Customer Discovery
Class # 2a

Iain Verigin

1
Today
• Majority of Time : Review an example –
“what exactly does this work looks like”
• Timeline
– Quickly Recap “Custom...
Customer Discovery
Customer
Discovery

Customer
Validation

Customer
Creation

Scale
Company

• Stop selling, start listen...
Discovery Phase =
Hypothesis Testing
•
•
•
•

What is the Hypothesis?
Where does the Hypothesis come from?
Why Test them?
...
Customer Discovery: Rules
• Rule 1:
Facts are outside the building, opinions are inside.
• Rule 2:
Solve a problem that cu...
Customer Discovery: Exit Criteria
• What are your customers top problems?
– How much will they pay to solve them

• Does y...
Customer Dev’t Process
Time Frames
Customer
Discovery

Customer
Validation

Customer
Creation

Scale
Company

Existing Mar...
Customer Discovery
Time Frames
Customer
Discovery

Customer
Validation

Customer
Creation

Scale
Company

Existing: 1 - 6 ...
Customer Discovery
In Detail

9
Methodology
• Customer Development can take months, or years
• Each Step has a set of phases
• Plan what you need to learn...
State Your Hypothesis
• One-time writing exercise
• All other time is spent in front of customers
• Assumes you’re smart
–...
building
blocks
TEAM NAME HERE

Who are our Key
Partners?

FILL OUT ALL 9 BOXES OF THE CANVAS IN ORDER 1 THUR 9

What Key
Activities do we...
CUSTOMER SEGMENTS

images by JAM
VALUE PROPOSITIONS

images by JAM
Product (Solution) Hypothesis
•
•
•
•
•
•

Features
Benefits
Product Delivery Schedule
Intellectual Property
Total Cost of...
Customer/Problem Hypotheses
•
•
•
•

•
•
•
•

Types of Customers
Magnitude of the problem
Visionaries
A Day in the Life of...
Competition Hypotheses
•
•
•
•

Who is out there?
Why are they important?
How do customers use them today?
What don’t cust...
CHANNELS

images by JAM
Distribution/ Pricing Hypotheses
•
•
•
•
•

Distribution Model
Distribution Diagram
Sales Cycle/Ramp
Channel strategy
Pric...
CUSTOMER RELATIONSHIPS

images by JAM
Demand Creation Hypotheses
• How do competitors create demand?
• How will you?
–
–
–
–

•
•
•
•

Viral
Advertising
PR
Trad...
Get keep grow

23
Get keep grow

24
Type of Market Hypotheses
• Positioning and Differentiation
– Existing Market
• The product is the basis of competition

–...
REVENUE STREAMS

images by JAM
Market/Opportunity Analysis
How Big is It?: Market/Opportunity Analysis
– Identify a Customer and Market Need
– Size the M...
How Big is the Pie?
Total Available Market

• How many people would want/need
the product?
• How large is the market be
(i...
How Big is My Slice?
Served Available Market
• How many people need/can use product?

• How many people have the money to
...
Total
Served
Available Available
Market
Market

How Much Can I Eat?
Target Market
• Who am I going to sell to in year 1, 2...
Market Size: Summary
• Market Size Questions:
– How big can this market be?
– How much of it can we get?

– Market growth ...
KEY RESOURCES

images by JAM
KEY ACTIVITIES

images by JAM
KEY PARTNERS

images by JAM
COST STRUCTURE

images by JAM
key
activities

value proposition

customer
relationships

key
partners

customer
segments

cost
structure

revenue
stream...
:Score Card: ( Hypothesis Summary)

test
Guess

Guess

Guess

Guess

Guess

Guess
Guess

Guess

Guess
37
WHAT DOES THIS “REALLY” LOOK
LIKE?
38
?

?

?
?

?
40

?

?
possible
alternatives
radiation-free
detection of
breast cancer

42

hospitals
proprietary IP

43

medicaldevicema
nufacturers
?

