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THE BIGGEST MISTEAKS I’VE SEEN BOB DORF allegedly retired serial entrepreneur email@example.com www.steveblank.com
Some rules to consider to break the rules… FOURTEEN RULES TO REMEMBER From the“CUSTOMER DEVELOPMENT MANIFESTO” 2
1. Get Out of the Building…Twice!- to free internal startups from parent’s baggage, rules- first to test the problem, then to test the solution- to engage customers upfront and often, before products are built and plans are baked THERE ARE NO FACTS IN THE BUILDING NEED TO LISTEN, NOT PRESENT MUST BE DONE BY SENIOR MANAGEMENT 3
2. Pair Customer Development with Agile Development• BREAKS THE “LOCKSTEP” OLD PROD DEV MODEL• IMPOSSIBLE TO PROCESS FEEDBACK OTHERWISE 4
3. Failure is an Integral Part of Search (and few searches travel in straight, unbroken lines) • DIFFICULT FOR BIG COMPANIES TO MEASURE • DIFFERENT PERFORMANCE METRICS NEEDED 5
4. Expect Continuous Iteration and Pivots • THAT’S THE WHOLE POINT!! • DIFFICULT IN MOST CORPORATE CULTURES • BUSINESS MODEL “BOXES” CHANGE, NOT JUST PRODUCT 6
5. Save the Business Plan for Later …use a Business Model Canvas! 7
6. Design Experiments and Test to Validate Your Hypotheses• SIMPLE, PASS/FAIL TESTS• GAIN INSIGHTS• ‘GOOD ENOUGH’ SIGNAL TO PROCEED 8
7. Determine your Market Type …it Changes Everything!• New/ Existing/ Resegmented(cost/niche)• Changes Spending, Growth, Messaging 9
8. Startup Metrics Differ from Those in Existing Companies • MEASURE PROGRESS IN THE SEARCH • NUMBER OF GUESSES TURNED TO FACTS • NUMBER OF “REMAINING PIVOTS” 10
9. Fast Decision-Making, Cycle Time Speed and Tempo• FOR STARTUPS, IT’S THE “BANK BALANCE” WAR• IN BIG COMPANIES, IT’S THE “CREDIBILITY” WAR• FACT-BASED DECISIONS. FACTS FROM CUSTOMERS 11
10. It’s All About Passion • ENTREPRENEURS ARE DIFFERENT • WIRED FOR CHAOS, UNCERTAINTY, BLINDING SPEED • THEIR JOB IS THEIR LIFE – IT’S NOT 9-TO-5, IT’S 24/7 12
11. Startup Job Titles Are Very Different from a Large Company’s • STARTUPS NEED EXECUTIVES COMFORTABLE IN UNDERTAINTY, CHAOS • DEPARTMENT HEADS OFTEN PREMATURE • CUSTOMER-FACING OR DEVELOPMENT? 13
12. Preserve Cash Until Needed. Then Spend.• “LEAN STARTUPS” ARE NOT “CHEAP STARTUPS”• GET IT RIGHT FIRST, THEN GET IT SOLD• SPEND ONLY WHEN THE MODEL IS: • REPEATABLE, SCALABLE, PROFITABLE 14
13. Communicate and Share Learning• REGULAR MANAGEMENT TEAM INTERACTION• FREQUENT INVESTOR/SPONSOR FEEDBACK• “STANDING MEETINGS”• “LAUNCHPAD CENTRAL” 15
14. Customer Development Success Begins with Buy-In• DISRUPTIVE INNOVATION MUST BE LED FROM THE VERY TOP OF THE COMPANY• EVERYONE – TEAM AND BOARD -- MUST ACCEPT THE PROCESS 16
15. When You’re Done (good or bad),just DO IT AGAIN!• …IT’S WHAT ENTREPRENEURS DO! 17
What did you learn? I Hope…• (I hope) the basics of Customer Development• This is “search” not “execute”• Don’t rush to build your product…learn first!• You have support in Innovation, in this room• This is HARD work, no excuses• You will PIVOT again and again• …and see that you have a TON of work to do!• …anything else??
What did we learn? I think…• This is very different from your “day job”• This is NOT easy• Failure is fine if you learn, move forward• No “magic bullets” or easy answers• And don’t look around for answers…• …but look around often for help, support
Bob Observation #1• There’s lots more Customer Discovery to do• You need to probe your key segments• 12 interviews can’t reflect 300,000 customers• …and you will clearly struggle to find the time to do it right…• …even though I guarantee it’s crucial for success
Bob Observation #2• Do you have an “elevator” pitch…didn’t hear it• 3-4-6 words summarizing Value Proposition• “Absolutely Positively Overnight”• “It takes a licking but keeps on ticking”
Bob Observation #3• KNOW we are here only to help YOU succeed!• we will not BS you, which may hurt• You need to develop confidence in your roadmaps for 30-60-90• First, know how high you want YOUR map to GO!• We must minimize wasted time on dumb ideas …by turning them into stronger ideas• Must get through the “valley of despair”• Are you man or woman enough to make it?
Bob Observation #4• Too many teams will build product too fast• It’s not just about the product…• …and a product without customers is zero• BALANCE your canvas and your energy
Bob Observation #5• Too much “I know what the customer wants” – This is the DEATH of innovation – You can’t possibly know...you’re a startup – And you can’t know if you don’t ask THEM
Bob Observation #6• Teams always define their customer segments far too broadly…• …it’s not “retailers” or “resellers”…too broad – Which bodegas – How do I know which ones/tell others which ones – Where’s my customer archetype – You can’t call on all, so know which ones to hit – Remember, you’re looking for earlyvangelists
Bob Observation #7• Seldom see any deep competitive analysis• The value proposition isn’t just your idea…• …it’s why it’s different from other ideas• …and why customers should buy YOU!
Bob Observation #8• Don’t be afraid to steal other people’s ideas• There are 100’s of Analogs in the US• Most of these ideas have been tried somewhere – Use that as your research and learning lab – If somebody made a pivot for good reason, do it – Steal feature ideas, value components, research what they’re doing and why – Devour the web, business school cases, LEARN
Bob Observation #9• Your discovery efforts need to include clear pass/fail experiments• State your expectations upfront• …3 out of 5 people will come back 3x• …I can acquire customers for $4.00 each• …I can maintain 85% retention over six monthsDon’t worry…you don’t fail with an “exact” score!
Bob Observation #10• Too much “ocean boiling”• You will not create a $25mm business this year• Start with something where you can be GREAT• When you’re great at that thing, build from there• Small teams, limited funds…• …you cannot do it all!
Customer Discovery: Exit Criteria• Consistent answers from “enough” people?• What are the customers’ top problems? – How much will they pay to solve them• Is there high demand for the solution? – Do customers agree? – How much will they pay? When?• Draw a day-in-the-life of a customer• Draw the org chart of users & buyers• Visit the leadership…convince them!
WHERE TO START• Refine and Tighten at least 2 of your 9 boxes: – Value Proposition(remember what’s in it) – Customer Segments(be darn specific)• Best First Guess at Minimum Viable Product• Identify the tests you’ll undertake to prove it – Who will you talk to, by type, how many – What are your pass/fail test goals• Develop your Customer Discovery Plan• Figure out how you’ll get it DONE!