This document provides an overview of Customer Discovery class #2a. It begins with reviewing an example Lean LaunchPad project called MammOptics. The majority of the class time is spent reviewing this example to demonstrate what customer discovery work looks like. The document then provides a brief recap of customer discovery planning and outlines the customer development process with the key stages of customer discovery, customer validation, customer creation, and scaling the company. It discusses rules and exit criteria for the customer discovery stage. Hypothesis testing is a core part of discovery, and the document outlines developing hypotheses for problems, products, customers, competition, distribution/pricing, markets, and the business model. Finally, it emphasizes that hypotheses are educated guesses to

1. Customer Discovery
Class # 2a
Iain Verigin
1

2. Today
• Majority of Time : Review an example –
“what exactly does this work looks like”
• Timeline
– Quickly Recap “Customer Discovery Planning”
– Example – MammOptics – LeanLaunch Pad project

3. Customer Discovery
Customer
Discovery
Customer
Validation
Customer
Creation
Scale
Company
• Stop selling, start listening
– There are no facts inside your building, so get outside
• Test your hypotheses
– Two are fundamental: problem and product concept
3

4. Discovery Phase =
Hypothesis Testing
•
•
•
•
What is the Hypothesis?
Where does the Hypothesis come from?
Why Test them?
How do you test them?
4

5. Customer Discovery: Rules
• Rule 1:
Facts are outside the building, opinions are inside.
• Rule 2:
Solve a problem that customers say is important and
valuable
• Rule 3:
Does the product concept solve that problem?
5

6. 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?
• Can you draw a day-in-the-lifeof a customer
– before & after your product
• Can you draw the org chart of users & buyers
6

7. Customer Dev’t Process
Time Frames
Customer
Discovery
Customer
Validation
Customer
Creation
Scale
Company
Existing Market: 1 Months - 1 Year
Resegmenting a Market: 6 Months - 3 Years
New Market: 1 - 3 Years
7

8. Customer Discovery
Time Frames
Customer
Discovery
Customer
Validation
Customer
Creation
Scale
Company
Existing: 1 - 6 Months
Resegmenting: 3 - 12 Months
New: 12 - 24 Months
8

9. Customer Discovery
In Detail
9

10. Methodology
• Customer Development can take months, or years
• Each Step has a set of phases
• Plan what you need to learn in writing
… so that 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 “Inviolable Commandments”
10

11. State Your Hypothesis
• One-time writing exercise
• All other time is spent in front of customers
• Assumes you’re smart
– ( but guessing )
11

12. building
blocks

13. TEAM NAME HERE
Who are our Key
Partners?
FILL OUT ALL 9 BOXES OF THE CANVAS IN ORDER 1 THUR 9
What Key
Activities do we
require?
Manufacturing?
Software? Supply
chain?
Who are our key
suppliers?
What are we
getting from
them? Giving
them?
Which of our
customer’s
problems are we
helping to solve?
How will we Get,
Keep and Grow
Customers?
Which customer
needs are we
satisfying
What Key
Resources we
require?
Financial,
physical, IP, HR?
What are the most important costs inherent
in our business model? Fixed? Variable?
What are the Key
Features of our
product that match
customers
problem/need?
Who are our most
important
customers?
What are their
archetypes?
Through which
Channels do our
Customer
Segments
want to be
reached?
What Job do they
want us to get
done for them?
How do we make money? What’s the revenue
model? Pricing tactics?

14. CUSTOMER SEGMENTS
images by JAM

15. VALUE PROPOSITIONS
images by JAM

16. Product (Solution) Hypothesis
•
•
•
•
•
•
Features
Benefits
Product Delivery Schedule
Intellectual Property
Total Cost of Ownership
Dependency Analysis
– What is out of our control?
16

17. Customer/Problem Hypotheses
•
•
•
•
•
•
•
•
Types of Customers
Magnitude of the problem
Visionaries
A Day in the Life of a customer
( Service Journey)
Organizational impact
ROI Justification
Problem Recognition
Minimum Feature Set
17

18. Competition Hypotheses
•
•
•
•
Who is out there?
Why are they important?
How do customers use them today?
What don’t customers like about them?
18

19. CHANNELS
images by JAM

20. Distribution/ Pricing Hypotheses
•
•
•
•
•
Distribution Model
Distribution Diagram
Sales Cycle/Ramp
Channel strategy
Pricing (ASP, LTV)
– Actual Selling Price, Life Time Value
• Customer Organization Map
• Demand Creation
20

21. CUSTOMER RELATIONSHIPS
images by JAM

22. Demand Creation Hypotheses
• How do competitors create demand?
• How will you?
–
–
–
–
•
•
•
•
Viral
Advertising
PR
Trade shows
Who are influencers/recommendors?
Key trade shows?
Key trends?
Start assembling advisory board
22

