"Life is too short to build something nobody wants," warns Ash Maurya author of the number one best seller Scaling Lean: Mastering the Key Metrics for Startup Growth. Maurya proffers plenty of keen insights for anyone who is eager to hang their own shingle.
Yet, the wisdom in his book goes beyond pithy one liners like the one opening this article. Maurya provides a road map to take your idea from its infancy to building a company that achieves its purpose. What follows is a list of wise insights pulled from the author's latest book.
"Traction is the rate at which a business model captures monetizable value from its users," writes Maurya. Traction goes beyond mere vanity metrics and helps a start-up measure the output of its business model. Citing one of my favorite thinkers of our time, Saul Kaplan, Maurya explains that your business model is how your company "creates, delivers and captures value." In other words, traction is your way of measuring if you are delivering valuable services or products to your customer: Are they getting what they want to ease their pain?
Create a Lean Canvas
"Your business model, not your solution, is the product." Riffing on the much lauded and valuable tool Business Model Canvas, Maurya has created a way for entrepreneurs to build their business model. The Lean Canvas is a free tool that helps you identify the essentials key to building a business that scales: unique value proposition (UVP), cost structure, revenue stream, problem your solving, solution to the problem, key metrics, your unfair advantage, channels to deliver the UVP, and customer segments.
The Lean Canvas will help you dig deep and add much needed clarity to your idea. It helps you test your idea to see if it's ready for prime time.
This is a meaty topic for a short article. So know that I'm providing just enough information to make the case for measuring throughput. Maurya defines it as the "net monetizable value captured from the customer in a given period." The guest lecturer advocated measuring customer throughout and not revenue throughput. People throughput is more tangible.
Throughput is monetizable value minus cost of customer acquisition. Why is this important? You want to measure value creation over cost cutting, according to Maurya. It's the difference between an abundance mindset versus a deficit mindset. Much more is possible when you view your business through an abundance mindset.
Go Slow to Go Fast
"At the earliest stages, entrepreneurs need deceleration, not acceleration." What's key for a startup is repeatability: business that doesn't come from random sources. "The problem with random is that random is not repeatable" wisely warns Maurya. Your company needs repeat business in order to grow. The author's advice is to identify actionable demographic and psychographic cues that trigger customers' decisions to buy your product and/or service.
As an entrepreneur myself, I found Ash Maurya's book invaluable. It's helping to shape my thinking in more strategic ways. I don't need to remind you how tough it is to breathe life into your idea. It's tempting to frantically run in the direction of "getting things done." But, Maurya's book helps you get things done in a wise manner without depleting yourself in the process.