "something great" is very unlikely to happen to you, because both acquirers and investors judge you by your level of commitment.

If an acquirer thinks you're going to stick around no matter what, they'll be more likely to buy you, because if they don't and you stick around, you'll probably grow, your price will go up, and they'll be left wishing they'd bought you earlier. Ditto for investors. What really motivates investors, even big VCs, is not the hope of good returns, but the fear of missing out. [6] So if you make it clear you're going to succeed no matter what, and the only reason you need them is to make it happen a little faster, you're much more likely to get money.

You can't fake this. The only way to convince everyone that you're ready to fight to the death is actually to be ready to.

You have to be the right kind of determined, though. I carefully chose the word determined rather than stubborn, because stubbornness is a disastrous quality in a startup. You have to be determined, but flexible, like a running back. A successful running back doesn't just put his head down and try to run through people. He improvises: if someone appears in front of him, he runs around them; if someone tries to grab him, he spins out of their grip; he'll even run in the wrong direction briefly if that will help. The one thing he'll never do is stand still. [7]

6. There Is Always Room.

I was talking recently to a startup founder about whether it might be good to add a social component to their software. He said he didn't think so, because the whole social thing was tapped out. Really? So in a hundred years the only social networking sites will be the Facebook, MySpace, Flickr, and Del.icio.us? Not likely.

There is always room for new stuff. At every point in history, even the darkest bits of the dark ages, people were discovering things that made everyone say "why didn't anyone think of that before?" We know this continued to be true up till 2004, when the Facebook was founded-- though strictly speaking someone else did think of that.

The reason we don't see the opportunities all around us is that we adjust to however things are, and assume that's how things have to be. For example, it would seem crazy to most people to try to make a better search engine than Google. Surely that field, at least, is tapped out. Really? In a hundred years-- or even twenty-- are people still going to search for information using something like the current Google? Even Google probably doesn't think that.

In particular, I don't think there's any limit to the number of startups. Sometimes you hear people saying "All these guys starting startups now are going to be disappointed. How many little startups are Google and Yahoo going to buy, after all?" That sounds cleverly skeptical, but I can prove it's mistaken. No one proposes that there's some limit to the number of people who can be employed in an economy consisting of big, slow-moving companies with a couple thousand people each. Why should there be any limit to the number who could be employed by small, fast-moving companies with ten each? It seems to me the only limit would be the number of people who want to work that hard.

The limit on the number of startups is not the number that can get acquired by Google and Yahoo-- though it seems even that should be unlimited, if the startups were actually worth buying-- but the amount of wealth that can be created. And I don't think there's any limit on that, except cosmological ones.

So for all practical purposes, there is no limit to the number of startups. Startups make wealth, which means they make things people want, and if there's a limit on the number of things people want, we are nowhere near it. I still don't even have a flying car.

7. Don't Get Your Hopes Up.

This is another one I've been repeating since long before Y Combinator. It was practically the corporate motto at Viaweb.

Startup founders are naturally optimistic. They wouldn't do it otherwise. But you should treat your optimism the way you'd treat the core of a nuclear reactor: as a source of power that's also very dangerous. You have to build a shield around it, or it will fry you.

The shielding of a reactor is not uniform; the reactor would be useless if it were. It's pierced in a few places to let pipes in. An optimism shield has to be pierced too. I think the place to draw the line is between what you expect of yourself, and what you expect of other people. It's ok to be optimistic about what you can do, but assume the worst about machines and other people.

This is particularly necessary in a startup, because you tend to be pushing the limits of whatever you're doing. So things don't happen in the smooth, predictable way they do in the rest of the world. Things change suddenly, and usually for the worse.

Shielding your optimism is nowhere more important than with deals. If your startup is doing a deal, just assume it's not going to happen. The VCs who say they're going to invest in you aren't. The company that says they're going to buy you isn't. The big customer who wants to use your system in their whole company won't. Then if things work out you can be pleasantly surprised.

The reason I warn startups not to get their hopes up is not to save them from being disappointed when things fall through. It's for a more practical reason: to prevent them from leaning their company against something that's going to fall over, taking them with it.

For example, if someone says they want to invest in you, there's a natural tendency to stop looking for other investors. That's why people proposing deals seem so positive: they want you to stop looking. And you want to stop too, because doing deals is a pain. Raising money, in particular, is a huge time sink. So you have to consciously force yourself to keep looking.

