Mar 212013

It’s true.  In ALL the companies I have worked and WITH all of the companies I have consulted, I’ve never created a market.

I’ve had one big success and many modest successes.  Outside of those successes, most often the findings from rigorous contact with prospective customers, partners, and competitors’ customers reveal that the demand for our solution to solve an existing problem is not investor worthy.  In other words, it’s not going to go IPO or be purchased by Google or Facebook.  It may be a nice, profitable business, but not a VC-backed rocket ship…which is important to know in order to manage expectations and resources.

Which leads me to my claim that No One Can Create A Market.

As a result of seeing scores of products and thousands of customer contacts, I make this claim. Let’s take the classic Pet Rock as an example. When Gary Dahl created Pet Rocks in the 1970s, many were flabbergasted that there would be such a high demand for a rock in a box. However, those that were surprised were those that were focused on the product and not the problem it solved or the cost of not solving the problem.

The existing problem that the Pet Rocks solved was, of course, the annual problem of gifting in a clever way. The Pet Rock, in its nest, with its instruction manual and nicely packaged was the solution to the problem of what to purchase to show that you care to try to delight and know how to delight.  And think of the accessories to buy!

So if I’m not willing to claim that market validation/customer discover helps create a market, why bother doing customer discovery and market validation at all?

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 Posted by at 22:29
Feb 142013

Okay, I admit, I studied engineering because I like the exactitude.  I’m way too literal in my listening.  And that’s why I get a good chuckle when I hear phrases like “the whole truth”.   #1:  I wonder how often this person tells partial truths and #2: Now I know I’m about to hear a lie!

For similar reasons, in customer/problem discovery meetings I counsel against the phrase, “I’m not going to try to sell you anything.  I’m just doing research.”  “Counsel” is too mild of a word.  I go ballistic (on the inside and after the meeting) when the presenter says this.

First of all, I believe that most people — when they hear the “not selling” claim — immediately reach for their wallets to make sure it’s secure.  Then, they are on edge the remainder of the discussion, just waiting for you to really start pitching something.

One of the worst parts of this situation is that if you have selected this particular “target” but are truly not interested in them as a customer, why are you meeting with them?  [Alert:  there ARE legitimate reasons possible to warrant meeting with them, but if the answer has something to do with coming back later to see if they’d be a customer, then you’re wasting your time doing in two meetings what can be done in one.]

Here’s how you should position your customer interview:

“Thank you for agreeing to meet with us. As we told you on the phone, we’re working on helping to solve the problem of <insert problem here>. We’re trying to make sure our solution hits a bull’s-eye for you and understand its value to in your situation. It’s also a chance for you to put your thumbprint on our solution to be sure it solves your problems. Our solution is still under development <or in the final stages of development or in the early stages of development>.  After we learn a bit more about your situation and your requirements in our discussion today, we will show you how far we’ve come.

“Although we won’t be asking your for a purchase order today, we would expect that if our product delivered value to you and fit with your circumstances, that we would be coming back here and asking you to purchase it. So please be very candid with your answers. How does that sound? Should we get started?”

And for completion’s sake, here’s my last slide of my presentation:

The last slide in my presentation is usually some form of this:

  • How would you describe us and our solution to your boss <spouse, buddy>?
  • Where would you use it first?
  • Is this a strike-out, single, double, home-run for you?
  • Who else do you need to involve to purchase our solution?
  • What’s the next steps <or substitute a specific action you “know” is the next step for an interested buyer>?

Of course, if by the time you get to this slide you already know there is something important missing in your offering to satisfy this prospect, you still show this slide, but you may orally modify the wording, such as, “If we added <this functionality>, where would you use it first?”

However, I’d only modify it if you have rigorously discussed a key missing element. I’ve been surprised by not realizing we already had an MVP for this prospective customer despite much discussion of a gotta-have feature. It turned out it was “gotta-have” six months from now.

My experience has shown me repeatedly that you can get buying commitments IFF you are solving an important problem AND the cost of NOT solving the problem is significant. [Careful, you can also get a commitment to trial, which is also different than a commitment to BUY. It might be just what you want, but it’s good to recognize it as not the same.]

Basically, these questions are to uncover two things:
1. What prevents this prospect from being a paying customer right now?
2. What is the selling process to this type of customer?

Okay, there’s a third. What do we need to change in our messaging/product to hit a bull’s-eye with this (and perhaps next) prospect?

Frankly, I found that when I hear “sales” or “selling” in a negative context, it’s invariably from the mouth of a marketing or salesperson with little experience (or someone who has been accosted by poor salesmanship).  Most professional sales people have learned long ago that consultative selling and appreciative inquiry is the path to success.

As one of the sharper minds addressing this subject, Sean Murphy often writes, “Customer development is sales.” and he points out that you sell complex products with your ears and your questions not provocations and assertions.

 Posted by at 14:13
Jan 122013

It’s past Christmas, so I won’t use the list of 12 that becomes popular late in the calendar year.  My previous post references several good lists covering prospective customer interviews.  Of course, I have to weigh in with mine.

