Making Sense of the Customer Development Model
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This document discusses the customer development model for startups. It states that most startups that follow the traditional product-centric model fail, while successful startups invent a process of customer learning and discovery called "customer development". This process involves getting feedback from customers early and often through minimum viable products and validating hypotheses through iterative testing and pivoting when needed. The document provides an overview of the customer development model and its key stages and strategies, such as validating problems are worth solving, building something people want, and accelerating growth. It emphasizes the importance of getting outside the building to learn from customers rather than assuming what they want.
![Making Sense
– of the –
Customer Development
Model
Tathagat
Varma
VP,
Strategic
Process
Innova5on,
[24]7
Innova5on
Labs,
Sr.
Member
ACM
and
IEEE,
CSP,
CSPO,
CSM,
PMP,
PRINCE2](https://image.slidesharecdn.com/custdev-130922194330-phpapp01/85/Making-Sense-of-the-Customer-Development-Model-1-320.jpg)
![MVP
A
strategy
used
for
fast
and
quan5ta5ve
market
tes5ng
of
a
product
or
product
feature
A
Minimum
Viable
Product
has
just
those
features
that
allow
the
product
to
be
deployed,
and
no
more.
The
product
is
typically
deployed
to
a
subset
of
possible
customers,
such
as
early
adopters
that
are
thought
to
be
more
forgiving,
more
likely
to
give
feedback,
and
able
to
grasp
a
product
vision
from
an
early
prototype
or
marke5ng
informa5on.
It
is
a
strategy
targeted
at
avoiding
building
products
that
customers
do
not
want,
that
seeks
to
maximize
the
informa5on
learned
about
the
customer
per
dollar
spent.
"The
minimum
viable
product
is
that
version
of
a
new
product
which
allows
a
team
to
collect
the
maximum
amount
of
validated
learning
about
customers
with
the
least
effort."
The
defini5on's
use
of
the
words
maximum
and
minimum
means
it
is
decidedly
not
formulaic.
It
requires
judgment
to
figure
out,
for
any
given
context,
what
MVP
makes
sense.
An
MVP
is
not
a
minimal
product,[3]
it
is
a
strategy
and
process
directed
toward
making
and
selling
a
product
to
customers.
It
is
an
itera5ve
process
of
idea
genera5on,
prototyping,
presenta5on,
data
collec5on,
analysis
and
learning.
One
seeks
to
minimize
the
total
5me
spent
on
an
itera5on.
The
process
is
iterated
un5l
a
desirable
product-‐market
fit
is
obtained,
or
un5l
the
product
is
deemed
to
be
non-‐viable.](https://image.slidesharecdn.com/custdev-130922194330-phpapp01/85/Making-Sense-of-the-Customer-Development-Model-29-320.jpg)
Making Sense of the Customer Development Model
- 1. Making Sense – of the – Customer Development Model Tathagat Varma VP, Strategic Process Innova5on, [24]7 Innova5on Labs, Sr. Member ACM and IEEE, CSP, CSPO, CSM, PMP, PRINCE2
- 2. What do you need to create successful products?
- 4. 90%
- 8. Google’s Hall of Shame Why 4.85 yrs to pull out??? hMp://blog.priceonomics.com/post/46028291791/digging-‐around-‐in-‐the-‐google-‐graveyard
- 9. Internet Hall of Shame… hMp://themyndset.com/2013/05/catch-‐the-‐wave-‐right-‐mindset-‐digital-‐iq/ hMp://www.cnet.com/1990-‐11136_1-‐6278387-‐1.html
- 10. …and in ROTW
- 11. …but… 2/3rd who succeed, dras5cally change their plans along the way!
- 12. Do you know these products?
- 13. Remember…
- 14. hMp://freeibone.net/wp-‐content/uploads/2013/02/real-‐freinds1.png What do they do differently?
- 15. “So what is it that makes some startups successful and leaves others selling off their furniture? Simply this: startups that survive the first few tough years do not follow the tradi=onal product-‐centric launch model espoused by product managers or the venture capital community. Through trial and error, hiring and firing, successful startups all invent a parallel process to Product Development. In par=cular, the winners invent and live by a process of customer learning and discovery. I call this process "Customer Development,” a sibling to "Product Development” and each and every startup that succeeds recapitulates it, knowingly or not.” – Steve Blank
- 16. hMp://steveblank.files.wordpress.com/2010/11/two-‐assump5ons.jpg Guaranteed 90% Failure!!!