?

?
?

?
44

?

?
But,
Realize They’re Hypotheses
9 Guesses

Guess

Guess

Guess

Guess
Guess

Guess

Guess

Guess

Guess
The Final Presentation

How Does This Really Work?
Stanford Lean LaunchPad Class
8 Weeks From an Idea to a Business
I.I.T.Y.I.W.H.T.K.Y
Key Opinion Leaders
(KOLs)
Key Opinion
Leaders (KOLs)
Key Opinion
Leaders (KOLs)
Key Opinion
Leaders (KOLs)
Key Opinion
Leaders (KOLs)
Key Opinion
Leaders (KOLs)
•
•
•

•
•
•
WHAT ARE YOU “REALLY”
THINKING?
115
! Holy Cow !
! I don’t know any of this stuff !
? How deep do I need to go ?
:HELP:
116
:Think:
• In practice I call “Version 1.0” a “Splat”
– I find it sets the tone/expectation much better
– Nb. expectation i...
:Aside:

Before You Start
• Board and Management Buy-In
– “Learning & discovery” not execution

• Customer Development Tea...
:Aside:

! Titles Matter !
“Traditional organizations & titles fail”
CEO

VP Eng

VP Mkt

VP Sales

VP Biz Dev

• People e...
:Aside:

Customer Development Team
“Tasks”
CEO

VP Product
Dev

Technical
Visionary

Business
Visionary

Business
Executio...
Documenting
• “Not too much and not to little”
• Get to know yourself
– Basic Rule of Thumb
• Marketers like to analyse an...
122
Design The Tests
• These can be simple.
• Q. How Accurate is our Service Journey
Sketch?
• Action: Review our “Service Jou...
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
2a customer discovery ( canvas and story ).2013.q2
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Part of 2013 Q2 Lean Launch Pad Presentations

0a-Introduction.2013.Q2.pptx
1a-Three_Types_Of_Startup.2013.Q2.pptx
1b-Customer Discovery (problem hypothesis).2013.Q2.pptx
2a-Customer Discovery ( canvas and story ).2013.Q2.pptx
2b-Value_Chain (team specific).2013.Q2.pptx
3a-Customer_Validation.2013.Q2.pptx
3b-GKG-CustomerRelationships.2013.Q2.pptx
4a-EndGame.2013.Q2.pptx

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2a customer discovery ( canvas and story ).2013.q2

