Innovation: the Trick is Managing the Pain

Written by Sean Murphy. Posted in 3 Early Customer Stage, 4 Finding your Niche, Customer Development, skmurphy

Any innovation effort is a painful struggle punctuated by false starts and dead ends. Your efforts are met with lack of interest even when a basic invention is working and active resistance when it starts to replace the tried and true. Like any childbirth the trick is managing the pain long enough to deliver.

The Uncanny Valley of Email Automation

Written by Sean Murphy. Posted in 2 Open for Business Stage, 3 Early Customer Stage, 4 Finding your Niche, Consulting Business, Customer Development, Sales, skmurphy

Trust is built over repeated interactions between people. If your business requires long term relationships then you have to make sure that investments in automation are not deployed in a way that undercut your ability to have real conversations. Unfortunately, some uses of email automation tools are pushing sales conversations into the “Uncanny Valley” because they strive to simulate–but miss–a genuine personalized touch.

5 Ways To Start Customer Discovery Interviews

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Customer Development, skmurphy, Workshop

Customer discovery interviews are essential to testing key B2B product hypotheses and understanding your target customers’ needs. Broadly there are five ways that you can reach out to potential customers to have a discovery conversation. All of them assume that you have a clear picture of who your target is and a few key questions that they will be willing and able to answer that will indicate they have a problem or need your solution may address.

Few–If Any–Silicon Valley Secrets

Written by Sean Murphy. Posted in 2 Open for Business Stage, Consulting Business, Customer Development

I signed up for a mailing list a while ago from a reasonably famous entrepreneur and he sent me this mass email in late November promising to share “Silicon Valley Secrets.” I don’t know if it’s because I have worked in Silicon Valley for more than three decades but I found the whole thing kind of sad (of course, he’s probably laughing all the way to the bank).

Webinar Replay: Innovator’s DNA Series Overview

Written by Sean Murphy. Posted in 1 Idea Stage, Books, Customer Development, Video

Steve Hogan and Sean Murphy walk through a five part webinar series on “The Innovator’s DNA” by Jeff Dyer, Hal Gregersen,and Clayton Christensen. Sean thinks it’s the best book on innovation and entrepreneurship for 2011 and useful for any team that is trying to innovate. Each webinar will be in a roundtable format and include first time entrepreneurs and experienced innovators discussing lessons learned applying the five key discovery skills described in the book.

Serious Problems With Business Model Canvas For Startups

Written by Sean Murphy. Posted in checklist, Customer Development, skmurphy

Q: I’m just about to get out of the building to validate hypotheses and start learning, but I have a problem with the business model canvas. I have been advised to develop detailed hypotheses before starting customer discovery. This is my startup and I have no idea how to fill in the business model canvas channel box or answer Steve Blank’s BMC channel/pricing hypotheses question on “the price at which half of the customers say yes.”

Customer Development and Channel Development

Written by Sean Murphy. Posted in Customer Development, skmurphy

I am rescuing a dialog on customer development and channel development I had with Ash Maurya from the comments to his “Lessons Learned in 2010” blog post. I am still at work on the “system of simultaneous equations” model and I think his new thinking on the “Customer Factory” is moving closer to iterating against multiple constraints simultaneously. I know with Theory of Constraints you should focus on the rate limiting constraint but after a few iterations everything can start to pinch.

I continue to work with the Okaloa team on Discovery Kanban and think that it also allows for the integration of option management into the next set of actions you are considering. This is still a work in progress and I welcome comments or suggestions for improvement.

Tristan Kromer on Testing Customer and Value Hypotheses

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Customer Development, skmurphy

These are excerpts from  Episode 9 of Outlier on Air: Tristan Kromer, A Lean Approach to Business.  They are in the same sequence the took place in the interview but a number of stories and asides have been omitted to focus on what I felt were some extremely valuable insights from Tristan Kromer on clarifying and testing customer and value hypotheses.

No Such Thing as a Random Sample of Five People

Written by Sean Murphy. Posted in Customer Development, skmurphy

Q: I have 3D printed a couple prototypes of my product. I am going to get user feedback by letting security guards–my target market–test if for free for a few days. How many prospect should I have test it before I can determine if there is a market for the product.

Since you are 3D printing and can iterate I would start by getting feedback from five folks: see Why You Only Need to Test with 5 Users by Don Norman for some research on why this is a reasonable place to start.

