This is part 1 of a 3 part series on developing and launching your idea with senior product leader Jesse E. Owens II. In this episode we cover:
- Validating your idea by testing and analyzing the results of your idea
- Value Proposition
- Business Model Canvas
- Product features and more.
[01:25] Product development overview
[05:57] Define a problem or an opportunity; establish idea to address the problem; conduct low-cost experiments/surveys.
[08:04] Don’t be protective of your idea.
[13:19] Conducting experiments/surveys to validate the idea/assumptions.
[22:46]Analyze the data from experiments/surveys and iterate.
[24:32] Persona Development
[31:33] The Business Model Canvas – the framework for building a business around your idea.
[32:00] Value Proposition
[38:01] Customer segments
[42:13] Channels – How will product be distributed?
[48:57] Customer relationship – interacting with customers
[50:26] Revenue streams
[53:25] Key resources
[56:23] Key activities
[58:30] Key partnerships
[1:00:14] Cost structure
[45:17] Common misconception about product development is that it’s only for digital/products (apps etc.)
Connect with Jesse
Join the convo online using #cofpodcast
Kerry-Ann Reid-Brown:Hello Jesse. Welcome back to theCarry On Friendspodcast. You are no stranger to the show. So for anyone who didn’t listen to the prior episode where you were on, tell the community a little bit about you, where you’re from, what you do.
Jesse Owens:Thank you for having me, Kerry. My name is Jesse Owens. My family resides in Tortola, British Virgin Islands, and I’m a senior product owner for MasterCard.
Kerry-Ann Reid-Brown:I’m really excited for Jesse to be on the show because he is going to be talking about one of the things that the audience has asked me about or emailed about or given feedback about, which was they wanted to know more about launching – developing and launching their product. And because of Jesse’s background, I knew he would be the perfect guest to be on the show. Jesse, are you ready?
Jesse Owens:I am ready.
Kerry-Ann Reid-Brown:Alright, so product development, tell us what does that really mean, product development and the whole process. Why is it important?
Jesse Owens:Yeah, so product development is essential because it really encompasses three components. There are many layers to product development, but at its core, you’re looking at – you’re developing an idea, so you’re developing hypothesis about problems that you’re seeing. And then you want to then cultivate those ideas into actionable tasks in terms of I identified this problem, now I need to build it. And then once you’ve built it, now you have to measure or validate whether or not that product has product market fit. So it’s post-launch of your product and really analyzing the success and how it really resonates with your target consumers. And so, really the essence of product development is identifying problems and building products and solutions that really fits the needs of your target consumers.
Kerry-Ann Reid-Brown:Alright, so before we go any further, for anyone who might be listening, I know you work with MasterCard, but will the product development process, does that apply to me launching a T-shirt or other lifestyle products to sell? Would it fit that process or is it…?
Jesse Owens:Yes. These are skills that not only applies to digital products, but also even physical products. These are also life skills as well, that as we go through the series, that you’ll start to understand that these are skills that you can apply to your everyday life. And so, there are key tenets during the product development life cycle that we’ll hone in on and then we’ll sort of illuminate how you can actually apply this to everyday life, but specifically, how you want to sort of manage all the ideas that you are conjuring up and kind of not really sure how to pursue those ideas or how to validate those ideas. And so, the real purpose of this is to guide the listeners and to coming up with ideas, validating them and then actually executing on them, and then measuring the success of your product.
Kerry-Ann Reid-Brown:Alright, I’m excited, very excited! What’s the first step in the product development series?
Jesse Owens:We talk about product development, I would like to take us back to science class where we learned about the scientific method where we conduct observations, we start to question things, we develop a hypothesis, we run experiments and then we analyze the results of those experiments, and then we arrive at a conclusion. And so, this is a method that has been and stood the test of time since the 17thcentury. It’s a very systematic process of validating our assumptions. So really, we’re using that as a foundation to really take us through the product development life cycle. And so, taking that foundation, you can look at several products that sort of evolved over time. You can look at the iPhone and Netflix. You can see how they’ve evolved over time, where the iPhone sort of – it came out of the incubation of the iPod. And so, all that functionality is now embedded in a pocket computer now. You see the evolution of the iPhone and just how it sort of matured into this product to now it’s the gold standard of smart phones and a lot of companies emulate some of the design patterns and the features of an iPhone. Also look at Netflix as well – you look at Netflix, it first came as a product that you would only get movie rentals via mail, but they had an assumption and a hypothesis that if we can stream all of for content, we cannot only scale the business, but we can create a new market for or content, whereas we never explored that before. So now they sort of opened the lane for other products and innovations around streaming. They’ve sort of risen as the gold standard for streaming content. That all rests on having assumptions and a hypothesis and validating those through a series of tests.
And so, that being said, we need to define a problem or an opportunity. Once you define a problem, you look at – if you want to take a look at your current product or if you don’t have a product at all and you just want to, just sort of get a journal landscape of what’s going on. You want to define what are some opportunities, what are some inefficiencies that you feel that needs to be addressed. For example, if you feel that maybe booking appointments causes a lot of friction and it’s very time-consuming, you may want to look at ways to make booking appointments more efficient. Then next once you define a problem, you want to establish an idea to address the problem. This is where the hypothesis comes into play. So if you have an issue with how you book appointments, then maybe you want to come up with an idea of addressing the problem. I feel that developing an application that can help streamline this appointment booking experience would help alleviate not only my problem, but a number of other potential users or potential individuals who have this issue with booking appointments.
