Paper Review : FINDING THE

PRODUCT / MARKET FIT

– Lean Canvas framework
as a tool for establishing customer-validated market orientation
in early-stage startup businesses

Henri Johansson
Bachelor’s Thesis Business Administration Marketing 2017

Oleh :

1. Ade Putra Junior 6032201009 MRP Jakarta

2. M. Rifqi Shadiqin 6032201019 MRP Jakarta
3. Faizin Yusuf 6032201026 MRP Jakarta
4. M. Farel Adhitabima 6032201161 MRP Jakarta
 Established itself around the 1990’s and early
2000’s as the Internet got widely adopted in
the world.

Startup is a temporary human organization searching for a scalable,

repeatable and profitable business model for a product or a service, under
conditions of extreme uncertainty.
 ta r t-u p
i stics S
ra cter • Youth and immaturity
Ch a • Limited Resources
• Multiple Influences
• Dynamic Technologies and Markets (Sutton, 2000)

To Build a Start-up is not an Easy

• Knowledge on market segments

• Customer needs
  New, non-existing market
 New business
 Breakthrough product
 Opportunity to start small and grow
 Dynamic business model
 High growth potential. (Watts, 2001)
 Shorter time to market than non VC-backed companies
(Hellman & Puri, 2000)

Start-ups can be divided into two subcategories:

Innovators The first to introduce a new product to a market

Imitators Build a products and services that do have existing and established competitors in the market
but look forward to compete with them feature-wise
(Hellman & Puri, 2000)
Startups essentially are powered by three core drivers :
1. The use of open source platforms and free software
2. The application of agile product development methodologies (in order to reduce waste and unlock
creativity)
3. Rapid, customer-centric iteration of products and services under construction, via proactive utilization of
customer segment feedback. (Ries, 2008)

Startups consist of three key

components :
1. The entrepreneur / the entrepreneurs
(founders)
2. Knowledge and experience
3. Technology

(Park, 2005)
WHAT IS MARKET FIT ????
Product/market fit means being in a good market with a product that can satisfy that market.” But too
often the focus is on latter part of the sentence (a product that can satisfy the market) and not the former
(in a good market)

• When a great team meets a lousy market, market wins

• When a lousy team meets a great market, market wins
• When a great team meets a great market, something special happens
(Andreesen,2007)
 Lean
• Lean are Philosophy of management and manufacture
• Lean gained international attention because, lean able to

Waste Effort
minimizing waste without affect to the productivity.

Productivity
LEAN
Define Customer FUNCTION
Value

Measure Control Continues

Customer Needs Core Improvement
Of  Lean used in the various Business sector;
Lean Management, supply chains, software development,
marketing, sales, analytics, leadership, services, and
Improve Removal
Analyse Team Work startup.
Process
Lean Start-Up & Lean Canvas
 Process in Lean Start-Up;
• Methodology for development in Start-ups
business. Minimum Viable Actionable
A/B Testing
• Lean Startup by Eric Ries 2008 Product Metrics

• Objective Lean in start-Up;

Shorten Development Develop Product Based On
Build Measure
Pivot Vanity Metrics
Cycle Customer Needs or Voice Learn Loop

Efficient research Avoid high priced products

investment cost Business Model
Lean Canvas
Canvas

• Important Value in the practical of “Lean

Start-Up” method are customer review by  Lean Canvas; as the result of lean start-up process to
using metrics quantitative or qualitative. recommend the business model canvas for new start-up
business, its called Lean Canvas
 HOW TO APPLY LEAN CANVAS AS A TOOL FOR FINDING
THE PRODUCT or MARKET FIT?

Documentation of Identification of Systematical testing of the plan via

”Plan A”
• Brainstorming possible
customers
• Sketching the canvases
the plans riskiest parts
• Prioritizing where to start
• Preparing for experimentation
The problem/solution team
• Effective experimentation
various experiments
• Customer Interviews
• Getting to the MVP release
• The MPV launch
• Feature iteration towards the
product/market fit

1 2 3
1. Document of “Plan A”
• Lean Canvas is a superior choice
of form for three main reasons:
it is fast, concise and portable

• Maurya (2012) points out that 4

entrepreneurs should view the
entire Lean Canvas business
plan as the ”product”, instead
of the traditional concept of a
product that is sold or marketed

• Lean Canvas helps the

entrepreneurs to deconstruct
their business model into nine
distinct parts, that can be
systematically tested.