You will more than likely end up talking to more folks before deciding if there is a market or not but working with a small group at one time and testing iteratively will be easier to manage and teach you things more rapidly.

What Are Core Skills For Customer Development?

Written by Sean Murphy. Posted in Customer Development

Q: What is the core mission for customer development at an early-stage start-up? Wat are the skills necessary to execute on that mission?

Customer Development Mission

Core mission is early customers, early revenue, early references. All of these reduce risk, demonstrate traction, and make subsequent sales efforts easier (and for bootstrappers, keep the lights on).

User Experience Research vs. Customer Discovery

Written by Sean Murphy. Posted in Customer Development, Sales, skmurphy

Q: Why don’t you ever blog about User Experience Research (UX)?

The short answer is that we don’t do it.

Our Clients Want Leads and Deals

My clients come to me for help generating leads and closing deals, so that narrows my focus.

We don’t sell studies to larger firms that want a lot of fingerprints on the gun if things go wrong. If things go wrong for too long for my clients they are out of business. It tends to keep me–and them–focused very directly on revenue. We tend to focus much more on the “job to be done” by the product instead of constructing user personas.

Customer Interviews: Spend an Hour to Save a Minute

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Customer Development, Lean Startup, Rules of Thumb

For customer interviews we have a rule of thumb that if an hour or research saves a minute early in the conversation it’s a good investment.  When you look at the list of questions you have prepared to learn about the prospect’s business and their needs, it’s easy to say to yourself, “I am really busy I can just ask these at the start to ‘set the table.'” But there are significant risks with this approach.

Preparations Cuts Risk Of Customer Interviews Ending Prematurely

While the interview may be nominally scheduled for 15 minutes or a half-hour and may run an hour if it goes well the first six minute or so  are critical to communicating that you have done your homework on their situation and their needs. If you start to ask questions that are already published on-line you can appear lazy or unprepared. If you can do research on a prospect in advance, it’s worth spending an hour to save a minute in the conversation. You can even start the conversation by saying “when I prepared for this conversation here is what I learned about your firm” and give a brief summary of what you know about their situation.

It’s OK to say “I see on your website that you have hired four people in the last three months, how has that impacted …” or “I read a profile of your firm in the San Jose Business Journal Book of Lists, have you grown beyond the 12 people listed in February?” This shows that you have done your homework and don’t want to waste their time but need to confirm some of the key facts that may bear on their needs.

Information Sources To Consult Prior To Customer Interviews

  • Do a thorough review of the prospect’s website.
  • Search for any articles in the last two years at least to see what kind of press coverage they have received.
  • Review the Linkedin profiles for the firm, the person you are talking to, and anyone with similar titles or in the same department.
  • Review on-line postings in relevant forums for the industry.
  • See if they have a blog, a twitter account, a YouTube account, and similar social media sits that are often used for business purposes.

Six Questions That You Normally Have to Ask In The Conversation

  1. Prospect’s description of the problem in their own words. This is rarely more than a sentence or two and capturing the essence in their own words is key.
  2. High level description of current work process or work flow in their own words. This forms the basis for any delta comparison or differentiation of your solution.
  3. Any constraints they mention: if you hear the same ones multiple times you will more than likely have to satisfy them.
  4. How they will tell that a new solution will leave them better off: this is different from asking them to specify the solution, it’s asking for “future state” or the end result they would like to achieve.
  5. What else they have tried to do to solve the problem: probe for why they were not satisfactory.
  6. Key metrics or figures of merit they would use to evaluate a new outcome.

Closing Thoughts

“A month in the laboratory can often save an hour in the library.”
F. H. Westheimer

Entrepreneurs seem to divide into two camps:

  • those who want to have a conversation immediately, and
  • those who are quite content to research for months as long as they don’t have to talk to strangers.

Striking a balance is the key to maximizing your learning from a customer interview. Effective research prior to the customer interview allows you to

  • Ask better questions
  • Provide evidence of your commitment to developing a mutually satisfactory business relationship
  • Detect when your prospect is leaving something out or perhaps coloring the situation too much. You are not a stenographer there to capture whatever they say without reflection, but if your only source of information is what they tell you then you risk “garbage in, garbage out” in your product plans and MVP.

