31.03.2021

Customer Development: the experience of startups for the benefit of corporations

Many startup founders take a close look at the success stories of mature companies and often seek mentoring from peers who are already known for their business achievements. But is there something successful companies can learn from aspiring entrepreneurs? Of course, below we will analyze one excellent example that confirms this.

Think about what all companies do at the start of their activities – they research and analyze market niches; in a situation of complete uncertainty, they strive to choose the most effective business model and achieve rapid growth. Thus, “fresh” companies on the market turn out to be more flexible to new customer demands and begin to represent real competition for companies that have been accustomed to offering their customers the same products for many years.

The often-used Customer Development methodology helps startups achieve quick results. With its help, you can quickly develop and test hypotheses aimed at meeting customer needs. This technique was developed by American entrepreneur Steve Blank as a result of his research of many startups. He concluded that the universally applied principles of the classical MBA school are effective for managing an already established company and are not at all suitable for startups. A start-up company needs to focus on finding customers quickly and the value they are willing to pay for, and the ability to create that value without major investment.

In this article, we will not go into all the nuances of the technique but will tell you what you should consider if you decide to try this approach in a corporation.

  1. First of all, you need to attract an experienced professional who can teach the staff all the subtleties. Equally important is to assemble an effective working group. A good employee is not suitable for such tasks. Customer focus should be in his blood (it is extremely difficult to teach this), and empathy should be no stranger to the staff of the CustDev working group. The basic principle of the approach is that customers are the main asset for the company. It is understanding customer problems and building effective relationships with them that is essential, not the products and services themselves. And in order to achieve success in business, first, it is necessary to develop customers and relationships with them.
  2. There will be a need for a major overhaul of customer engagement processes. At this stage, it is necessary to form and test many hypotheses and be prepared for the fact that most of these hypotheses will subsequently be refuted. It is necessary to take into account that the modern corporate culture in Russian companies most often does not accept mistakes. It is important to realize that for the purposes of CustDev, a rejected hypothesis is not a mistake, but a necessary part of the workflow to achieve the result. It is important that employees do not perceive non-working hypotheses as a failure, as this can seriously demotivate them.
  3. What first results should management expect from the working group? First of all, this is a list of hypotheses that have been confirmed as a result of customer surveys and testing. After reviewing this list, management may decide to fully implement updates / new products or develop a pilot for focus group testing. It is worth noting here that the leader himself must master the concept, basic concepts and terms in order to become a like-minded person within the team. This will significantly increase the likelihood that the new practice will be valid and in demand for the corporation.

 

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