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Berkeley columbia alumni 092411 Presentation Transcript

  • 1. Customer Development Update
  • 2. I Write a Blog
    www.steveblank.com
  • 3. This Talk is Based On
    Business Model Generation
    Four Steps to the Epiphany
    The Lean Startup
  • 4. This Talk
    What’s a Startup?
    Search versus Execution
    Entrepreneurship As a Mgmt Science
    B-Schools = Large company mgmt
    Incubators = the transition
    E-School = the conclusion
  • 5. First -What’s A Startup?
    Six Types of Startups
  • 6. Startup
    Lifestyle Startups Work to Live their Passion
    • Serve known customer with known product
    • 7. Pay for their passion
  • Small Business
    Startup
    Small Business StartupsWork to Feed the Family
    • Serve known customer with known product
    • 8. Feed the family
  • Small Business
    Startup
    Exit Criteria
    • Business Model found
    - Profitable business
    • Existing team
    < €100K in revenue
    Small Business StartupsWork to Feed the Family
    • known customer known product
    • 9. Feed the family
  • Small Business
    Startup
    - Business Model found
    - Profitable business
    • Existing team
    < $10M in revenue
    Small Business Startups
    • 5.7 million small businesses in the U.S. <500 employees
    • 10. 99.7% of all companies
    • 11. ~ 50% of total U.S. workers
    http://www.sba.gov/advo/stats/sbfaq.pdf
  • 12. Scalable
    Startup
    Large Company
    Scalable Startup
    Search
    Goal is to solve for:
    unknown customer and unknown features
  • 13. Execute
    Search
    Scalable
    Startup
    Large Company
    Exit Criteria
    • Business model found
    • 14. Total Available Market > €300m
    • 15. Can grow to €50/year
    Scalable StartupBorn to Be Big
  • 16. Scalable
    Startup
    Large Company
    • Total Available Market > $500m
    • 17. Company can grow to $100m/year
    • 18. Business model found
    • 19. Focused on execution and process
    • 20. Typically requires “risk capital”
    Scalable Startup
    Execute
    Search
    • In contrast a scalable startup is designed to grow big
    • 21. Typically needs risk capital
    • 22. What Silicon Valley means when they say “Startup”
  • The Transition – Founders Leave
    Scalable
    Startup
    Transition
    Large Company
    Build
    Execute
    Search
    Founders depart
    • Operating executives
    • 23. Professional Mgmt
    • 24. Process
    • 25. Beginning of scale
  • Buyable StartupBorn to Be Big
    Search
    Sell
    Scalable
    Startup
    €3 to 30M Acquisition
    Goal is to solve for:
    Internet, Mobile, Gaming Apps
  • 26. Buyable Startup
    Search
    Sell
    Scalable
    Startup
    €3 to e0M Acquisition
    Goal is to solve for:
    Internet and Mobile Apps
    Sell to larger company
  • 27. Scalable
    Startup
    Large Company
    • Business Model found
    • 28. i.e. Product/Market fit
    - Repeatable sales model
    - Managers hired
    What’s A Startup?
    Search
    Execute
    A Startup is a temporary organization used to search for a repeatable and scalable business model
  • 29. Large Company Sustaining InnovationInnovate or Evaporate
    Sustaining Innovation
    Transition
    Scalable
    Startup
    Large Company
    • Existing Market / Known customer
    • 30. Known product feature needs
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    • New Market
    • 31. New tech, customers, channels
  • Large Company Disruptive Innovation
    New Division
    Transition
    Large Company
    Disruptive Innovation
    • Build
    • 32. Acquire
    - IP- Talent
    - Product
    - Customers
    - Business
  • 33. Large Non-Profit
    Social Startup
    Social Entrepreneurship Startups
    • Solve pressing social problems
    • 34. Social Enterprise: Profitable
    • 35. Social Innovation: New Strategies
  • Each of these startups require different skills
    They Can Not Be Taught the Same Way
  • 36. Search Versus ExecutionWhy Accountants Don’t Run Startups
  • 37. Startups Search and Pivot
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Model found
    • customer needs/product features found
    i.e. Product/Market fit
    • Found by founders, not employees
    • 38. Repeatable sales model
    - Managers hired
  • 39. Startups Search, Companies Execute
    The Execution of the Business Model
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    - Cash-flow breakeven
    - Profitable
    - Rapid scale
    - New Senior Mgmt
    ~ 150 people
    • Business Model found
    • 40. Product/Market fit
    - Repeatable sales model
    - Managers hired
  • 41. Metrics Versus Accounting
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Traditional Accounting
    • Balance Sheet
    • 42. Cash Flow Statement
    • 43. Income Statement
  • Metrics Versus Accounting
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Startup Metrics
    • Customer Acquisition Cost
    • 44. Viral coefficient
    • 45. Customer Lifetime Value
    • 46. Average Selling Price/Order Size
    • 47. Monthly burn rate
    • 48. etc.
