Customer Development/Lean Startup 092409 class 5 and 6

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Customer Development/Lean Startup 092409 class 5 and 6

  1. Customer Development in the High Tech Enterprise Customer Discovery Parts 2 & 3 Steve Blank sblank@kandsranch.com 9/23/09 1
  2. Class 5 & 6: Agenda  Logistics/Questions  Customer Discovery  Customer Development Team  CASE: E INK Customer Development in the High-Tech Enterprise Fall 2009 2
  3. E INK Case  3
  4. Customer Discovery: Step 1 Customer Customer Customer Company Discovery Validation Creation Building  Stop selling, start listening  Test your hypotheses  Two are fundamental: problem and product concept Customer Development in the High-Tech Enterprise Fall 2009 4
  5. Customer Discovery Customer Phase 3 Phase 4 Discovery Test Verify, Iterate & Product Expand Hypothesis To Validation Phase 1 Phase 2 Author Test Hypothesis Problem Hypothesis Customer Development in the High-Tech Enterprise Fall 2009 5
  6. Customer Discovery Hypotheses Product Customer Distribution Demand Market Type Competitive Hypothesis & Problem & Pricing Creation Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Test “Problem” Hypothesis Friendly “Problem” Customer Market First Contacts Presentation Understanding Knowledge Test “Product” Hypothesis First Reality “Product” Yet More Second Check Presentation Customer Reality Check Visits Verify Verify the Verify the Verify the Iterate or Product Problem Business Exit Customer Development in the High-Tech Enterprise Model Fall 2009 6
  7. Customer Discovery Hypotheses Product Hypothesis Inside the Building Customer & Problem Hypothesis Distribution & Pricing Hypothesis Demand Creation Hypothesis Market Type Hypothesis Competitive Hypothesis Test “Problem” Friendly First Contacts Hypothesis “Problem” Presentation Customer Understanding Market Knowledge Outside the Building Test “Product” Hypothesis First Reality “Product” Yet More Second Check Presentation Customer Reality Check Verify Visits Verify the Verify the Verify the Iterate or Product Problem Business Exit Customer Development in the High-Tech Enterprise Model Fall 2009 7
  8. Phase 1: Author Hypothesis Phase 3 Product Phase 4 Iterate &  One-time writing exercise Concept Expand Testing  All other time spent in front of customers Phase 1  Assumes you’re smart but Phase 2 Test Author guessing Problem Hypothesis Hypothesis Customer Development in the High-Tech Enterprise Fall 2009 8
  9. Hypothesis  Product  Customer/Problem  Distribution/Pricing  Demand Creation  Market Type  Competition Product Customer Distribution Demand Market Type Competitive Hypothesis & Problem & Pricing Creation Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Customer Development in the High-Tech Enterprise Fall 2009 9
  10. Product Hypotheses  Features  Benefits  Product Delivery Schedule  Intellectual Property  Total Cost of Ownership  Dependency Analysis Customer Development in the High-Tech Enterprise Fall 2009 10
  11. Customer/Problem Hypotheses  Types of Customers  Magnitude of the problem  Visionaries  A Day in the Life of a customer  Organizational impact  ROI Justification  Problem Recognition  Minimum Feature Set Customer Development in the High-Tech Enterprise Fall 2009 11
  12. Distribution/ Pricing Hypotheses  Distribution Model  Distribution Diagram  Sales Cycle/Ramp  Channel strategy  Pricing (ASP, LTV)  Customer Organization Map  Demand Creation Customer Development in the High-Tech Enterprise Fall 2009 12
  13. 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 Customer Development in the High-Tech Enterprise Fall 2009 13
  14. 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  Redefine Existing Market  Resegment the existing market is the basis of competition Customer Development in the High-Tech Enterprise Fall 2009 14
  15. Competition Hypotheses  Who is out there?  Why are they important?  How do customers use them today?  What don’t customers like about them? Customer Development in the High-Tech Enterprise Fall 2009 15
  16. Intermission The Customer Development Team 16
  17. Traditional organizations and titles Fail Typical Startup CEO VP Engineering VP Marketing VP Sales VP Business Dev  People equate their titles with their functions  But standard titles describe execution functions  We need new titles = learning & discovery functions Customer Development in the High-Tech Enterprise Fall 2009 17
  18. Customer Development Team Tasks Not Titles Customer Development Driven Startup CEO VP Product Dev Technical Visionary Business Visionary Business Execution In Front of Customers Customer Development in the High-Tech Enterprise Fall 2009 18
  19. End of Intermission 19
  20. Customer/Problem Hypotheses  Types of Customers  Magnitude of the problem  Visionaries  A Day in the Life of a customer  Organizational impact  ROI Justification  Problem Recognition  Minimum Feature Set Customer Development in the High-Tech Enterprise Fall 2009 20
  21. Distribution/ Pricing Hypotheses  Distribution Model  Distribution Diagram  Sales Cycle/Ramp  Channel strategy  Pricing (ASP, LTV)  Customer Organization Map  Demand Creation Customer Development in the High-Tech Enterprise Fall 2009 21
  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 Customer Development in the High-Tech Enterprise Fall 2009 22
  23. 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  Redefine Existing Market  Resegment the existing market is the basis of competition Customer Development in the High-Tech Enterprise Fall 2009 23
