"No business plan survives first contact with customers," Steve Blank says. What? Isn't the point of planning that you maximize the likelihood of success in the marketplace? Well yes, but perhaps not the kind of planning you might be thinking about. A business plan conceived on paper, powered by a great idea or invention, enhanced by research on the size of the market and a customer profile, has great potential. But it also has a crucial flaw.
It is full of what Steve Blank calls hypotheses, or guesses. These are guesses about how the great idea or invention might solve a customer's problem, who the customer is, and how they'd use a particular product or services. Because these are only guesses (perhaps well-informed ones), they are unlikely to survive when you get out the building and actually talk to customers. Customers may have a different problem than that which was anticipated, or they need the technology for a slightly different use, or want a different feature set.
If you stick to the business plan "on paper" and never get out of the building, you're missing an opportunity to build a stronger startup. As a result of information from customers, startups can change what they're doing to achieve a better product-market fit. They may pivot (make a major change to one or more of the elements of their business model) or iterate (make small adjustments). Achieving a better product-market fit means a greater likelihood of success for the company.
Kauffman Founders School presents startup expert Steve Blank, a Silicon Valley-based serial entrepreneur to discuss just such issues. Steve, who teaches entrepreneurship at Stanford, U.C. Berkeley, Columbia University, Caltech and UCSF, developed the customer development model to help startup founders tackle the early-stage challenges of a venture, with a view to creating a thriving company that meets a strong market need with the best possible product
In our series “The Lean Approach” Steve addresses several topics. He introduces the customer development approach and elaborates on the insights that founders can gain from early contact with customers. He provides practical hints and tips for how to do this. He details the process of gathering data (noting that you’re looking for insight, not just a numerical tally) and provides advice on how to use a minimum viable product (MVP) to explore interest in a product and its features. Finally, he discusses the process of customer acquisition, built on a clear and robust customer archetype.
Check out our “Lean Approach” series. Gather ideas for your own customer discovery work, learn how to think about the data you’ve gathered, and begin to build a customer archetype that will help you in the process of getting, keeping and growing your customers.
Finally, ask yourself the pivotal impact question: How can what I’ve learned today change what I do tomorrow?