Even if you ultimately do the first deal, it will be to your advantage to have kept looking, because you'll get better terms. Deals are dynamic; unless you're negotiating with someone unusually honest, there's not a single point where you shake hands and the deal's done. There are usually a lot of subsidiary questions to be cleared up after the handshake, and if the other side senses weakness-- if they sense you need this deal-- they will be very tempted to screw you in the details.

VCs and corp dev guys are professional negotiators. They're trained to take advantage of weakness. [8] So while they're often nice guys, they just can't help it. And as pros they do this more than you. So don't even try to bluff them. The only way a startup can have any leverage in a deal is genuinely not to need it. And if you don't believe in a deal, you'll be less likely to depend on it.

So I want to plant a hypnotic suggestion in your heads: when you hear someone say the words "we want to invest in you" or "we want to acquire you," I want the following phrase to appear automatically in your head: don't get your hopes up. Just continue running your company as if this deal didn't exist. Nothing is more likely to make it close.

The way to succeed in a startup is to focus on the goal of getting lots of users, and keep walking swiftly toward it while investors and acquirers scurry alongside trying to wave money in your face.

Speed, not Money

The way I've described it, starting a startup sounds pretty stressful. It is. When I talk to the founders of the companies we've funded, they all say the same thing: I knew it would be hard, but I didn't realize it would be this hard.

So why do it? It would be worth enduring a lot of pain and stress to do something grand or heroic, but just to make money? Is making money really that important?

No, not really. It seems ridiculous to me when people take business too seriously. I regard making money as a boring errand to be got out of the way as soon as possible. There is nothing grand or heroic about starting a startup per se.

So why do I spend so much time thinking about startups? I'll tell you why. Economically, a startup is best seen not as a way to get rich, but as a way to work faster. You have to make a living, and a startup is a way to get that done quickly, instead of letting it drag on through your whole life. [9]

We take it for granted most of the time, but human life is fairly miraculous. It is also palpably short. You're given this marvellous thing, and then poof, it's taken away. You can see why people invent gods to explain it. But even to people who don't believe in gods, life commands respect. There are times in most of our lives when the days go by in a blur, and almost everyone has a sense, when this happens, of wasting something precious. As Ben Franklin said, if you love life, don't waste time, because time is what life is made of.

So no, there's nothing particularly grand about making money. That's not what makes startups worth the trouble. What's important about startups is the speed. By compressing the dull but necessary task of making a living into the smallest possible time, you show respect for life, and there is something grand about that.





Notes

[1] Startups can die from releasing something full of bugs, and not fixing them fast enough, but I don't know of any that died from releasing something stable but minimal very early, then promptly improving it.

[2] I know this is why I haven't released Arc. The moment I do, I'll have people nagging me for features.

[3] A web site is different from a book or movie or desktop application in this respect. Users judge a site not as a single snapshot, but as an animation with multiple frames. Of the two, I'd say the rate of improvement is more important to users than where you currently are.

[4] It should not always tell this to users, however. For example, MySpace is basically a replacement mall for mallrats. But it was wiser for them, initially, to pretend that the site was about bands.

[5] Similarly, don't make users register to try your site. Maybe what you have is so valuable that visitors should gladly register to get at it. But they've been trained to expect the opposite. Most of the things they've tried on the web have sucked-- and probably especially those that made them register.

[6] VCs have rational reasons for behaving this way. They don't make their money (if they make money) off their median investments. In a typical fund, half the companies fail, most of the rest generate mediocre returns, and one or two "make the fund" by succeeding spectacularly. So if they miss just a few of the most promising opportunities, it could hose the whole fund.

[7] The attitude of a running back doesn't translate to soccer. Though it looks great when a forward dribbles past multiple defenders, a player who persists in trying such things will do worse in the long term than one who passes.

[8] The reason Y Combinator never negotiates valuations is that we're not professional negotiators, and don't want to turn into them.

[9] There are two ways to do work you love: (a) to make money, then work on what you love, or (b) to get a job where you get paid to work on stuff you love. In practice the first phases of both consist mostly of unedifying schleps, and in (b) the second phase is less secure.

