Hippo’s, Pirates and Happy Customers
[Place one hippo on the desk in front of each of the Executive Team]
“I do not care who you are, how much or little experience you have, what you have seen work before, what your gut or intuition tell you, what you think and especially not what you feel. I only care about data.”
My risky opening statement to the leadership team set the stage for delivering aggressive innovation, and with it, disruptive results.
I wanted to make the point that a powerful way to sift through hundreds of ideas and experiment with the best ones was to focus on data and only data. Not anyone’s opinion, but facts.
After a few uncomfortable glances around the room, with my point made, they had a good snigger, and I am still here.
Why the Hippo?
The HIghest Paid Person’s Opinion is not what matters. The data you get back from customers matters.
Data proves that the problem you are trying to solve exists.
Data proves which of the many innovative solutions you test with customers are 10x better than the way they currently solve the problem. If your solution is not significantly better, the customer has zero incentive to switch to your product or service.
I have handed out over a hundred of these Hippo’s over the last 18 months. They are a powerful symbol of a relentless focus on the customer, and using this customer data to make informed decisions.
This is how much we save every time we do not pursue an idea. When you take the HIPPO approach, ideas are attempted based on influence, energy, salesmanship or political will. Using data mostly negates these tendencies.
Ignoring the HIPPO
An example is an idea I pursued to solve the naming problem for websites and startups. At the time we were helping founders turn their ideas into MVP’s, and every founder spent way too much time looking for the perfect name for their startup.
There was a problem. How do I find a good name that’s no longer than five letters with a .com domain that is available?
We rushed off and built a beautiful site that would ask your close circle of friends via Facebook messenger for name suggestions with a shared bounty as a prize. It had virality, an existing network and gamified rewards built right in.
We forgot one important step: Asking ourselves “what is the smallest possible version of this we can do that costs little to validate our solution.” We also forgot to measure the customer action vs. their intent. We were the HIPPO!
This idea failed because customer’s friends did not want to be paid for ideas or ‘spammed’ in Facebook messenger. If we had gone with a data-first approach, we would have manually sent messages to a sample of our customers or own friends and measured the results. We could have saved thousands of dollars and got the answer in 2 weeks.
What to measure?
My answer to this question at the early stage of an idea is always the same. Use Dave McClure’s Pirate Metrics.
There are very few ideas that cannot be validated or improved by these metrics. The secret is:
- Find the OMTM (One Metric That Matters) that is a clear leading indicator of each stage of the funnel.
- Measure week on week GROWTH for each cohort of users.
At this early stage, absolute numbers do not matter much. What is important is the relationship between A,A,R,R,R, and the growth rate for each metric. This allows you to make rational decisions based on data (facts not feelings or bias) and improve what’s not working or amplify what’s working.
Embracing the PIRATE
An example of data driving the next phase decision is a Facebook Messenger bot. We built the basic bot with minimum functionality to test how customers would engage.
These are the metrics we used:
Acquire — Clicks on the bot
Activate — Start conversation with the bot
Retain — Complete conversation with the bot
Revenue — Call To Action (subscribe or leave email)
Refer — Share
The Pirate Metrics quickly revealed what works and what does not.
What about the Bean Counters?
People trust data. If the data coming back shows no growth week on week, and we are indeed acting on that data and killing ideas which are bad, there’s a level of comfort with people and areas of the business that are looking for those numbers.
This focus on data and week on week growth gives the business a sense of trust in the process, provided these numbers are used for clear decision making.
During this validation phase, you need to stay commercially aware, run as lean as you can and spend the least amount of money possible. Resist having a commercial conversation too early as you will kill potential outlier ideas that have some upside.
HIPPO or PIRATE?
I have used this approach working with hundreds of startups and corporate ideas in innovation teams, and it always delivers. Try the HIPPO’s and PIRATE’s — you may be surprised at the results.
Do you choose ideas based on what the HIPPO thinks and feels or on customer data?