Shop the Problem, Not the Product-Customer Discovery

The Philosophy

“A start-up begins with a vision: a vision of a new product or service, how the product will reach its customers, and why lots of people will buy it.” I believe this sounds right thus far. “But most of what a startup’s founders initially believe about their market and potential customers are just educated guesses. A startup is in reality a ‘faith-based enterprise’ on day one.” Now that was a humorous reality, but I can still agree. Customer Discovery is “to turn faith into facts…to know whether they have a valid vision or just a hallucination.” (Blanks, 2013, pg. 43)

Customer Discovery occurs when you seek out potential customers to buy your product or service. Blanks defines it as “time to hit the streets and identify your repeat buyers.” This discovery goes beyond gathering electronic market data. Instead it translates into being “…out in the field, listening, discovering how consumers worked and what their key problems were.” (Blank, 2013, p.28)

The Question?

When you began this journey, did you shop your product or service or did you shop the problem that your product or service would solve?

I find this question very important when building a business. Are we following our passion and dreams or actually lending our dreams to a product or service that can solve a problem, which will provide sustainability for your company. It’s like applying for a grant. Many people think they have a great idea for someone to fund. When in reality, your idea needs to fit the goals and mission of a granting organization. It’s all about how you fit in the grantee’s world and so it also is about the consumer that you will be serving.

“The concept is deceptively simple: form hypotheses around the problem that your product solves, and around the product itself, test these hypotheses with those who could be your potential customers to verify, iterate or exit. This discovery process is part of the larger customer development model where the minimally viable product resulting from customer discovery undergoes validation testing among customers.” (Venture Atlanta)

I agree with Venture Atlanta when they say it’s deceptively simple. You have to get the buy in from a group of strangers that will agree that what you are offering will solve their problem. And remember the problem may not exist yet. Once you gather real data, you are testing or tweaking to make adjustments from their feedback. Then you hit the pavement again to gather another round of feedback. In this round, you have your reality check of where the pairing of the product/service and the consumer provides conclusive evidence; to draw a conclusion you hope will say that you have made the right decision and it makes sense financially.  It’s the beginning or the end.

Just think, you haven’t sold a thing, but you have gathered valuable information that will allow you to be profitable. This in depth approach to gaining a viable consumer following could make the difference in a start-up’s continued success.

5 Phases of Customer Discovery

Phase 0-Get Buy-In

Phase 1-Start Your Hypothesis

Phase 2- Test and Qualify Your Hypothesis

Phase 3-Test and Qualify the Product Concept

Phase 4-Verify

An in-depth study of the 5 Phases of Customer Discovery can be found in Steve Blank’s The Four Steps to the Epiphany. (pg. 53-105) In addition, Venture Atlanta provides a wonderful set of Customer Discovery Tips

Resources

Blank, Steven G. The Four Steps to the Epiphany: Successful Strategies for Products That Win. 2nd ed. California: Steve Blank, 2013.

Customer Discovery Basics. (2013, March 7). Retrieved February 15, 2017, from http://ventureatlanta.org/2013/03/customer-discovery-basics/

ENT 601 -Week 5 Reflections

10 Major Flaws to Using the Product Development Model in a startup

“And I – I took the road less traveled by and that has made all the difference.” Robert Frost

There are so many things that I have forgotten about elementary school, but the poem, “The Road Not Taken” by Robert Frost has resided in my heart all this time. Was it because it was the first poem I ever learned and recited; was it my English teacher, Mrs. Bynum, whose expectations of me were grander that I could fathom at the time; maybe I just wanted an A; or in reality it was a seed planted in my heart about choices. I have never been one to follow the crowd, but that doesn’t mean I haven’t had some do-overs. Choices have made some forerunners and some trailblazers; while other choices have created casualties of bankruptcy and public shame on the road to entrepreneurial success.

In his book The Four Steps to the Epiphany, Steve Blank shares that start-ups follow a worn path that should lead to success, but unfortunately it dwindles into bankruptcy by using the Product Development Model. “The Product Development model is used by almost every organization launching a new product…to take their first product to market.” (2013, Pg. 6) He insists that successful start-ups do not follow the “traditional product-centric launch model espoused by product managers or venture capital community.” (pg. vii) But instead, they take a less trodden path; “through trial and error, hiring and firing successful startups all invent a parallel process to Product Development-a process of customer learning and discovery…[known as] “Customer Development.” (Pg. vii)

In this blog we are going to take a closer look at why Blank believes that following the path of the Product Development Model leads to disaster. (pg. 6-18)

10 Major Flaws to Using the Product Development Model (PDM) in a startup

  1. Where are the Customers? – Product focused instead of customer focused
  2. The Focus on First Customer Ship Date – “Fire, Ready, Aim” strategy – the only date when PDM thinks they are ‘finished’ building a product
  3. An Emphasis on Execution Instead of Learning and Discovery – ‘get it done, and get it done fast’, relating prior experience to a new venture
  4. Lack of Meaningful Sales, Marketing and Business Development Milestones – lacking a way to identify, stop and fix what’s broken
  5. The Use of a Product Development Methodology to Measure Sales –  readiness to sell instead of discovering the right market
  6. The Use of a Product Development Methodology to Measure Marketing – all marketing plans are made in a virtual vacuum
  7. Premature Scaling – having sales and marketing believe that by the first customer ship, they need fully staffed organizations
  8. Death Spiral: The Cost of Getting Product Launch Wrong – effects of premature scaling-causes the burn rate to accelerate
  9. Not All Startups Are Alike – PDM ignores this fact
  10. Unrealistic Expectations – ‘build it and the customers will come’ is not a good strategy

I have found that the road less traveled is one that is people centered and not product or production centered. As we gravitate towards our human nature, we are often driven by the whom and not so much the what, even though the what creates a change for the whom. Therefore, as we launch our startup, we must carefully consider the consumer in all aspects of the business from startup, to expansion, to succession.

Next week’s blog will explore the Customer Development Model.

Resource

Blank, Steven G. The Four Steps to the Epiphany: Successful Strategies for Products That Win. 2nd ed. California: Steve Blank, 2013.