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Key Points:

(1) Release Early.
(2) Keep Pumping Out Features
(3) Make Users Happy
(4) Fear the Right Things
(5) Commitment is a Self-Fulfilling Prophecy
(6) There is Always Room.
(7) Don’t Get Your Hopes Up
(8) Speed Not Money …

How Artificial Intelligence (AI) Will Strengthen the Balanced Scorecard (BSC) Strategy Framework

 

by Terry Sterling 

Billionaire and majority owner of the Dallas Mavericks, Mark Cuban, said this about Artificial Intelligence (AI): “AI, deep learning, machine learning – whatever you’re doing if you don’t understand it – learn it! Because otherwise, you’re going to be a dinosaur within three years.”

The Balanced Scorecard (BSC) Strategy framework is a powerful management tool that many companies use to create alignment between their organization’s vision and mission and their strategic organizational goals, often referred to as strategic themes . The BSC framework uses four perspectives to develop an organization’s strategy and measure its performance.

In recent years, leading organizations have started exploring the integration of AI into their BSC framework to improve performance measures and decision-making processes. Here’s how AI might be incorporated into each perspective to help improve an organization’s strategy execution.

1. Financial perspective

AI can help organizations improve financial performance by increasing the automation of tasks related to financial analysis, forecasting, and budget analysis, to name a few. AI-powered tools enable the use of real-time data, trend analytics, and the ability to provide insights into future performance by looking at vertical and horizontal analysis. AI tools also help leverage analysis, growth rates, and a multitude of others . Ultimately, AI has the potential to empower organizations to make better financial decisions that improve financial performance.

2. Customer perspective

The impact of AI on this perspective can provide analysis to improve the customer experience by providing personal recommendations and outlining interactions with a specific customer persona. One example would incorporate using AI-powered chatbots to interact with customers and provide personalized recommendations based on past interactions and preferences. As a result, the proper use of AI in this area could enhance the customer experience and increase loyalty, ultimately leading to higher revenues and organizational growth.

3. Internal processes perspective

Every organization wants to improve its internal processes to become more efficient, eliminate duplication and unnecessary steps, and better manage those processes. AI-powered tools have the potential to automate repetitive tasks, supply chain management, and supply chain logistics. Automating these functions can enable organizations to achieve the commonly found goals of this perspective, which are to do things faster, better, safer and cheaper.

4. Learning and growth perspective

AI-powered training tools can significantly Improve your employees’ performance and develop their talents. Employee skills can be better assessed with personalized, individually targeted training programs. This approach ensures that employees are provided training in the specific areas where it’s needed and that they don’t waste time training in areas where they’re already proficient, thus saving time and money. In terms of strategy execution, AI can analyze vast amounts of data in real time, thus providing insights into key performance indicators (KPIs) tied directly to strategy execution. Additionally, AI can help improve forecasts and scenarios to better equip an organization to respond with agility and decisiveness in rapidly changing environments.

When AI is incorporated within a proven strategy framework such as the BSC, it can improve an organization’s ability to successfully execute its strategy by providing:

• Better data analysis
• Predictive analysis capabilities
• Improved resource allocation
• Process automation
• Personalized training and development
• Real-time performance monitoring

As AI technology continues to evolve, it‘s critical for organizations to continuously explore new ways to incorporate it into their strategy and operations or risk finding themselves on the endangered species list.

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What Should Your Company Measure Besides Financial Results?

 

By Will Kaydos

Most people don’t recognize that performance measurement lies at the heart of the improvements we humans have made in our standard of living in the past few centuries. That’s because almost all of the gains can be linked to using the Scientific Method to determine cause-effect relationships – and that requires measurement.

For example, bloodletting to cure illness was a common practice in many cultures for over 2000 years until Pierre Louis used measurement to show the practice did not increase recovery rates (circa 1850). Although his discoveries were not quickly adopted, they eventually led to discontinuing this worthless, and potentially harmful, procedure.

Until Louis came along, everyone “knew” bloodletting worked because some people did recover after being drained of several ounces of blood. Sure, some died, but when that happened, the rationale was that the person was just too sick to be cured in the first place. It’s hard to argue with that kind of thinking unless, like Louis, you have the data to prove otherwise.

But are things so much different today? They certainly are in the scientific community, where rigorous substantiation of theories by sound data is always required. The business community, however, is nowhere near as disciplined. Some companies have excellent measurement systems, but many are still in the Dark Ages when it comes to their executives and managers having the measures necessary to understand how their business works, how it is performing, and why it is performing as it is. Like tenth-century physicians, managers in these companies are making decisions based on subjective information, anecdotal evidence, and beliefs about what drives results that are simply not true.

