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Customer Development
and
Pivoting
Dr Tendayi Viki

Follow Me: @tendayiviki
Ash Maurya (2012)
Running Lean
http://www.runningleanhq.com/
Ash Maurya (2012)
Running Lean
http://www.runningleanhq.com/
The Scientific Method
Customer Development
is NOT the same as
market research or focus groups!
Introspection
 Market research methods are
based on one major premise:
• If you want people to tell you what they
think, ...
Introspection
 This premise is based on one
major problematic assumption:
• People are able to introspect and
gain access...
Introspection
 People often don’t know
what drives their thoughts
and actions.
• But if you ask them, they often have
som...
9
To Fully Understand Your Customers
You Have to Go
Beyond the Focus Group
It is a “hypothesis driven” process.
@robfitz
12
http://momtestbook.com/
13
@robfitz
Running Successful Experiments
 Specify who you are going to be talking to
from the beginning.
 Be specific about your t...
Running Successful Experiments
 Specify exactly what you would expect to
find if your assumptions are correct.
 Hypothes...
Running Successful Experiments

Ash Maurya
http://www.ashmaurya.com/2010/09/lean-startup-is-a-rigorous-process/
Running Successful Experiments

Capture reliable data.
Do not try to fudge the data.
Avoid the confirmation bias.
18
The Mom Test
 Anybody will say you product is good if
you bug them for long enough.
 People also often don’t know the fa...
@padday
http://insideintercom.io//
The Mom Test
 Never ask for opinions…
 Ask about specific things in their life.

 Ask about specific things they have d...
Examples of Bad Questions
 Do you think this is a good idea?
 Would you enjoying using this product?

 How many times w...
Examples of Good Questions
 How do you currently solve this problem?
 Tell me about the last time you solved
this proble...
The Process
Alexander Osterwalder (2012)
http://www.businessmodelgeneration.com/
Riskiest Assumption
 Talk about your business model.
 Identify the riskiest assumption.

 Describe one main problem.
 ...
Ash Maurya (2012)
Running Lean
http://www.runningleanhq.com/
The Anatomy of A Pivot
 Remember that at any point during the customer
development process you might run into challenges.
• People don’t have th...
 If you run into any of these problems, you don’t give
up on your idea.
•

However, you don’t just persevere “the plane i...
Different Types of Pivots
Zoom-in Pivot
 What was previously a single feature in a
product becomes the whole product.
 This is usually based on cu...
Zoom-Out Pivot
 This is when a single feature is not sufficient.
 So what was once the product, becomes a single feature...
Customer Segment Pivot
 This is when the company realises that
their product serves a real customer need:
 But for a dif...
Customer Need Pivot
 This is when the company realises that
the customer need they were planning to
serve is not real:
 ...
Platform Pivot
 This represents a change in strategy
from an application to a platform and
vice-versa.
 Usually starts a...
Business Architecture Pivot
 This represents a change in strategy
from a sales to a marketing business
model, or vice ver...
Value Capture Pivot
 This represents a change in the way
the company captures value from its
customers.
 Such changes in...
Engine of Growth Pivot
 This represents a change in the
companies growth strategy.
 Sticky
 Viral

 Paid
Eric Ries (20...
Channel Pivot
 This represents a change in the way
you reach your customers to deliver
the value proposition.
 For examp...
Technology Pivot
 This is when a company discovers a
new way to deliver the same value
using a different technology.
 Th...
A Pivot is:

NEW
ˆ

 It still needs to be tested...
Good Luck!
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
Customer Development and Pivoting SP640
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Customer Development and Pivoting SP640

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The fourth class of the SP640 enterprise and innovation course delivered at the University of Kent for final year students. In this class, students learn about customer development methods, the mom test and pivoting.

Published in: Business

Transcript of "Customer Development and Pivoting SP640"

