The Lean Business Scorecard
The fastest-growing businesses in the world experiment on an industrial scale to demonstrate how Desirable, Viable, Feasible and in some cases, how Responsible they are. Give your business a headstart with The Lean Business Scorecard, a one-page canvas that helps you focus your time, money and energy on the right questions to answer at the right time.
We’re at the turning point of a new age.
Whilst our fundamental needs haven’t changed during the pandemic, our priorities and expectations most certainly have.
As the first wave of lockdowns were announced across the world, many of us shifted overnight from the world of commuting and face-to-face meetings to digitally-enabled, remote ways of living and working.
Millions upon millions of retail and hospitality businesses were forced to close as their customer footfall and sales fell to zero.
The shops that survived have been left with increasingly bare shelves due to the disruptions to our global supply chain. First, it was items like hand sanitiser and toilet roll, then it was staple food items like tinned food, flour and pasta.
Meanwhile, tech companies like Apple, Google and Amazon with their global network of cloud data centres and highly automated and resilient supply chains have not only survived but have positively thrived.
Their digital channels, products and services, largely impervious to recent world events, have increasingly become the way many of us meet our consumer demands.
Their share prices have risen to all-time highs, giving them an even greater ability to capture more of the markets that have been disrupted by COVID.
For Business leaders trying to navigate this new age, it can appear daunting.
How can anyone compete with these billion- and trillion-dollar companies?
The good news is that it is not only possible to compete, but if you’re someone looking to grow or invest in a business in this new age, there are not only numerous opportunities to exploit at any moment in time (if you know where and how to look), but you can still gain a competitive advantage without having thousands of Google or Amazon engineers to help you.
That advantage is gained through focused and lean experimentation.
The Lean Business Scorecard helps you focus on the right problems at the right time by assessing how desirable, viable, feasible and responsible your Business is.
Depending on the scores you achieve using the Scorecard, you can then use a series of simple Experiment “Flows” to rapidly identify better insights and opportunities, develop solutions your customers love to use and grow your business in ways that are good for people, profit and the planet.
[note: a post about Experiment Flows is coming soon, watch this space]
Who is this for?
The Lean Business Scorecard is designed for 2 types of people -
- Creators of Business ideas like Corporate Innovators and Entrepreneurs
- Investors in Business ideas like Business Leaders and Startup Investors
Creators of Business Ideas
If you are an Innovator, Entrepreneur or looking to set up a Side Hustle, having an effective strategy for knowing where to focus will help you avoid distractions on your journey to conquering new markets.
Managing your time effectively will either be one of the biggest challenges you face or one of the most competitive advantages you have at your disposal.
The scores you get from using the Lean Business Scorecard will help bring to the surface any assumptions you still have, check your unconscious biases and quickly evaluate how much evidence each part of your business idea has.
Armed with this knowledge you will know where to focus your time and efforts next for business success.
Investors in Business Ideas
If you’re a Business Leader or Investor, having an effective strategy to review and prioritise multiple business ideas will increase your chances of capitalising on the right opportunities and help you to drive sustainable growth across the greatest number of them.
In your case, the Scorecard’s scoring system is an invaluable way to help you compare and contrast several ideas, work out which ones to focus your investments on and provide the right level of support as those opportunities are realised.
One of the benefits of using the scorecard approach is that it’s easy to use even if you have little prior knowledge of the problem, solution or market a business intends to operate in.
The Lean Business Scorecard gives you a simple way to evaluate any business idea based on evidence rather than how well someone presented a set of slides or how theoretically sound a business case looks
How does the Scorecard work?
The Scorecard provides a simple framework to reliably assess 4 business-critical questions and examines how much evidence or assumptions you have to back up your answers.
The 4 Business-critical Questions
Depending on the quality and quantity of evidence you have, the Scorecard produces a set of scores for your business idea that help give you confidence that a business is -
- Desirable — Do people need this?
- Viable — Can we get paid for this?
- Feasible — Can we scale this?
- Responsible — Is this good for society?
Each question explores key angles to the 4 business-critical questions
Desirability
- PROBLEM — Are you solving the right problem for your customers?
- SOLUTION — What does your solution allow your customers to do?
Viability
- MARKET — What is the size of the prize if you win?
- BUSINESS MODEL — When do you answer the burning question and break-even?
Feasibility
- LEAN OPERATIONS — How lean can you get your operations?
- UNIQUE VALUE — Are you set up to test & learn your way to growth?
Responsibility
- PEOPLE — How does this make life better for employees?
- SOCIETY+PLANET — How does this make life better for society?
If the types of questions are starting to look familiar to you, it’s because they are inspired by several Business Design innovations that have come before like
- Tim Brown of IDEO’s Human-centred Design
- Alex Osterwalder’s Business Model Canvas
- David J. Bland’s Testing Business Ideas approach
- the Continuous Discovery approach of Teresa Torres
- Dean Leffingwell’s Lean Business Case
- Jay Coen Gilbert, Bart Houlahan and Andrew Kassoy’s B Corporations, and
- Jay Peter’s 4th Design Lens of Responsibility.
I owe a big thank you to all of you.
Each question has 5 angles to explore the types of evidence a business idea has to support it, which you assess by using a simple Scoring system that measures how far up the ‘Ladder of Evidence’ you have climbed.
Scaling the Ladder of Evidence
The Ladder of Evidence is a concept that Teresa Torres often talks about in relation to Product Discovery and customer research. It’s a way of thinking about how you ask questions to get more valuable insights from the data you gather.
For example, asking your customers what they would like or do when presented with a certain situation is not a reliable way to understand what they really want or would do if they were in that situation.