As Pierre Louis demonstrated, when it comes to identifying cause-effect relationships, nothing beats measurement – and the same is true about identifying business problems and opportunities. So what should a well-managed company measure besides the usual financial results?

Measurement frameworks

The Balanced Scorecard is currently a very trendy (and often misunderstood) topic in business circles, but there are other measurement frameworks such as the Performance Prism, the Quantum Performance Management Model and the Tableau de Bord. All are useful, but none of them is the answer to everything despite what their advocates may say.

Combining elements of various measurement frameworks yields the measurement model below. It works as follows:

1. The needs and expectations of customers and stakeholders are the primary drivers of strategies. Stakeholders include shareholders and employees, but suppliers, the community, government entities and other organizations could also be important stakeholders.
2. Strategy consists of defining your intended customers and how you are going to compete for them. A company’s strategy is made up of individual strategies, which are the key actions a company must take to achieve its vision and goals. When developing strategies, all other elements of the model must be considered.
3. Operations include all direct and support business activities that execute strategies and produce products and services for customers and stakeholders.
4. The capabilities of a company’s organization and infrastructure enable its operations to efficiently satisfy customer and stakeholder requirements. Stakeholder capabilities may also be important to a company’s operations. In the short-term, capabilities can limit what strategies are feasible; in the long-term they may need to be developed to implement certain strategies.
5. Stakeholder contributions include products or services that are essential to operations. For example, suppliers may provide critical technical support for designing products.
6. Products and services provided to customers create financial returns (7) for shareholders and perhaps other stakeholders as well.

Note: For public sector organizations, the model is similar, but customer and stakeholder satisfaction become the primary desired outcome, not financial returns.

Critical questions executives must answer

Using this model, we can develop the critical questions executives must be able to answer about their company and the performance measures that apply to each question.

CUSTOMERS

1.  Are we satisfying our customers?

• Customer satisfaction and dissatisfaction
• Customer retention and behavior

STAKEHOLDERS

2.  Are we satisfying our shareholders?

• Financial returns to shareholders

3.  Are we satisfying our other stakeholders?

• Stakeholder satisfaction and dissatisfaction
• Stakeholder retention and behavior

STRATEGIES

4.  What is happening to our customer base?

• Market potential
• Market growth rate

5.  Is our company strategy working?

• Market share
• Customer acquisition
• Customer profitability
• Product/service profitability
• External factors that affect customers

6.  Are our individual strategies being properly executed?

• Strategic goals and the objectives necessary to achieve them.

OPERATIONS

7.  Are we serving our customers and stakeholders effectively?

• Product and service quality

8.  Are we operating efficiently?

• Process quality and capability
• Productivity
• Waste
• Product and service costs

STAKEHOLDER CONTRIBUTIONS

9.  Are stakeholders contributing what they should?

• Stakeholder resource contribution
• Stakeholder contribution quality

CAPABILITIES

10. Are we developing the abilities we need to ; execute our strategies?

• Organizational capabilities
• Infrastructure capabilities
• Stakeholder capabilities

This is a simplified picture of what should be measured at the executive level of any company. There are some overlaps among the questions and measures as well as many finer points that won’t be discussed here, but this overview is consistent with what leading companies are measuring.

The importance of market share

Many would say market share is the most important measure, because if you’re losing market share, your competitors have an advantage and they will soon eat your lunch. Market share won’t tell you how to correct the problem, but it will tell you when you are getting into trouble.

For example, Kmart was losing market share to Wal-Mart way back in the ‘70’s, but Kmart’s management failed to heed the warning – apparently because the company was still growing and profitable. Although Kmart eventually made some changes to its strategy, it was too little, too late. Now it’s a Chapter 11 “blue-light special” and the chances of it regaining its market position appear to be somewhere between zero and none.

Measurement and business success

All of the listed variables can be measured to a useful degree of accuracy and some companies are doing it. Companies that have won the Baldrige Award or similar state award have extensive measurement systems that include all of the above measures.

In reviewing numerous Baldrige-based quality award applications, I have found that a good estimate of a company’s final score can be made by just examining the measures being used. Why? Because the depth, breadth and underlying logic of a company’s measures reflect management’s understanding of the business and how well it is being managed.

Not surprisingly, over a five-year period ending in 1998, the winners of Baldrige and similar awards did two to three times better than comparable companies in terms of their growth in sales and operating income. That is a huge difference!