Then you want to conduct an experiment. What you want to do is not necessarily focus on the development, because I think often times when you – I think that’s just where – this is the sticking point with a number of people who have ideas and feel that they need to invest in engineers or development to sort of conduct this experiment. You don’t necessarily need to do that at this point, because this is in the ideation phase where we are simply just curating ideas and potential solutions to the problem that you’re trying to solve. What you want to do is think about low cost ways of conducting experiments, surveys. You can run Instagram campaigns – just different experiments on would it be nice if we had a solution that does this and just measure engagement around that, or can draft up a survey and send it out to your network. Don’t be protective of your idea. That’s also another thing that’s also prevalent in the community, is that well if I share my idea, someone – they may take it. Don’t worry about that. Your objective is validating your assumption. And so, your primary goal is to validate what your hypothesis is, and then to follow through on the results that comes out of those experiments or those tests.
Kerry-Ann Reid-Brown:I want to jump in right there because you said it’s a sticking point. And so, why shouldn’t I be protective over my idea? You probably lost people, like what? I don’t want to do this, like someone is going to steal my idea, make money and run with it. We’ve all heard stories of who is the person who really started Napster, then let’s bring it further into the future with Facebook, whose idea really was Facebook based on the movie. I mean I get it, you’re saying we’re still testing it, but really why is protecting the idea shouldn’t that be such a big deal or what can you say to kind of soothe my very, very heightened concern that somebody else is going to steal my idea and make money off of it?
Jesse Owens:Well you have to talk*to the customers. And so, you want to know if you have product market fit until you actually talk to people. You have to validate these assumptions early on because what you – so let’s just say that you do protect this idea and you don’t talk to anyone. What happens is now you’ve launched a product that a) no one is aware of, you didn’t educate consumers on how this product works. Now you’ve launched a product that a), you’re not really sure if this really resonates or if it’s the right solution to the problem that you’re trying to address. What you end up doing is you invest the time, money, resources into a product that hasn’t been vetted, hasn’t been validated, and you don’t really have any real insights either quantitative or qualitative data that can lead you or builds up a sense of confidence that you’re building the right product. That’s why we want to run these experiments up front in a low cost way so that we can validate some of these assumptions early on.
And so, I think it’s healthy sharing those ideas as far as what you’re building because at the end of the day, these can be potential customers of yours. I think at this day and age, it’s very rare that your idea is completely unique and it hasn’t been done before. It takes a great deal of research of looking at what has been done in the past and then figuring out what caused the product not to be successful, what are some things that prevented wide user adoption of the product. I hope that soothes your…
Kerry-Ann Reid-Brown:Yeah, so what I heard is first and foremost, forget field of dreams if you build it, they won’t come necessarily.
Jesse Owens:Right, and that’s also an assumption that’s made as well. It’s like well I won’t share my idea, if I build it then everyone is going to know about it and it’s going to be great – not necessarily.
Kerry-Ann Reid-Brown:So that’s one and two, what I heard you say is you’ve got to look and see if someone tried this before because maybe they tried it and failed. If you don’t do enough research or figure out what’s happening in the market, you can make the same mistake someone else did.
Jesse Owens:Exactly, exactly.
Kerry-Ann Reid-Brown:Most importantly, in sharing the idea since most – you know actually, I read a book, we’ll talk about that, but just sidebar where it says most ideas aren’t new, most artists kind of stole from each other and just added their own little thing to it. I think the book was calledSteal Like an Artist, where essentially, each artist, every musician – classical musician, they were influenced by the people before them and they just added their own twist. Comedians are like that. Everyone likes Eddie Murphy or Richard Pryor before that. They just added their own style to emulate what Eddie Murphy did or what Richard Pryor did or Redd Foxx did. I get that. Sharing the idea is valuable because 1) you are testing the product; you have to share information in order to test the product, and in doing that, we might get potential customers in the process. Fail fast, correct fast basically.
Jesse Owens:Exactly, exactly. Versus you build, you realize that it doesn’t quite fit or it doesn’t really resonate, then you have to start to revisit your hold value proposition, what you tried to establish at the beginning which is a very long process. And so, you want to be very iterative as you’re ideating over what are some potential solutions to the problems or used case that you’re trying to solve.
Kerry-Ann Reid-Brown:Alright, got it. Now I’m calm, I got to share my idea. I’m not going to hold onto it with clenched fists. I got to share it. What’s next?
Jesse Owens:Now what you want to do is conduct some experiments. And so, these experiments – these are just ways of collecting data. You want these experiments to sort of guide you in the right direction in terms of is this an opportunity worth pursuing.
Kerry-Ann Reid-Brown:So just to be clear, we are still in developing the idea part, so even within developing the idea, we’re doing experiments?
Jesse Owens:That is correct, because what you want to do is you want to reassure that this can actually have traction. Once you go through the actual development of the product, you want to validate the idea and ensure that this actually resonates with consumers and this is something that consumers actually want and/or need. And so, that’s really the purpose of the experiments.
Kerry-Ann Reid-Brown:To validate the idea.
Kerry-Ann Reid-Brown:The reason why I am asking, because now that you’re taking us through this life cycle, often times when the idea is validated, it’s almost as if when we are actually getting some semblance of the product, but you’re seeing we’re not even there yet. Experiments happen in each phase. So in this very starting point of developing the idea, we have to conduct experiments.