Here’s what I tell my clients and what I do when I’m the Chief Market Validation and Revenue Officer.  I number them because I feel the order is important from an effectiveness and efficiency standpoint.  My list is definitely more B2B-centric, but little would be adjusted for B2C:

1)  Articulate what problem we solve, for whom we solve this problem, and what is the cost to them for NOT solving the problem. 

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 Posted by at 23:02
Jan 032013

I know, some of you are thinking, “Congratulations, Dave!  You’ve figured out that there’s a difference between selling to consumers and to businesses!”

No, that’s not why I make a point of this distinction.  I make this point because as I review other blogs and writings on the Customer Development process, Lean Startups, etc., it’s becoming clear to me that some advice is directed toward user interface testing and B2C demand while others is key for B2B.  Of course, some advice works for both.  Here’s my overview and comments on a few lists I’ve found.

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 Posted by at 17:37
Dec 272012

I just read and added to a conversation initiated by Paul Fox regarding his description of how he is going about teaching Lean Startup.

Paul starts a conversation about his post in the Lean Startup Circle on LinkedIn and in one of his responses to supportive comments he writes:  “One thing I think that’s important is distinguishing between principles, processes, tools, and tactics.”

For me, this is an important way to frame the Customer Development, Lean Startup, and Market Validation concepts to help others grok them.

Paul characterizes Eric Reis’s The Lean Startup as primarily about First Principles and Process with some discussion on tactics and tools.  He suggests that Ash Maurya digs deeper into tactics. To continue on this theme, I would add that Steve Blank and Bob Dorf are clearly Principle and Process focused in their latest The Startup Owner’s Manual and Steve’s blog, of course.  Business Model Generation by Alexander Osterwalder and Yves Pigneur is clearly an important tool and usage is a useful tactic.

For me, Paul has put his finger on what I have felt is missing in emphasis from Customer Development and Lean Start-Up books — the tactics….especially as they relate to actually getting “out of the building”.

For me, the principles, process, tactics, and tools are all just motivators to help lower the barrier to getting out into the field.  That is, principles help explain why it works, process how it works, tactics what to do, and tools help you get the most out of it.

I’ll feel successful if I can make this blog into a tool for explaining the tactics and where the tactics fit into the process while showing how they follow and flow from the principles.

 Posted by at 10:04
Dec 162012

I just read a post by Andrej Kostresevic about how to avoid false positive information when speaking with prospective customers.  It’s an important topic and it’s good to highlight the problems caused by a prospect’s natural inclination to express answers in a positive way relative to your questions.

Andrej has a five-step process for avoiding false positive responses from prospective customers.  However, Andrej’s overall attitude appears to be that he doesn’t trust his prospective customers’ answers.  I must take issue with the usefulness of this attitude.  I think it’s wrong and actually causes him to miss important learning opportunities.

Having been on probably over 1,000 meetings presenting new-to-the-world solutions to prospective customers, here’s how I would refine his BS Meter and minimize the false positives feedback:

First, it’s important to understand a few important-to-me guiding principles which I’ve found valuable.  Then I will comment on each of Andrej’s specific steps in his BS Meter.  Continue reading »

 Posted by at 01:02
Dec 132012

This post is about Intuit’s apparently successful product development in India.  I’ve heard this story twice recently. The first time was listening to the Livestream of the Lean Startup Conference and the second time was reading a Lean Startup Group post in LinkedIn by Rammohan Reddy.  Here’s a link to the Lean Startup Conference video of all the speakers. Rammohan’s original post is here. This account of Customer Discovery and Customer Development provides some good detail on the starting point and the pivots in a fairly concise write-up. Two elements stood out to me and I’d like to reinforce them and one element that I think they “overlooked” and is important to highlight. Continue reading »

 Posted by at 17:26
Dec 062012

The focus on getting in front of prospective customers is because you cannot get the right, paying customers without first talking to prospective customers.  It’s akin to a fundamental law of physics.

The right, paying customers are vital because the best single feedback source — the absolute, spot-on, most useful, very best feedback — and very best guide to your business opportunity roadmap comes from rich discussions with product users who are using your solution and have paid for it.  Repeat for emphasis…

The very best, single source of feedback on your business opportunity roadmap comes from rich discussions with product users who have written a check and use your product.

All other feedback is conjecture and guessing…and as I like to ask:  Why settle for guess?
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 Posted by at 11:11
Nov 302012

We’re just about ready to take the next step and trying to figure out how to proceed.  Can you help?

I hear this statement often from entrepreneurs and intrepreneurs — which is appropriate, given my focus.  My company and blog name is Decisive Path precisely because my expertise is helping organizations understand the fastest path to sustainable revenue.

So, what do I tell them?  First, I ask where they are in their product development and their vision of their business model.

The product development stage is not actually a primary concern of mine at that initial moment, but it typically is so profoundly front and center in the entrepreneur’s mind that it infiltrates almost every answer.  That’s why I first offer a chance to give voice to their accomplishments and their vision so that we can then focus on the key to unlock understanding of the business opportunity.

The key is What Problem Is Being Solved.
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