    Traditional Accounting
    • Balance Sheet
    • 49. Cash Flow Statement
    • 50. Income Statement
  • Customer Validation Versus Sales
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Sales
    • Sales Organization
    • 51. Scalable
    • 52. Price List/Data Sheets
    • 53. Revenue Plan
  • Customer Validation Versus Sales
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Customer Validation
    • Early Adopters
    • 54. Pricing/Feature unstable
    • 55. Not yet repeatable
    • 56. “One-off’s”
    • 57. Done by founders
    Sales
    • Sales Organization
    • 58. Scalable
    • 59. Price List/Data Sheets
    • 60. Revenue Plan
  • Customer Development VersusProduct Management
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Product Management
    • Delivers MRD’s
    • 61. Feature Spec’s
    • 62. Competitive Analysis
    • 63. Prod Mgmt driven
  • Customer Development Versus Product Management
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Product Management
    • Delivers MRD’s
    • 64. Feature Spec’s
    • 65. Competitive Analysis
    Customer Development
    • Hypothesis Testing
    • 66. Minimum Feature Set
    • 67. Pivots
    • 68. Founder-driven
  • Engineering Versus Agile Development
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    • Requirements Docs.
    • 69. Waterfall Development
    • 70. QA
    • 71. Tech Pubs
  • Engineering Versus Agile Development
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    • Requirements Docs.
    • 72. Waterfall Development
    • 73. QA
    • 74. Tech Pubs
    Agile Development
    • Continuous Deployment
    • 75. Continuous Learning
    • 76. Self Organizing Teams
    • 77. Minimum Feature Set
    • 78. Pivots
  • Startups Model, Companies Plan
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Plan
    • Plan describes “knowns”
    • 79. Known features for line extensions
    • 80. Known customers/markets
    • 81. Known business model
  • Startups Model, Companies Plan
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Model
    • Unknown customer needs
    • 82. Unknown feature set
    • 83. Unknown business model
    • 84. Model found by iteration
    • 85. Plan describes “knowns”
    • 86. Known features for line extensions
    • 87. Known customers/markets
    • 88. Known business model
  • Startups Are Not Small Versions of Large Companies
    Scalable
    Startup
    Transition
    Large Company
    Build
    Execute
    Search
    Yet our curriculums assume they are – we teach that the knowledge is interchangeable
  • 89. The Business Model:
    Any company can be described in 9 building blocks
  • 90. CUSTOMER SEGMENTS
    which customers and users are you serving?
    which jobs do they really want to get done?
  • 91. VALUE PROPOSITIONS
    what are you offering them? what is that
    getting done for them? do they care?
  • 92. CHANNELS
    how does each customer segment want to be reached? through which interaction points?
  • 93. CUSTOMER RELATIONSHIPS
    what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?
  • 94. REVENUE STREAMS
    what are customers really willing to pay for? how?
    are you generating transactional or recurring revenues?
  • 95. KEY RESOURCES
    which resources underpin your business model? which assets are essential?
  • 96. KEY ACTIVITIES
    which activities do you need to perform well in your business model? what is crucial?
    43
  • 97. KEY PARTNERS
    which partners and suppliers leverage your model?
    who do you need to rely on?
