Lean Startup for Associations Part 2: Problem Solving!

Written by Associations Catalyzing Entrepreneurship on December 20, 2018

Part One of this series introduced Peter Dudka to the ACE conversation, and looked at the basics of Lean Startup methods and tactics. The question remained: how do we apply these concepts in a real-life challenge facing associations?

Back to the ACE meeting:

Peter sketches out a possible path.

The scenario: A trade association (with organizational membership) holds three week-long, in-person training institutes in a year — offering a range of business and operations courses that lead to certification in different areas. Attendance has been dwindling and the ROI is becoming disproportionate to the effort of running these events. In response, there’s a directive to convert these in-person certification events to online courses.

But how will the market respond to this change? Do we even fully understand the problem we’re trying to solve?

Let’s treat the directive as a solution hypothesis and apply three Lean Startup steps — exploration, validation, and simulation.

1.Exploration: Start by exploring the problem space. Draft a “lean canvas” which spells out all the key elements like problems, solutions, metrics for success, cost and revenue, etc.


Peter constructed a lean canvas for the scenario at hand — see https://app.xtensio.com/6bzpvptc.

After drafting the canvas, we proceed to interview 10-20 member staff that are early in their career to understand barriers to participating in the institutes. Identify the actual pain points and breakdowns in their working lives. Use interview questions like “tell me about the last time you did X…” or “how do you feel about your current approach to Y.”

The key here, offered ACEr Joe Klem is to “make this about them and not about us.”

However, members may not always be able to express what they need. Shira Harrington reminded us of what Henry Ford is purported to have said “If I had asked people what they wanted, they would have said faster horses.” So what we are ask members is important. Members’ behaviors can indicate what problems we need to solve.

Let’s say in talking to the 10-20 members, a theme begins to emerge — their biggest challenge is getting executive buy-in for the time away from the office. They actually appreciate the opportunity for in-depth instruction and peer networking.

Peter emphasizes that just by getting out there and talking to stakeholders, you’ll develop an intuition for what they need and what they don’t. Set minimum success criteria — eg. if your idea sparks some interest from seven out of ten people, you can move forward.

2. Validation: After exploring the problem space, proceed to validate — test initial findings with a larger audience. If you’ve gained insights from 20 people, figure out if they apply to 2,000.

Validation could take the form of surveys, measuring online conversions, A/B testing, and even pre-selling your solution (e.g. event registrations, memberships, etc.).

The validation process is only useful once you understand what questions you’re asking and of whom. Try to ask specific questions of a specific group, advises Peter. For example, the association with the “institutes” challenge could ask past institute attendees to rank barriers to participation in future institutes.

Let’s say a large number of previous attendees indicate that they would like to attend again to work toward additional certification, IF they can get buy-in from supervisors. Based on these findings, the focus shifts to understanding the attitudes of senior-level gatekeepers around in-person institutes.

3. Simulation: Simulation could take various forms — prototyping, solution interviews, and building a minimum viable product. The MVP is the simplest approach to delivering a solution that helps you understand if you’re delivering the right solution.

The solution we test does not have to be as polished as we think it needs to be. “Seek to simulate the solution before you bet the farm on implementing a full-blown version of it,” says Peter.

Joe Klem vouches for the value of simulation. He has done website usability testing with wireframe prototypes (with a collaborative prototyping tool like ProtoShare) on smartphones as well as desktops, and it was a huge timesaver.

For the “institutes” problem at hand, Peter suggested conducting interviews with 10-20 senior executives at member organizations to understand their attitudes toward permitting staff to attend and giving these executives an insider look at the program.

Finally, based on findings from these interviews, the conclusion reached could be that the association does not need to shut down in-person institutes and go fully online — it needs to rethink who it markets to and how. A very different outcome from what was initially conceived as a HPPO solution!

ACEr Mindy Kaplan Eline says she has been using these methodologies without even being aware of Lean Startup as a concept. She was tasked with identifying a for-profit company her association could buy to supplement non-dues revenue, as directed by the board. Mindy started by calling a few members for reactions to some ideas on what services this for-profit could provide. She asked questions like “What do you think of us offering this service? Would you buy this service from us vs. another vendor?”

Based on the reactions she got, Mindy sent out a survey to a subset of 3,000 members, asking specific questions on 16 ideas grouped into categories. A ten percent response validated some of the initial assumptions and questioned others. The association brand was strong among members but they did not see why it had to get into the service business. The whole process helped Mindy prepare a lean business plan that proposed a build-measure-learn type of strategy — start offering an easy-to-implement service in-house first and buy a company later, after gauging performance and uptake. “Now I can prepare a lean canvas and give my process a name,” says Mindy.

Other ACErs warned about barriers to watch out for if you implement Lean Startup at your association.

Jeffrey Phillips says that it might feel like Lean Startup is slowing things down and cause frustration. How do you explain the value of the process? Don’t shoot down a HPPO’s idea or solution, suggests Peter. Roll with it and find windows to introduce Lean Startup processes. And remember that this process helps you build a body of knowledge that is valuable beyond the immediate problem. It’s intellectual property that can get amortized a number of ways.

Michael Butera laments that in associations, fail fast often turns into “Don’t try again.” We need to figure out how to deal with this status quo mentality and show that fail means learn rather than stop. Dennis Sadler, on the other hand, has been using basic lean concepts to reinforce the positive aspects of failure and proving oneself wrong as a pathway to deeper learning for value creation. “We purposely use failure to get people comfortable with identifying what doesn’t work and being less vested in a solution so they can let go,” he says.

What about the increasing competition that associations face from for-profit companies and new technologies, asks Caroline Baugher?Lean startup, explains Peter, does not preclude traditional methods like large-scale market studies, top-down market analysis, total addressable market, or total serviceable market. Lean startup is about how to get from point A to B to C to D by considering what problem a small group of people might be facing and figuring out an efficient means to create a solution for them. But you want to also see if that solution is scalable or if it is trumped by some larger market force and consider if the universe for that solution makes it worthwhile.

However, you can’t even figure out what your addressable market share might be until you rigorously define the problem you’re solving and who has the problem. Lean startup helps you understand the problem and makes you analyze the market for a completely different solution than the one you started with.

Katie Bergmann points out that emotion is a huge component in association decision-making. When a project becomes someone’s baby, decisions are subjective rather than objective and difficult to pull apart. So, it’s important to keep asking why are we doing this, are we solving the right problem, and what can go wrong.

“Talk up front about what an exit strategy would look like,” says Katie. If we fail, know that we’ll learn and move forward. Talking about what might go wrong or less than optimal results at the outset and outlining an exit strategy can help take some emotion out of the equation. It comes down to creating a culture that supports an environment that learns and moves forward.

At the end of the day, says Peter, “Associations have an incredible advantage. You already have brand affinity and mind share from members. Leverage this to test new ideas with Lean Startup.”