Jesse Owens:That is correct. Yes. And so, you’ll create experiments and the experiments can come in different forms depending on what you’re trying to validate. A good practice is to have qualitative and quantitative data. You’ll hear me say this a lot because I’m a huge advocate of data and being data-driven in terms of making decisions. It’s very key that what you do is measurable. You need to take your emotions out of the product and be very pragmatic in terms of your decision-making, and let the users sort of drive the decisions that you make with regards to the product direction. And so, you can run these experiments in various ways. You can run it through, as I mentioned surveys. You can run it through customer interviews. You can run it through social media, because now we have tools that allow us to reach a much wider audience than before. You can leverage your social media networks and you can gauge the engagement of some of these ideas through your network, and then based off of that, you can get some rich data that can lead you into identifying opportunities.
Kerry-Ann Reid-Brown:In terms of surveys and testing the audience, are there some very basic generic questions that should be asked regardless of whatever product you’re trying to create?
Jesse Owens:Yes. There is a baseline of questions. Basically, you want to hone in on the value proposition. And so, you want to get an understanding of – you want to first establish what the problem is, how we want to solve it and why is it meaningful. Really structure your questions around the value and getting a sense of currently what the consumer experienced – what they experience currently. And so, what you want to do is sort of build out an empathy map, where you want to list out particular tasks, problems, some goals that they want to achieve and sort of document that journey, and what are some of the pain points of that experience currently. What you’ll start to do is you’ll build up essentially a profile of your target consumer as you fill out your empathy map.
Kerry-Ann Reid-Brown:Alright, so I’m going to go back because you’re talking problem-solving and I’m going to go back to this T-shirt business. So I’m launching this T-shirt business, like what kind of problem – I mean empathy solving and meaningful, how does that apply to something as simple as a T-shirt? You just want to look good. I want to wear a T-shirt. I ask that because sometimes it’s hard to see how this applies because someone could say, “Well of course with a software, an app or something, you need to get all granular and so detailed and so big picture, but if it’s a T-shirt, I don’t need to do all of that. I can just skip all the steps and just put my T-shirt out and sell it.” How does this apply to even something as developing like a T-shirt or something like that?
Jesse Owens:Well because the T-shirt, it’s a design. It’s an asset that you’re looking to monetize. So you’re essentially – if we’re not building a digital product and you opt to build a T-shirt, this T-shirt needs to resonate with your target consumer. And so, this T-shirt should in essence – we’re actually moving a bit forward into talking about design principles and looking at human cognition on how the human mind thinks and interprets objects and things. Now we’ll use a T-shirt as an example of how your T-shirt design will resonate with consumers. There are sort of behavioral things that occurs when a human is interacting with objects and things. You can look at the three levels of processing, where you look at behavioral emotions, visceral emotions, and also reflective emotions. And so, if you’re looking at a T-shirt, these are more like visceral behaviors that you want to observe. When you show someone a new design, do they get excited or are they kind of indifferent on the brand or the logo? And so, those are sort of the things that you need to test because with regards to T-shirts, you probably need to have a number of prototypes before you actually go to print, because you don’t just rush to print because you have a great idea, because maybe the design didn’t quite resonate with your target consumers because maybe the font was off or maybe there wasn’t a good blend of the color palettes.
What you want to do is create a series of prototypes that you can then test. You can look at AB testing of your T-shirts and you can measure the engagement of those designs from your network. You can have your hypothesis of I want to build a T-shirt line that’s focusing around let’s say advocacy in our communities. And so, this is something that we are all passionate about, however, we all want to feel good and look good while they are wearing your brand, my brand. We now need to think about what sort of design is going to resonate with my target audience. And so, for me, it’s going to save me money just iterating over the prototype versus rushing to print, and then realize that this design doesn’t quite resonate.
Kerry-Ann Reid-Brown:I didn’t want to jump ahead. I just wanted to make sure that even if in this design that – because we’re still at the idea phase. This is all we’re focusing right now. What I’m getting from you is that regardless of what we consider a very simple physical product or a very simple digital product, we have to go through the process. It may not be as long for some products, but it’s still the process we have to go through, where we have to experiment, have some baseline questions or idea, have a sense. It shouldn’t be just for my emotions, like yes this T-shirt, is going to sell and it’s going to be good. I’m just going to put it to market. We still have to go through this phase. That’s essentially what I’m hearing you say.
Jesse Owens:That is correct. You want to validate your assumptions and you want to be mindful of every decision that you make, it’s going to cost. You want to make sure that at least you’ve done your due diligence before making a decision to go to market. There are examples of products that may not have gone through their due diligence. They’ve launched and then they didn’t quite resonate with consumers and then it just sort of fizzled out.
Kerry-Ann Reid-Brown:So the key here, validate assumptions regardless of how big, small or complex the product is; digital or physical, validate.
Jesse Owens:That is correct. And so, you want to do that because it guides you in the right path. You sort of alleviate some of the worries of launching and it not resonating, because you have the data to sort of backup these assumptions.
Kerry-Ann Reid-Brown:Alright. I’ll let you get back on your [21:19]. This is good because a lot of times I think there are just some assumptions that oh this doesn’t apply to me, this applies to if you’re building a software, a phone, some other digital products or technology product. All these other things that we think are fairly simple, a T-shirt or something very simple that the process doesn’t apply to that. I mean I’m sometimes – I’m guilty of thinking that way because we think that oh that’s just – it’s not as sophisticated that it needs to go through this whole life cycle of a process. I really appreciate you explaining that for each decision or lack of a decision, it’s going to cost.