  1. 1. Customer Discovery Class # 2a Iain Verigin 1
  2. 2. Today • Majority of Time : Review an example – “what exactly does this work looks like” • Timeline – Quickly Recap “Customer Discovery Planning” – Example – MammOptics – LeanLaunch Pad project
  3. 3. Customer Discovery Customer Discovery Customer Validation Customer Creation Scale Company • Stop selling, start listening – There are no facts inside your building, so get outside • Test your hypotheses – Two are fundamental: problem and product concept 3
  4. 4. Discovery Phase = Hypothesis Testing • • • • What is the Hypothesis? Where does the Hypothesis come from? Why Test them? How do you test them? 4
  5. 5. Customer Discovery: Rules • Rule 1: Facts are outside the building, opinions are inside. • Rule 2: Solve a problem that customers say is important and valuable • Rule 3: Does the product concept solve that problem? 5
  6. 6. Customer Discovery: Exit Criteria • What are your customers top problems? – How much will they pay to solve them • Does your product concept solve them? – Do customers agree? – How much will they pay? • Can you draw a day-in-the-lifeof a customer – before & after your product • Can you draw the org chart of users & buyers 6
  7. 7. Customer Dev’t Process Time Frames Customer Discovery Customer Validation Customer Creation Scale Company Existing Market: 1 Months - 1 Year Resegmenting a Market: 6 Months - 3 Years New Market: 1 - 3 Years 7
  8. 8. Customer Discovery Time Frames Customer Discovery Customer Validation Customer Creation Scale Company Existing: 1 - 6 Months Resegmenting: 3 - 12 Months New: 12 - 24 Months 8
  9. 9. Customer Discovery In Detail 9
  10. 10. Methodology • Customer Development can take months, or years • Each Step has a set of phases • Plan what you need to learn in writing … so that everyone knows: – – – – what they should be doing when they should do it If they succeeded If they need to do more • These are checklists, not “Inviolable Commandments” 10
  11. 11. State Your Hypothesis • One-time writing exercise • All other time is spent in front of customers • Assumes you’re smart – ( but guessing ) 11
  12. 12. building blocks
  13. 13. TEAM NAME HERE Who are our Key Partners? FILL OUT ALL 9 BOXES OF THE CANVAS IN ORDER 1 THUR 9 What Key Activities do we require? Manufacturing? Software? Supply chain? Who are our key suppliers? What are we getting from them? Giving them? Which of our customer’s problems are we helping to solve? How will we Get, Keep and Grow Customers? Which customer needs are we satisfying What Key Resources we require? Financial, physical, IP, HR? What are the most important costs inherent in our business model? Fixed? Variable? What are the Key Features of our product that match customers problem/need? Who are our most important customers? What are their archetypes? Through which Channels do our Customer Segments want to be reached? What Job do they want us to get done for them? How do we make money? What’s the revenue model? Pricing tactics?
  14. 14. CUSTOMER SEGMENTS images by JAM
  15. 15. VALUE PROPOSITIONS images by JAM
  16. 16. Product (Solution) Hypothesis • • • • • • Features Benefits Product Delivery Schedule Intellectual Property Total Cost of Ownership Dependency Analysis – What is out of our control? 16
  17. 17. Customer/Problem Hypotheses • • • • • • • • Types of Customers Magnitude of the problem Visionaries A Day in the Life of a customer ( Service Journey) Organizational impact ROI Justification Problem Recognition Minimum Feature Set 17
  18. 18. Competition Hypotheses • • • • Who is out there? Why are they important? How do customers use them today? What don’t customers like about them? 18
  19. 19. CHANNELS images by JAM
  20. 20. Distribution/ Pricing Hypotheses • • • • • Distribution Model Distribution Diagram Sales Cycle/Ramp Channel strategy Pricing (ASP, LTV) – Actual Selling Price, Life Time Value • Customer Organization Map • Demand Creation 20
  21. 21. CUSTOMER RELATIONSHIPS images by JAM
  22. 22. Demand Creation Hypotheses • How do competitors create demand? • How will you? – – – – • • • • Viral Advertising PR Trade shows Who are influencers/recommendors? Key trade shows? Key trends? Start assembling advisory board 22
  23. 23. Get keep grow 23
  24. 24. Get keep grow 24
  25. 25. Type of Market Hypotheses • Positioning and Differentiation – Existing Market • The product is the basis of competition – New Market • Creating the market is the basis of competition – Resegment - Redefine Existing Market • New segment of the existing market is the basis of competition • :Think: What does my playing field look like? 25
