1 00:00:05,800 --> 00:00:10,720 I want to be talking about customer development and to take you through just an outline of 2 00:00:10,720 --> 00:00:15,070 the of the lectures tonight so you can get a sense of where you are as we move through it. 3 00:00:16,270 --> 00:00:25,150 So I'll start off by increasing customer development, and then I will zero in on a part of the customer development model, 4 00:00:25,360 --> 00:00:29,890 which is customer discovery and tell you how you prep for this phase. 5 00:00:31,450 --> 00:00:37,750 And then I will look at one part of customer discovery, which is testing that there is a problem. 6 00:00:38,440 --> 00:00:43,720 And then I will look at the second part, which is testing your solution to that problem. 7 00:00:45,310 --> 00:00:47,430 We'll start with what is customer development, 8 00:00:48,270 --> 00:00:55,569 and then I'll start by telling you a bit of a story about a product launch that I was involved with quite a number of years ago. 9 00:00:55,570 --> 00:01:00,969 Now we were taking a product which already exists and was being sold to businesses and 10 00:01:00,970 --> 00:01:05,950 we were reshaping it for a consumer market and we were really sure about that market. 11 00:01:05,950 --> 00:01:12,040 We knew who we're selling to. We knew exactly why they were going to buy this new this product, which we were about to build and launch to them. 12 00:01:13,900 --> 00:01:23,320 So we spent nine months building the products, putting in the infrastructure to support millions of users, marketing it with a with a big PR bang. 13 00:01:23,320 --> 00:01:30,130 We even had a a full time marketeer on the team to drum up interest in our in our new product. 14 00:01:31,300 --> 00:01:38,770 And we had a big launch and a few months went by and we looked at user numbers and we were at 1500 and practically none 15 00:01:38,770 --> 00:01:47,050 of those users were coming back again at this point were still we'd spent £200,000 and all of our budget was gone. 16 00:01:48,250 --> 00:01:54,890 It was a failure. The products had failed. So what went wrong and what could we have done differently? 17 00:01:57,580 --> 00:02:05,770 And we were suffering from conviction. I think that most entrepreneurs suffer from this rather cruelly. 18 00:02:05,780 --> 00:02:10,450 It's one of the qualities that you need to be a successful entrepreneur in the first place. 19 00:02:10,900 --> 00:02:20,889 But it's also the one thing that can kill you off really early. All around the world, people are taking their money, taking other people's money, 20 00:02:20,890 --> 00:02:28,150 and diving headlong into product development and building businesses based on nothing more than hunches. 21 00:02:29,740 --> 00:02:34,250 You shouldn't feel bad about it. If you've got the guts to give up your job at P.W., say. 22 00:02:34,660 --> 00:02:43,150 Mackenzie As well as probably a massive ego, you'll have complete and utter conviction that the idea that you that you're taking on is going to work. 23 00:02:44,350 --> 00:02:48,280 If you're bright and eloquent, you'll probably have convinced lots of other people, 24 00:02:48,280 --> 00:02:52,540 your friends, your family, some seed investors to back you with some money. 25 00:02:53,650 --> 00:02:57,840 But most of the time, you've got absolutely no clue whether or not this is going to work. 26 00:02:58,030 --> 00:03:06,190 No clue what you're spending your hard won money on products for people that you don't know exist, 27 00:03:06,640 --> 00:03:12,190 serving needs that you don't know exist, using messaging that you've got no idea will work. 28 00:03:12,550 --> 00:03:16,000 Going out via channels which you which you don't know will work for you. 29 00:03:16,870 --> 00:03:22,689 You're so confident in your plans that you put in place the infrastructure to support 30 00:03:22,690 --> 00:03:28,690 the millions of customers and users that you're going to inevitably end up with in. 31 00:03:28,960 --> 00:03:34,150 Once you've finished your development and it's your conviction, your idea, 32 00:03:34,210 --> 00:03:39,640 your Achilles heel that makes you blind to the complete insanity of what you're doing. 33 00:03:41,370 --> 00:03:52,260 So what's the alternative? Well, if your conviction is driving you towards a the realisation of your business, then stop. 34 00:03:53,130 --> 00:04:00,360 Stop driving and start searching. Realise that you can't possibly know your destination at the beginning of your journey. 35 00:04:00,840 --> 00:04:05,790 And from here on in and to search mode, you're looking for a successful business model. 36 00:04:06,690 --> 00:04:10,140 And so you should be ready to learn from the clues that you discover along the way. 37 00:04:11,250 --> 00:04:16,410 Sometimes you probably take a wrong step, but because you're constantly checking your progress as you go, 38 00:04:16,860 --> 00:04:20,880 you can retrace your steps and and get back on the trail of that business. 39 00:04:22,800 --> 00:04:27,780 So I've been taking one of Maria just a few weeks ago slides and redrawn it. 40 00:04:27,840 --> 00:04:30,780 This is my stick, man. I think she had an artist impression. 