making sense of the customer development model
Post on 12-Sep-2014
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My presentation on Steve Blank's Customer Development Model at Agile Goa 2013, Sep 21-22TRANSCRIPT
Making Sense – of the –
Customer Development Model
Tathagat Varma VP, Strategic Process Innova5on, [24]7 Innova5on Labs,
Sr. Member ACM and IEEE, CSP, CSPO, CSM, PMP, PRINCE2
What do you need to create successful products?
90%
hMp://inspiredmagz.com/infographic-‐why-‐startups-‐fail/
The Difference…
Google’s Hall of Shame
Why 4.85 yrs to pull out??? hMp://blog.priceonomics.com/post/46028291791/digging-‐around-‐in-‐the-‐google-‐graveyard
Internet Hall of Shame…
hMp://themyndset.com/2013/05/catch-‐the-‐wave-‐right-‐mindset-‐digital-‐iq/ hMp://www.cnet.com/1990-‐11136_1-‐6278387-‐1.html
…and in ROTW
…but…
2/3rd who succeed, dras5cally change
their plans along the way!
Do you know these products?
Remember…
hMp://freeibone.net/wp-‐content/uploads/2013/02/real-‐freinds1.png
What do they do differently?
“So what is it that makes some startups successful and leaves others selling off their furniture? Simply this: startups that survive the first few tough years do not follow the tradi=onal product-‐centric launch model espoused by product managers or the venture capital community. Through trial and error, hiring and firing, successful startups all invent a parallel process to Product Development. In par=cular, the winners invent and live by a process of customer learning and discovery. I call this process "Customer Development,” a sibling to "Product Development” and each and every startup that succeeds recapitulates it, knowingly or not.” – Steve Blank
hMp://steveblank.files.wordpress.com/2010/11/two-‐assump5ons.jpg
Guaranteed 90% Failure!!!
Problem with tradi5onal product development model
From: Running Lean – Ash Maurya The Startup Owners Manual – Steve Blank
“In large companies, the mistakes just have addi=onal zeroes in them” – Steve Blank
9 Deadly Sins of New Product Introduc5on
Assuming “I know what the customer wants”
The “I know what features to build” flaw
Focus on launch date
Emphasis on execu5on instead of hypotheses, tes5ng, learning and itera5on
Tradi5on business plans presume no trial and no errors
Confusing tradi5onal job 5tles with what a startup needs to accomplish
Sales and Marke5ng execute to a plan
Presump5on of success leads to premature scaling
Management by Crisis leads to “Death Spiral”
From: Startup Owner’s Manual
“A startup is NOT a smaller version of a large company” – Steve Blank
Are all Startups the same?
Lifestyle Startups
Work to live their passion
Small business Startup
Work to fee the family
Funded from savings
Barely profitable
Not designed for scale
Scalable Startup
Born to be big
Founders have a vision
Require risk capital
Buyable startup
Acquisi5on targets
Social Startup
Driven to make a
difference
Large-‐company Startup
Innovate or Evaporate
3 Stages of a startup
“Do I have a problem worth solving?”
“Have I built something people want?”
“How do I accelerate growth?”
From: Running Lean – Ash Maurya
hMp://newentrepreneurship.nl/business-‐model-‐canvas/
hMp://torgronsund.com/wordpress/wp-‐content/uploads/2011/04/Slide1.jpg
GET OUT OF THE BUILDING…
So, what is your product?
From: Running Lean – Ash Maurya
The Customer Development Insight Cycle
A Pivot is a structural course correc5on to test a new fundamental hypothesis about the product, strategy and engine of growth. It is not a failure!
hMp://steveblank.files.wordpress.com/2010/11/pivot-‐the-‐model.jpg
MVP A strategy used for fast and quan5ta5ve market tes5ng of a product or product feature A Minimum Viable Product has just those features that allow the product to be deployed, and no more. The product is typically deployed to a subset of possible customers, such as early adopters that are thought to be more forgiving, more likely to give feedback, and able to grasp a product vision from an early prototype or marke5ng informa5on. It is a strategy targeted at avoiding building products that customers do not want, that seeks to maximize the informa5on learned about the customer per dollar spent. "The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort." The defini5on's use of the words maximum and minimum means it is decidedly not formulaic. It requires judgment to figure out, for any given context, what MVP makes sense. An MVP is not a minimal product,[3] it is a strategy and process directed toward making and selling a product to customers. It is an itera5ve process of idea genera5on, prototyping, presenta5on, data collec5on, analysis and learning. One seeks to minimize the total 5me spent on an itera5on. The process is iterated un5l a desirable product-‐market fit is obtained, or un5l the product is deemed to be non-‐viable.
Build-‐Measure-‐Learn Loop
Pivot now, Op5mize later
From: Running Lean – Ash Maurya
Pivot
Make the transi5on only aoer you have a ‘scalable startup’
How to op5mize?
From: Running Lean – Ash Maurya
When to raise money?
From: Running Lean – Ash Maurya
Products and Services that have benefited from Lean Startup
Case Study: Ash Maurya’s book
From: Running Lean – Ash Maurya
Recap
• Don’t build something no one wants!
Discover customers first
• Search for the business model
Validate your assump5ons • Build, measure
and learn itera5vely
Build products itera5vely
• Aggressively execute business plan and op5mize
Scale-‐up for execu5on
“I never perfected an inven=on that I did not think about in terms of the service it might give others... I find out what the world needs, then I proceed to invent....” Thomas Edison
References
• www.steveblank.com • hMp://blog.startupcompass.co/ • hMp://blogs.wsj.com/accelerators/2013/06/24/steve-‐blank-‐the-‐6-‐types-‐of-‐startups-‐2/
• Running Lean – Ash Maurya • The Startup Owners Manual – Steve Blank • Four Steps to Ephphany – Steve Blank • The Lean Startup – Eric Ries
Q&A
• hMp://managewell.net • hMp://slideshare.net/managewell