  • 98. COST STRUCTURE
    what is the resulting cost structure?
    which key elements drive your costs?
  • 99. value proposition
    customer relationships
    key activities
    customer segments
    key partners
    cost structure
    revenue streams
    key
    resources
    channels
    46
    images by JAM
  • 100. sketch out your business model
  • 101. sketch out your business models
  • 102. But,Realize They’re Hypotheses
  • 103. 9 Guesses
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
  • 104. Customer Development
    The founders
    ^
    Get Out of the Building and Search for the Business Model
  • 105. The Customer Development Process
    Customer Discovery
    Customer Validation
    Customer Creation
    Company Building
    Pivot
  • 106. The Customer Development ProcessCustomer Discovery
    Customer Discovery
    Customer Validation
    Customer Creation
    Company Building
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
  • 107. Customer Discovery: Physical/Web
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
  • 108. Customer Discovery
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
  • 109. Customer Discovery - Physical
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 110. Product MVP
    • 111. Customers
    • 112. Channel
    • 113. Market Type
    • 114. Customer Relationships: Get/Keep/Grow
    • 115. Key Resources
    • 116. Partners
    • 117. Pricing
  • Customer Discovery - Web
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 118. Low Fidelity MVP
    • 119. Customers/Source
    • 120. Channel
    • 121. Market Type
    • 122. Customer Relationships: Acquire/Activate
    • 123. Traffic Partners
    • 124. Pricing
  • Customer Discovery - Physical
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 125. Low Fidelity MVP
    • 126. Customers
    • 127. Channel
    • 128. Market Type
    • 129. Cust Relationships
    • 130. Traffic Partners
    • 131. Pricing
    • 132. Customer Contacts
    • 133. Problem Understanding
    • 134. Customer Understanding
    • 135. Market Knowledge
  • Customer Discovery - Web
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 136. Low Fidelity MVP
    • 137. Customers
    • 138. Channel
    • 139. Market Type
    • 140. Cust Relationships
    • 141. Traffic Partners
    • 142. Pricing
    • 143. Customer Engagement
    • 144. Test Low Fidelity MVP
    • 145. Customer Understanding
    • 146. Traffic & Competitive Analysis
  • Customer Discovery - Physical
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 147. Low Fidelity MVP
    • 148. Customers
    • 149. Channel
    • 150. Market Type
    • 151. Cust Relationships
    • 152. Traffic Partners
    • 153. Pricing
    • 154. Update Bus Model
    • 155. Create Prototype/Prod Presentation
    • 156. Test Solution with Customer
    • 157. Update Business Model
    • 158. 1st Advisory Board Members
  • Customer Discovery - Web
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    • TAM/SAM
    • 159. Low Fidelity MVP
    • 160. Customers
    • 161. Channel
    • 162. Market Type
    • 163. Cust Relationships
    • 164. Traffic Partners
    • 165. Pricing
    • 166. Customer Engagement
    • 167. Test Low Fidelity MVP
    • 168. Customer Understanding
    • 169. Traffic & Competitive Analysis
    • 170. Update Bus Model
    • 171. Test High Fidelity MVP
    • 172. Measure Customer Behavior
    • 173. Update Business Model
    • 174. 1st Advisory Board Members
  • Customer Discovery – Web/Physical
    Bus Model Canvas
    Extract Hypotheses
    Test Problem
    Test Solution
    Pivot or Proceed
    Verify the:
    • Value Prop
    • 175. Cust Segment
    • 176. Cust Relationships
    • 177. Channel
    • 178. Revenue Model
    • 179. Pivot or Proceed
    • 180. TAM/SAM
    • 181. Low Fidelity MVP
    • 182. Customers
    • 183. Channel
    • 184. Market Type
    • 185. Cust Relationships
    • 186. Traffic Partners
    • 187. Pricing
    • 188. Customer Engagement
    • 189. Test Low Fidelity MVP
    • 190. Customer Understanding
    • 191. Traffic & Competitive Analysis
  • The Customer Development ProcessCustomer Validation
