Lecture 8 - Technology, Innovation and Great Power Competition - Cyber
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
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
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
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