Customer Discovery 201: Lesson One
Customer Discovery Can Miss the Mark When It Lacks Design Process
I’ve worked with dozens of startups. And as we all know, most startups do not succeed—for a number of reasons.
But in 2018, I was surprised that an idea didn’t work out.
A founder experienced in manufacturing developed a software-as-a-service (SaaS) advancement. It could maximize a company’s capacity, reduce manufacturing waste, and dramatically lessen the impact of the industry’s human capital scarcity. Before engineering the product, the founder interviewed numerous production managers in several facilities. He became acutely aware of the challenges faced by the organizations and developed an easy-to-implement solution. It seemed like a sufficiently de-risked bet to me and a number of other investors who supported the company.
Yet the market rejected the product entirely.
What bothered me in this and other cases is how thoroughly it seemed the founder performed customer discovery, only to miss the mark in determining what customers desired.
It’s a pattern I’ve seen for more than a decade.
As the managing director of the Desai Accelerator at the University of Michigan, I coach promising early-stage startups. Most have participated in multiple entrepreneurship training programs before applying to the accelerator. Despite their undeniable preparation and dedication, early-stage founders can exhibit a familiar dysfunction in their startup tactics: their customer discovery efforts, no matter how robust, are largely ineffective in informing decisions that increase the odds of business success.
So, I decided to examine why this occurs. I looked at friction points, stakeholder motivations and relationships, and other internal and external pressures on founders that affect customer discovery.
Here’s what I found:
There exists an imbalanced focus on the different stages of customer discovery.
Coaches, educators, investors, and founders give the most attention to quantifying early activities like interviews and secondary research (“Observation Activities”).
Founders are often asked to report Observation Activities such as the total number of interviews, total interview hours, number of individuals interviewed, and variety of stakeholder types interviewed. While these Observation Activities are essential, they encompass only a small portion of the research process and don’t convey the quality of the overall discovery performed or process steps that lead to informed action such as insight creation, and information analysis and synthesis. These drive decisions and actions (“Decision Activities”).
Looking at this through a design lens, consider the typical representation of startup Customer Discovery versus the Seven Modes of Design Innovation Process from Vijay Kumar’s 101 Design Methods. One could argue that the entirety of the startup Customer Discovery cycle fits into just the Research quadrant of the Design Innovation Process until the Verify stage.
To use a simplistic analogy, consider you’re reading a textbook for my class. You can tell me how many pages you read, the number of chapters you covered, or how many times you opened the book, but that data provides little assurance that you achieved comprehension of the material. Just because you read it, doesn’t mean that you got it or can do anything with it. If instead I also asked you to summarize the important points of the text, compare the narrative with other relevant works, and describe how the author altered your point of view on the main topic, I’d have higher confidence that you appropriately engaged with the material — that you learned. I would also be able to assess whether your interpretations of the material were correct (or at least somewhere on the better end of a spectrum of accuracy when there is no definitive right or wrong).
Presumably, a classroom setting has an expert who “knows the answers,” but in customer discovery, the learner must be the one to generate insights and find the answers. This responsibility may land outside the learner’s comfort zone (and in this setting, the learner is the startup founder in a messy, ambiguous environment) and lead them to focus solely on easily quantifiable Observation Activities. Tracking the number of interviews you did is easy; performing rigorous analysis and synthesis (then reporting the results!) is less so.
While analysis and synthesis are likely well-known to those trained in design, founders may not be familiar with these steps. As Brianna Cohen, co-founder of on-demand patient support platform FindYourDitto, stated: “This is the fundamental problem: we are being told there is a magic number of people to talk to. I interview well, but that doesn’t translate into discovering well. Tell me how to get data-supported information that will help move my company forward.”
Intentionally tracking and evaluating Decision Activities may improve the overall effectiveness of customer discovery. To test this theory, I created a framework that systematizes the tracking and reporting of Decision Activities, which the Desai Accelerator cohort startups are piloting this year.
Find out why this is worth the extra effort in Customer Discovery 201, Lesson Two: For Startups, Customers Matter Most. Also available at the ID website now.