Related Posts

Minimum Viable Product: Enthusiastically Proceed Skeptically

Written by Sean Murphy. Posted in 1 Idea Stage, 2 Open for Business Stage, 3 Early Customer Stage, Customer Development, skmurphy

In a candid discussion about the challenges of managing your own expectations for a minimum viable product (MVP), Tristan Kromer observed, “It’s psychologically hard to enthusiastically proceed with skepticism.” And that is the challenge, we have to be enthusiastic about our product ideas to persevere to complete them and tell others about them, but we have to be skeptical enough to accept criticism and open to prospect perspectives on needs and constraints on solutions.

Strong Opinions Weakly Held

Bob Sutton blogged about this in 2006 as “Strong Opinions Weakly Held” as one of the differentiators between smart people and wise people. Both have strong opinions, but the wise can more easily allow revisions to theirs:

Perhaps the best description I’ve ever seen of how wise people act comes from the amazing folks at the Institute for the Future. A couple years ago, I was talking the Institute’s Bob Johansen about wisdom, and he explained that – to deal with an uncertain future and still move forward – they advise people to have “strong opinions, which are weakly held.”  They’ve been giving this advice for years, and I understand that it was first developed by Institute Director Paul Saffo.  Bob explained that weak opinions are problematic because people aren’t inspired to develop the best arguments possible for them, or to put forth the energy required to test them. Bob explained that it was just as important, however, to not be too attached to what you believe because, otherwise, it undermines your ability to “see” and “hear” evidence that clashes with your opinions. This is what psychologists sometimes call the problem of “confirmation bias.”

Early Adopters For Your MVP Are Often Very Normal

I think too many entrepreneurs conflate “early adopter” with “technically sophisticated’ or ‘geek hipster.’ Normal people are early adopters when they have a strong need for your product. The first two people to tell me about E-Bay, and who were genuinely excited about it, were two mothers who didn’t know each other but were collectors of different specialty handicraft items (teddy bears and glass angels) and they were shopping regularly there because they were not available in stores.

They were early adopters. I ignored their advice, of course, when I should have realized that neither used a computer for any other purpose than visiting E-Bay. They were early adopters. I should have realized that if E-Bay could create markets for these highly specialized products they could create and serve a lot of niche/specialty markets in a way that was winner take all.

Another example:  I think Pinterest looks a lot like the way that someone who creates scrapbooks or manages a physical bulletin board would want to author a website.

David Binetti On The Mind of the Entrepreneur

Written by Sean Murphy. Posted in Customer Development, skmurphy

In the mind of the entrepreneur the future is obvious and imminent. This  “reality distortion field” can be useful for making a better future possible, but it inclines the entrepreneur to minimize adoption risk–people will see the benefits of my product immediately and adopt it–and to be impatient. Customer development techniques allow you to identify expensive false positives for potential markets and to refine your approach.

I have been reviewing the presentations from Startup Lessons Learned 2010 and 2011 again and realized that I had never blogged about 2011 presentation “Lessons Learned Pivoting Votizen” by David Binetti (@dbinetti). His key take-away on the value of a customer development is that is helps the entrepreneur avoid expensive false positives, in particular the kind that can happen when you fall victim to your own reality distortion field and are overoptimistic about market risk.

Clip For The Mind Of the Entrepreneur

This clip starts at the 5 minute 40 second mark in David Binetti’s presentation at Startup Lessons Learned 2011 and gives a little context before “Phrenology of the Entrepreneur” slide shown below.

Slide For Phrenology Of the Entrepreneur

Here is the deck starting at the “Phrenology of the Entrepreneur” slide (19).

Related Posts

Update Aug-21: Source of the Phrenology Image this blog post from July 29 2008 on BzzAgent blog: Phrenology of the Entrepreneur

Having worked with several entrepreneurs throughout my career, I’ve noticed precisely nine common traits that unite them together and distinguish them from the rest of us. But what’s particularly interesting is this: just as these characteristics unify entrepreneurs into a discrete group, so too do they corral those who work for them into a community of their own. You see, entrepreneurs inadvertently create a culture in which the staff that survive bond over the realization that it is not each of them that is crazy.

