3 learning tools Kenyan startups can use to build a sustainable business

achievement

 

Validated Learning

In the article, ‘What is the price of learning?’ We explained that the process of innovating and learning for Kenyan entrepreneurs is often wasteful; that more resources are used than is needed to acquire the crucial lessons on building a sustainable business. Useful insights are often still left to guesswork after a business fails.

Failure is an inevitable and necessary part of building a successful Kenyan Startup. However for failure to be useful, the business has to be structured to gleam insights into a market or business as efficiently as possible.

In his book, The Lean Startup, Eric Ries explained the concept of validated learning. Validated learning simply means testing out a business idea and measuring its effects. Results from the first test are applied and the process is repeated, continuously making incremental improvements.

The basic concept is that your startup is an experiment based on certain assumptions that it should test rigorously to build a sustainable business or product. To set up this experiment you need the following components:

  1. A hypothesis

Any good experiment needs a solid theory to test. A hypothesis in this case is a statement of the assumption your business model is based on. Your most important assumptions are based on the existence of a valuable problem to solve, who your target market is and what product is needed to solve the problem or how the business will grow. It must show a clear cause and effect between what your startup will do and what results you expect.  The variables being tested should be clear.

An example would be ‘Parents will buy learning videos for toddlers because there is an increased interest in early childhood education.’

This hypothesis can be refined further to make it easier to test. What sales are enough to demonstrate demand, how do you measure interest in early childhood education?

  1. Actionable Metrics

Next you need to decide on how you are going to measure your variables. What counts as an actionable metric depends on the business or assumption being measured. These variables have to click here be useful in your decision making. The number of page views might be useful for a blog but for a lead generation site, it is more useful to track the number of filled out contacts forms.

For the above hypothesis, the number of video purchases and views might be the actionable metrics you need to track.

  1. Minimum Viable Product

This refers the basic version of a product with just enough pictures to interest early adopters. It should have just enough to test your main hypothesis. This helps entrepreneurs avoid building features and products that consumers do not need. The startup for our hypothesis can start with a simple website with a select number of videos that explain a few topics exhaustively e.g. number 0 to 9 and test the response.

People often take this to mean that the quality of the first product should be low but that is not the case. Our startup can create a few high definition videos for customers instead of low resolution formats that might be hard for children to watch.

Another example would be if you believe there is a need for quick transportation between 2 towns. You can start by introducing a van and upgrade to a minibus if your assumptions prove true. The van is a complete product on its own, capable of adequately meeting customers’ transport needs.

The MVP doesn’t also have to be an actual product either. The point is to let customers interact with your idea and get feedback quickly and efficiently. A brochure or website might be sufficient to check if people are interested in your product first.

Don’t think of the MVP as a product so much as a process of repetition where you get customer feedback and improve on your initial idea.

Pivot or persist

You’ve built your minimum viable product, your customers have seen it and you have data on what they think and how they are using it. You can either chose to stay the course or change direction depending on the data.

Do not be afraid to embrace change. YouTube would be a failed dating app and Twitter would be a struggling podcast platform if they stuck to their initial direction.