Jesse Owens:Right, and so what I also want to ensure is that we’re not over analyzing the data because you can also suffer analysis by paralysis or paralysis by analysis. You want to be very decisive in your decision-making and move forward, but what you want to do is making sure that you have the data necessary to make a decision. If you feel like at the end of your experiment you don’t have enough data, then you need to revisit how you are conducting it. And so, you may need to run the experiment again or maybe with a different set or different pool of users or potential customers that could use your product in order to guide you in that decision. It’s very iterative and you want to make sure that you have enough data in order to move forward in the process.
Kerry-Ann Reid-Brown:Got it. So in developing our idea, we have to define the problem or the opportunity and we come up with some kind of idea to address that problem or opportunity. Then we are experimenting, not developing the products yet, but we are really doing an experiment to validate essentially whether this idea is an idea worth pursuing for lack of a better word. And then, once we validate these ideas through, you mentioned surveys, interviews, then we gather that data and make decisions on the data. Don’t over analyze, but if there’s not enough data, then we have to kind of make the process iterative, meaning we just got to do it again and figure out some other way to get the data we need in order to make the proper decisions.
Jesse Owens:That is correct. And so, from that, what you’ll start to realize is that – let’s say that you’ve identified the idea, you conducted experiments, you have the data, you reached a conclusion. Now what you can actually do is you can start crafting what’s called a persona. Your persona will be a profile that basically you’ve collected over time on who is the actual user of this product. And so, there are a number of components that comprises of the user persona. Why it’s actually important is because it helps guide the development of the product and it helps provide scope, direction, and it adds constraints in regards to what you’re actually building so that you don’t run into any situation where you have scope creep, where you have a ton of ideas, a ton of features that you want to build that it takes longer to launch. It doesn’t really fit the core value prop that you want to deliver to your target persona. You run the risk of missing an opportunity by doing too many things. You want to be very focused in terms of what you’re building and who you are building it for. That’s the whole premise of building a user persona.
And so, the user persona will comprise of demographic data. It’s going to comprise of just sort of habits and behaviors of that user. Let’s say that we are building a persona for a T-shirt line – we’ll keep going back to this T-shirt line, so I’m building a persona. This person is from Chicago, Illinois, is 24 years old. They are very active in the community. They feel very passionate about social issues and things that are going on in and around the community, and want to wear or represent a brand that’s really meaningful, that speaks to the issues that are going on. Some of the pain points are that there are – some of the brands that he or she shops doesn’t really address some of those problems. And so, what they would like is a brand to really emulate – not emulate, but to capture current events and/or issues that are going on in his or her community. That essentially provides a framework that you as a product developer, needs to look at and address like if I’m building a T-shirt line and this is my target persona, I probably need to structure or design my T-shirts in such a way that it really captures or addresses some of the pain points and some of the opportunities that I’m seeing from my target persona.
I’m sure there is a question, well can you have multiple personas. Certainly, you can have multiple personas if you have a brand that sort of scales across different verticals. You want to have – you can have a primary persona and you can actually have secondary personas as well. Depending on the brand of the T-shirt line, you could have multiple personas, but you want to have something when regards to building a product, you want to be very focused on the primary and then validating that persona through the process. You can certainly build secondary personas as you look to scale out the T-shirt line business.
Kerry-Ann Reid-Brown:What is the max number of personas you should have?
Jesse Owens:I wouldn’t quite say that there is a max, but what I would say is that whatever product or business that you develop or create, you want a persona that represents that product because that should be the focal point, and that should be your reference in regards to as you build a product and you iterate over the product, you want to reflect back on that persona and making sure that the product is representative of the core values that you’re building in, in order to address some of the pain points that’s expressed by that persona.
Kerry-Ann Reid-Brown:That makes total sense, because for Christmas, my daughter bought me these pair of pants from Aeropostale. Aeropostale, I’m sure I’m not there primary or secondary persona, but for some reason, my daughter found me two pairs of pants that fit in that store. I guess based on what you’re saying, their primary persona is my daughter’s demographic. It doesn’t mean that they don’t have anything that caters to anyone else. It’s just that their primary focus is my daughter’s age group.
Jesse Owens:That is correct.
Kerry-Ann Reid-Brown:Okay got it. I think that’s important because sometimes when you think of a persona, a lot of times I hear people say don’t sell to everyone, but personas don’t mean you’re excluding people, it’s just allowing you to be laser focused on like what you just said, who this person the product represents or something to that effect.
Jesse Owens:That is correct. Based off of this persona, now we need to start looking at what features or what sort of needs that we need to build to alleviate or to address some of the pain points expressed by our persona. Now what we’ll want to do is you want to curate a list of features that you feel will address some of the needs expressed by the persona. And so, what you do now is you’ll take a look at your features and then you’ll run experiments around those features themselves, because what you want to do is make sure that you have a very well-defined list of what’s going to address some of the pain points of that persona.
Let’s take an example of music streaming. If there are assumptions that maybe music discovery doesn’t quite resonate with a particular demographic, then I may want to build in features to allow music discovery to be a bit more seamless for the everyday consumer or for that particular demographic. I want to build in better search tools and maybe build in better notifications around when new music releases or new music that I’m particularly interested in or particular genres or sub genres are being developed and released on whatever platform that I’m on, I’m notified of that. Those are things that you’ll need to sort of build into what’s called a minimum viable product, your MVP. And so, the whole premise around MVP is just to build something that is low cost, that you can validate core value propositions of your idea.
Now what we’re actually moving into is now we’re looking into our business model canvas. And so now, we’ve validated that this is an idea that is worth pursuing. Now we actually need to build like an actual business around it. This is a very important step in the process because without a business model canvas, you aren’t really assured the viability of your business.
