LEARNING AND VALIDATED KNOWLEDGE AS A COMPETITIVE ADVANTAGE

Accelerate your business with these tips "Validated learning and knowledge as a competitive advantage". Analyse and discover this TIP!

In a new company, validated learning is crucial to develop innovative and differentiated products or services that are competitive in the market. To this end, it is necessary to in-depth market and customer research, and rigorous testing and experimentation to validate ideas and concepts.

Through this process, key opportunities and challenges can be identified and solutions developed to meet customer needs and expectations. Validated learning is also important for the continuous optimisation of the company's products and services.

By obtaining constant feedback from customers and conducting critical evaluations of results, the quality, efficiency and effectiveness of products and services can be improved, which in turn can increase customer satisfaction and long-term loyalty.

Validated learning is essential for the success of a new enterprise, as it enables them to develop innovative and differentiated products and services, and to continuously improve their quality and efficiency to meet customers' needs and expectations.

Validated learning as a source of competitive advantage (+) for a new company

Validated learning can be a competitive advantage for a company, enabling them to develop innovative and differentiated products or services that meet customer needs and outperform the competition.

By having a systematic process of verification and validation of technical knowledge and skills, the company can ensure that its products and services are of high quality and effective for customers, which in turn can enhance its image and reputation in the market.

In addition, validated learning can also help the company reduce development costs and time costs by minimising the risks associated with bringing new products or services to market.

By having a clear understanding of customer needs and expectations, and by conducting rigorous testing and experimentation, a company can ensure that its products or services are viable before investing large amounts of resources in their development.

Validated learning can be an important competitive advantage for a company, enabling them to develop innovative and differentiated products and services, continuously improve their quality and effectiveness, and reduce the risks associated with developing new products or services. This can help the company stand out in a competitive market and gain customer preference.

Validated learning is one of the fundamental pillars on which the methodology is based. Lean Startup (+). It is difficult to talk about concrete facts when it comes to launching a business project. There is a high level of uncertainty. Therefore, a series of fundamental elements must be known in order to obtain accurate information for the development of the business idea.

Elements of validated learning:

Validated learning refers to a systematic and continuous process of gathering and validating relevant information for the development of the business idea. For this process to be effective, it is essential to know a series of key elements to obtain accurate and useful information for the company.

One of the first elements to take into account is knowledge of the market, that is, identifying and knowing the customers the company is going to target, as well as the competition that can be found in the market. This information is essential to develop a differentiated value proposition adapted to the needs and expectations of customers.

Another key element is to find the Early Adopters (+), i.e. the first customers who will adopt the product or service and who can provide valuable feedback on their experience and possible improvements. Knowing the Early Adopters is important to adapt to changes in their own demand and to ensure customer satisfaction.

It is also important to test the product or service in all possible situations and scenarios. In this way, possible problems or limitations can be identified and improvements can be made before launching it on the market.

Finally, it is necessary to know the economic factors relevant to the business model, such as price, supply, distribution and other economic indicators. All this information is essential for the development of a profitable and sustainable business model.

In short, validated learning is not limited to drawing large conclusions or large amounts of information, but also involves the collection of any relevant data about the company and the environment that can contribute to the learning process.

By systematically and continuously collecting and validating information, the company can make more informed decisions and improve the quality of its products or services, which can lead to a competitive advantage in the marketplace.

VALIDATED LEARNING APPLICATION

The application of validated learning consists of applying the data and conclusions drawn from testing and experience at each stage of the business model design. Instead of relying on one's own opinions, it seeks to adapt the project to the needs and demands of the market and customers. In other words, it puts the project at the service of the market and not the other way around.

If test results show that something is not working, be willing to modify the business plan and the minimum viable product to better fit and meet customer needs. The key to validated learning is to be flexible and willing to change course according to market demands, rather than sticking to a preconceived idea.

The application of validated learning is more about common sense than theoretical factors. The information we extract from each test and interaction must be applied at each stage of the business model design. And, with what is learned, the outcome is evaluated.

We must be willing to modify our LMP. We must be adaptive and put our project at the service of customers and the market, rather than moving forward based on our own opinions.

LEARNING AND NOT PROFITABILITY IS THE MEASURE OF YOUR STARTUP'S PROGRESS 

We have been taught very badly. We still often continue to treat the startup as a small business, and not as the experiment it is... which leads us to make wrong, and often fatal, decisions about its future and the steps we should take. Why profitability is not the key, at least at the beginning. 

