No Business Plan survives its first contact with customers. Don’t Panic. Pivot!
After a year at a top rated British business school and co-founding a social enterprise- some good words about the process of the entrepreneurial journey starting from 0.
The methodologies and tools used:
- The LEAN method- learn, measure, build
- Customer Development process- discovery, validation, pivot
- Business Model canvas
Here we go!
Customer Development Process is (as it says) a process where you learn about your customers- no matter what is your business- you basically know nothing about your market- you just have assumptions that you have to validate for the chosen target market. The process consist of 4 stages:
- Customer Discovery first captures the founder’s vision and turn it into a series of business model hypothesis, assumptions. Then it develops a plan to test customer reactions to the hypothesis and turn them into facts.
- Next, Customer Evaluation tests whatever the resulting business model for the tested hypothesis is a repeatable and scalable model. If not, you have to return to customer discovery, test new hypothesis and PIVOT.
- Next, Customer Creation is the start of Execution of the validated learning. It builds end-user demand and drives it into the sales channel to scale the business. This is when the game starts.
- Finally, Company Building transitions the organization from a start-up to company focused on execution of a validated model. This when you grow your company.
Having this formal process to “follow”, here’s some “rules”:
Rule number 1: There are no Facts inside your building. So, Get Outside!
Key customer feedback is random, unpredictable and other painful. Take it as it it and go on! This is crucial for step 1- customer discovery- GET OUT!
Rule number 2: No business plan survives the First contact with customers. So, Be Flexible!
Use the business model canvas to be as flexible as possible on every building block on the canvas- you may find out that you have to pivot only on certain building block or pivot in many blocks- try to test many blocks and pivot wherever needed- this is crucial in achieving a sustainable enterprise and sustainable competitive advantage.
Rule number 3: Pair customer development with agile development Customer development is useless, unless the product development organization can iterate the product with the speed and agility. In tech startups, use SCRUM, XP or any other custom made LEAN methodology that works for your company. It is essential to be agile and flexible, so follow your market and adapt fast!
Rule number 4: Failure is an integral part of the start
If you are afraid to fail in a start-up you are destined to do so. The more failures, the closer to success. So, don’t be afraid to fail, make brave moves and celebrate every failure. :)
Rule number 5: Make continuous integration and pivots
Pivots are driven by the insights by continuous learning of “pass/fail” tests. The validated learning will lead you the right pivots- the earlier you notice the failure- the better- so, don’t fall in love with your first idea- pivot, pivot, pivot fast.
Rule number 6: Design experiment to validate your hypothesis
Hypothesis is a fancy word for guess. When I say ” test your GUESSES”- I don’t mean ask your mom if she is going to use your product- design a proper experiment and formal tests according to your market and business model- and then confirm your product. OR change it.
Follow the “rules”, however you can break some. Every startup is unique- unique market, unique internal knowledge, unique management, so find out what works for you and go for it!
The entrepreneurial journey is not easy, not at all- but there is nothing as exciting as riding on the entrepreneurial tide. Good luck!