Customer development
One of the roles of Product Management is to fully understand their customers, and to develop them through different stages:
- Customer Discovery
- Proble-solution fit (problem-solution cycle)
- minimum viable product
- Customer Validation
- Customer Creation
- Scale execution
- Company Building
- Scale organization
Steve Blank ([[@blank2012The startup owner's manual. 1: The step-by-step guide for building a great company]]) seems to be the guy behind many of these ideas. He wrote a manifesto:
- There are no answers in your building
It is too easy to fall in the temptation of the building trap. Building things is much easier than talking to people (talking to customers). Especially for scipreneurs this is a massive blindspot.
Founders are responsible for going out and talking to people.
Firsthand experience, by definition, cannot be delegated. Employees hate to deliver bad news to higher-ups Employees have far less at stake and seldom listen as acutely. Consultants have even less at stake than employees and often color their commentary to either tell the client what he wants to hear or deliver messages that can lead to extended consulting relationships.
- Pair customer development with agile product development (agile development). Product needs to iterate at the speed in which new insights are gathered.
- Failure is an integral part of the process (because you are searching for a business model) Although it is described as failing (perhaps piling on the idea of failing fast), I believe it is much more accurate to call it learning. You are not failing is you know the process is about trying and learning rather succeed or fail.
- Make continuous iteration and pivots Pivots are changes (substantial) to the business model, iterations are small adaptations. This is the counterpart of point 3, if you fail (or learn), you need to adjust.
- No Business plan survives first contact with customers "But once it has delivered financing, the business plan is fundamentally useless." The only reason to have a business plan when you are a startup is because an investor is asking for it. If not, you should focus on what experiments you are going to perform, what unknowns you are addressing and how you are managing risks. We can call it "business model" instead of "business plan" and iterate on the 9 boxes of the Business Model Canvas.
- Design experiments and test to validate your hypotheses. What is "good enough" that will allow you to proceed? On the contrary, what is not good enough that will force you to pivot?
- Agree on market type, it changes everything
- Market type defines how Customer Discovery will be carried on.
- The minimum viable product is different in each market type.
- sales and Marketing are different depending on the market conditions.
- Startup metrics are different from those in an existing company Or Startups are not scaled down versions of companies. Focusing on the P&L when there's no validated business model, for example, does not make sense. It is better to have a list of pass/fail tests that are going to be conducted and measure progress against them.
- Fast Decision-making, cycle time, speed, and tempo A startup has a ticking clock that will run out of time as soon as there's no more money in the bank account. Moving fast is the only strategy a startup has. It's not just about being agile, it's about decisions taken quickly (see: indecision freeze). Forward momentum is more important than perfect decision making (which in the end is impossible: Make decisions with incomplete information)
- It's all about passion Hard to argue against, but it's also a tricky argument. You have to be passionate about what you are trying to do, and embrace uncertainty.
- Startup job titles (Job titles can stunt startup development) are very different from a large company's. In a startup people must be open to learning and discovery, eager to search for a repeatable business model, agile to deal with daily changes and operating without a map, readily able to wear multiple hats, often on the same day, comfortable embracing failure if it leads to learning. The team could be called Customer Development Team, with the founders talking to customers, adding a "sales closer" later on, which is not a sales VP.
- Preserve all cash until needed, then spend. Preserving means not hiring sales and marketing if founders are still validating hypothesis and turning them into facts. Before product/market fit, a sales person will not be able to do much. Spend like there's no tomorrow: if you've found a repeatable business model, and every €1 invested turns into €2 earned, invest in creating user demand.
- Communicate and Share Learning This is one of the hardest things I've come across. Whatever is learned must be shared across the company. Preventing the creation of silos and working together from every possible angle. It's amazing how bad people communicate in small teams. Even when there's so much technology that supports a very decent flow. Weekly meetings are useful, but less necessary than before. If you document your process, there's no reason why people wouldn't be up to speed. Document who has talked to whom, what have they learned, questions asked, demo's, reactions, etc.
- Customer Development Success Begins with Buy-In You need to make sure everyone understands what the process looks like. That it is iterative, failure and learning are inevitable. That the business model needs to be understood. The product is not spec'ed out, and everything can be changed while you are developing your customer. A startup with that mentality is a startup with all red flags.
Customer development is extremely hard, and it can't be faked.
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Aquiles Carattino
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