Launching a startup is completely different from operating a consolidated business, because if there is a common element in all startups, it is uncertainty: about who the customer is, what problems they have, how to reach them... in the early stages everything is unknown, and yet we are still obsessed with working with the same philosophy as in consolidated companies, which usually leads us to sacrifice weeks or even months of our lives making a business plan. Absurd.

"In the early stages of any start-up, the only constant is uncertainty, so we should focus all our efforts on reducing it as much as possible.

This means to stop thinking like sailors and start acting like pirates, which means changing our mindset... and above all, giving up the pursuit of the established measure of progress from day 1: profitability. Some may be surprised, but I will say it again: at the beginning we should NOT be obsessed by profitability.

THE COMMON MISTAKES THAT PROFITABILITY LEADS US TO MAKE

If our main measure of progress when launching a startup is profitability, we will be making one of the most serious and usually deadly mistakes: focusing on optimisation, something that was confirmed in the Startup Genome Report as the main cause of startup mortality (after studying a sample of 3,200 companies).

THE FACT IS THAT OPTIMISATION TAKES DIFFERENT FORMS DEPENDING ON THE PROFILE OF THE STARTUP'S FOUNDERS, FOR EXAMPLE:

1. Founders with a technical profile: Trying to build a perfect product with many features that customers have not asked for, technologically preparing the whole infrastructure for the high volume of customers that we "think" will come, fully optimising the production line to make it very efficient... 
2. Founders with a business profile: Spending a lot of time looking for customers before the product/market fit (which leads to sub-optimal conversion funnels), striving to make processes very efficient in order to maximise margins, optimising profits too early by looking for suppliers "for when everything goes well"?

This approach leads us to waste a lot of time on optimisation and the search for early returns, which means that we take for granted a weak and, above all, unvalidated foundation.

It also delays the time to market, which usually means that we run out of money too soon and we only have the capacity for a single attempt (and as we saw in validation, the average number of "attempts" in a start-up is 27 before success).

LEARNING (AND NOT PROFITABILITY) AS A MEASURE IN A STARTUP 

When we are launching a startup there are several distinct phases (as we discussed when talking about fit product-market (+) and where the focus will vary greatly (which implies different metrics). At the beginning, the point I want to focus on in this TIP, we are in the search phase, where we try to find a problem worth solving.

It is a phase characterised by the fact that the business model is based on numerous hypotheses that we have not yet validated, which means that, as we have already said, our company is built on a foundation of uncertain stability.

FOUNDATIONS OF UNCERTAIN STABILITY:

• We do not know if the customer we have identified is really the most responsive to our value proposition.
• We have no idea whether the problem we are going to solve is something interesting and for which someone is willing to pay.
• We do not know which is the best way to attract and retain our customers.
• We don't know the best way to earn money (there are more than 90 ways to earn money).
• ... and so on.

In this context, the key is to try to get your product to market as quickly as possible in order to learn, even if this is sometimes not profitable or goes against business common sense (a product that is not perfect, of course).

For example, if you are creating a product that is a combination of several elements (a pack) and you cannot get suppliers to give you a reasonable margin for one of the items, go to a normal shop and buy it. What you want at this stage is not to get the maximum profit from each sale, but to learn if there are customers interested in buying your pack. 

"Validated learning is the result of applying the scientific method to a hypothesis, i.e. designing an experiment that confirms or disproves the hypothesis...".

In a similar way to the previous example, and applicable to technical entrepreneurs, we could cite as an example of optimisation the entrepreneur who spent months of his time building a process (for example, designing a system that creates a list of recipes personalised according to the customer's tastes, something very laborious that can take months) without having validated whether the customer really appreciates it.

Perhaps with this background we can apply the concierge technique of manually providing the service for a few customers (not at all efficient!) to validate whether the customer is willing to pay for such a service... and if so, build the process.

CONCLUSIONS

If you adopt as a fundamental principle that your main measure of progress (at least until you have validated your business model) is what you learn, you will remove a series of very dangerous mental restrictions that tend to lead to an obsession with scaling up the model very quickly.

Your obsession should be to learn, but that is not the same as doing things "futres": if by spending 1.000€ you are able to learn more than by using 2 months of your time, don't waste a second. And make no mistake, just because you don't have to focus on profitability doesn't mean you don't have to charge your clients and offer the product for free, far from it:

"You must charge your teeth from day 1... but not because you are looking for profitability, but because there is no better validation that your product or service matters than if someone is willing to pay for it what you think it is worth".