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Customer Developmentin the High Tech Enterprise
MBA 295-F/EMBA 295-F
Customer Discovery: Part 1
Steve [email protected]
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Agenda
Case: WebVan Startup Hypothesis Testing the Problem Customer Development Team Testing the Product Concept
3
Webvan Case
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Customer Discovery: Step 1
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
Existing Market: 1 Month – 1 Year
Resegmenting a Market: 6 Months – 3 Years
New Market: 1 Year – 3 Years
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Customer Discovery: Step 1
Existing : 1-6 Months
Resegmenting: 3-12 Months
New: 1-2 Years
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Methodology
Customer Development can take months or years Each Step has a set of phases Plan what you need to learn in writing so everyone knows:
what they should be doing when they should do it If they succeeded If they need to do more
These are checklists, not the inviolable commandments
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Before You Start
Board and Management Buy-In Learning and discovery not execution
Customer Development Team Not traditional hires
Sufficient funding for 2-3 passes
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Modify the Process forYour Company
Text Example = Enterprise Software Co. You need to develop your ownyour own
Specifically for your company/market Don’t quibble about details but understand there is a
process
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Discovery = Hypothesis Testing
What are Hypothesis? Where do Hypothesis come from? Why Test them? How do you test them?
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Stop selling, start listening
Test your hypotheses Two are fundamental: problem and product concept
Customer Discovery: Step 1
CustomerDiscovery
CustomerValidation
CompanyBuilding
CustomerCreation
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Customer Discovery
CustomerDiscovery
Phase 1Author
HypothesisPhase 2
TestProblem
Hypothesis
Phase 4Verify, Iterate &
Expand
Phase 3Test
ProductHypothesis
To Validation
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Test “Problem” Hypothesis
Customer Discovery
Demand Creation
Hypothesis
Market TypeHypothesis
Product Hypothesis
Customer& ProblemHypothesis
Distribution & Pricing
Hypothesis
CompetitiveHypothesis
Hypotheses
MarketKnowledge
FriendlyFirst Contacts
“Problem”Presentation
CustomerUnderstanding
SecondReality Check
First RealityCheck
“Product”Presentation
Yet MoreCustomer
Visits
Test “Product” Hypothesis
Iterate orExit
Verify the Product
Verify theProblem
Verify theBusiness
Model
Verify
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Test “Problem”Hypothesis
Customer Discovery
Demand Creation
Hypothesis
Market TypeHypothesis
Product Hypothesis
Customer& ProblemHypothesis
Distribution & Pricing
Hypothesis
CompetitiveHypothesis
Hypotheses
MarketKnowledge
FriendlyFirst Contacts
“Problem”Presentation
CustomerUnderstanding
SecondReality Check
First RealityCheck
“Product”Presentation
Yet MoreCustomer
Visits
Test “Product” Hypothesis
Iterate orExit
Verify the Product
Verify theProblem
Verify theBusiness
Model
Verify
Inside the Building
Outside the Building
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Phase 1: Author Hypothesis
One-time writing exercise All other time spent in
front of customers Assumes you’re smart but
guessingPhase 1Author
Hypothesis
Phase 2Test
ProblemHypothesis
Phase 4Iterate &
Expand
Phase 3ProductConceptTesting
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Hypothesis
Product Customer/Problem Distribution/Pricing Demand Creation Market Type Competition
Demand Creation
Hypothesis
Market TypeHypothesis
Product Hypothesis
Customer& ProblemHypothesis
Distribution & Pricing
Hypothesis
CompetitiveHypothesis
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Product Hypotheses
Features Benefits Product Delivery Schedule Intellectual Property Total Cost of Ownership Dependency Analysis
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Intermission
The Customer Development Team
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Traditional organizationsand titles Fail
CEO
VP Engineering VP Marketing VP Sales VP Business Dev
Typical Startup
People equate their titles with their functions But standard titles describe execution functions We need new titles = learning & discovery functions
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Customer Development TeamTasks Not Titles
CEO
VP Product Dev Technical Visionary Business Visionary Business Execution
Customer DevelopmentDriven Startup
In Front of Customers
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End of Intermission
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Customer/Problem Hypotheses
Types of Customers/Archetypes Magnitude of the problem Visionaries A Day in the Life of a customer Organizational impact ROI Justification Problem Recognition Minimum Feature Set
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Distribution/ Pricing Hypotheses
Distribution Model Distribution Diagram Sales Cycle/Ramp Channel strategy Pricing (ASP, LTV) Customer Organization Map Demand Creation
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Demand Creation Hypotheses
How do competitors create demand? How will you?
Dave McClure’s AARGH model Who are influencers/recommendors? Key trade shows? Key trends? Start assembling advisory board
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Type of Market Hypotheses
Positioning and Differentiation Existing Market
The product is the basis of competition New Market
Creating the market is the basis of competition Redefine Existing Market
Resegment the existing market is the basis ofcompetition
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Competition Hypotheses
Who is out there? Why are they important? How do customers use them today? What don’t customers like about them?
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Next Week: Discovery Part 2
Read Christensen
Discovering What Has Already Been Discovered Note on Lead User Research
Blank Four Steps to the E.piphany – Chapter 3
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
XP (Extreme Programming) Phases
XP by far most common agile method Exploration
customers write story cards Project team becomes familiar with tools, technology and practices
Planning set priority of stories & contents first release
Iterations to Release iterations before releases
Productionizing extra testing & checking before release to customer
Maintenance and Death new iterations and no more more customer stories
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
XP (Extreme Programming) Practices
Planning game programmers estimate effort of implementing cust stories customer decides about scope and timing of releases
Short releases new release every 2-3 months
Simple design emphasis on simplest design
Testing development test driven. Unit tests before code
Refactoring restructuring and changes to simplify
Pair Programming 2 people at 1 computer
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
XP (Extreme Programming)
Roles and Responsibilities
Programmer writes tests and then code
Customer writes stories and functional tests
Tester helps customer write tests and runs them
Tracker gives feedback on estimates and process on iterations
Coach person responsible for whole process
Consultant supplies specific technical knowledge needed
Manager makes decisions
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
XP (Extreme Programming) Practices Collective ownership
anyone can change any part of the code at any time Continuous integration
new builds as soon as code ready 40 hour week
maximum 40-hour week. No overtime On-site customer
customer present and available full-time for team Coding standards
rules exist and are followed Open workspace
large room small cubicles Just rules
team has own rules but can be changed any at time
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Scrum Phases
Pregame Planning - define system. Product Backlog Architecture - high level design of system
Development Iterative cycles (sprints) - new/enhanced functionality
Postgame Requirements satisfied - no new items or issues
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Scrum
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Scrum Practices Product Backlog
Current prioritized list of work to be done Effort Estimation
iterative on Backlog items Sprint
30 day iteration Sprint Planning Meeting
decide goals for next sprint and how team will implement Sprint Backlog
Product Backlog items for sprint Daily Scrum meeting
what doing, what will do, and any problems Sprint Review Meeting
present results of sprint
MBA295-F Customer Development in the High-Tech Enterprise Spring 2009
Scrum Roles and Responsibilities
Scrum Master project following rules and practices
Product owner officially responsible for project
Scrum Team project team
Free to organize as they see fit to achieve goals of eachsprint
Customer participates in Backlog items
Management Makes final decisions