customer development - identifying and testing startup hypotheses
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Henrik Berglund Chalmers University of Technology Center for Business Innova8on
henber@chalmers.se www.henrikberglund.com
@khberglund #bogl2014
Customer Development
2014-‐08-‐13 1
1) Why customer development? 2) Identifying central hypotheses 3) Testing hypotheses
1) Why customer development? 2) Identifying central hBrief ypotheses 3) Testing hypotheses (interviews)
Strategy
Start by developing a Business Plan…
…make the financial forecasts…
…then Execute
“Everybody has a plan un?l they get punched in the face” Mike Tyson
Searching for a Business Model comes before
Executing a business plan
Process
Tradi8onal Development Process
Concept Product Dev. Alpha/Beta Test
Launch/ 1st Ship
Concept Product Dev. Alpha/Beta Test
Launch/ 1st Ship
Organiza?on
Hire and Build a Functional Organization
Founders run an agile Customer Development Team
No sales, marketing and business
development
Opera8ng Plan + Financial Model
Product Management Agile or Waterfall Development
Func8onal Organiza8on by Department
Business Model Hypotheses
Organiza?on Customer
Development Team, Founder-‐driven
Customer Development, Agile Development
Search Execu?on Strategy
Process
1) Why customer development? 2) Identifying central hypotheses
A) Surface all Assumptions B) Write down Problem Hypothesis C) Create Customer Persona
A) Surface all assump8ons
Exercise with founders! 1) Brainstorm/iden8fy hypotheses individually
Examples of hypothesis to get started
www.cindyalvarez.com
I believe that my customers have a need to _____________.
This need can be solved with_________________________.
My ini8al customers will be__________________________.
The #1 value a client wants to get out of my service is ____.
The client can also get these addi8onal benefits ___ and ___.
I will acquire most users/customers through ____and _____.
I will make money by _______________________________.
Examples of hypothesis to get started
Cluster around themes
www.cindyalvarez.com
Group exercise with founders! 1) Brainstorm/iden8fy hypotheses individually 2) Then discuss and cluster them as a group
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
hypothesis
Map them onto the canvas in LPC
Map them onto the canvas in LPC
B) Write down problem hypothesis “I believe [type of person] experience [type of problem] while doing [type of task]” Or “I believe [type of person] experience [type of problem] because of [limit or constraint]”
www.cindyalvarez.com
Example “I believe [tech opera8ons teams] experience [wasted 8me and budget] while [predic8ng network bandwidth usage for their growing companies]”
www.cindyalvarez.com
Example “I believe [small businesses] experience [inability to grow their businesses] because [tradi8onal email marke8ng pla`orms are to expensive and complicated]”
www.cindyalvarez.com
Problem Hypotheses “I believe [type of person] experience [type of problem] while doing [type of task]” Or “I believe [type of person] experience [type of problem] because of [limit or constraint]”
www.cindyalvarez.com
Specific >> General
NamePersona type
Age>ŽĐĂƟŽŶTechnical comfortJob Title
Back story
�DŽƟǀĂƟŽŶƐ
�&ƌƵƐƚƌĂƟŽŶƐ
Their ideal experience
Feel free to doodle!
Persona Template
Quote
“
_”
Tell us a bit about their lives
ͻ�ͻ�ͻ�ͻ�
What concerns do they have? Why do they need this website/service? How have they found or heard about the website?
ͻ�ͻ�ͻ�ͻ�
What’s stopping them from choosing the service/website or annoying them?
ͻ�
ͻ�
ͻ�
ͻ�
ͻ�
Their story including features and content which will help them have a great
experience
ͻ�
ͻ�
ͻ�
ͻ�
ͻ�
ͻ�
ͻ�
Sum up their experience with the
ǁĞďƐŝƚĞͬŽƌŐĂŶŝƐĂƟŽŶͬƐĞƌǀŝĐĞ͘WŽƐŝƟǀĞ�Žƌ�ŶĞŐĂƟǀĞ͘
C) Create a Customer Persona
1) Why customer development? 2) Identifying central hypotheses 3) Testing hypotheses
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
guess
If customers could talk…
If customers could talk…
Here’s why it’s a problem! Here’s how we try to deal with it now! Here’s who is involved! Here are the contexts where it’s a problem! Here are our constraints! Here’s what we’re willing to pay to solve it!
Suggested Interview Flow
1) Person
2) Problems
3) Solu8on
1. Person
• What is your name and role at your company?
• How do you fit into your company’s structure?
• What is your budget like? • Who has to approve your purchases? • How do you discover new products for work? • Do you need any approval to try them? • What is a typical day like on your job? • How much 8me do you spend on [Task]?
Learn about them and their role in your industry
www.jasonevanish.com
2. Problems
• What are the top 3 challenges you face related to [X]?
• How do you deal with them today? • What do you like about your current
solu8on/process? • What other solu8ons have you tried? Were
they beher or worse? • Who is involved with this solu8on/process?
How long does it take? • If you could wave a magic wand…what
would the solu8on be?
Learn about the problems they priori4ze
www.jasonevanish.com
3. Solu?on Concept
• Describe you product concept. • Would you be willing to pay [X] for such a
solu8on? • If they're willing to pay: “Would you be willing to
start right away?” • “That’s interes8ng” = Kiss of Death. • Read body language, voice inflec8on and energy
level for signals of interest.
See if they’re interested & get feedback
www.jasonevanish.com
Interview 8ps and examples
Be prepared to go off script
If users get worked up – don’t stay on script,
but follow their lead and drill down!
Emo?on = Importance!
Don’t talk
You should be talking as 8hle as possible!
Don’t fear ”uncomfortable silence” (let them break it).
80/20 is a good ra8o to aim for.
Ask brief follow-‐ups (remember, they should be takning)
That sounds expensive/inefficient/painful…
Tell me more!
When was the last 4me that happened?
Can you give an example?
What do you mean by that?
Can you explain that a liHle more?
What else do you do when that happens?
How do you feel about that?
Parrot back and misrepresent => More elaborate answer
Get psyched to hear things you don’t want to hear
Give permission to disagree
”Other people say”
”Others have told me the opposite”
Don’t assume things
Bad: You love walking your dog!
Good: How do you feel about walking your dog?
Even BeZer: What was it like the last 8me you walked your dog?
Write up results a.s.a.p.
Take notes!
Write upp results and extract key insights immediately ater the interview!
Surprises, Trends, (In)validated hypothesis
Interview 8ps
hhp://www.cindyalvarez.com/communica8on/customer-‐development-‐interviews-‐how-‐to-‐what-‐you-‐should-‐be-‐learning hhp://giffconstable.com/2012/12/12-‐8ps-‐for-‐early-‐customer-‐development-‐interviews-‐revision-‐3/ hhp://jasonevanish.com/2012/01/18/how-‐to-‐structure-‐and-‐get-‐the-‐most-‐out-‐of-‐customer-‐development-‐interviews/
“nice to have”
Jackpot!
1. Has a problem
2. Understands he or she has a problem
3. Ac8vely searching for a solu8on
4. Cobbled together an interim solu8on
5. Commihed funds for a solu8on
Useful people to talk to
Much faster to build => get quan8ta8ve feedback sooner
Web
Tes8ng Solu8on Hypothesis
www.pretotype.org
www.pretotype.org
www.pretotype.org
Test Solution Hypotheses
Ater demoing, ask about other things: Posi8oning – how do they describe the product? Product category (new, exis8ng, resegmented) Compe8tors Features needed for first version Preferred revenue model Pricing Addi8onal service needs Marke8ng – how do they find this type of product? Purchasing process Who has a budget? etc.
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