Determining what to measure

So how can you determine what your company should measure? As mentioned before, there are several frameworks that can be used. Although they all have merit, some have advantages in terms of their state of development, ease of use, and direct relationship to common business practices.

I believe the best approach for developing company or business unit strategy and related measures is to use the Balanced Scorecard methodology in conjunction with the robust perspectives of the Performance Prism. Balanced Scorecard performance systems have an established record of success, but one needs a disciplined way of building and implementing the system to ensure that business strategies get executed and that the necessary organization culture change gets implemented. One framework that is becoming an international “best practice” is the Balanced Scorecard Institute’s Nine-Step Methodology for developing strategic themes, business strategies, strategic goals, strategy maps, performance measures, targets, and new initiatives. The result is a strategic management system that is comprehensive, logically sound, and supported by the whole organization.

This does not assure the strategies will work, but the measures will provide timely feedback about how well they are working so timely corrective action can be taken regarding the strategies or their execution. Without the measures, a company’s strategy and finances could get substantially off-track before any problems are even recognized.

But having good strategies is not enough to be successful. Operational excellence is also needed to execute them. To achieve and maintain high levels of productivity, quality, and customer service, comprehensive operations or process measurement systems are needed to manage processes, departments and work units. These systems would include the measures that are strategically important, but those measures alone are insufficient for effectively managing operations.

For developing operational measures, I recommend the approach and model given in my book Operational Performance Measurement: Increasing Total Productivity. No doubt I am biased, but the book’s process measurement model is the only one I’ve seen that meets three critical criteria: it is logically sound, it readily relates to real world processes, and it has a record of successful application. The model is also consistent with TQM and Six Sigma methodologies that contain many specialized techniques for measuring and managing processes.

Becoming familiar with the Baldrige Criteria for Performance Excellence is also recommended. Since it outlines general management best practices, it provides a very helpful perspective on what a well-managed company should be measuring, as well as what it should be doing.

Cascading measures

Corporate level measures are very important, but they aren’t going to have much impact unless they are cascaded all they way down to front-line employees. The case for cascading is simple: Do you want 10% of your employees working toward company objectives or 100%?

With some exceptions, such as market share, what you measure at the top is what must be measured at all levels. However, the specific measures will change with every function and organizational level because managers doing different jobs need different information to make different decisions.

The same methodologies used to develop measures at the corporate level can be used to cascade the measures down to front-line managers, supervisors, and employees. However, as you go down the organization chart, the focus is on operations or processes. Strategy is incorporated into operational measures by giving more weight to the measures that are strategically important. This communicates strategy to all employees by translating it into operational terms – a primary objective of the Balanced Scorecard.

Implementing performance measures

Determining what to measure can take considerable effort, but it will probably be less than one-third of the total effort required to implement an efficient and effective measurement system. Data collection and processing systems will have to be implemented to produce the measures; everyone will have to be trained in using the systems and measures; and as the measures are used, some problems are sure to be identified that will require changes to the system.

Perhaps the greatest challenge faced when implementing performance measurement systems is changing an organization’s culture. Using performance measures requires managers and employees to change the way they think and act. For most people, this is relatively easy, but for some, changing old beliefs and habits is very difficult.

Overcoming such problems requires strong leadership to provide appropriate direction and support. The best measurement system in the world will yield few benefits if the right knowledge, skills, abilities, and values are not developed in a company. An organization doesn’t just interface with a measurement system; it is part of the system.

Developing and implementing effective measurement systems requires leadership, commitment, and hard work. Some investment is required, but it is small relative to the key benefits of a well-designed and implemented measurement system:

• The ability to determine if sales and profit problems are caused by strategies, operations, or both;
• Early identification of problems and opportunities;
• Increased productivity, quality, and customer service;
• A clear understanding of what drives financial and operational performance so resources can be allocated to the areas of greatest return; and
• A cohesive organization working toward common goals.
• No matter what approach you use to develop performance measures, bear in mind that the objective is not to have a Balanced Scorecard, Performance Prism or some other type of system, but to have the measures in place that will enable managers at all levels to answer the ten key questions given earlier.

If all of your managers can readily answer those questions about their areas of responsibility and support their answers with objective numbers, your company has the performance measures it needs. If they can’t, some of the “good” decisions they are making are undoubtedly not very effective – and they may even be harmful.

Sounds a lot like practicing bloodletting, doesn’t it?

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