1. Customer Development in the
High Tech Enterprise
Customer Discovery
Part 3
Steve Blank
sblank@kandsranch.com
5/24/10 1

2. Class 6: Agenda
 Logistics/Questions
 Customer Discovery
 Guest: Flowtown
 CASE: Motive

3. Customer Discovery: Step 1
Customer Customer Customer Company
Discovery Validation Creation Building
 Stop selling, start listening
 Test your hypotheses
 Two are fundamental: problem and product concept

4. Customer Discovery
Customer Phase 3 Phase 4
Discovery Test Verify, Iterate &
Product Expand
Hypothesis
To Validation
Phase 1
Phase 2 Author
Test Hypothesis
Problem
Hypothesis

5. Customer Discovery
Hypotheses!
Product Customer Distribution Demand Market Type Competitive
Hypothesis & Problem & Pricing Creation Hypothesis Hypothesis
Hypothesis Hypothesis Hypothesis
Test “Problem” Hypothesis!
Friendly “Problem” Customer Market
First Contacts Presentation Understanding Knowledge
Test “Product” Hypothesis!
First Reality “Product” Yet More Second
Check Presentation Customer Reality Check
Visits
Verify!
Verify the Verify the Verify the Iterate or
Product Problem Business Exit
Model

6. Customer Discovery - Web
Source: ash maurya

7. Customer Discovery
Hypotheses!
T
h
e
i
m
Product
Hypothesis Inside the Building!
Customer
& Problem
Hypothesis
Distribution
& Pricing
Hypothesis
Demand
Creation
Hypothesis
Market Type
Hypothesis
Competitive
Hypothesis
Test “Problem” Hypothesis!
Friendly “Problem” Customer Market
First Contacts Presentation Understanding Knowledge
Outside the Building!
Test “Product” Hypothesis!
First Reality “Product” Yet More Second
Check Presentation Customer Reality Check
Verify! Visits
Verify the Verify the Verify the Iterate or
Product Problem Business Exit
Model

8. Phase 1: Author Hypothesis
Phase 3
Product
Phase 4
Iterate &
 One-time writing exercise
Concept Expand
Testing  All other time spent in
front of customers
Phase 1  Assumes you’re smart but
Phase 2
Test Author guessing
Problem
Hypothesis Hypothesis

9. Phase 2: Test & Qualify Problem Hypothesis
Phase 3 Phase 4
Test
Product
Iterate &
Expand
 Get out of the building
Hypothesis
 Test the problem
 Become the customer
Phase 1
Phase 2 Author  Solve a real problem
Test Hypothesis
Problem
Hypothesis

10. Phase 3: Test Product Hypothesis
Phase 3 Phase 4  First reality check w/
Test Iterate &
Expand product development
Product
Hypothesis  The product hits the street
 Lots of customer visits
Phase 1
Phase 2
Test
Hypothesis  More doses of reality
& Qualify
Hypothesis

11. Test Product Hypothesis
 First Reality Check
 Product Presentation
 Yet More Customer Visits
 Second Reality Check
First Reality “Product” Yet More Second
Check Presentation Customer Reality Check
Visits

12. Test Product Hypothesis:
First Reality Check
 Build a Workflow Map of customer
 Before and after your product
 Problem scale
 Key insights
 How did the product spec match needs?
 Re-review product feature List
 Why are you different

13. Test Product Hypothesis:
Product Presentation
 Questionnaire
 Start with a Problem Presentation
 Then describe the Product
 Demo if you have one

14. Test Product Hypothesis:
Yet More Customer Visits
 Set up More Calls
 Validate Solution
 Validate Product
 Validate Positioning
 Understand Customer and Org. Pain
 Validate Pricing and Budget
 Understand “Whole Product” needs
 Understand Approval Process
 Update potential Advisory Board candidates

15. Test Product Hypothesis:
Second Reality Check
 Does the product solve a problem?
 Serious problem?
 For a large scalable market?
 How did the product spec match needs?
 Re-review product Feature List

16. Phase 4: Verify, Iterate & Expand
Phase 3 Phase 4
 The Problem
Test
Product
Iterate &  The Product
Hypothesis Expand
 The Business Model
 Iterate or Exit
Phase 1
Phase 2 Hypothesis
Test
Problem
Hypothesis
Verify the Verify the Verify the Iterate or
Product Problem Business Exit
Model

17. Verify, Iterate and Expand:
The Problem
 Problem Hypothesis Testing
 Magnitude of customer needs
 Rank customer problems
 Summary of customer problem input

18. Verify, Iterate and Expand:
The Product
 Product match Problem?
 Feature list
 Quantify customer problem
 Summary of customer product input
 Why are you different?
 Review Product Spec

19. Verify, Iterate and Expand:
The Business Model
 Customer Model
 ROI
 Market Size
 Service
 Development
 Manufacturing
 Customer Acquisition

20. Customer Discovery:
Exit Criteria
 What are your customers top problems?
 How much will they pay to solve them
 Does your product concept solve them?
 Do customers agree?
 How much will they pay
 Draw a day-in-the-life of a customer
 before & after your product
 Draw the org chart of users & buyers

21. Verify- Iterate or Exit
 Summarize
 Iterate
 Exit

22. 3 Ways To FAIL At Customer Development
Credit: cgldesign

23. Flowtown’s Evolution

24. Don’t Talk to Customers

25. Solve Problems You’re Not Passionate About

26. Sell Your Solution Before It’s Validated

27. 3 Tips For A Successful CD Process

28. Thanks! We’re
twitter: @ebloch & @danmartell
ethan@flowtown.com &
dan@flowtown.com