Instead, asking them to tell you stories of what they actually did in a certain situation will likely yield slightly better results and insights.
Better still would be to observe your customers “in the wild” like a nature documentary maker, where you can observe all the different types of verbal and non-verbal behaviours in the context you’re interested in.
This approach of gathering evidence is used across all 4 of the questions to extract as much insight as possible.
I use a numeric interpretation to assess how far up the Ladder your are in the Scorecard and determine whether an idea is
- Just a hunch — which gets a score of one point
- Has early signs of evidence — a two-pointer, or
- Has strong evidence to back it up — the full three points
The lower the score, the lower the confidence in that part of the business idea and therefore the greater the need to keep focusing focus on that question.
All it takes to scale the ladder is to keep running experiment flows to gather evidence that would bust or validate your business hypothesis before moving on to other questions.
What question do I answer first?
No matter where you are in your business journey, If you’re new to using the Scorecard, you always have to start by building confidence in the Desirability of a business idea before considering any other questions.
After all, if you don’t have evidence of the problem or challenge that you’re addressing for your customer and how your solution addresses that, it really doesn’t matter how viable, feasible or responsible you believe your business idea is. Nobody is going to be using it.
Don’t fall into the trap of assuming you know what your customers want.
According to Clayton Christensen, founder of the “Jobs to be done” customer needs analysis framework, 95% of new products fail for this reason.
In the Startup world, this isn’t much better, with 92% of startups failing according to the Startup Genome report.
So before you move on to try and answer any other question, focus on Desirability first.
What score is good enough to proceed?
The key to answering each set of business-critical questions and building enough confidence in each of them to proceed, is evidence.
Without both qualitative and quantitative evidence, you lack the ability to drive predictable and repeatable results for one part of your business that you can use as strong foundations to build on top of for other parts of your business.
In the following sections of this guide you’ll find detailed breakdowns of what you need to do to get higher up the Ladder of Evidence, but in the meantime here’s a quick cheat sheet to get you started.
Scoring Cheat Sheet
Desirability
Note that the Desirability section has a 2-part scoring system due to the critical importance of understanding the right customer need or problem to address and how you go about addressing it with the best solution.
PROBLEM — Are you solving the right problem for your customers?
Score 0–5 — Speak to your customers to qualify the kinds of problems they face
Score 6–8 — You’ve qualified the problems, now quantify the biggest problem
Score 9 — You have strong evidence of a problem worthy of addressing
SOLUTION — What does your solution allow your customers to do?
Score 0–2 — Get lots of ‘quick-and-dirty’ prototypes into your customers’ hands
Score 3–4 — Make your concepts more real. Compare & contrast value propositions
Score 5–6 — You’ve got a killer feature that customers love using
Viability
Score 0–9 — Run small scale experiments to validate assumptions in your business model
Score 10–12 — Run larger-scale experiments to build further confidence
Score 13–15 — You’re on your way to profitable growth. What would help you accelerate?
Feasibility
Score 0–9 — Work on your customer acquisition and activation — Try Pirate Metrics
Score 10–12 — Industrialise, automate and optimize your customer funnels
Score 13–15 — You’ve optimised your operations for both cost and conversion
Responsibility
Score 0–9 — Take active steps to engage with your employees and community
Score 10–12 — Make corporate responsibility part of your long-term strategy
Score 13–15 — You’re helping to lead the way to a bright, sustainable future
What order do I follow?
After validating Desirability, typically you assess Viability and Feasibility next.
Responsibility should be a consideration throughout rather than a tagged-on afterthought.
Don’t expect this to be a linear process, it’s very much iterative. You might take a two steps forward and then need to take a step back.
For example, you may find that you’ve identified and validated a problem and potential solution that your customers love, but to launch a product at a sufficient scale to break even might be beyond your means given the initial technology setup costs. So you have to go back to find another problem people will pay you enough to solve.
In other words, there may be strong evidence of Desirability, but the Commercial Viability and Feasibility don’t stack up, so you need to go back to Desirability.
Getting started
You don’t need much to get started, the key thing to have to hand is evidence.
Here’s what you’ll need
- The Lean Business Scorecard — Download a PDF / PNG of the Scorecard
- Evidence — gather any materials that describe your business — pitch decks, business cases, research or experiments you have run, anything that shows your thinking and validation of your business model
- Workspace — Set up a Digital or Physical space to set out all your evidence, I like to use Mural or Miro which are Digital whiteboarding tools, or you can even put it into slide deck software like Google Slides, Powerpoint or Keynote if you prefer
- Sticky notes — again I prefer the Digital options that you get on Digital whiteboards as it’s more eco-friendly, they’re easier to edit and you can resize them
Once you’ve assembled all these elements, write the name of your business idea on the top right of the Scorecard and we are ready to move on to the next part of the guide where we will explore the question of Desirability first.
Recap
Business ideas fail because they lack strong evidence around how Desirable, Viable, Feasible or Responsible they are. It’s easy to get distracted and spend time working on parts of a business that don’t add value. The Lean Business Scorecard gives you a strategy to understand where to focus your time, effort and money on a business to increase the chances of business success.
Next up
This is the introduction to the 4-part guide to the Lean Business Scorecard.
The first and usually most important question to tackle next is Desirability.
- Part 1 — How Desirable is your idea?
- Part 2 — How Viable is your idea?
- Part 3 — How Feasible is your idea?
- Part 4 — How Responsible is your idea?
- Part 5 — Experiment Flows (coming soon)
- Download the Lean Business Scorecard (download link)
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Thanks for reading.
