If you own, run, or work in a startup and you’ve never heard of The Startup Owner’s Manual, The Four Steps to Epiphany, or Steve Blank, you NEED to remedy that as soon as possible. Over the last few years, Steve’s speaking and writing have been an inspiration to many entrepreneurs to re-examine the approach they take to making their visions a reality and examine exactly why the majority of startups are destined to fail before they even hit their first milestone.
In a nutshell, most startups fail because they instinctively adopt the product development approach used by established companies to develop new products for EXISTING customers.
The Product Development Model:
The problem with this approach is that when you don’t have any existing customers, a heavy focus on product development usually means that very few resources are devoted to customer and business development until a product is close to launch – which results in products launched into a market with little or no buyers. While some companies that launch like this can adapt and survive if they are backed by a massive amount of funding – the majority fail.
What has been mostly neglected thus far by the startup and investment community is the customer development approach.
Customer Development Model:
From day one – or as soon as you have a functioning prototype – you should be talking to and signing up customers – even if only as on trial/experimental basis. This will give you key insight into if/how your idea or product will even be marketable – without this, money spent on product development and energy spent developing investor interest will likely be a waste.
If you’d like to dive deeper into this topic – definitely check out Steve’s books and check the articles from his blog listed below. Our whole team has here and we HIGHLY recommend you do too.
The Leading Cause of Startup Death
Customer Development Manifesto Part I
Customer Development Manifesto Part II
Customer Development Manifesto Part III
Customer Development Manifesto Part IV
I agree with the main points in the article (and Steve’s blog – thank you for the link), but I think you are both missing the main reason why the customer development model isn’t included. In the various start-ups (12+ at this point) that I’ve been involved with, there’s be no real understanding of a targeted customer. Rather a ‘customer’ is any person who gives the company money in exchange for some service. Generally each customer is offered a full range of services in hope of a ‘sale’. Then the ‘product’ of the company morphs to attempt to meet the demands of the latest customer. Over time the product definition looks more and more like a collage of dissimilar ideas. The other problem with customer development is that all the CEOs of start-ups that I’ve met consider themselves to be representative ‘customers’ of their own product. This idea by itself is enough to silence conversations with actual customers.
Another resource in the same vein, that is also (sadly) overlooked is ‘Contextual Design’ by Hugh Beyer (http://en.wikipedia.org/wiki/Contextual_design).
I think you make some incredibly valid points.
Many companies seem to have the impression that whatever they are making is so awesome that everyone will want one, leaving little room for deep analyzing or honest conversation about the customer’s real needs/desires.
In my experience with consulting small businesses, convincing someone to look objectively at their service or product is often emotionally difficult. Even CEO’s are not immune to this desire to feel that their product or service is somehow too special to be ‘put in a box’.
For me, the most important thing Steve Blank has done is by bringing this conversation out into the open is that he is provoking dialogue and creating a visual model that provides a fundamental change in the way we think about productization.
Thank you, Chris for sharing the Contextual Design process. You are right when you say “sadly overlooked”, as this is new information.