- 17. Problem with tradi5onal product development model From: Running Lean – Ash Maurya The Startup Owners Manual – Steve Blank “In large companies, the mistakes just have addi=onal zeroes in them” – Steve Blank
- 18. 9 Deadly Sins of New Product Introduc5on Assuming “I know what the customer wants” The “I know what features to build” flaw Focus on launch date Emphasis on execu5on instead of hypotheses, tes5ng, learning and itera5on Tradi5on business plans presume no trial and no errors Confusing tradi5onal job 5tles with what a startup needs to accomplish Sales and Marke5ng execute to a plan Presump5on of success leads to premature scaling Management by Crisis leads to “Death Spiral” From: Startup Owner’s Manual
- 19. “A startup is NOT a smaller version of a large company” – Steve Blank
- 20. Are all Startups the same? Lifestyle Startups Work to live their passion Small business Startup Work to fee the family Funded from savings Barely profitable Not designed for scale Scalable Startup Born to be big Founders have a vision Require risk capital Buyable startup Acquisi5on targets Social Startup Driven to make a difference Large-‐ company Startup Innovate or Evaporate
- 21. 3 Stages of a startup “Do I have a problem worth solving?” “Have I built something people want?” “How do I accelerate growth?” From: Running Lean – Ash Maurya
- 25. GET OUT OF THE BUILDING…
- 26. So, what is your product? From: Running Lean – Ash Maurya
- 27. The Customer Development Insight Cycle
- 28. A Pivot is a structural course correc5on to test a new fundamental hypothesis about the product, strategy and engine of growth. It is not a failure! hMp://steveblank.files.wordpress.com/2010/11/pivot-‐the-‐model.jpg
- 29. MVP A strategy used for fast and quan5ta5ve market tes5ng of a product or product feature A Minimum Viable Product has just those features that allow the product to be deployed, and no more. The product is typically deployed to a subset of possible customers, such as early adopters that are thought to be more forgiving, more likely to give feedback, and able to grasp a product vision from an early prototype or marke5ng informa5on. It is a strategy targeted at avoiding building products that customers do not want, that seeks to maximize the informa5on learned about the customer per dollar spent. "The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort." The defini5on's use of the words maximum and minimum means it is decidedly not formulaic. It requires judgment to figure out, for any given context, what MVP makes sense. An MVP is not a minimal product,[3] it is a strategy and process directed toward making and selling a product to customers. It is an itera5ve process of idea genera5on, prototyping, presenta5on, data collec5on, analysis and learning. One seeks to minimize the total 5me spent on an itera5on. The process is iterated un5l a desirable product-‐market fit is obtained, or un5l the product is deemed to be non-‐viable.
- 32. Pivot now, Op5mize later From: Running Lean – Ash Maurya
- 33. Pivot
- 34. Make the transi5on only aoer you have a ‘scalable startup’
- 35. How to op5mize? From: Running Lean – Ash Maurya
- 36. When to raise money? From: Running Lean – Ash Maurya
- 39. Products and Services that have benefited from Lean Startup
- 40. Case Study: Ash Maurya’s book From: Running Lean – Ash Maurya
- 41. Recap • Don’t build something no one wants! Discover customers first • Search for the business model Validate your assump5ons • Build, measure and learn itera5vely Build products itera5vely • Aggressively execute business plan and op5mize Scale-‐up for execu5on
- 42. “I never perfected an inven=on that I did not think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent....” Thomas Edison
- 43. References • www.steveblank.com • hMp://blog.startupcompass.co/ • hMp://blogs.wsj.com/accelerators/2013/06/24/ steve-‐blank-‐the-‐6-‐types-‐of-‐startups-‐2/ • Running Lean – Ash Maurya • The Startup Owners Manual – Steve Blank • Four Steps to Ephphany – Steve Blank • The Lean Startup – Eric Ries
- 44. Q&A • hMp://managewell.net • hMp://slideshare.net/managewell