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Translating Customer Needs Into MVPs
Frank Rimalovski discusses translating customer needs into minimum viable products (MVPs). He emphasizes the importance of testing assumptions about customers and problems through interviews and MVPs rather than assuming knowledge. Developing an MVP helps start the learning process quickly and cheaply to validate ideas before large investments. The goal is to fail early if needed and learn through the process of iteration with customers.
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Translating Customer Needs Into MVPs
- 1. @NYUEntrepreneur Translating Customer Needs into MVPs FrankRimalovski Executive Director, NYU Entrepreneurial Institute Managing Director, NYU Innovation Venture Fund Instructor, NSF Innovation Corps (I-Corps) November 14, 2015
- 2. @NYUEntrepreneur What makes fora successful startup?
- 3. @NYUEntrepreneur Commercialization Myth Basic & Applied Research Scientific Discovery/ Invention/ IPCreation Venture Formation & Growth
- 4. @NYUEntrepreneurThe “valley ofdeath” Basic & Applied Research Scientific Discovery/ Invention/ IP Creation Customer Discovery & Prototype Dev Business Model & Team Formation Venture Formation & Growth • Customer/market discovery • Engineering/prototypes • Mentors & advisors • Collaborative spaces • Business leadership • Legal counsel • Capital Commercialization Reality
- 5. @NYUEntrepreneur (At least) ThreeParts to Building a Successful Startups 1. Advancing the product/technology 2. Beginning to build a team 3. Finding a repeatable business model u Most focus on #1 and/or #2 u Successful efforts require all three 5
- 6. @NYUEntrepreneur It’s Bigger Thanthe Revenue Model u Testing hypotheses makes substantive changes to biz model before you do science/design o Define clinical utility o Who core & tertiary users/buyers/payers are o Sales & marketing process required for initial revenues and downstream commercialization o Data required for future partnerships/collaborations o Intellectual property risks o Regulatory pathways o Reimbursement strategies u Affects your biological & clinical hypotheses 6
- 7. @NYUEntrepreneur Need to dothis before finishing the science or building/designing the product
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- 9. @NYUEntrepreneur The Business ModelCanvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market The Business Model Canvas Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis Hypothesis
- 10. @NYUEntrepreneur More than halfof your assumptions are wrong! 10
- 11. @NYUEntrepreneur Customer Development Test assumptions aboutcustomer needs/problem & develop MVPs Seek validation that people are interested in your product/ solution Begins to build demand & improve efficiency of customer acquisition Drive growth aggressively & execute business model
- 12. @NYUEntrepreneur Customer Discovery u Applythe scientific method to business model development Modify hypothesis Observe phenomena Formulate hypothesis Test hypothesis via rigorous experiments Establish theory based on repeated validation of results PIVOT! You are here
- 13. @NYUEntrepreneur First test theproblem, then test the solution Customer Development 13
- 14. @NYUEntrepreneur Value Proposition What ProblemAre You Solving?
- 15. @NYUEntrepreneur Value Proposition describes thebenefits customers can expect from a bundle of products and services
- 16. @NYUEntrepreneur Key Questions forValue Prop u Problem Statement: What is the problem? u Technology / Market Insight: Why is the problem so hard to solve? u Product: How do you solve it today? u Competition: Who is delivering that solution? u Clinical utility: What level of improvement in efficacy/safety/cost/etc. is needed? u Market Size: How big is this problem?
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- 18. @NYUEntrepreneur Customer Profile u Whoare they and why would they buy?
- 19. @NYUEntrepreneur Define Customer Archetype uWho are they? o Position / title / age / sex / role u How/where do they buy? o Discretionary budget (name of budget and amount) u What matters to them? o What motivates them? u Who influences them? o What do they read/who do they listen to?
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- 21. @NYUEntrepreneur So where doesmy technology come in?
- 22. @NYUEntrepreneur It’s not aboutyour technology! 22 bit.ly/1MFD3YJ
- 23. @NYUEntrepreneur So where doesmy technology come in? Customers don’t care about technology They are trying to solve a problem Customer discovery is about identifying that problem & exploring how you could solve it
- 24. @NYUEntrepreneur put yourself in thecustomers’ shoes
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- 26. @NYUEntrepreneur Customer Interviews (aka Talkingto Humans) Customer Development 26
- 27. @NYUEntrepreneur “You can’t just askcustomers what they want and then try to give that to them.”
