A better way to start companies
My last article told you about how you most likely learnt an outdated way of starting companies. We all did. It’s had it's time but in the digital age, a more innovative way of how you can start companies is needed.
This is where Customer Development and Lean Startup comes into play. As part of this process, what we're looking to do is start with our customers, rather than the product.
Having a comprehensive understanding of your customers is key to achieving your core business goals or getting to revenue, fast. Through the study of your customer's experience, you will create more engaging content or increase sales. The key is knowing your customers better than they do.
But, before we get into detail, I'd like to introduce you to the two fathers, or founders of these concepts.
Steve Blank himself, has been part of more than eight companies over 21 years. He retired as a CEO entrepreneur in 1999 and has been a lecturer of entrepreneurship since. He now teaches at top universities around the world and has come up with the customer development process.
Eric Ries is the founder of the Lean Startup methodology. Eric has created this methodology out of his own successes and failures as the CTO of various startups. Eric developed the Lean Startup methodology, out of management principles, in particular, lean manufacturing that we know as Lean Six Sigma.
What these two educators and entrepreneurs have in common is that rather than focusing on the product and starting with the product, we want to hone in on the customers and focus on the customer before we focus on the product.
So rather than focusing on the product and developing it on a standalone and then finding customers, place your focus on creating and improving your product at the same time as finding and on-boarding customers.
The aim is to build them in parallel to each other.
As you go along and build your product, at each stage, you're not just creating a product, but you're building customers that are willing to adapt and accept the products you are creating.
The customer development process is not too dissimilar to your traditional methods. You just flip it on its head so that you start where most people fail, the customer.
How it works is as follows:
You still start with an idea or a concept. However, this time you don't jump into business plans and strategies.
What you do is write down risks and assumptions that you have about your customers, your product, and how it fits into the business environment.
Once you have documented your risks and assumptions, you then create small little products, or M-V-Ps that you can put out into the market to gather data that allows you to learn from and iterate your product.
The reason you start in this order is that these days you can pretty much create anything that you want. The difficulty is not in technology, but rather in finding customers that are willing to purchase your technology.
Now, in summary, the question we look to answer is not can we build this product, the question should be whether we should actually build this product in the first place. Are customers willing to adopt and pay for this product?