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Business Models &Customer Developmentwww.steveblank.com@sgblankTeaching Points
Objective• Review basics• Emphasis on how to teach it
Student Assignments & ToolsIn-Class
Student Assignments & ToolsBetween Class
Student Assignments & Tools
Teaching Team Responsibilities&ToolsIn-Class
Teaching Team Responsibilities&ToolsBetween Class
Teaching Team Responsibilities&Tools
Business Model CanvasWhy?How?
Why?This ClassTEACHING POINT
The Search for a Path1602 - 1908
© 2012 Steve Blank
Business SchoolsTEACHING POINT
The MBAthe Path to Business Execution
Business Schools• Made the American Century• Embraced entrepreneurship– Myles Mace HBS 1947, Stanford 1953– But as an acti...
Startups SearchCompanies Execute
Why?Startups are Not Smaller Versions of aLarge CompanySearch versus ExecutionTEACHING POINT
Startups versus existing companies• That startups begin with a series of unknowns (mostly)– They Search• That existing com...
What’s a Startup?
Why?Why a definition of a startup?TEACHING POINT
What’s A StartupA temporary organization designed to search for arepeatable and scalable business model• This is what the ...
What We Used to BelieveStrategy
Start With an Operating Planand Financial Model
What We Now KnowStrategy
Planning comes before the plan
Business Models
Why?Business Model versus Business PlanTEACHING POINT
Business Model versus Business Plan• We are not saying never to a business plan• We are saying, “not first”• Plans are sta...
What We Used to BelieveProcess
Product Introduction ModelConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship
Tradition – Hire MarketingConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Posit...
Tradition – Hire SalesConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioni...
Tradition – Hire Bus DevelopmentConcept ProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioni...
Tradition – Hire EngineeringConcept ProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioning- ...
Customer Problem: knownProduct Features: knownWaterfall / Product ManagementExecution on Two “Knowns”RequirementsDesignImp...
What We Now KnowProcess
More startups fail froma lack of customers than from afailure of product development
Customer Development
Agile Development
+
Why?Customer & Agile Development versusProduct Launch and WaterfallTEACHING POINT
Customer & Agile Development versusProduct Launch and Waterfall• Product Launch process assumes hypotheses are facts• Wate...
What We Used to BelieveOrganization
Hire and Build aFunctional Organization
What We Now KnowOrganization
Founders run aCustomer Development TeamNo sales, marketing and businessdevelopment
Why?Functional OrganizationsTEACHING POINT
Functional Organizations• An easy trap for startups• Large companies have VP’s of Sales, Marketing &Business Development• ...
How?Business Model CanvasTEACHING POINT
The Canvas in Class• Forces students to articulate all 9 parts of a businessmodel (static)• Used to keep score of customer...
What’s a Business Model?
Value PropositionWhat Are You Building and For Who?
Customer SegmentsWho Are They?Why Would They Buy?
Multiple Customer SegmentsTEACHING POINT
Multiple Customer Segments• Might have multiple segments of users• Might have users and payers• Might have 5 or 6 differen...
Product/Market FitValue Proposition + Customer SegmentTEACHING POINT
Product/Market FitDoes the Value Proposition MVP matchthe Customer Segment Archetype?TEACHING POINT
TEACHING POINTTHIS IS THE TOOL TO TEST PRODUCT/MARKET FIT
ChannelsHow does your ProductGet to Customers?
Customer RelationshipsHow do you Get, Keep and Grow Customers?
We define Customer Relationshipsas Get, Keep and GrowDifferent and more actionable thanOsterwalderTEACHING POINT
TEACHING POINT
Revenue StreamsHow do you Make Money?
Key ResourcesWhat are your most important Assets?
Key PartnersWho are your Partners and Suppliers?
Key ActivitiesWhat’s Most Important for the Business?
Cost StructureWhat are the Costs and Expenses
How?Business Model Canvas ComponentsTEACHING POINT
Canvas Components• We overview all the 9 boxes in the first lecture• Subsequent classes detail each of canvas components• ...
But,Realize They’re Hypotheses
9 GuessesGuess GuessGuessGuessGuessGuessGuessGuessGuess
How?Customer DevelopmentTEACHING POINT
Customer Development• While so far the class looked like an easy business modelcanvas class …• The class is actually all a...
Customer DevelopmentTest the Problem, Then the Solution
How?Test the problem, then the solutionTEACHING POINT
Test the Problem then the Solution• Customer development is about hypothesis testing• It’s why scientists do great in this...
Customer DevelopmentThe Minimum Viable Product
How?Build the minimum viable productTEACHING POINT
Build the minimum viable product• This is easy if you use Agile development• You build your product iteratively and increm...
Customer DevelopmentThe Pivot
How?The PivotTEACHING POINT
The Pivot• A core concept of Customer Development• In the past a failure to make “the plan” meant a failure ofan individua...