  24. Competition Hypotheses  Who is out there?  Why are they important?  How do customers use them today?  What don’t customers like about them? Customer Development in the High-Tech Enterprise Fall 2009 24
  25. Phase 2: Test & Qualify Problem Hypothesis Phase 3 Phase 4 Test Product Iterate & Expand  Get out of the building Hypothesis  Test the problem  Become the customer Phase 1 Phase 2 Author  Solve a real problem Test Hypothesis Problem Hypothesis Customer Development in the High-Tech Enterprise Fall 2009 25
  26. Test & Qualify Problem Hypothesis  Friendly First Contacts  “Problem” Presentation  Customer Understanding  Market Knowledge Friendly “Problem” Customer Market First Contacts Presentation Understanding Knowledge Customer Development in the High-Tech Enterprise Fall 2009 26
  27. Test & Qualify Problem: First Contacts  Build a Rolodex  Develop “Innovators” list  Create reference story/sales script  Schedule Customer Visits Customer Development in the High-Tech Enterprise Fall 2009 27
  28. Test & Qualify Problem: Create Problem Presentation  Not a Sales Pitch  Test of your understanding of the customers problem  Problem/Solution – Slide  Problems column 1  Today’s solution column 2  Your solution column 3  Capture other missing data Customer Development in the High-Tech Enterprise Fall 2009 28
  29. Test & Qualify Problem: Customer Understanding  Become a Domain Expert  Understand their “Day-in-the Life”  Understand their problems/pain  Get a feel of how this impacts their life/work  Who has similar products that solve this problem  How do they learn about new solutions  Can they be helpful later Customer Development in the High-Tech Enterprise Fall 2009 29
  30. The Big Idea  What is the problem?  Who has the problem?  How important is the problem’s solution to the customer?  How valuable is the problem’s solution to the customer? Customer Development in the High-Tech Enterprise Fall 2009 30
  31. Test & Qualify Problem: Market Knowledge  Get a feel for the “lay of the land”  Adjacent Market players  Industry Influencers  Key Analysts  Attend Conferences/Tradeshows Customer Development in the High-Tech Enterprise Fall 2009 31
  32. Phase 3: Test Product Hypothesis Phase 3 Phase 4  First reality check Test Iterate & Expand w/product development Product Hypothesis  The product hits the street  Lots of customer visits Phase 1 Phase 2 Hypothesis  More doses of reality Test & Qualify Hypothesis Customer Development in the High-Tech Enterprise Fall 2009 32
  33. Test Product Hypothesis  First Reality Check  Product Presentation  Yet More Customer Visits  Second Reality Check First Reality “Product” Yet More Second Check Presentation Customer Reality Check Visits Customer Development in the High-Tech Enterprise Fall 2009 33
  34. Test Product Hypothesis: First Reality Check  Build a Workflow Map of customer  Before and after your product  Problem scale  Key insights  How did the product spec match needs?  Re-review product feature List  Why are you different Customer Development in the High-Tech Enterprise Fall 2009 34
  35. Test Product Hypothesis: Product Presentation  Questionnaire  Start w/Problem Presentation  Then describe the Product  Demo if you have one Customer Development in the High-Tech Enterprise Fall 2009 35
  36. Test Product Hypothesis: Yet More Customer Visits  Set up More Calls  Validate Solution  Validate Product  Validate Positioning  Understand Customer and Org. Pain  Validate Pricing and Budget  Understand “Whole Product” needs  Understand Approval Process  Update potential Advisory Board candidates Customer Development in the High-Tech Enterprise Fall 2009 36
  37. Test Product Hypothesis: Second Reality Check  Does the product solve a problem?  Serious problem?  For a large scalable market?  How did the product spec match needs?  Re-review product Feature List Customer Development in the High-Tech Enterprise Fall 2009 37
  38. Phase 4: Verify, Iterate & Expand Phase 3 Phase 4  The Problem Test Product Iterate & The Product Hypothesis Expand  The Business Model  Iterate or Exit Phase 1 Phase 2 Hypothesis Test Problem Hypothesis Verify the Verify the Verify the Iterate or Product Problem Business Exit Model Customer Development in the High-Tech Enterprise Fall 2009 38
  39. Verify, Iterate and Expand: The Problem  Problem Hypothesis Testing  Magnitude of customer needs  Rank customer problems  Summary of customer problem input Customer Development in the High-Tech Enterprise Fall 2009 39
  40. Verify, Iterate and Expand: The Product  Product match Problem?  Feature list  Quantify customer problem  Summary of customer product input  Why are you different?  Review Product Spec Customer Development in the High-Tech Enterprise Fall 2009 40
  41. Verify, Iterate and Expand: The Business Model  Customer Model  ROI  Market Size  Service  Development  Manufacturing  Customer Acquisition Customer Development in the High-Tech Enterprise Fall 2009 41
  42. 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  Draw a day-in-the-life of a customer  before & after your product  Draw the org chart of users & buyers Customer Development in the High-Tech Enterprise Fall 2009 42
  43. Verify- Iterate or Exit  Summarize  Iterate  Exit Customer Development in the High-Tech Enterprise Fall 2009 43
  44. Webvan Case 44

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