Shooting down risk
Strategist, Project Manager, User Experience Expert
The two major risks of most startups: solving the right problem & approaching the right customers.
Customer profiles are a starting point. You have to put a stake in the ground.
Entrepreneurs do not need to have all the answers. You just need to know good processes.
Lesson: Creating Customer Personas with Julie Hamwood
Step #6 Iterate: Shooting down risk
We've done our first profile based on what we were all carrying around in our heads. We then need to take the salient points of that profile and put it back into our business model canvas or our lean canvas. We need to put in what the customer segment is, what the problem is, what the channels are, what we think the unique value proposition will be. We need to put those things in and look at the business as a whole because at the end of the day, as entrepreneurs, we're trying to create a business. Once we create and look at that canvas again, we then need to analyze what are the things that are riskiest in this canvas? What's riskiest in this business model?
Maybe the thing that's riskiest is the cost structure of providing the particular solution you're envisioning. If that's the case, then you're not going to be using a customer development interview to assess that risk. Invariably two of your biggest sources of risk are going to be, are you approaching the right customers and are you solving the right problem? That's where customer development interviews really help. When you take your customer profile information, put it back into the canvas, assess what's riskiest about your business model. If those highest risks are around your customers or around the problem then you need to pull that out and start to develop what interviews you're going to conduct to test this risk.
As important as I think it is to do customer development work, I really don't think we should do it for its own sake. This is a business. I'm trying to find how I can make a product that somebody else wants to buy in a way that works well for them and for myself. I am not trying to perfectly identify every task that I am supposed to do and tick it off in a beautiful way and have a very shiny checklist completed and that sense of satisfaction. If I do that but fail to create a good business, I’ve missed my goal. I'm also not trying to create gorgeous documentation about who the people are and how perfectly I understand them. I want to understand them well enough for us to have a meaningful value exchange. We are both in this. I need some time, attention and money. They need me to fulfill their need.
Customer development is definitely an iterative process. There are no two ways about it. You basically just keep iterating until you are so dialed into what your product offering is and that you have such strong demand for it; and you are so clearly able to communicate out to your customers and have a very smooth and efficient exchange of value. When you're at that point, you don't need to do any more customer development with that segment.
The very act of offering a product means you will identify other areas of need and you may want to develop other products in tandem with your products. So you'll need to start doing more product development as soon as you want to move into different customer segments; you will definitely do customer development, as soon as you want to move into different products, you'll want to do different customer development.
None of us stays the same. We're all evolving. The environment in which we live, that is evolving all the time. Who we are as people, those things are evolving all the time. So even if you have a really great relationship between what you are offering and what people are excited to purchase from you, you are still going to need to stay in touch and keep that customer development awareness knowledge going.
And the point about whether we do the interview first and then do the profile or do we do the profile first and then do the interview, I personally think that if you're starting a business you already have somebody in mind. Otherwise, it's a piece of artwork or something like that. You have somebody in mind, make that explicit. You can spend 15 minutes, you can spend an hour or two hours on it, but make it explicit. When you then go out to do your customer development interviews you have at least got a line in the sand. You have at least put a stake down to say this is who I think it is. The reality is, wherever I put the stake, it's going to be quite a ways away from my stake, but I had to start somewhere. So I'm going to start here.
It's very interesting to think about the fear of being wrong. We are educated to be professional, competent, knowledgeable people. We feel that we need to know the answers to who our customers are in order to start the business. I don't agree with that. I think we need to know our processes to know how to learn who we're serving; we could then execute well on how we get to know who we are serving. By doing that well, we will come to the right answer around who our customers actually are, and what it is that they need, and what we can provide to them.