Customer DevelopmentDone By the Founders
Customer DevelopmentCanvas to Keep Score
How?Keeping Score with the CanvasTEACHING POINT
Keeping Score with the Canvas• A core concept of the class• Weekly updates of the canvas allow the teaching team tovisuall...
Customer DevelopmentDetails
Customer Development ishow you search for the model
Customer DevelopmentPhysical vs. Web/MobileProducts and Channels
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
Bus model and cust dev june 2013
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Transcript of "Bus model and cust dev june 2013"

  1. 1. Business Models &Customer Developmentwww.steveblank.com@sgblankTeaching Points
  2. 2. Objective• Review basics• Emphasis on how to teach it
  3. 3. Student Assignments & ToolsIn-Class
  4. 4. Student Assignments & ToolsBetween Class
  5. 5. Student Assignments & Tools
  6. 6. Teaching Team Responsibilities&ToolsIn-Class
  7. 7. Teaching Team Responsibilities&ToolsBetween Class
  8. 8. Teaching Team Responsibilities&Tools
  9. 9. Business Model CanvasWhy?How?
  10. 10. Why?This ClassTEACHING POINT
  11. 11. The Search for a Path1602 - 1908
  12. 12. © 2012 Steve Blank
  13. 13. Business SchoolsTEACHING POINT
  14. 14. The MBAthe Path to Business Execution
  15. 15. Business Schools• Made the American Century• Embraced entrepreneurship– Myles Mace HBS 1947, Stanford 1953– But as an activity you execute• Now embracing searchTEACHING POINT
  16. 16. Startups SearchCompanies Execute
  17. 17. Why?Startups are Not Smaller Versions of aLarge CompanySearch versus ExecutionTEACHING POINT
  18. 18. Startups versus existing companies• That startups begin with a series of unknowns (mostly)– They Search• That existing companies deal with execution of knowns(mostly)– They Execute• The insight is that management tools built to execute donot work in search• Early stage ventures need their own toolsTEACHING POINT
  19. 19. What’s a Startup?
  20. 20. Why?Why a definition of a startup?TEACHING POINT
  21. 21. What’s A StartupA temporary organization designed to search for arepeatable and scalable business model• This is what the class is about• It’s a definition filled with action• Each word has meaning– Temporary– Search– Repeatable– Scalable– Business ModelTEACHING POINT
  22. 22. What We Used to BelieveStrategy
  23. 23. Start With an Operating Planand Financial Model
  24. 24. What We Now KnowStrategy
  25. 25. Planning comes before the plan
  26. 26. Business Models
  27. 27. Why?Business Model versus Business PlanTEACHING POINT
  28. 28. Business Model versus Business Plan• We are not saying never to a business plan• We are saying, “not first”• Plans are static• Models are dynamic• Planning comes before the planTEACHING POINT
  29. 29. What We Used to BelieveProcess
  30. 30. Product Introduction ModelConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship
  31. 31. Tradition – Hire MarketingConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioning- Hire PR Agency- Early Buzz- Create Demand- Launch Event- “Branding”Marketing
  32. 32. Tradition – Hire SalesConcept/Seed RoundProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioning- Hire PR Agency- Early Buzz- Create Demand- Launch Event- “Branding”• Build SalesOrganizationMarketingSales • Hire Sales VP• Hire 1st Sales Staff
  33. 33. Tradition – Hire Bus DevelopmentConcept ProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioning- Hire PR Agency- Early Buzz- Create Demand- Launch Event- “Branding”• Hire Sales VP• Pick distributionChannel• Build Sales Channel /DistributionMarketingSales• Hire FirstBus Dev• Do deals for FCSBusinessDevelopment
  34. 34. Tradition – Hire EngineeringConcept ProductDev.Alpha/BetaTestLaunch/1st Ship- Create MarcomMaterials- Create Positioning- Hire PR Agency- Early Buzz- Create Demand- Launch Event- “Branding”• Hire Sales VP• Pick distributionChannel• Build Sales Channel /DistributionMarketingSales• Hire FirstBus Dev• Do deals for FCSBusinessDevelopmentEngineering • Write MRD • Waterfall • Q/A •Tech Pubs
  35. 35. Customer Problem: knownProduct Features: knownWaterfall / Product ManagementExecution on Two “Knowns”RequirementsDesignImplementationVerificationMaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
  36. 36. What We Now KnowProcess
  37. 37. More startups fail froma lack of customers than from afailure of product development
  38. 38. Customer Development
  39. 39. Agile Development
  40. 40. +
  41. 41. Why?Customer & Agile Development versusProduct Launch and WaterfallTEACHING POINT
  42. 42. Customer & Agile Development versusProduct Launch and Waterfall• Product Launch process assumes hypotheses are facts• Waterfall development assumes you know:– the customer problem– Entire solutionTEACHING POINT
  43. 43. What We Used to BelieveOrganization
  44. 44. Hire and Build aFunctional Organization
  45. 45. What We Now KnowOrganization
  46. 46. Founders run aCustomer Development TeamNo sales, marketing and businessdevelopment
  47. 47. Why?Functional OrganizationsTEACHING POINT
  48. 48. Functional Organizations• An easy trap for startups• Large companies have VP’s of Sales, Marketing &Business Development• I guess we should too• Titles are the same, functions are radically differentTEACHING POINT
  49. 49. How?Business Model CanvasTEACHING POINT
  50. 50. The Canvas in Class• Forces students to articulate all 9 parts of a businessmodel (static)• Used to keep score of customer development progress(dynamic)• Allows visualization of the entrepreneurial process• 9 boxes provides a convenient tempo for weekly classesDifferent from Osterwalders original intent - strategyTEACHING POINT
  51. 51. What’s a Business Model?