41 00:04:32,550 --> 00:04:40,980 And if you can remember, Maria was talking about knowing where you needs to go and it feeling like a big giant leap to get there. 42 00:04:40,980 --> 00:04:49,050 And how taking a few smaller stepping stones you could get to that destination in a more sensible and safer fashion. 43 00:04:49,740 --> 00:04:53,340 So I want to continue that analogy today. What would this look like from above? 44 00:04:53,970 --> 00:04:59,760 If I have more time, I would have done a sort of 3D swing around to see it from the top, but that's what it would look like from top. 45 00:05:00,270 --> 00:05:08,809 So my artist's impression of a stick man from the top. So and the reality is your journey is actually never in a straight line like this. 46 00:05:08,810 --> 00:05:09,870 So let's get rid of those. 47 00:05:11,460 --> 00:05:19,860 And while that first step might go according to plan, when you get there, you may discover that the next one is off in a slightly different direction. 48 00:05:22,590 --> 00:05:28,740 And that's how you keep going with an open mind searching for the next step and learning as much as you can as you go. 49 00:05:29,370 --> 00:05:36,780 And quite often you find out that your goal isn't quite where you thought it was, but hopefully the prize will be bigger. 50 00:05:39,060 --> 00:05:44,690 This is doing the rounds on Twitter a few weeks ago and I really like it. 51 00:05:44,700 --> 00:05:48,089 It's basically saying the same thing, how you see the road ahead, 52 00:05:48,090 --> 00:05:54,330 a straight a straight line to your destination, what it will actually be like a very bendy road. 53 00:05:54,570 --> 00:05:59,430 And I really like this because the destination is further away in the picture, in the middle and in a different place. 54 00:05:59,910 --> 00:06:05,790 And what you can plan for today, virtually nothing. You've got no idea. So the only thing you can plan for is that uncertainty. 55 00:06:07,210 --> 00:06:15,370 And customer development is a way of systematically discovering and walking that path to get your business up and running. 56 00:06:17,080 --> 00:06:23,680 And I'll talk today about some of the theory and the methodology behind customer development. 57 00:06:24,460 --> 00:06:29,920 And you should go away and if you haven't already, by the numerous big, thick books on this. 58 00:06:30,790 --> 00:06:35,980 But at its core, it's just a mindset. So don't get too daunted by all of the theory. 59 00:06:36,340 --> 00:06:37,440 It's just a way of thinking. 60 00:06:37,450 --> 00:06:45,370 It's a common sense mindset of questioning everything about your business and questioning your conviction and constantly asking yourself this 61 00:06:45,370 --> 00:06:53,440 question What are the riskiest assumptions that I'm making about this business and what's the quickest and cheapest way of validating them? 62 00:06:55,010 --> 00:07:03,830 And this thinking isn't particularly new either. I've got a very old school business mentor who's been around for a lot longer than me. 63 00:07:04,940 --> 00:07:10,100 And I spoke to him about a new venture in the used car business that I was about to invest in. 64 00:07:10,580 --> 00:07:16,580 And his advice to me was, go and speak to some used car dealers and talk to them about their needs. 65 00:07:17,090 --> 00:07:20,150 Now, that advice is straight out of customer development. 66 00:07:21,860 --> 00:07:25,790 But it's also common sense, and it's what successful entrepreneurs have been doing forever. 67 00:07:28,000 --> 00:07:31,989 So thinking back to that Big Bang project that I spoke about earlier on, 68 00:07:31,990 --> 00:07:41,230 what would have happened if I had questioned more of my assumptions and and tested them before entering headlong into that product development phase? 69 00:07:42,070 --> 00:07:45,520 And I'll never know whether or not we were we would have been successful or not. 70 00:07:45,520 --> 00:07:51,520 But based on the way I know for certain, if we'd gone and spoken to a few customers in the very early stages, 71 00:07:51,520 --> 00:07:56,800 we would have found out that our idea about who they were and what they were interested in was wrong. 72 00:07:57,010 --> 00:08:00,100 Our assumptions, which seemed really sensible, were really flawed. 73 00:08:00,340 --> 00:08:06,220 And well, I think the product probably had has value, but probably presented in just a completely different way. 74 00:08:06,850 --> 00:08:12,520 I can't talk too much about the detail of it because of confidentiality, but and looking back, 75 00:08:12,520 --> 00:08:16,209 I can see lots and lots of opportunities of how right in the beginning we could 76 00:08:16,210 --> 00:08:20,620 have tested so many aspects of the idea that we had without building anything, 77 00:08:21,190 --> 00:08:25,960 and we already had a product that was being sold to businesses. We could have we could have just used that and gone and tested it. 78 00:08:25,990 --> 00:08:31,180 It wouldn't have been perfect by any means. We would have found out very quickly whether or not it was going to work in that consumer market.