  26. 26. REVENUE STREAMS images by JAM
  27. 27. Market/Opportunity Analysis How Big is It?: Market/Opportunity Analysis – Identify a Customer and Market Need – Size the Market – Competitors – Growth Potential
  28. 28. How Big is the Pie? Total Available Market • How many people would want/need the product? • How large is the market be (in $’s) if they all bought? Total Available Market • How many units would that be? How Do I Find Out? • Industry Analysts – Gartner, Forrester • Wall Street Analysts – Goldman, Morgan
  29. 29. How Big is My Slice? Served Available Market • How many people need/can use product? • How many people have the money to buy the product Total Available Market Served Available Market • How large would the market be (in $’s) if they all bought? • How many units would that be? How Do I Find Out? • Talk to potential customers
  30. 30. Total Served Available Available Market Market How Much Can I Eat? Target Market • Who am I going to sell to in year 1, 2 & 3? • How many customers is that? • How large is the market be (in $’s) if they all bought? • How many units would that be? Target Market How Do I Find Out? • Talk to potential customers • Identify and talk to channel partners • Identify and talk to competitors
  31. 31. Market Size: Summary • Market Size Questions: – How big can this market be? – How much of it can we get? – Market growth rate – Market structure (Mature or in flux?) • Most important: Talk to Customers and Sales Channel • Next important: Market size by competitive approximation – Wall Street analyst reports are great • And : Market research firms Like Forester, Gartner
  32. 32. KEY RESOURCES images by JAM
  33. 33. KEY ACTIVITIES images by JAM
  34. 34. KEY PARTNERS images by JAM
  35. 35. COST STRUCTURE images by JAM
  36. 36. key activities value proposition customer relationships key partners customer segments cost structure revenue streams key resources channels images by JAM
  37. 37. :Score Card: ( Hypothesis Summary) test Guess Guess Guess Guess Guess Guess Guess Guess Guess 37
  38. 38. WHAT DOES THIS “REALLY” LOOK LIKE? 38
  39. 39. ? ? ? ? ? 40 ? ?
  40. 40. possible alternatives
  41. 41. radiation-free detection of breast cancer 42 hospitals
  42. 42. proprietary IP 43 medicaldevicema nufacturers
  43. 43. ? ? ? ? ? 44 ? ?
  44. 44. But, Realize They’re Hypotheses
  45. 45. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess
  46. 46. The Final Presentation How Does This Really Work? Stanford Lean LaunchPad Class 8 Weeks From an Idea to a Business
  47. 47. I.I.T.Y.I.W.H.T.K.Y
  48. 48. Key Opinion Leaders (KOLs)
  49. 49. Key Opinion Leaders (KOLs)
  50. 50. Key Opinion Leaders (KOLs)
  51. 51. Key Opinion Leaders (KOLs)
  52. 52. Key Opinion Leaders (KOLs)
  53. 53. Key Opinion Leaders (KOLs)
  54. 54. • • • • • •
  55. 55. WHAT ARE YOU “REALLY” THINKING? 115
  56. 56. ! Holy Cow ! ! I don’t know any of this stuff ! ? How deep do I need to go ? :HELP: 116
  57. 57. :Think: • In practice I call “Version 1.0” a “Splat” – I find it sets the tone/expectation much better – Nb. expectation is that this phase requires 2 to 3 passes ( or iterations ) before its done. • Keys – You want to figure out what you know and don’t know. • :Issue: A lot of people are afraid to “write down” what they don’t know, or accept that they don’t know. – The real work is “Outside” the building to fill in the blanks & convert assumptions into facts 117
  58. 58. :Aside: Before You Start • Board and Management Buy-In – “Learning & discovery” not execution • Customer Development Team – Not traditional hires • Sufficient funding for 2-3 passes 118
  59. 59. :Aside: ! Titles Matter ! “Traditional organizations & titles fail” CEO VP Eng VP Mkt VP Sales VP Biz Dev • People equate their titles with their functions – Standard titles describe execution functions • We need new titles consistent with “learning & discovery” functions 119
  60. 60. :Aside: Customer Development Team “Tasks” CEO VP Product Dev Technical Visionary Business Visionary Business Execution In Front of Customer Positions Nb. This doesn’t mean “VP, Product Dev” doesn’t visit customers 120
  61. 61. Documenting • “Not too much and not to little” • Get to know yourself – Basic Rule of Thumb • Marketers like to analyse and plan – Ielotsa documentation • Sales likes to live in the field – Ie none 121
  62. 62. 122
  63. 63. Design The Tests • These can be simple. • Q. How Accurate is our Service Journey Sketch? • Action: Review our “Service Journey Sketch” with Emergency Staff at “n” hospitals. 123
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