Curt Fowler: Get Out of the Building to Succeed
Tuesday, November 4th, 2014
"No startup business plan survives first contact with customers." - Steve Blank
Iridium was founded in 1991 to deliver a mobile phone system that would work anywhere on Earth. It spent seven years and $5.2 billion to put its service in place. In 1998, the first call on its network was made and nine months later the company was in Chapter 11 bankruptcy.
This is part 4 of our Lean Innovation Series.
What happened? In the 7 years it took Iridium to go from concept to an actual product the world changed dramatically. Traditional cellular service expanded rapidly and the price of that service plummeted. All of this made Iridium's service almost irrelevant, and certainly not financially viable, well before the service was actually available.
What could Iridium have done differently? By using the Customer Discovery Process described below, they could have kept a constant read on the decreasing size of their market, made Pivots to their business model, or scrapped it altogether - saving its investors billions.
The Customer Discovery Process fixes this problem by getting innovators out of the building and in front of customers with a Minimum Viable Product as quickly as possible. There are 4 phases of the Customer Discovery Process. I know. Things are starting to sound complicated. Well, I hate to break this to you but life is complicated. We'll help you break down the process of building a great product or service into digestible chunks. By the way, Steve's book, "The Startup Owner's Manual", is only 557 pages, so you are getting quite a lot of information in just a few posts. Here are the 4 phases:
Phase 1 - Is the only phase that occurs inside the building and consists of deconstructing the founders' vision into hypotheses captured in the Business Model Canvas.
Phase 2 - Gets you outside of the building! This is where you test the hypotheses that you created in Phase 1. If you were wrong, you make changes and re-test.
Phase 3 - This is where you test the solution that has been molded by Phases 1 & 2. The goal is to understand how well you understood the problem your product or service is built to fix.
Phase 4 - The last phase of the Customer Discovery Process is where you stop and assess the results of the experiments you have run. If your experiments have succeeded, you are ready to go out and try to sell your product to a few visionary customers.
Next week, we'll dive into the Business Model Canvas. The Business Model Canvas is what you should be doing rather than a traditional business plan.
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