But what happens in reality is critical to whether your business exists today or tomorrow, or whether you become irrelevant. One of the biggest problems of startups founded is that they build solutions that nobody needs.
How Customer Development can help in this way is what you will read in this article.
The risk of a market is the biggest risk new products are exposed to.
Customer Development, this topic is behind the book “The Four Steps to the Epiphany” by Steve Blank. It has been around for about ten years as a kind of manifesto, has launched the Lean Startup Methodology by and with Eric Ries, and is more important and timely in ever-faster product development. To achieve a later traction for your business, a very early and constant engagement with the customer is essential.
In an agile process, which emerges from the Lean Startup, hypotheses about the customer, whose problem and possible solutions for it at least viable (thus minimally executable) with so-called minimum viable products are tested. You can use this framework for your startup, but also for your small or medium-sized enterprise, if you are interested in customer-centered innovation.
The influential and experienced Silicon Valley tech entrepreneur and investor Marc Andreessen described Steve Blank in his blog as follows: In a nutshell, Steve suggests companies need a customer development process that complements their product development process. So he offers a roadmap to get to a product market fit.
Alexander Osterwalder and the Strategyzer team later brought this back into their Business Model Canvas and Value Proposition Canvas.
In this phase our goal is to understand the problems and challenges of our customer. During an open conversation some additional subliminal data may be revealed that helps to understand to what extent your customer is ready to pay for the solution provided.
We draw a sketch of a day in the life of our customer. This way we can see how customer’s life looks with our product/service and without it. So, we are building an Org Chart for customers.
In this phase we find out what a viable and effective Sales Roadmap is. We are going to examine it through further tests, checking on the pricing models, traction channels, and client acquisition, sales cycle and customer lifetime value, return on investment, among other things. This way we can get a clear picture whether our business model is generally reasonable and whether it makes sense to develop our product. So, we come up with two roads:
At the end of this phase we establish if we have a market for this product, who our primary buyers are and what is the value of this product at the existing market. This is the moment that proves whether your assumptions are correct before you spend too much money. And if you are right, this is the moment to set the pivot.
Big Ideas
The creation of demand requires different approaches in three market types
Market differences
Existing Market
Resegmented Market
Lower Market Segment
Niche
New Market
Here we are actually creating the organization and management of our new business and, once again, we look carefully at our mission.
Big Ideas
In this phase you need focus. Does your sales growth plan fit into the canvas of the market type you are working in and do we have a mission oriented culture?
Get the Customer Insights Suite Light. This lean toolbox helps you create exciting customer relationships.
Sitting in a quiet chamber and developing “genius” ideas does not bring you anywhere. Let us learn to develop products and services in a dialogue with customers where we can ask a lot of questions.
As a founder and entrepreneur, I experience every day how important customer centricity is for companies.
Integrate the essential customer perspective into your product genesis and marketing processes. That puts horse powers on the street, until it runs.
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