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Steve Blank on the four stages of Customer Development

Anything by Steve Blank on Startups is worth your time – especially if you work in a sector where people don’t think in terms of “customers” (education, non-profits etc).

The lean methodology is a tool that can help you to discover what works, and how to fund it sustainably.

… a startup is a temporary organization designed to search for a repeatable and scalable business model. Within this definition, a startup can be a new venture or it can be a new division or business unit in an existing company.

If your business model is unknown – that is, just a set of untested hypotheses – you are a startup searching for a repeatable business model.

Once your business model (market, customers, features, channels, pricing, Get/Keep/Grow strategy, etc.) is known, you will be executing it.

Search versus execution is what differentiates a new venture from an existing business unit.

The primary objective of a startup is to validate its business model hypotheses (and iterate and pivot until it does). Then it moves into execution mode. It’s at this point the business needs an operating plan, financial forecasts and other well-understood management tools.

The Customer Development model… breaks out all the customer-related activities of an early-stage company into four easy-to-understand steps.

The first two steps of the process outline the “search” for the business model. Steps three and four “execute” the business model that’s been developed, tested, and proven in steps one and two.

The steps:

Customer discovery first captures the founders’ vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts;

Customer validation tests whether the resulting business model is repeatable and scalable. If not, you return to customer discovery;

Customer creation is the start of execution. It builds end-user demand and drives it into the sales channel to scale the business;

Company-building transitions the organization from a startup to a company focused on executing a validated model.

Steve BlankStartup Owners Manual

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