Customer Development is a technique startups use to quickly iterate and test each part of their business model. How you execute Customer Development varies, depending on your type of business. In my book, “The Four Steps to the Epiphany” I use enterprise software as the business model example.
Ash Maurya, the CEO of WiredReach, has extended my work by building a model of Customer Development for Web Startups.
I think his process models are pretty good. Go read both of his posts on Discovery and Validation for web startups. His two key slides are at the end of this post but the details on his blog are worth reviewing.
Customer Development In Context
Your startup is an organization built to search for a repeatable and scalable business model.
Your job as a founder is to quickly validate whether the model is correct by seeing if customers behave as your model predicts. Most of the time the darn customers don’t behave as you predicted.
Customer Development is the process startups use to quickly iterate and test each element of their business model. Agile Development is the way startups quickly iterate their product as they learn. A Lean Startup is Eric Ries’s description of the intersection of Customer Development, Agile Development and if available, open platforms and open source.
Diving into the Customer Development diagram inside the diagram above, we see that the first two steps, Customer Discovery and Customer Validation are all about iteration and testing of your business model.
How you actually do Customer Discovery and Validation depends on what type of business you are in. What makes sense for startups selling Enterprise Software may not work for startups on the web. Therefore you need different versions of the actual steps of Customer Development for different types of businesses.
The Customer Discovery step for Enterprise Software Startups
The first step in the Customer Development is Customer Discovery: testing your hypotheses. The flow for Customer Discovery for an enterprise software company was described in the Four Steps to the Epiphany. It looked like this:
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The Customer Discovery step for Web Startups
Ash Maurya‘s version of the Discovery step of Customer Development for a web startup looks like this:
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Customer Validation for Enterprise Software Startups
The next step in the Customer Development process is Customer Validation – making sure that there really is a repeatable and scalable revenue and business model before you turn up your cash burn rate. My version of Customer Validation for an enterprise software company looked liked this:
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Customer Validation for Web Startups
Ash Maurya‘s version of the Valdiation step of Customer Development for a web startup looks like this:
- A startup is an organization built to search for a repeatable and scalable business model.
- Customer Development is a technique startups use to quickly iterate and test each part of their business model.
- You need different versions of the actual steps of Customer Development for different types of businesses.
- This post illustrates a version of Customer Development for startups on the web.
