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STRUCTURE	
  

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Why Steve Blank’s CUSTOMER DEVELOPMENT STACK is Good But Not Great: Towards the Ideal Business Model Innovation Toolkit

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Steve Blank is widely recognized as the Father of the Lean Startup Movement which focuses on applying a scientific experimental approach to projects that are launched under conditions of great uncertainty. The current focus of the Lean Startup movement is the development of business startups. For systematically discovering and validating a scalable business model, Steve Blanks uses a toolkit which he calls the “Customer Development Stack.”

The approach of the Customer Development Stack is being taught to students at the University of Stanford, Berkeley, and Columbia as well as to selected scientists from America’s National Science Foundation. In spite of the increasing popularity in use of the Customer Development Stack, my observation is that the Customer Development Stack is far from the “ideal” Business Model Innovation toolkit.

In the presentation below, I take a critical look at the Customer Development Stack. The critique is presented under 3 headings: Structure; Linkages (Functional Analysis); Logic (Predictive Capability). One critique suggests that transformation of “customer habit” should be a goal for Business and Customer Development; in fact, for every change management project. From this perspective, the toolkit of the Customer Development Stack is “hired” to reduce waste while discovering and validating a scalable business model as well as a customer habit engine. Hence, the imperative of “Getting Out Of the Building” to observe and influence customer habit engines while trying to create and transform them. Another critique notes that the process of the Customer Development Stack is weakly integrated with the Vision-Strategy-Product (VSP) Pyramid that is inherent in the approach of Steve Job as well as Eric Ries’s Lean Startup Method.

My final remark is about a question: What would you consider as the characteristics, features, or specs of an Ideal Business Model Innovation Toolkit? For example, how would the Ideal Business Model Toolkit look 30 to 50 years from now?

We look forward to hearing your feedback.

Rod.

http://goo.gl/okVMaS

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Why Steve Blank’s CUSTOMER DEVELOPMENT STACK is Good But Not Great: Towards the Ideal Business Model Innovation Toolkit

  1. 1. Why  Steve  Blank’s  Customer  Development  Stack  is  Good  But  Not  Great   STRUCTURE   In  an  ideal  world,  the  Customer   Development  Stack  has  3  “CAB”  layers:   q  Customer  Development  Model   q  Agile  (Product)  Development  Model   q  Business  Model  (Logic  Diagram)               In  Steve  Blank’s  Customer  Development       Stack,  ideas,  principles,  and  tools  exist   for  formulaDng,  tesDng,  and  validaDng  a     Customer  Development  Model  as  well   as  9  blocks  of  a  Business  Model.   However,  there’s  a  paucity  of  materials   on  the  Agile  (Product)  Development   Model  as  well  as  “Trade-­‐off”  Problem   Solving.  Also,  there  are  missing  links   between  business  model  strategy,   market  type,  and  product  analogs.   CUSTOMER  DEVELOPMENT  STACK     Source:     h.p://steveblank.com/2009/11/02/lean-­‐ startups-­‐aren%E2%80%99t-­‐cheap-­‐startups/       Customer  Development  Stack  is  a  good     Toolkit  to  systemaFcally  reduce  waste   when  discovering  &  valida7ng  a  scalable   business  model  and  habit  engine  but  …       LINKAGES  (FUNCTIONAL  ANALYSIS)   The  tool  for  organizing  and  managing   ideas  in  the  Customer  Development   Stack  is  the  Business  Model  Canvas.   However,  the  Business  Model  Canvas  is   a  staXc  graphic  organizer  that  ignores   relaXonships/flows  between  blocks  of   a  business  model  (as  well  as  in  their   environment).  The  Business  Model   Canvas  is  not  a  process  (funcDonal   analysis)  diagram  that  shows  dynamic   concepts,  e.g.,  Build-­‐Measure-­‐Learn   Loop,  Problem-­‐SoluXon  Fit,  AIDA,  and   Habit  Loop.  So,  techniques  such  as   Premortem,  NormaXve  Hypothesis   GeneraXon,  and  Habit  Engine  Analysis   &  Design  cannot  be  simply  shown  and   visually  used  with  the  Stack  (Canvas).   LOGIC  (PREDICTIVE  CAPABILITY)   The  predicXve  process  in  the  Customer  Development  Stack  is  currently  largely  qualitaXve.  In  theory,  the  Business  Model   Canvas  can  be  used  to  facilitate  quanXtaXve  analysis  and  predicXon  as  well  as  performance  and  resource  management  of  a   business  model.  However,  in  the  Stack,  use  of  the  Canvas  is  limited  to  visually  documenDng  and  modifying  hypotheses.   Also,  the  Stack  is  weakly  integrated  with  the  Vision-­‐Strategy-­‐Product  (VSP)  Pyramid  of  Steve  Jobs/Lean  Startup  Method.   Further,  the  Customer  Development  Stack  ignores  Outcome-­‐based  approaches  such  as  in  Discovery-­‐driven  Planning.  The   Customer  Development  Stack  hardly  uses,  as  a  starXng  point,  an  organizaXon’s  “Why”:  Mission/Vision/Purpose/Profit.   Finally,  the  Stack  does  not  explicitly  consider  the  transformaXon  of  customer  habits  as  a  goal  of  Customer  Development.     #4ROD.  Dr.  Rod  King.  rodkuhnhking@gmail.com  &  h8p://businessmodels.ning.com  &  h8p://twi8er.com/RodKuhnKing  

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