  52. 52. Value PropositionWhat Are You Building and For Who?
  53. 53. Customer SegmentsWho Are They?Why Would They Buy?
  54. 54. Multiple Customer SegmentsTEACHING POINT
  55. 55. Multiple Customer Segments• Might have multiple segments of users• Might have users and payers• Might have 5 or 6 different customers– Medical devices have doctors, hospitals, patient, insurancecompany, FDA, etc.• For every customer segment you need:– Value proposition– Revenue model– And may have unique channels, cust relationships, etc.TEACHING POINT
  56. 56. Product/Market FitValue Proposition + Customer SegmentTEACHING POINT
  57. 57. Product/Market FitDoes the Value Proposition MVP matchthe Customer Segment Archetype?TEACHING POINT
  58. 58. TEACHING POINTTHIS IS THE TOOL TO TEST PRODUCT/MARKET FIT
  59. 59. ChannelsHow does your ProductGet to Customers?
  60. 60. Customer RelationshipsHow do you Get, Keep and Grow Customers?
  61. 61. We define Customer Relationshipsas Get, Keep and GrowDifferent and more actionable thanOsterwalderTEACHING POINT
  62. 62. TEACHING POINT
  63. 63. Revenue StreamsHow do you Make Money?
  64. 64. Key ResourcesWhat are your most important Assets?
  65. 65. Key PartnersWho are your Partners and Suppliers?
  66. 66. Key ActivitiesWhat’s Most Important for the Business?
  67. 67. Cost StructureWhat are the Costs and Expenses
  68. 68. How?Business Model Canvas ComponentsTEACHING POINT
  69. 69. Canvas Components• We overview all the 9 boxes in the first lecture• Subsequent classes detail each of canvas components• But that’s a sleight of hand• What we are really doing is getting the students to talk to100 customers in a quarter• The class is not about the lectures• It’s about the work the students do outside the buildingTEACHING POINT
  70. 70. But,Realize They’re Hypotheses
  71. 71. 9 GuessesGuess GuessGuessGuessGuessGuessGuessGuessGuess
  72. 72. How?Customer DevelopmentTEACHING POINT
  73. 73. Customer Development• While so far the class looked like an easy business modelcanvas class …• The class is actually all about Customer Development!• Drawing the canvas hypotheses are easy• Testing them is really, really hard• Just like a startupTEACHING POINT
  74. 74. Customer DevelopmentTest the Problem, Then the Solution
  75. 75. How?Test the problem, then the solutionTEACHING POINT
  76. 76. Test the Problem then the Solution• Customer development is about hypothesis testing• It’s why scientists do great in this class• What are you testing? All the nice, neat assumptions inthe business model canvas• First, you test basic assumptions• Then, you test the solution itself• Customer discovery and validation is a fairly rigorousprocessTEACHING POINT
  77. 77. Customer DevelopmentThe Minimum Viable Product
  78. 78. How?Build the minimum viable productTEACHING POINT
  79. 79. Build the minimum viable product• This is easy if you use Agile development• You build your product iteratively and incrementally• The goal is feedback, learning, insight, orders, etc. withthe minimum feature setTEACHING POINT
  80. 80. Customer DevelopmentThe Pivot
  81. 81. How?The PivotTEACHING POINT
  82. 82. The Pivot• A core concept of Customer Development• In the past a failure to make “the plan” meant a failure ofan individual to execute• In the past we fixed problems and changed strategies byfiring executives• Now we first fire the plan• A pivot is a substantive change in one or more businessmodel canvas components• An iteration is a minor change in one or more businessmodel canvas componentsTEACHING POINT
  83. 83. Customer DevelopmentDone By the Founders
  84. 84. Customer DevelopmentCanvas to Keep Score
  85. 85. How?Keeping Score with the CanvasTEACHING POINT
  86. 86. Keeping Score with the Canvas• A core concept of the class• Weekly updates of the canvas allow the teaching team tovisually see customer development process• Visualize the canvas extending in the Z-axis• That axis represents the customer development processover timeTEACHING POINT
  87. 87. Customer DevelopmentDetails
  88. 88. Customer Development ishow you search for the model
  89. 89. Customer DevelopmentPhysical vs. Web/MobileProducts and Channels
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