The New Rules

A foundational blueprint for building products in a world driven by continuous innovation.

Continuous Innovation fundamentally changes how products need to be built.

Here are the new rules:


1. SPEED OF LEARNING IS THE NEW UNFAIR ADVANTAGE.

Time is your scarcest resource.

In the new world, companies that outlearn their competition win. When you outlearn your competition, you get to uncover what customers want and build products that matter. Doing this once gets you to a great product launch. But doing this continuously, is what's really key to growing your business model.

A corollary to the first rule is understanding the true value of time. You can get more people and money, but time moves in only one direction. Practicing continuous innovation about maximizing your learning per unit of time.


2. THE BUSINESS MODEL IS THE PRODUCT.

Life's too short to build something nobody wants.

When entrepreneurs get hit with an idea, they prematurely fall in love with their solution. This is the Innovator's Bias. Left unchecked, this predisposition to solution building is the top reason for new product failure -- spending needless time, money, and effort building something nobody wants.

Building solutions used to be hard and expensive, but the world has changed. Given enough time, money, and effort, we can build almost anything these days. The real question is: "Will anyone care?"

A great solution is a key, but it's still just one piece in your overall business model. You need to think more holistically about your entire business model from day one and work towards building it out systematically with the same rigor and discipline as you would your solution.


3. TACKLE YOUR RISKIEST ASSUMPTIONS FIRST.

Protect your downside.

When building a complex technical product, a best-practice is first tackling what's riskiest versus what's easiest . Building your business model is no different.

There is a myth that entrepreneurs love taking risks. In fact, some of the best entrepreneurs are quite risk-averse. They work really hard to de-risk their big ideas as quickly as possible to protect their downside.

In the new world, the prioritization of risks have also changed. Mitigating technical risks was the old game when building products was hard and expensive. The biggest risks today aren't technical risks, but customer and market risks.


4. CUSTOMER/PROBLEM CENTRIC.

Love the problem, not your solution.

The challenge today isn't building more products, but uncovering what to build. A fundamental mindset shift for doing that is starting with customer problems before solutions.

Starting with a solution (no matter how small) is like building a key without a door. If you simply flip that around and start with problems, solution building becomes a lot easier, and you actually build keys to doors that take you places.

Problems, not solutions, create space for innovation.


5. EVIDENCE-BASED

The best way to find your next big idea is by testing lots of ideas.

The old world relied on a ANALYZE-PLAN-EXECUTE approach. But this approach breaks down when you're going really fast. Furthermore, the early stages of any idea are often riddled with extreme uncertainty where you don't know what you don't know.

The perfect plan is a myth.

Winning in the new world requires a new MODEL-PRIORITIZE-TEST approach -- where you start with a dynamic model versus a static plan, prioritize your riskiest assumptions, and then use fast experiments to systematically test and refine your model -- before running out of resources.

"In God we trust. All others bring data."
- Edward Deming


6. TRACTION IS THE GOAL.

Prefer outcomes over outputs.

In the old world, we measured progress in terms of outputs like meeting budgets, build velocity, or execution of a plan. But is executing a flawed plan that results in a product no one wants on time and on budget progress?

The new world trades business model outcomes for outputs as the measure of progress. More specifically, it uses traction (or growth) as the measure of a working business model. Traction is a much more reliable metric for progress than even revenue and profit. First, because those are non-existent during the early stages of an idea. Second, because revenue and profit are trailing indicators that tell you something worked but don't tell you why. When you use traction as the measure of progress, you can tie business model outcomes to specific causal activities that then allow you to repeat and scale your business model.