Enter Exhibit A: This post. I wrote this post because our entrepreneur/leader constantly complains that too few blog posts are being submitted. I decided to write minimal text, and instead let the image speak for itself. After reviewing the post, our entrepreneur/leader informed me that “we” (another baffling entrepreneurial habit is to use plural pronouns when assigning tasks to an individual) need to add more text to make this post more about “the business” (code for “the entrepreneur,” himself?). So that’s what I am doing. And, in doing so, I have found myself reconsidering the image, itself. Perhaps the size of the rearmost lobe (labeled “self-esteem,” which was polite for “ego”), should be, err, adjusted.

 

Direct link to image http://www.bzzagent.com/blog/wp-content/uploads/2008/07/phrenology-of-the-entrepreneur.jpg

A Conversation With Tristan Kromer on B2B vs. B2C Customer Acquisition Challenges

Written by Sean Murphy. Posted in Audio, Customer Development, skmurphy


Direct download from http://traffic.libsyn.com/skmurphy/Tristan_Sean_6-13-14b.mp3

Here is a rough transcript of the first five minutes or so to give you a flavor, I think you will find it interesting if you are wrestling with customer development or customer validation in an early market:

Sean: I am sitting here today with Tristan Kromer, we are going to talk about the differences between B2B an B2C customer acquisition methods.

Tristan: some consumer startups seem to latch onto a particular technique and apply it regardless of context. I am really interested in the different approaches you can use to find B2B customers and where the differences are between selling to consumer, small business, and enterprise.

Sean: B2B the outreach is tailored / artisinal, where the price point or deal value is above 5-10,000. Consumer startups feel this pressure to move to more scalable methods much earlier due. I know one piece of advice you always offering regardless of whether it’s consumer or business is to have conversations with prospects on an ongoing basis.

Tristan: always start face to face, even for consumer. What the consumer folks may call a “manual process.” Because that’s a much more rapid form of connect. Even if you want to have a highly automated sales process, you believe that consumers will see your hero image and read your FAQ and click on the purchase button, that’s a sales process. Your face to face conversation can be roughly analogous: demonstrate the the value proposition, answer questions and then you have an ask. By doing that face to face, analog vs. digital so to speak, you get a lot more feedback and can see when the prospect smiles, frowns, looks confused, etc.. You can apply that feedback to your digital process. For example, when I use this language consistently  it’s getting a much better response. Let me try that on a landing page.

Sean: there is a desire to create scale, to create the digital process, right away. For me it’s much harder to learn from when you have a lot of unknowns. The odd thing is that B2B stays more personal because above a certain deal size you cannot assume you can avoid a negotiation to be able to get the business. There are going to be several serious conversations and at least one serious negotiating session where the value of the transaction is above $10,000.

Tristan: there is also a bias to a longer term relationship on the large dollar B2B purchase. There is an expectation of support that is often not there in a smaller consumer purchase. There is a sense of “you are going to be guy we deal with when we have problems or renew.”

Sean: yes the salesperson has to be viewed as a point of service and as providing value. Your point about a “bias ot a long term relationship” was a good one: I think the enduring consumer brands pay a lot of attention to that as well. With startup sometimes there is so much focus on the ramp that sometimes unfortunately less attention is paid to reputation, brand, social capital, whatever you want to call it. It’s not so much “we have cool logo” but “our cool logo represents a promise that people can depend on.”

Tristan: I agree: it’s two different things. It’s esthetics vs. trust. You have repeated interactions with the firm and now you can
trust them. I have recently been doing some work with large brands and it’s amazing the impact that a trusted brand has on conversations with customers. There is an automatic assumption that it’s going to be a serious conversation.

Sean: does that work against experimentation? Because they feel that they are carrying the brand they don’t want to be “too experimental?”

Tristan: it opens doors and you can have conversations that startups find much more difficult to secure. So there can be a bias towards a false positive. But as least you are having conversations you can learn from instead of trying to have conversations. I think you can be aware of the bias and manage for it. But there is fear of failure, but you can compensate for that with “off brand” tests where you don’t identify the brand.

Sean: we don’t do as much “I am from IBM” as “Charlie recommended that we speak to you” and they can check with Charlie and he will confirm it. Or I am a member of this community, I have presented at this conference, I have taken part in this working group. There is a brand effect for smaller startups, but it’s predicated on prior accomplishments or prior
relationships that can be re-activated or leveraged.


Here are some other interesting interviews with Tristan:

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