- 28. @NYUEntrepreneur “New ideas come fromwatching something, talk(ing) to people, experimenting, asking questions and getting out of the office!”
- 29. @NYUEntrepreneur Talk to Humans! uGOTB: The #1 lesson of this talk u In person is best u You must gain insight into your customer & market u You are doing pattern recognition… Must have sufficient data points to see 2B. Story
- 30. @NYUEntrepreneur Meet People YouDon’t Know u People you know will be nice and tell you what you want to hear u Those interviews are possibly harmful u Let other teams use people you know u People you don’t know have no relationship to protect…Only they will tell you the truth
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- 32. @NYUEntrepreneur Secret: This iswhy we brought all the mentors in! 32
- 33. @NYUEntrepreneur What do youwant to learn? 33 The Business Model Canvas Revenue Streams Channels Customer SegmentsValue PropositionsKey ActivitiesKey Partners Key Resources Cost Structure Customer Relationships Designed by: Date: Version:Designed for: designed by: Strategyzer AG The makers of Business Model Generation and Strategyzer This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit: http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. strategyzer.com What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? is your business more Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing) Value Driven (focused on value creation, premium value proposition) sample characteristics Fixed Costs (salaries, rents, utilities) Variable costs Economies of scale Economies of scope Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? channel phases 1. Awareness How do we raise awareness about our company’s products and services? 2. Evaluation How do we help customers evaluate our organization’s Value Proposition? 3. Purchase How do we allow customers to purchase specific products and services? 4. Delivery How do we deliver a Value Proposition to customers? 5. After sales How do we provide post-purchase customer support? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? For whom are we creating value? Who are our most important customers? Mass Market Niche Market Segmented Diversified Multi-sided Platform What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? examples Personal assistance Dedicated Personal Assistance Self-Service Automated Services Communities Co-creation What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? categories Production Problem Solving Platform/Network What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? types of resources Physical Intellectual (brand patents, copyrights, data) Human Financial Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? motivations for partnerships Optimization and economy Reduction of risk and uncertainty Acquisition of particular resources and activities What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? characteristics Newness Performance Customization “Getting the Job Done” Design Brand/Status Price Cost Reduction Risk Reduction Accessibility Convenience/Usability types Asset sale Usage fee Subscription Fees Lending/Renting/Leasing Licensing Brokerage fees Advertising fixed pricing List Price Product feature dependent Customer segment dependent Volume dependent dynamic pricing Negotiation (bargaining) Yield Management Real-time-Market
- 34. @NYUEntrepreneur Don’t Assume You Understandthe Problem!
- 35. @NYUEntrepreneur What do youwant to learn? u Do not sell! No demos! No presos! u You are there to learn! u Get stories, not speculation u Ask open-ended questions o Learn about their problems and how they solve them today u Ask why? Then why? They why again! u Create a guide (not a script) 35
- 36. @NYUEntrepreneur Ensuring an EffectiveInterview u Beware of confirmation bias u Get subjects to tell a story u Look for solution hacks u Understand their priorities u Follow your nose & drill down u Listen and STFU! u Have someone take notes 36
- 37. @NYUEntrepreneur Gaining Insight u Factsare interesting…Insights are your goal u Don’t just scratch the surface, dive deep u Find the hidden motivations u Ask why? And why? Then why again? u Depth of understanding always leads to insight
- 38. @NYUEntrepreneur38 “It's grueling listening to customer feedback.And if it isn't, you're probably doing it wrong."
- 39. @NYUEntrepreneur The Minimum ViableProduct Customer Development 39
- 40. @NYUEntrepreneur Help start theprocess of learning as quickly & cheaply as possible The Minimum Viable Product 40
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- 45. @NYUEntrepreneur Why create anMVP? u Answer questions & generate new ones u Validate your assumptions u Compare alternatives u Fail early & cheaply u Visualize your ideas & share with others o Team o Customers o Investors 45
- 46. @NYUEntrepreneur Why use thisapproach?
- 47. @NYUEntrepreneur 1. Find go-to-marketstrategy… 47
- 48. @NYUEntrepreneur …and do itmore quickly 48
- 49. @NYUEntrepreneur 2. Design anMVP 49 Start the process of learning as quickly & cheaply as possible Minimum Viable Product
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