This is Part 2 of our Innovation Accounting series.
For the sake of learning and progress it is important to be able to keep track of what happens in terms of the changes and adaptions to your Business Model in every stage of your startup. Every update due to an experiment, the things you have validated or dismissed over time. The closer you get to product market fit, the more likely it is that you can show metrics like traction or retention, but are those the metrics you can account your decisions on, put milestones on or determine your roadmap on? From the very first start you want to be able to account for the decisions made towards building a viable business model, you want to see the progress you are making towards a this. Most likely (in the very first fase of your startup) you will start off with multiple possible options and models. The goal is, over time, to validate and de-risk as much as possible, ending up with one that actually works. Going through the phases, experiment by experiment, means you are making decisions and setting milestones along the way. To account for those, it makes sense to document the learnings in such a way that it gives insight in this learning progress.
At NEXT we are using a Trello board for now. We have changed our approach over time and probably will optimize it when we have learned more. Playing with the structure is easy with a flexible tool like Trello and we don’t have to build anything yet ourselves. Although it misses certain other things, this still gives us a flexible approach towards something workable.
Setting up the Trello board
Create lists that correspond with experiment loops. These are preferably two-week time slots, but sometimes something happens and the timeslot changes to a longer period, so it makes sense to number the lists. Something like ‘Experiment loop #’, but weeks or dates work as well, whatever gives you insight.
Every Trello card within a list corresponds with a Business model canvas that is still in option. Experiment loops at the very beginning of the board can have multiple canvas cards, since there are often a lot of options in play. Some are discarded on gut feeling or research, some on experiments. We use a picture of the business model canvas (lean canvas or our own canvas) as a cover for the card, adding color to the canvas segment that is specifically being tested. This makes the overview more clear. There can be more than one experiment in play on a specific card. Note also that in a two-sided businessmodel, you will need a canvas for each side, each is put on its own card.
Whenever an experiment is run, we add the experiment to the corresponding canvas card. In a comment we upload a picture of our experiment card, with its unique number. (Make sure that the canvas remains set as cover on the card.) The due date of the experiment is set in the calendar. Once an experiment is finished, the end result (validated or invalidated ) as well as the metrics or documents that proof this, get uploaded or linked to this card as well. The updated Business model (Canvas) is than made into a new card in a new experiment loop.
Stickers and labels
Every card that has an experiment attached to it gets a triangle/exclamation mark sticker. If an experiment fails it gets a thumbs down sticker, if it validates a thumbs up or checkbox sticker (whichever you prefer). Running experiments get a rocket sticker and business models that are still in play but without experiments currently being done get a clock sticker. For experiments that have proven inconclusive or those that need follow up experiments, either more experiments are added to the card, or the card is copied to a new loop and experiments are added there. Sometimes we assign a confused smiley sticker to show this.
Labels are very useful especially for two-sided marketplaces or more complex models that need several canvasses for one option. Colored labels can be assigned to cards indicating the two sides of the market place, or the slices that belong to different users within a certain segment when you are dealing with complex markets/customers that need separation into user, influencer etc.
If you keep updating your board over time this will create a very visual overview of your learnings. Building up from one side, that has many options and assumptions, working towards something that has fewer assumptions and is less risky. It will give you some insight into your learnings and a way to proof your progress. Whenever there are periods of time when you have not been able to take steps in proofing your businessmodel, this will also be visible on the overview, just as pivots or new options.
You can work from left to right or the other way around, the result is the same. A progress over time, validating towards a working businessmodel. With everything that is related to this, the exeriments and their corresponding results attached to it. Thus accounting for decisions and steps made along the way.
We’d love to hear how you keep track of your learnings and if and how you have made adaptions to make this work for your startup? Let us know in the comments!