Kerry-Ann Reid-Brown:Before we go any further, just a couple things. Value proposition, I don’t think we went into too much detail about that, but quickly, the value proposition is…
Jesse Owens:Oh, so the value proposition is the value that you’re delivering to consumers. The value proposition of your product. Value proposition can be looked at in many ways. It can be looked at from – your value prop is, it could be a superior design that is designed by designers that have built products in the past or built products that we all know and love, or it could be by performance like this product performs above and beyond industry standards. The value prop could be around price. It’s much cheaper. It’s better quality than our competitors. Also it can be your brand. If you’re already an established player in your space, your brand can be your value proposition. If it’s a brand that consumers know and trust, then you can leverage that is that being your value proposition, or if it can actually save you time. That’s also something that’s very important as well when you’re building products that can this really save me time and like how can this impact me in my everyday life.
In my opinion, one of the greatest storytellers is Steve Jobs. He did such a great job with sort of capturing some of the pain points that consumers experience with regards to the iPod. If you were to think back before the iPod, we used to walk around with book bags full of CDs, the CD player, and having to make decisions on what CDs to carry with us when we traveled. Now that’s not even an issue anymore because everything resides in our pocket. And so, he was able to capture that pain point and the emotion of having to carrying around CDs to now everything being digitized. That’s really what we’re talking about. Value proposition is just capturing the emotion and capturing the true essence of what you’re going to deliver as part of this product and why should I care as a consumer. That’s really what you want to tackle with regards to that.
Kerry-Ann Reid-Brown:And then going back to the business model canvas, you’re saying this canvas is the framework for which you are building a business around the product?
Jesse Owens:That is correct. The value proposition is – that is the foundation of your business model canvas. That would be my recommendation, to start at the value prop and then you can sort of work your way out, which we’ll talk about in full about the business model canvas, but really, once you’ve established a value proposition, then you want to sort of look outwardly and kind of fill out all the different pillars of your business model canvas.
Kerry-Ann Reid-Brown:Alright, so now again, this might seem like oh my God Jesse, what you’re saying, it sounds so, it is so perfect, it’s so right, but I’m already established. Do I need to stop everything I’m doing and start all over again from the beginning? How can someone who’s already in business or have a product, apply some of these principles without feeling like they have to stop everything they’re doing and just start all over again?
Jesse Owens:What we’re saying here is not to stop what you’re doing, continue to do what you’re doing, but what it does, it helps provide a much better framework in regards to decision-making as you progress with your product and as you iterate over new product lines, new features, or even new verticals for your product. It’s very, very important that you have a business model in place that you can always refer to so that you can quickly map out how you’re managing the product, and then also looking at what are some opportunities to maybe optimize your business.
Kerry-Ann Reid-Brown:So if we’re already in business, don’t stop. We should still apply the process to help guide us in the future development or creating complementary products or whatever brand extension, line extensions – whatever that is.
Jesse Owens:That is correct.
Kerry-Ann Reid-Brown:This is like really good stuff, Jesse. Thank you so much. I’m like learning a lot. I am. I’m like what, so I mean look out for me, I’m going to be launching some products and service soon because I have the framework. I mean by this is what you do every day and I so now have an appreciation, because like you said, I love music. So to have all – well not all, I have a ton of music, but to have a good chunk of it in my pocket is amazing. I still love the feel of books, hardcover books, flipping through pages. I get into these discussions with other booklovers and they’re like there’s nothing that beats the book. I’m like yeah, but I annotate like crazy and I can’t walk around with a whole bag of books. If I’m able to use an app or a product that allows me to walk around like a nerd with all my books, with all my notes, my highlights so I can reference easy, that is so amazing. We take these things for granted and not realizing there’s a whole team of people going through this cycle every day, every week, however their intervals are for their product development to bring this value to me and I’m paying whatever amount for the book or for whatever app. I mean it just really puts a lot of things into perspective. The easiest thing doesn’t necessarily mean the process to get there was very easy.
Jesse Owens:Exactly, exactly.
Kerry-Ann Reid-Brown:Alright, so I think the last thing you talked about was building out the business model canvas.
Jesse Owens:That is correct. And so, when you’re building out your business model canvas, you need to ask yourself a series of questions with respect to your business model canvas. We first talked about your value proposition. We’ll essentially provide the foundation of the business model canvas. It’s really asking a question of what do you do, what does it do for consumers. Once you established that, you want to start looking at your customer segments. And then so your customer segments can comprise of a number of verticals. It can be a mass-market. When we talk about mass markets, think about electronic goods, think about speakers or stereos. This market really applies to all. Niche markets, think about niche markets as if I’m developing auto parts, my market is repair shops. That’s my market. It’s not going to extend any further because I’m focused on dealerships and auto repair stores. Segmented, segmented markets, think of a bank as a segmented market where you have your consumer side but then you also have kind of like your private wealth bank, all comprised in this institution. If I’m a consumer like making over 500,000 per year, I’m going to look at opportunities for my portfolio. I’m going to build out products for those consumers. If I’m making below 500,000, I’m going to have a portfolio that’s catered to those consumers. It’s very segmented for a reason because it’s targeted to a particular customer base.
Kerry-Ann Reid-Brown:Now you said something before, and I’ve used this term but I really would like for you to explain, you said it depends on the number of verticals. What do you mean by the number of verticals? What does verticals in this context mean?
