If you read any of Steve Blanks’ materials, or if you look at books and articles on the “Lean Startup” model, or if you work through Steve’s Lean Startup MOOC on Udacity…
- https://www.udacity.com/course/how-to-build-a-startup–ep245 (this is a great class, and free!)
…then one thing you will hear constantly is the phrase “Get out of the building“. This is also known as the Customer Development process. It is also known testing the business model. It is also known as validating your hypotheses.
The basic concept is very simple: you might think you have a great idea when you come out of the ideation phase of IPESSI, but you don’t really know until you validate your idea in the marketplace and prove that there is customer demand. And this validation comes during prototyping, either right before or right after you develop your prototype (preferably both).
In the Lean Startup approach, one way to do this is to start with a Business Model Canavas, which you can learn about with this quick video:
Read an article like this one for a bit more detail:
You can use a tool like this to quickly sketch out your own business model canvas for your idea:
It might take half an hour, an hour, maybe two hours of thought to sketch out a canvas. Now what have you created? You have created a set of hypotheses about your idea. For example, if you put that your customer segment is 25 to 40 year-old stay-at-home moms, that is a hypothesis. You have to prove this hypothesis to be true. It might be that, in reality, stay-at-home moms do not really care about your product, but female freelancers who work at home really do care. The only way to find out is to get out of the building and talk to real people.
Finding a Real Problem
Here is an example of an article about Costco, and a new competitor it is facing called Boxed.com :
With this quote form the founder of Boxed, Chieh Huang:
Chieh Huang founded Boxed in 2013 with a simple idea: Deliver bulk goods to shoppers who don’t live near a wholesale club or have a car to get to one. What he quickly discovered, though, was a different sort of demand. “We actually found a bigger problem to solve, which is that folks didn’t have the time or patience to go,” even if they lived near a Costco or Sam’s Club, Huang said recently at the National Retail Federation’s annual conference in New York. In other words, it wasn’t physical proximity or access to warehouse stores that were keeping customers away but rather a lack of willingness to shop for toilet paper and dish soap in person.
The way to understand the “bigger problem to solve” is by talking to customers early in the process, during the prototyping phase.
What if Chieh had written on the canvas that the customer segment is ” shoppers who don’t live near a wholesale club or have a car to get to one”? That hypothesis was not correct. The better hypothesis turned out to be, “shoppers who don’t have the time or patience to go to a wholesale club.” An insight like this could, for example, completely change the target audience for advertising. It might also change all of the primary messaging on the web site.
The big questions that you want to answer with your customer development process include:
- Is there a group of customers who would buy this product?
- Is this a significant pain point for them, or a minor pain point?
- Are people really excited about an idea like this, or is the response pretty blah?
- How big is this group of customers potentially?
- Is there a change or a tweak or a full-scale revision to this idea that would radically increase the number of customers?
- What price might customers be willing to pay?
- What solution are customers currently using to solve this problem? Is this solution pretty good or pretty bad? How receptive are people to the idea of a better solution?
- How much are people currently paying for this alternative solution?
- How would your reach these customers? Is there a place where they get together? A web site or sites they all read? Conventions they all attend?
- Would these people tell their friends about your idea, or not reall? (this is a measure of word-of-mouth resonance.
- And so on…
Interviewing potential customers to gain insights
How are you going to gather information? You can use:
- One-on-one interviews
- Focus groups
- Surveys and questionnaires
- Landing pages
Let’s say you are going to use one-on-one interviews. These have the advantage of being extremely detailed. And let’s imagine that your new product idea is a knife that uses a laser beam rather than a blade to cut food. You can walk into the interview and immediately blurt out, “Hey, what do you think about a laser knife for the kitchen???” However, this is really not the best approach. The reasons for not doing this include:
- The person is unlikely to give an honest answer
- The person is unlikely to give more than a one or two sentence answer, and…
- It is hard to ask many follow-on questions.
Instead, you want to ask lots of open-ended questions that have to do with your idea, without getting specific. Ask a whole package of questions, like this:
- Do you ever use kitchen knives?
- When do you use kitchen knives?
- Why do you use a kitchen knife? (seems obvious, until you find out that 75% of people use kitchen knives as screwdrivers, or something like that)
- What do you use kitchen knives for? Do you use them for cutting? What else do you use them for?
- Have you ever used a kitchen knife for anything other than cutting?
- Where do you normally use your kitchen knives? Indoors? Outdoors? Kitchen? Bathroom? Garage? Bedroom? Office? Car? Other?
- How do you use a knife?
- How do you hold your knife? Show me. (what if you hold the knife one way, but 75% of people hold it some other way that you have never thought of?)
- Why do you hold it that way?
- What do you typically cut with a kitchen knife? Why?
- When do you use kitchen knives? (what if lots of people use kitchen knives at 3AM, in the dark, and a knife/flashlight combo would help lots of people?)
- Do you cut different things in different places? At different times?
- How many kitchen knives do you have? Why?
- Where do you buy your kitchen knives? Why? How much do they cost? How much are you willing to pay? Why?
- What do you like about your kitchen knives?
- What do you dislike?
- What is important to you in a kitchen knife when you are buying one?
- What isn’t important?
- Can you think of anything you would like to change about your knives?
- When you think of the best possible knife, what features would it have?
- How much might you pay for something like that?
- If I gave you a knife that did _______, would that be of any interest to you? Why?
- What about ______ or ________? Why?
- Can you think of anything else like that that would be cool to change about kitchen knives?
- Where do you keep your kitchen knives? Why?
Things like that. You want to gather a lot of information about the product space and the way the customer is using the products in the space. If, in the process of asking all of these questions, you slip in some questions about your specific product, you can see that this would be completely natural, and also that the customer is never going to know what you are really working on. It’s not like you have given a detailed description of your product. Or, if you want to give a detailed description toward the end of the cycle and ask what the customer thinks, that would be OK, and far more natural.
You might ask all of these questions, and find out that customers really like colored knives. They may have several reasons for liking them. Or they might like knifes that come with sheaths, so the exposed blade is not there in the drawer to cut you. Or they might like colored knives with colored sleeves that match. Something like this would would have never come up with just one or two interview questions.
There is a great example of this process from my EEP class. One team started out with a new idea to improve trailer hitching, thinking that the big problem customers had was getting the hitch connected. Then during the customer interviews the team discovered that the real problem people had was backing up trailers. Everyone talked about this problem over and over again. They discovered this new pain point by asking general questions about trailers and learning all about the way people use trailers – along with what they like and dislike about trailers. Strive to accomplish this same kind of thing in your interviews and the interview process will be a lot more valuable.
When you do interviews, have a list of questions that you have prepared ahead of time. Then write down all of the answers, or record them and transcribe. This becomes one document from your customer interview process. At the bottom of the document, summarize things like:
- What did you learn?
- Did you hear anything surprising or unexpected?
- Have you gotten any new ideas?
- Does this interview confirm or deny any of your hypotheses?
At the top of the document list things like:
- Who did you interview?
- Date of interview
- How did you find this interviewee?
- Position of interviewee
If you do 50 or a hundred interviews like this, you will start to notice patterns. After you do a number of interviews, go back to your canvas and revise your hypotheses.