So far, we've explored techniques for typical‐sized, smaller efforts like adding a new feature, or medium to large‐sized efforts like a redesign. Those cover most of what product teams actually work on.
However, another especially difficult situation requires a more comprehensive framing technique. This is an early stage startup, where you are trying to figure out a new product that can power a new business, or, for those that work at an enterprise size company, when you're asked to tackle an all‐new business opportunity for the company.
In other words, you're not being asked to improve an existing product, you're being asked to invent an entirely new product.
In this situation, you have a much broader set of risks, including validating your value proposition, figuring out how you intend to make money, how you plan to get this product out to your customers and sell to them, how much it will cost to produce and sell this product, and what you will measure to track your progress—not to mention determining whether the market is large enough to sustain a business.
You're not being asked to improve an existing product, you're being asked to invent an entirely new product.
For decades, people would create thick business plans to try to highlight these topics and how they intended to tackle them. But many people, including me, have written about the many reasons those old business plans were often more harmful than helpful.
A startup canvas, its close cousins the business model canvas, and the lean canvas are intended to be lightweight tools to call out these risks early and encourage the team to tackle them up front.
I much prefer the startup canvas to old‐style business plans, but I have also observed that many startup teams still spend too much time on the canvas and keep postponing that pesky little problem of discovering a solution that people want to buy (see the box “The Biggest Risk”).
You can use a canvas for any product change, no matter the size, but you would likely quickly find that, once you have an existing product and business, the majority of the canvas doesn't change and is only duplicated. You already have a sales or distribution model. You already have a monetization strategy. You have a well‐defined cost structure. You are mainly trying to create more value in your solution. In that case, it probably makes sense for you to look at one of the earlier framing techniques.
That said, you can use the startup canvas for simpler work, especially if you have a new product manager. The startup canvas can help that new product manager get a good holistic understanding of her product and understand the key areas of the affected business.
One of the things I like about a startup canvas is that it helps to quickly highlight the key assumptions and major risks facing a startup or a significant new product in an existing business. This is a good thing. The idea is to tackle the biggest risks first. At least that's the theory.
In practice, I keep running into entrepreneurs and product leaders who are focused on secondary risks rather than primary risks.
It's human nature for people to focus more on those areas they feel they can control and are knowledgeable about.
I think this is at least partly because risk is subjective and hard to quantify. So, depending on your perspective, you may think some risk is secondary when I think it is primary.
Mostly, however, I think the major reason is that it's human nature for people to focus more on those areas they feel they can control and are knowledgeable about.
So, let's say your startup founder is someone who comes from a business background, probably trained as an MBA. He or she is likely acutely aware of the risks associated with coming up with a good business model. They're often focused on unique value proposition, pricing, channels, and costs. These are all real risks, which are part of assessing business viability.
But, I will often have to sit these people down and explain that, while these are real risks, they are largely academic at this stage. And then I try to point them at what, in my experience, is the biggest reason that startups and new products fail.
You're probably thinking that I'm speaking of market risk—that the new product is focused on solving a problem that customers just don't care enough about. This is a very real risk, and one that's responsible for its share of failed efforts, but I argue this is not usually the most significant risk.
I need to mention a couple caveats here.
First, I have to say that the vast majority of the teams I meet are not solving truly new problems. They are working on long‐standing problems with long‐proven markets. What's different about the startup or product is their approach to solving the problem (their solution), most often—and increasingly—because they are leveraging newly available technology to solve the problem in an innovative way.
Second, if the market is indeed new, then today the techniques we have for validating demand have never been better. If you don't use these techniques, you proceed at your own peril. This is an especially egregious mistake because the techniques are not expensive in terms of money and time, so there's just no excuse not to do this.
I believe the major risk facing most efforts is value risk. On a startup canvas, this shows up under solution risk—discovering a compelling solution to customers. A solution that your customers will choose to buy and use.
This is generally hard enough but realize that to get someone to switch to our new product, it's not enough that it's comparable (sometimes referred to as feature parity), it must be demonstrably and substantially better. This is a high bar.
However, if you've created a canvas before, you know that there's precious little in there about the solution. The official rationale for that is that it's far too easy to fall in love with your particular approach and lock yourself in prematurely. In fairness, this is a very real issue with teams. I see this behavior frequently. But a consequence of this meager representation of the solution in a canvas is that it plays to the tendency of many to focus on those risks they feel more comfortable with and leave the solution as “an exercise for the engineers.”
Rather than delegating or deferring figuring out the solution, we need to embrace product discovery as the most important core competency of the startup.
Look, if you can discover a solution that your customers love, then you can tackle the risks of monetization and scale. However, without that solution, the rest of your work is very likely going to be wasted. So, whether your constrained resource is cash or management's patience, you need to make sure you primarily use your time to discover a winning solution. Get that risk resolved first and then you can focus on the other risks.
The point is that you don't need to spend your time doing pricing optimization testing, sales tools, marketing programs, and cutting costs, until and unless you have discovered a truly valuable product.