Customer development is not just a concept, but something that you can provoke by sharing your knowledge.
When we think about startups, we often think about successful cases of young technology savvy entrepreneurs who dropped out the school to take over the Universe through the creation of a new web app from their garage or basement. This vision is actually not common, is only true for very select few, and it creates the wrong image about building new products or services.
Startups are not smaller versions of large companies. Large companies execute known business models. They use big company tools – business plans, income statements, etc. to help get themselves organized and execute their goals. In contrast, startups search for a new business model that works for them. The big company tools are simply irrelevant in the early days of a startup.
However, there is one thing in common between startups and those large companies: Customers!
Steve Blank is a Silicon Valley-based retired serial entrepreneur, founder of 8 startup companies in his career. Now, he’s a prolific educator at UC Berkeley and Stanford, thought-leader and writer.
He proposes that companies need a Customer Development process that complements their Product Development Process. Take a look at the diagram below:
Customer Development is about integrating the customer within the product from the beginning, getting feedback and rapidly integrating it into the production process. Here are 4 key points that I see as most important:
1- Get out of the building. Attempt to learn about your customers (or potential customers), get some facts to inform and qualify our hypotheses about what kind of product customers will ultimately buy and use long-term.
2- Theory of market types. There are three fundamental groups to consider that will determine what your company will need to do when bringing a new product to market: The new market (still to be created/discovered), the existing markets, and subsections of an existing market.
3- Finding a market for the product as specified. Our goal in product development is to find the minimum feature set required to get early customers. In order to do this, we have our customer development team work hard to find a market, any market, for the product as currently specified.
4- Learning and iterating vs. linear execution. New products need time spent in a mindset of learning and iterating, before they try to launch. During that time, they can collect facts and change direction (pivot) to find a repeatable and scalable sales process.
Social Media is a very powerful channel obtaining thousands of leads and customers on which to test your hypothesis and get feedback before taking the big leap, and in turn burning your resources, in something that perhaps nobody is interested.
You can learn about customer development, and quite a bit more, in Steve’s book The Four Steps to the Epiphany