Customer Development/Lean Startup 020210 Class 3

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Customer Development/Lean Startup 020210 Class 3

  1. Customer Development in the High Tech Enterprise MBA 295-F/EMBA 295-F Customer Discovery: Part 2 Steve Blank sblank@kandsranch.com 1
  2. Class 5: Agenda !  Logistics/Questions !  CASE: WebVan !  Customer Discovery
  3. Webvan Case 3
  4. Customer Discovery Customer Customer Customer Company Discovery Validation Creation Building !  Stop selling, start listening !  Test your hypotheses "  Two are fundamental: problem and product concept
  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
  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 Model
  7. Customer Discovery Hypotheses! T h e i m Product Hypothesis Inside the Building! Customer & Problem Hypothesis Distribution & Pricing Hypothesis Demand Creation Hypothesis Market Type Hypothesis Competitive Hypothesis Test “Problem” Hypothesis! Friendly “Problem” Customer Market First Contacts Presentation Understanding 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 Model
  8. Customer Discovery - Web Source: ash maurya
  9. 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
  10. 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
  11. Distribution/ Pricing Hypotheses !  Distribution Model !  Distribution Diagram !  Sales Cycle/Ramp !  Channel strategy !  Pricing (ASP, LTV) !  Customer Organization Map !  Demand Creation
  12. 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
  13. 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
  14. Competition Hypotheses !  Who is out there? !  Why are they important? !  How do customers use them today? !  What don’t customers like about them?
  15. Intermission The Customer Development Team 15
  16. 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
  17. Customer Development Team Tasks Not Titles Customer Development Driven Startup CEO VP Product Dev Technical Visionary Business Visionary Business Execution In Front of Customers
  18. End of Intermission 18
  19. Customer/Problem Hypotheses !  Types of Customers/Archetypes !  Magnitude of the problem !  Visionaries !  A Day in the Life of a customer !  Organizational impact !  ROI Justification !  Problem Recognition !  Minimum Feature Set
  20. Distribution/ Pricing Hypotheses !  Distribution Model !  Distribution Diagram !  Sales Cycle/Ramp !  Channel strategy !  Pricing (ASP, LTV) !  Customer Organization Map !  Demand Creation
  21. Demand Creation Hypotheses !  How do competitors create demand? !  How will you? "  Dave McClure’s AARGH model !  Who are influencers/recommendors? !  Key trade shows? !  Key trends? !  Start assembling advisory board
  22. 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
  23. Competition Hypotheses !  Who is out there? !  Why are they important? !  How do customers use them today? !  What don’t customers like about them?
  24. How Do You Figure Out Your Business Model?
  25. 25
  26. Source: Alexander Osterwalder 26
  27. Source: Alexander Osterwalder 27
  28. Source: Alexander Osterwalder 28
  29. Source: Alexander Osterwalder 29
  30. Source: Alexander Osterwalder 30
  31. Source: Alexander Osterwalder 31
  32. Source: Alexander Osterwalder 32
  33. Source: Alexander Osterwalder 33
  34. Source: Alexander Osterwalder 34
  35. Source: Alexander Osterwalder 35
  36. Source: Alexander Osterwalder 36
  37. Source: Alexander Osterwalder 37
  38. 38
  39. Source: Alexander Osterwalder 39
  40. Source: Alexander Osterwalder 40
  41. Source: Alexander Osterwalder 41
  42. Source: Alexander Osterwalder 42
  43. Source: Alexander Osterwalder 43
  44. Source: Alexander Osterwalder 44
  45. 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
  46. Test & Qualify Problem: First Contacts !  Build a Rolodex !  Develop “Innovators” list !  Create reference story/sales script !  Schedule Customer Visits
  47. 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
  48. 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
  49. 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?
  50. Test & Qualify Problem: Market Knowledge !  Get a feel for the “lay of the land” !  Adjacent Market players !  Industry Influencers !  Key Analysts !  Attend Conferences/Tradeshows
  51. Phase 3: Test Product Hypothesis Phase 3 Phase 4 !  First reality check w/ Test Iterate & Expand product development Product Hypothesis !  The product hits the street !  Lots of customer visits Phase 1 Phase 2 Test Hypothesis !  More doses of reality & Qualify Hypothesis
  52. 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
  53. Test Product Hypothesis: Product Presentation !  Questionnaire !  Start w/Problem Presentation !  Then describe the Product !  Demo if you have one
  54. 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
  55. 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

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