Jesse Owens:Verticals meaning like your customer segments. When we talk about verticals, let’s look at digital payments products. Our target vertical is merchants, so we want to enable merchants or we want to provide merchants services that they are able to leverage doing the checkout experience. We also have a vertical of banks because banks also want to participate in digital payments as well. We also provide – when I say we, we’re talking about master pass. We provide products for the issuing banks to build out wallets, digital wallets solutions for their customer base. In addition to that, we also have solutions for your start-ups that want to build commerce solutions into their product. You have a number of verticals, if regards to verticals in terms of revenue opportunities. So you have revenue opportunities with merchants, with issuing banks as well as third-party companies, agencies that want to build commerce solutions into their products. The verticals is just really a diverse set of customers that you serve.
Kerry-Ann Reid-Brown:Okay, alright. Got it, so that makes sense. You were defining a different type of vertical or segment which would be niche, use of mass markets. There’s segments within segments, so for instance you mentioned like B to B which would be let’s say a bank and within that bank as a business, they have a different segment within it. They have retail. They have investment. They have wealth and all that good stuff. Alright, got it.
Jesse Owens:That is correct.
Kerry-Ann Reid-Brown:You see just a little explanation so we can un-hack all of this so it makes sense. I’m not afraid to ask questions because the more we know, the more we can do.
Kerry-Ann Reid-Brown:I am so for it. Yes, gwaan teacher Jesse.
Jesse Owens:Now as we start to carve out our business model canvas, now we need to look at our channels; how do we plan on distributing the product. And so, let me just level set, like this business model canvas, it may sound prescriptive, but once we lay out the canvas, it’s very introspective and it will actually poke holes into your business and identify opportunities to make your product and your business whole once we go through all the different layers of the canvas. We’ll actually go into channels. Your channels is your means of distributing your product. If you look at apps that we all love and adore, there’s multiple channels in which you can access these apps. And so, you have to make a conscious decision on is it going to be web only, is it going to be iOS, is it going to be iOS and android, is it going to now be built into Google home or the echo*, is it going to be voice-activated. These are distribution channels for your product. And so, you want to establish that upfront so that you can have a focus on when you actually start to build, you actually have an idea of what’s this platform that you’re distributing this product on upon launch.
Kerry-Ann Reid-Brown:Yeah and the same applies to – I’m going back to the T-shirt, are we going to sell only online, are we going to sell only in stores, are we going to do both, are we going to do our own printing, are we going to outsource print or is that part…?
Jesse Owens:That is correct.
Kerry-Ann Reid-Brown:Alright cool, channels. At what point, because the question then comes for me, which channel is the better child? How do we come to that decision, which channel makes sense?
Jesse Owens:Yeah, so I think that’s an excellent question. And so, kind of the approach that you would take is, kind of getting a sense of the market and look at how you plan on distributing the product. Are you going to distribute a product in the US and/or if you want to just make it available only in New York? You probably want to take a look at what is the penetration of certain devices and markets that you want to deploy or you want to release. If you feel like in your market, you’re seeing a higher concentration of android users versus iOS, maybe that will influence your decision, maybe go android first versus iOS and what is just the overall adoption of these products. That should help sway the sort of channel that you want to target for your launch. Essentially, you want to be available on all platforms, but because we have resource time constraints and we don’t want to be misguided in terms of what the focus should be, we want to target on what’s the general penetration of this product for the market that you are trying to serve.
Kerry-Ann Reid-Brown:This is, again, we don’t think about a lot of these details or – I mean I can’t speak for everyone, but it just feels like we – and I can see for myself personally where a lot of these steps are skipped. It’s just straight out like was this even a step to do anyway. Before we go any further, why do you think we haven’t really – a lot of us don’t do more of product development or understand the process outside of you working in an industry that requires that? Why don’t we already have this information? Is it because people aren’t teaching it, people don’t understand it or people don’t want to do it?
Jesse Owens:That’s actually a great question. I’ve actually been pondering this for some time now, and basically what I’ve arrived at is there’s a couple things. There’s one, just lack of exposure, and two, I think there is a misconception that this only applies to digital products or to apps. This can actually apply to any business in our everyday lives. You could look at planning a wedding. This goes through a similar process. If your business is being a wedding planner, you have to go through this process. Irregardless of your business, this will apply. I think sometimes practitioners fail to eliminate that and make it more applicable for everyone versus it’s only like the Facebooks or the Googles or the Twitters that aligns around this.
Kerry-Ann Reid-Brown:That’s really what I’ve been feeling. I really feel like what you’ve been saying on a bare-bones perspective, it makes sense which is why I mentioned the T-shirt because it just always seems like everything was just for tech companies and it couldn’t apply to anything else. Really I’m getting the sense that the principles are just something that should be applied regardless. It’s just, it hasn’t felt that way, and to our disservice because then we do all these things thinking we build it, it’s hot, it’s good, you need it, but we didn’t spend the time validating it. And so, we’ve spent a lot of money on something that’s not working. I was just curious as to why, but now that I know, I’m going to try to use this. And also, I found a really good copy of the business model canvas and I’ll include that template from strategizer* in there.
Jesse Owens:So we just finished up on customer segments and the question that we want to ask is who do you help. We are focused around our target customers, and so, we mentioned that before. Now what we’ll actually get into is how do you interact with your customers. And so, what we’re looking at is when there is inquiries by a customer, how should a customer engage with your business, your product. Is it a self-service model? Do they fill out a form and then someone will get back to them or is it automated? With the emergence of Chatbot, is this something that you want to embed into that experience where a user can essentially ask questions to a bot and they get an automated response back? Do you have someone dedicated or staff that actually – you actually have a physical person behind the emails that are being received by customers or do you look at building communities? You’ll see like products where – or Quora. Quora is actually a good example where it’s a community of individuals who answer questions, provide feedback or on different things that we ponder on. You can build out the same community around your product, where a user can go maybe to your website or to your app, type in a question and you can get a plethora of responses in regard to this problem.