    Customer Discovery
    Customer Validation
    Customer Creation
    Company Building
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
  • 192. Customer Validation - Web
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    Pivot
  • 193. Customer Validation - Physical
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Craft Positioning
    • 194. Develop Sales Materials
    • 195. Hire “Sales Closer”
    • 196. Sales Channel Action Plan
    • 197. Refine the Sales Roadmap
    • 198. Formalize advisory board
  • Customer Validation - Web
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Craft Positioning
    • 199. Acquire/Activate Plans and Tools
    • 200. Build High Fidelity MVP
    • 201. Build Metrics Toolset
    • 202. Hire data analytics chief
    • 203. Formalize advisory board
  • Customer Validation - Physical
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Craft Positioning
    • 204. Acquire/Activate Plans
    • 205. Build High Fidelity MVP
    • 206. Build Metrics Toolset
    • 207. Hire data analytics chief
    • 208. Formalize advisory board
    • 209. Find Earlyvangelists
    • 210. Test Sell – Out of the Building
    • 211. Refine Sales Roadmap
    • 212. Test Sell Channel Partners
  • Customer Validation - Web
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Craft Positioning
    • 213. Acquire/Activate Plans
    • 214. Build High Fidelity MVP
    • 215. Build Metrics Toolset
    • 216. Hire data analytics chief
    • 217. Formalize advisory board
    • 218. Prepare Optimization Plans & Tools
    • 219. Out of the building Activation Test
    • 220. Measure and Optimize Results
    • 221. Test Sell Traffic Partners
  • Customer Validation - Physical/Web
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Craft Positioning
    • 222. Acquire/Activate Plans
    • 223. Build High Fidelity MVP
    • 224. Build Metrics Toolset
    • 225. Hire data analytics chief
    • 226. Formalize advisory board
    • 227. Company Positioning
    • 228. Product Positioning
    • 229. Validate Positioning
    • 230. Prepare Optimization Plans
    • 231. Out of the building Activation Test
    • 232. Measure and Optimize Results
    • 233. Test Sell Traffic Partners
  • Customer Validation - Physical/Web
    Get Ready to Sell
    Sell, Sell, Sell
    Positioning
    Pivot or Proceed
    • Assemble Data
    • 234. Validate Business Model
    • 235. Validate Financial Model
    • 236. Pivot or Proceed
    • 237. Craft Positioning
    • 238. Acquire/Activate Plans
    • 239. Build High Fidelity MVP
    • 240. Build Metrics Toolset
    • 241. Hire data analytics chief
    • 242. Formalize advisory board
    • 243. Prepare Optimization Plans
    • 244. Out of the building Activation Test
    • 245. Measure and Optimize Results
    • 246. Test Sell Traffic Partners
  • The Minimum Viable Product (MVP)
    • Smallest feature set that gets you the most …
    - orders, learning, feedback, failure…
  • 247. The Pivot
    • The heart of Customer Development
    • 248. Iteration without crisis
    • 249. Fast, agile and opportunistic
  • Pivot Cycle Time Matters
    • Speed of cycle minimizes cash needs
    • 250. Minimum feature set speeds up cycle time
    • 251. Near instantaneous customer feedback drives feature set
  • The Pivot
    A Pivot is the change of one or more Business Model Canvas Components
  • 252. The Pivot
    Strong clinical data
    Training
    Maintenance
    Conferences
    CME courses
    Product Development
    IP
    Clinical trials
    FDA
    Publishing
    Doctors:
    Earlier detection
    Price
    Accuracy
    Patients:
    Radiation Free
    Non-Invasive
    A Pivot is the change of one or more Business Model Canvas Components
    Leading doctors
    Key Opinion Leaders
    3rd party manufacturers
    Distributors
    Breast Cancer Foundations
    ACOGACS
    OB/GYNs
    PCPs
    Direct Sales to hospitals
    Distributor
    IP
    Leading doctors
    Technical Expertise
    Product Development
    Clinical trials
    Operating Costs
    Marketing Costs
    Capital Equipment Sales and disposable item
    Per use fees
  • 253. Thanks
    www.steveblank.com