Lean startups are not about learning — or at least not just about it. Learning is not enough because translating what you’ve learned into value is just as important and often no less difficult.
Measure-Learn-Act is also a core part of our company vision. We believe measuring, learning and acting on usage-data is the right way to build, scale and operate any SaaS and web-business — and we’re building Totango to help companies do just that.
In this post, we’ll talk about how we “eat our own dogfood” and use this principle, and the Totango product, to drive our own product’s evolution.
In his remarkable work on lean-startups, Eric Reis uses the following definition for measuring progress at a startup:
We found that to be a limiting concept.
We discovered that when we defined learning as our core objective, we ended up spending too much energy on our own learning (running A/B tests, minimum viable versions to learn about market interest, etc.) and not enough on leveraging our learning to deliver value to end-users and customers.
In other words, learning is not enough and is not the end goal. The real test of a startup is whether it builds a service of value — one that people want to use and can’t live without.
So our definition of progress is:
‘Value’ means we released a product or service enhancement that helps customers accomplish something better or faster. ‘Validated’ is that we have a way to quantify the value delivered, usually through a positive change to one of the key usage metrics we track.
If, and only if, we reach that point do we declare progress. All the rest are considered internal milestones along the way.
Here is a set of product-level metrics we monitor on an ongoing basis:
Each product or service improvement we undertake needs to ultimately manifest itself with an improvement to one of these metrics. For example, changes to our signup process need to yield an improvement in signup numbers; a better customer onboarding process should result in a higher and faster rate of activations.
Our most interesting metric is ‘Engaged Organizations’. Our goal here is to have a quantifiable way to determine if accounts that went through the signup and activation process are actually deriving value from the solution. We measure this by counting the number of days each user performed meaningful interactions with our solution.
They also change over time when new functionality is added or product pivots are made. The point is that they provide a solid way to validate if users are seeing value in our solution, which in turns helps us determine if changes we make have a positive impact.
Validated-value-delivered is the way we measure progress, but that doesn’t mean we don’t spend a lot of time trying to learn what customers want. In fact, we’ve found that is the only way to consistently be able to add value. Otherwise, you spend too much time on bad ideas and get overly invested in product directions that ultimately prove incorrect.
We try to build an MVP (minimum viable product) as the first step for every product idea or feature request we handle. If we get good validation on the need, we know it’s a good place to spend more time.
Forcing ourselves to scientifically validate our assumptions about customer needs not only helps us reach results faster, it frees us from the need to argue to death over the merits of certain product directions. Rather than argue about it, we find a quick way to validate things as a precursor to spending more time on them.
But we don’t stop there, and neither should you. Measure value delivered.
It’s the best way to keep yourself true to the core mission of creating value, and make sure your product is on track.