You could also build in feedback loops for your customers. When we talk about feedback loops, think about times where you’ve been on a product and you get presented with something that’s a bit discreet or something that’s very pronounced in regards to would you like to provide feedback on our app, do you rate it as a five star, four-star, or I don’t feel like. You’ve presented options, do you want to rate this app now. That’s actually very important and that provides rich insights as a product developer on how consumers actually feel about the product itself. You actually build this into whatever channel that you’ve distributed your product on and you want to ensure that you are proactively asking for feedback throughout the customer journey.
Kerry-Ann Reid-Brown:Customer journey, that’s another one, but I guess…
Jesse Owens:Yeah, we could certainly dive into that once we start talking about developing the experience, but now we’re just talking about building the business. Now we’ll actually start talking about something that we all know and love is revenue streams. How much will you make or how do you make money? That is really the crux of developing businesses, is developing business models – not only business models, but developing a business. Really at its core is how do we plan on making money. And so, when we talk about making money, we’re looking at two different sort of forms. We’re looking at one time sort of transactions or recurring. These transactions can occur through subscriptions. We can receive revenues through licensing, usage. When we talk about subscriptions, think about – we’re going back to music, think about your Spotify and sound cloud – sorry, I missing the Jay-Z.
Kerry-Ann Reid-Brown:Oh, Tidal.
Jesse Owens:Tidal – so sorry, you look at the different subscription fees. You subscribe, you pay your $10 a month and you have this unlimited access to music. Licensing, so when we talk about licensing, we’re talking about, you essentially, you have a product that can now be leveraged on or can be used as part of that for them, for a customer gaining access to your product, they need to pay a licensing fee in order to use it. So usage, an example of this is – take an example of Amazon. Amazon provides a host of services for small, midsized, large companies. They provide infrastructure for companies to build their products on top of. They don’t necessarily need to worry about developing the domains, standing up servers, they handle all of the mundane task of the infrastructure. The company can just focus on building the product, but because they are providing this infrastructure – think of it as paying taxes to have your presence on the internet. You essentially tax companies to use the internet. And so, they develop a revenue stream for those types of services.
You also can look at advertising. A lot of brands – you look at your Snapchats, your Instagrams, they leverage advertising as their core revenue stream. They can partner with different brands and you’ll see like sponsored posts or sponsored ads. Depending on the ad placement, you can get certain revenue streams based off of the level of engagement of those ads.
Kerry-Ann Reid-Brown:So then, what you’ve mentioned, the revenue stream you choose is really dependent upon the product itself?
Jesse Owens:That is correct, or how you plan on monetizing a product. Next is key resources. When we talk about key resources, you have to think about what do you actually need in order to build a product. Key resources can be physical. If you’re building a T-shirt line, you need a T-shirt printer. You need different inks for the different arrays of colors that the shirt can – or the different colors that you want to design the shirts in. You may need the actual physical shirts in different colors of T-shirts depending on what you plan on printing. This also applies for digital products. One that actually comes to mind, think about MakerBot where it’s a 3-D printing company of various physical renderings. They need to have the materials that are needed to build out these physical prototypes that are being sent through the 3-D printing machine. It could be intellectual, so you have to look at the teams. If you’re building a digital product, you need a team of engineers, designers, product people who can actually bring the product to life or this idea. Certainly, you can pair that down if you’re constrained by budget, but also, you’ll need to be mindful of those keyword resources that you need in order to bring this product to life. And so, we could actually talk about that in depth in regards to if you’re budget constraint, what are some tactics to sort of keep your costs down, but you can still maintain a certain level of productivity.
And then also in addition to that is IP*. So sometimes when we look at different products, we may identify that hey we need to build a particular experience in the product. We want to build a commerce experience, so do we need something embedded in our product that probably isn’t our core competency, but we need to leverage this in some way, shape or form. An example of this would be if I don’t have a marketer or I don’t have a marketing manager, I want to build out marketing campaigns. I want to build out a way of engaging with my users via email. You probably want to look at products, maybe like MailChimp that can sort of offload some of that task because that’s not really core to your value prop. You’re building T-shirts, but you want to be able to engage with your customers because you feel like this is the proper channel to engage with them. And so, you want to identify those gaps in your business where it’s not really part of your core, but you want to build this into your product because it was expected. This is what they get from them using other products. Also, financial – this all sounds good if it was all free, but unfortunately, building product actually costs money. So you need to look at the type of capital that you need in order to get your business up and running.
Now we’ll actually get into key activities. When we talk about key activities, we’re talking about how do you do it, how do we actually produce this product. And so, if we’re talking about digital products, we’re talking about – you want to identify your technology stack. We’ll actually go through that in a later series, but you want to essentially look at what sort of tools do you need in order to build your product. Going back to the T-shirt, what are the key activities in terms of how do we actually need to build a shirt, to produce it and actually put it into the hands of customers, and just that whole process. Think about shipping. Think about packaging. Think about those things that are very core to the development and the delivery of your product to the consumer.
Kerry-Ann Reid-Brown:You said shipping, package, how is that different from channels where we did the delivery or the distribution of the product?