  1. 1. Customer Development and Pivoting Dr Tendayi Viki Follow Me: @tendayiviki
  2. 2. Ash Maurya (2012) Running Lean http://www.runningleanhq.com/
  3. 3. Ash Maurya (2012) Running Lean http://www.runningleanhq.com/
  4. 4. The Scientific Method
  5. 5. Customer Development is NOT the same as market research or focus groups!
  6. 6. Introspection  Market research methods are based on one major premise: • If you want people to tell you what they think, just ask them!
  7. 7. Introspection  This premise is based on one major problematic assumption: • People are able to introspect and gain access into how they feel and communicate it to researchers.
  8. 8. Introspection  People often don’t know what drives their thoughts and actions. • But if you ask them, they often have something to say. • Psychologists call this confabulation.
  9. 9. 9
  10. 10. To Fully Understand Your Customers You Have to Go Beyond the Focus Group
  11. 11. It is a “hypothesis driven” process.
  12. 12. @robfitz 12 http://momtestbook.com/
  13. 13. 13 @robfitz
  14. 14. Running Successful Experiments  Specify who you are going to be talking to from the beginning.  Be specific about your target sample.  If you talk to anyone who will talk to you:  It becomes hard to distinguish signal from noise.
  15. 15. Running Successful Experiments  Specify exactly what you would expect to find if your assumptions are correct.  Hypotheses MUST be falsifiable.  Set minimum success criteria.  Otherwise, there is no way to know if you have learned anything.
  16. 16. Running Successful Experiments Ash Maurya http://www.ashmaurya.com/2010/09/lean-startup-is-a-rigorous-process/
  17. 17. Running Successful Experiments Capture reliable data. Do not try to fudge the data. Avoid the confirmation bias.
  18. 18. 18
  19. 19. The Mom Test  Anybody will say you product is good if you bug them for long enough.  People also often don’t know the factors motivating their own behaviour. @robfitz http://momtestbook.com/
  20. 20. @padday http://insideintercom.io//
  21. 21. The Mom Test  Never ask for opinions…  Ask about specific things in their life.  Ask about specific things they have done in the past.  Only ask questions that even your mom would tell you the truth about… @robfitz http://momtestbook.com/
  22. 22. Examples of Bad Questions  Do you think this is a good idea?  Would you enjoying using this product?  How many times would you buy such a product?  Would you buy this product?  How much would you pay for this? @robfitz http://momtestbook.com/
  23. 23. Examples of Good Questions  How do you currently solve this problem?  Tell me about the last time you solved this problem?  How much money does this problem cost you?  How much are you currently paying to solve this problem? @robfitz http://momtestbook.com/
  24. 24. The Process
  25. 25. Alexander Osterwalder (2012) http://www.businessmodelgeneration.com/
  26. 26. Riskiest Assumption  Talk about your business model.  Identify the riskiest assumption.  Describe one main problem.  Transform that into a falsifiable problem hypothesis.  Develop two-three customer development questions? GET OUT OF THE BUILDING!!
  27. 27. Ash Maurya (2012) Running Lean http://www.runningleanhq.com/
  28. 28. The Anatomy of A Pivot
  29. 29.  Remember that at any point during the customer development process you might run into challenges. • People don’t have the problem you were hypothesising. • People don’t like the solution you built. • People don’t want to pay for the solution you developed. • People use the product once and don’t come back.
  30. 30.  If you run into any of these problems, you don’t give up on your idea. • However, you don’t just persevere “the plane into the ground”.  You can do a PIVOT. • Keep one foot in what you have learnt and then change one other thing and test again! • This is why the companies that can run these tests quickly and get to a plan that works, are more likely to succeed.
  31. 31. Different Types of Pivots
  32. 32. Zoom-in Pivot  What was previously a single feature in a product becomes the whole product.  This is usually based on customer usage data. Eric Ries (2011) The Lean Startup http://lean.st
  33. 33. Zoom-Out Pivot  This is when a single feature is not sufficient.  So what was once the product, becomes a single feature of a much larger product. Eric Ries (2011) The Lean Startup http://lean.st
  34. 34. Customer Segment Pivot  This is when the company realises that their product serves a real customer need:  But for a different customer segment to what they originally thought. Eric Ries (2011) The Lean Startup http://lean.st
  35. 35. Customer Need Pivot  This is when the company realises that the customer need they were planning to serve is not real:  But from talking to customers they realise that there is another important need they can serve for that customer. Eric Ries (2011) The Lean Startup http://lean.st
  36. 36. Platform Pivot  This represents a change in strategy from an application to a platform and vice-versa.  Usually starts as an application and then becomes a platform (e.g. Twitter and Facebook). Eric Ries (2011) The Lean Startup http://lean.st
  37. 37. Business Architecture Pivot  This represents a change in strategy from a sales to a marketing business model, or vice versa.  Low Margin, High Volume (Consumer)  High Margin, Low Volume (B2B) Eric Ries (2011) The Lean Startup http://lean.st
  38. 38. Value Capture Pivot  This represents a change in the way the company captures value from its customers.  Such changes in your revenue model can have a significant impact on the rest of the business model. Eric Ries (2011) The Lean Startup http://lean.st
  39. 39. Engine of Growth Pivot  This represents a change in the companies growth strategy.  Sticky  Viral  Paid Eric Ries (2011) The Lean Startup http://lean.st
  40. 40. Channel Pivot  This represents a change in the way you reach your customers to deliver the value proposition.  For example, you could change from brick and mortar to exclusively online. Eric Ries (2011) The Lean Startup http://lean.st
  41. 41. Technology Pivot  This is when a company discovers a new way to deliver the same value using a different technology.  This is more likely in established businesses.  For example, newspapers are moving from print to online outlets (e.g. tablets). Eric Ries (2011) The Lean Startup http://lean.st
  42. 42. A Pivot is: NEW ˆ  It still needs to be tested...
  43. 43. Good Luck!
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