23. Get keep grow
23

24. Get keep grow
24

25. 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
– Resegment - Redefine Existing Market
• New segment of the existing market is the basis of competition
• :Think: What does my playing field look like?
25

26. REVENUE STREAMS
images by JAM

27. Market/Opportunity Analysis
How Big is It?: Market/Opportunity Analysis
– Identify a Customer and Market Need
– Size the Market
– Competitors
– Growth Potential

28. How Big is the Pie?
Total Available Market
• How many people would want/need
the product?
• How large is the market be
(in $’s) if they all bought?
Total Available Market •
How many units would that be?
How Do I Find Out?
• Industry Analysts – Gartner, Forrester
• Wall Street Analysts – Goldman, Morgan

29. How Big is My Slice?
Served Available Market
• How many people need/can use product?
• How many people have the money to
buy the product
Total
Available
Market
Served
Available
Market
• How large would the market be (in $’s)
if they all bought?
• How many units would that be?
How Do I Find Out?
• Talk to potential customers

30. Total
Served
Available Available
Market
Market
How Much Can I Eat?
Target Market
• Who am I going to sell to in year 1, 2 & 3?
• How many customers is that?
• How large is the market be
(in $’s) if they all bought?
• How many units would that be?
Target
Market How Do I Find Out?
• Talk to potential customers
• Identify and talk to channel partners
• Identify and talk to competitors

31. Market Size: Summary
• Market Size Questions:
– How big can this market be?
– How much of it can we get?
– Market growth rate
– Market structure (Mature or in flux?)
• Most important: Talk to Customers and Sales Channel
• Next important: Market size by competitive approximation
– Wall Street analyst reports are great
• And : Market research firms Like Forester, Gartner

32. KEY RESOURCES
images by JAM

33. KEY ACTIVITIES
images by JAM

34. KEY PARTNERS
images by JAM

35. COST STRUCTURE
images by JAM

36. key
activities
value proposition
customer
relationships
key
partners
customer
segments
cost
structure
revenue
streams
key
resources
channels
images by JAM

37. :Score Card: ( Hypothesis Summary)
test
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess
37

38. WHAT DOES THIS “REALLY” LOOK
LIKE?
38

40. ?
?
?
?
?
40
?
?

41. possible
alternatives

42. radiation-free
detection of
breast cancer
42
hospitals

43. proprietary IP
43
medicaldevicema
nufacturers

44. ?
?
?
?
?
44
?
?

46. But,
Realize They’re Hypotheses

47. 9 Guesses
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess
Guess

48. The Final Presentation
How Does This Really Work?
Stanford Lean LaunchPad Class
8 Weeks From an Idea to a Business

51. I.I.T.Y.I.W.H.T.K.Y

65. Key Opinion Leaders
(KOLs)

66. Key Opinion
Leaders (KOLs)

67. Key Opinion
Leaders (KOLs)

68. Key Opinion
Leaders (KOLs)

69. Key Opinion
Leaders (KOLs)

70. Key Opinion
Leaders (KOLs)

71. •
•
•
•
•
•

115. WHAT ARE YOU “REALLY”
THINKING?
115

116. ! Holy Cow !
! I don’t know any of this stuff !
? How deep do I need to go ?
:HELP:
116

117. :Think:
• In practice I call “Version 1.0” a “Splat”
– I find it sets the tone/expectation much better
– Nb. expectation is that this phase requires 2 to 3 passes (
or iterations ) before its done.
• Keys
– You want to figure out what you know and don’t know.
• :Issue: A lot of people are afraid to “write down” what they don’t
know, or accept that they don’t know.
– The real work is “Outside” the building to fill in the blanks
& convert assumptions into facts
117

118. :Aside:
Before You Start
• Board and Management Buy-In
– “Learning & discovery” not execution
• Customer Development Team
– Not traditional hires
• Sufficient funding for 2-3 passes
118

119. :Aside:
! Titles Matter !
“Traditional organizations & titles fail”
CEO
VP Eng
VP Mkt
VP Sales
VP Biz Dev
• People equate their titles with their functions
– Standard titles describe execution functions
• We need new titles consistent with “learning &
discovery” functions
119

120. :Aside:
Customer Development Team
“Tasks”
CEO
VP Product
Dev
Technical
Visionary
Business
Visionary
Business
Execution
In Front of Customer Positions
Nb. This doesn’t mean “VP, Product Dev” doesn’t visit customers
120

121. Documenting
• “Not too much and not to little”
• Get to know yourself
– Basic Rule of Thumb
• Marketers like to analyse and plan
– Ielotsa documentation
• Sales likes to live in the field
– Ie none
121

122. 122

123. Design The Tests
• These can be simple.
• Q. How Accurate is our Service Journey
Sketch?
• Action: Review our “Service Journey Sketch”
with Emergency Staff at “n” hospitals.
123