Jesse Owens:Oh, so when we talk about channels, we’re talking about how do consumers get access to your product. And so, you want to distribute your product – if we’re saying your product is Omnichannel, it resides on various platforms. We want to make sure that consumers can – we can be reached on iOS devices, android devices, on web through voice activated devices. Those are the channels that we are referring to. The key activities, we’re talking about if you design a T-shirt, you have to now think about shipping and how do we want to ship it. You have to look at what is the cost of shipping maybe through Amazon or whatever third-party we decide to ship through. And so, those are some of the key activities you should think about as you develop that. The same applies when you are building digital products, is what’s our process of building and launching a product, and looking at the different technologies that we need in order to bring our product to life.
Next is key partnerships. When we talk about key partnerships, we’re looking at who will help you, because certainly, if we can launch on our own, that’s great but we’re going with the assumption that your idea isn’t new; you had incumbents already in the market. And so, what we’re looking at is may be partnerships that can – partnering with brands that can further establish yourself as a leader and something that really resonates with consumers. What you want to do is, from key partnerships, you’re looking at potentially acquiring talented resources. You’re also looking at the reduction of competitive risk. When we talk about competitive risk, is that when you launch a product that already has competitors in the market, you want to take a look at the product that you’re delivering, is it competitive alignment or is it a competitive advantage. And so, I like to give the guidance on you want to make sure that you are aligned with your competitors, so you’re at least offering what’s on par with your competitors, and then start thinking about what can be your competitive advantage.
Kerry-Ann Reid-Brown:So alignment is on par, advantage is where you are ahead of your competition or you have a greater…
Jesse Owens:Right and delighting your customer. That’s what we’re really striving for. And so, that’s where some of the key partnerships will allow your business to do. Does that make…?
Kerry-Ann Reid-Brown:Yes, this makes a whole bunch of sense to me.
Jesse Owens:So to wrap this up, we will go into car structure. Now when we talk about car structure, we’re looking at – if we have time in our later series, we can actually go into different pricing strategies, but before we actually get into pricing, you have to assess how much it’s actually going to cost to actually run your business. Sounds like a very “oh duh”, we need to figure out how much money we’re spending, but what this allows you to understand is your runway for your business to understand how long do you have until you are reaching that redline of I may go out of business, my customer acquisition cost far outweighs the revenue that I’m bringing in, and we’ll actually get into that as well. What we want to look at is car structures and value driven.
Cost driven, we want to look at how we actually arrive at this is purely looking at how much it actually takes to build the product, how much it actually costs. And so that essentially will drive how much you need to actually charge in regards to making sure that you can still develop the product at the quality that you want to build it out, but still be profitable. Now we established a cost driven approach, now the value driven is also – it’s interesting because you’re looking at, let’s say that I’m a brand and I want to build a product to automate a particular process. What you can do is take a look at the average salary or the average earnings per hour that particular segment makes. Give an assessment of how much time you can actually save that individual or that industry and then put a price tag on by using this product, we can save you X amount of dollars per month. Considering we’re going by 40 hours a week, we’re talking about 160 hours a month and we can save you maybe 10 to 20 hours a month. That can equate to a dollar value. So because we’re saving individuals that much time, they are willing to invest a certain dollar amount because – or companies are willing to invest a certain dollar amount because you’re optimizing a core business that wasn’t previously optimized.
Kerry-Ann Reid-Brown:Got it, got it.
Jesse Owens:So that actually wraps up the business model canvas. This is really framework and really the foundation when you are looking to start a business and when you’ve identified an idea, you validated it. Now what we’re doing is spending some time building some structure around that idea so that once we move into the next phase, we can have a solid framework on what to actually build.
Kerry-Ann Reid-Brown:Awesome. So the next phase, just to give a preview, what the next phase is cultivating the idea, yes?
Jesse Owens:That is correct. And so, when we’re looking about cultivating the idea, we’re looking at the product life cycle which we’ll go into the different phases of that cycle where we look at market development, we’ll look at market growth, market maturity, market decline. We’re looking at different sort of levers in order to maintain growth in your particular market and different strategies that companies have used in order to continue to grow their revenue, as well as their customer base.
Kerry-Ann Reid-Brown:Awesome. Jesse, I’m looking forward to the other topics in the rest of the series because you just gave me so much in this first step. The most important thing for anyone listening, is to don’t be intimidated by this and saying oh this is only for a tech or this is only for a bigger company. The way how Jesse broke down the steps here, they can apply to any process, maybe just on a smaller scale, but the steps still do apply. It’s important as we build stronger businesses and companies and services and products, that we do it the right way. So we mitigate how many mistakes we make. We’re bringing you this information to help you know what you should be doing or what we should be doing to build better products – anything that this framework can be applied.
Jesse, I thank you for really unpacking this for us and I’m excited about the next episode. So if you have any questions about anything we discussed in this episode, please feel free to send us an email, email@example.com. You can send a tweet @CarryOnFriends. You can Instagram @carryonfriends. We are @carryonfriends on all social platforms. Use the hashtag #cofpodcast and join the conversation online. Jesse is also available. And so, Jesse, you could tell the audience how they could reach out to you as part of this series. We’ll even compile all the questions to do a Q&A, but Jesse, how can the audience reach out to you?
Jesse Owens:Yeah, so I can be reached on LinkedIn, Jesse E. Owens II. I can be reached as well on Twitter, Twitter handle is @JesseEOwensII. I’m more than happy to provide feedback, answer any questions, concerns, provide some clarity.
Kerry-Ann Reid-Brown:Alright cool. So until the next installment of this series, walk good.