Source : The Lean Canvas (Blankcanvas, 2017)

A. Brainstorming possible customers

Distinguishing Putting the customer

customers and users segments on Lean
from each other Canvas

Sketching an
Splitting customer individual canvas for
segments all the relevant
segments
B. Sketching the canvases

Problem- and
Customer- Channels
segments Key Metrics Solution

01 02 03 04 05 06 07

Unique Value Revenue Streams Unfair Advantage

Proposition and Cost Structure
2. Identification of the plans riskiest parts
a. Preparing where is starts b. Preparing for experimentation: The
problem/solution team
1. Risk Identification
 Product risk  Product development  The ideal problem/solution team in the early stage
 Customer risk  Building a path to customers would be two to three people - that’s when
 Market risk  Building a viable business communication stays fluent and the staff costs
reasonable.
 More important than the number of the members
2. Business Model Ranking is, though, that the right talent is accessible at all
 the Problem segment times
 the Channels segment
 the Revenue Streams and Cost Structure segment
 the Customer Segments box
 the Solution segment
c. Effective experimentation
 Falsifiable Hypotheses
3. External advice  Qualitative validation, quantitative verification
Another effective technique for risk control is simply  Constant communication of learning
seeking external advice  The iteration meta-pattern in risk control
3. Customer Interview
In Lean Startup business development, the swiftest way to accelerate learning is to talk
to customers - customer interviews

 Finding prospects to talk to

Knowing the interviewee already makes the situation more comfortable, so first-degree
contacts that fit the target group should be the people to start with

 Different types of interviews

a. The Problem Interview

In the problem interview, the goal is to understand the customers’ views of the world and validate hypotheses
related to problem- and customer segment boxes of the Lean Canvas. From the risk tackling perspective, the relevant
questions attempted to get answers
b. The solution interview
in the solution interview stage it’s smart to mix up the old prospects that fit the early adopter demographic from
the problem interview stage and have agreed with a follow-up actions, with new ones
4. Getting to The MVP Release

The Marketing Website The MVP Interview

The purpose of the marketing website is to sell the
product. It’s the most crucial acquisition. In its
essence, the marketing website is constructed to
encourage an unaware site visitor to move forward
in the funnel and turn to a interested prospect
Before launching the MVP, it’s advisable to seek
confirmation for the development from early adopters.
After learning from them, design, positioning and
pricing can still be refined for the proper MVP launch.

Activation Flow Measurement
The activation flow is essentially a
funnel that describes the path Preparation
customers take from the first The goal of the measurement is
signup to the first gratifying user not to optimize conversion rates,
experience. but to identify problematic spots
that the prospects get stuck with
and then troubleshoot them
Customer Lifecycle
Validation
The last step before the MVP launch
is to validate the customer lifecycle
and improve all the steps needed to
ensure that the MVP really works
when it’s launched.
 5. THE MVP
LAUNCH
Maurya (2012) determines that the product is
ready for the MVP launch, when at least
80% of the early adopter group consistently
makes it through the conversion funnel.

Right before the launch (when being confident that the

MVP works), the entrepreneur’s final step is to revisit
the acquisition channels to make sure a constant stream
of potential prospects are entering the conversion
funnel. think big,
begin small,
scale fast.
6. Feature Iteration Towards The Product/Market
Fit
Feature Development
After the launch, usually feature requests start
to pour in and the customers have different
desires and expectations concerning the
product development.
Feature ideas should be treated like
experiments - kept in the backlog until further
priority has been determined.
Feature request prioritization
Upon arrival, the feature requests have to be
carefully analyzed to determine what should be
done with them.
After that, it’s vital to consider whether the
feature requested is essentially a minor or
major bug. Emergency situations, obviously
ought to be fixed right away.
A good practice for constraining the features pipeline is to use the classic
Kanban board system. A Kanban board is a workflow visualization tool that
gives a good chance to optimize the flow of work (Leankit, 2017)
 REACHING THE
PRODUCT/MARKET FIT CONCLUSION
1. Finding the Product/Market fit is the first
significant milestone and an invaluable
Maurya (2012) recommends a following iteration achievement in the lifetime of a startup, because
Maurya (2012) recommends a following iteration it allows the company to start scaling.
framework in order to determine if
framework in order to determine if
Product/Market fit has been reached:
Product/Market fit has been reached: 2. But the real remarkable accomplishment is to
1.
Conversion dashboard results need to be build something that the people want to buy and
1. Conversion dashboard results need to be credibly confirm it. .The key is to build a culture
reviewed on weekly basis
reviewed on weekly basis of constant learning and follow the framework in
2. The feature development backlog has to be
2. The feature development backlog has to be a thorough manner
effectively prioritized
effectively prioritized
3. Reviewing all the features constantly to
3. Reviewing all the features constantly to 3. No methodology can promise absolute success,
ensure that they have a positive impact
ensure that they have a positive impact but the Lean Startup and Running Lean
4. Monitoring the value metrics - activation
4. Monitoring the value metrics - activation philosophies provide a repeatable process and an
and retention - and making sure they grow
and retention - and making sure they grow actionable model for building products that
steadily
steadily achieve the Product/Market fit and then can be
5. Running the Sean Ellis test when the
5. Running the Sean Ellis test when the scaled to produce prominent revenue.
retention numbers approach 40%.
retention numbers approach 40%.