Are enough qualified customers experiencing a specific problem?

imageSolution providers never seem to have a shortage of ideas about possible application areas for their favorite technologies and ideas. But unless sponsors have deep pockets and inexhaustible patience, the enthusiasm of these change agents will usually not be sufficient by itself to fuel the effort required to bring these ideas to fruition across a product's lifecycle. Sponsor priorities and available resources wax and wane with time, and usually have other fires to fight.

The first customers of new things are called innovators and early adopters, and they receive this label because of their pioneering spirit. Being the first to the finish line with the next new thing could enable them to exploit first mover advantages over competitors. But customers in this red zone typically must exhibit a higher than average tolerance to the uncertainties which predominate this region of technology adoption.

In Crossing the Chasm, Geoffrey A. Moore describes the challenge of spanning the gap between these innovators and early adopters, and the majority of other customers which may come out of the woodwork, once these pioneers have absorbed fate's stock of uncertainty arrows. Accelerating across this gap is usually critical to making the economics of any business endeavor work, as it determines how much momentum can be established for full scale product development. But one should not just take leaps of faith in new product concepts based upon the enthusiasm of technologists or their testimony about the value of their proposed new things. Just as references provided in employment applications can be manipulated to inflate expectations of potential performance, project endorsements can temporarily be secured from niche customers, and these are not necessarily representative of the market or businesses most pressing needs, and may not be economically viable or make business sense for all concerned.

Solution providers try to traverse this adoption lifecycle with the best intentions. Innovators may generate, discover, or just become aware of candidate component technologies which suggest characteristics that may offer breakthrough performance. It is easy to envision introducing such components as a single key that will unlock high value, much as one might substitute one part for another in a machine. But human nature causes us all to over-simplify the complexity of such substitutions, and under-estimate the width of the gap that must be crossed in order to achieve viable economies of scale, service-readiness, and product support over time. Customers often have problems that they believe need solving, yet technology solutions are not always the best answer for those problems. Problems are best resolved by attacking the intrinsic difficulties which constrain the realization of value, while minimizing the production of waste and rework. Such constraints include

  • Lack of clarity about the most critical situations which customers find themselves in, and what attributes are essential for them to get help in these situations
  • Uncertainties about the means of production to deliver and support customers in those situations
  • Assumptions about team's behaviors and their underlying beliefs and motivations
  • Scarcity in resources required to perform work

These roadblocks are why software-intensive projects fail so frequently. According to Steve McConnell, these failure rates are as high as 75% across the technology industry. This means that decisions to invest in such new ventures should be made deliberately and reviewed regularly. The decision-making processes for such investments must integrate information about the discoveries that are made while searching for solutions, and must be capable of adjusting project requirements and targets, and re-evaluate continued investments, should this information indicate that these projects will no longer will yield the returns originally expected.

The stakeholders that participate in such projects will have many different perspectives that must be considered and communicated.  Some of these stakeholders will be sophisticated about evaluating the value of changes from a business's perspective, and others may instead suggest changes which provide benefits only to the role they most frequently operate within. In either case, it is easy to be technologically or systematically naive about where the real constraints will arise in most situations. In this climate, solution providers need to borrow, combine, and fill in the missing pieces from many innovation sources in order to weave together a balanced solution.

imageTo be viable, projects must amortize the costs of developing these founding ideas into solutions that will appeal to a target set of customers. When the number of these customers is sufficiently broad, implementation can be made affordable. As solutions prove themselves in meeting customer expectations, sponsors can cash in on their original investments. However, if solutions do not satisfy a sufficiently large set of customers, the pursuits can distract businesses from focusing on other, more valuable endeavors. This is why delaying the validation of potential benefits can be hazardous to any business's health. This is not an easy task, for, as John Sterman describes, the process of synthesizing customer choices is non-trivial:

Humans are not only rational beings, coolly weighing the possibilities and judging the probabilities. Emotions, reflex, unconscious motivations, and other non-rational or irrational factors all play a large role in our judgments and behavior. But even when we find time to reflect and deliberate we cannot behave in a fully rational manner (that is, make the best decisions possible given the information available to us). As marvelous as the human mind is, the complexity of the real world dwarfs our cognitive capabilities… Faced with the overwhelming complexity of the real world, time pressure, and limited cognitive capabilities, we are forced to fall back on rote procedures, habits, rules of thumb, and simple mental models to make decisions. Though we sometimes strive to make the best decisions we can, bounded rationality means we often systematically fall short, limiting our ability to learn from experience… Experimental studies show that people do quite poorly in systems with even modest levels of complexity. These studies led me to suggest that the observed dysfunction in dynamically complex settings arises from misperceptions of feedback. The mental models people use to guide their decisions are dynamically deficient… and are insensitive to non-linearity that may alter the strengths of different feedback loops as a system evolves

Since this synthesis of a product's vision and requirements are such critical guideposts, any project should focus its early efforts on customer development. The primary objective of customer development activities is to see if there are enough 'paying' customers who will rally around the vision of the product, and help the development team evolve this vision into a workable solution. It is not enough to simply discover customers that are willing to embrace high-level ideas expressed in the vagueness of language. Innovators and early adopters are by their nature starters who will rapidly embrace technology, but will likely be fickle when the next new idea is identified. These early adopters are also unlikely to be sufficiently representative of the market segments which solutions are ultimately intended to serve. By their nature, such innovators are starters, not finishers, and can often be fickle in their interests.

Once technologists realize that selling a rough concept to a broad market is both time consuming and frustrating, they have two choices: to focus exclusively on one client, or to do the hard work of customer development. The latter path is the optimum one for a business's long-term success, even though it requires broad participation and active listening. Customer development requires eliciting enough details from a range of customers to justify, shape, elaborate, and implement needed changes to ideas and concepts in a collaborative manner; the goal of this effort is that everyone embraces a shared and meaningful vision that will guide development and allow teams to maximize their contributions, without coordinating every detail. This customer development requires discovering the critical information details that enable meaningful project decision-making, and that enables everyone to be successful in the long run. Many new ventures devote too much of their time and effort in trying various product configurations in isolation, before they have validated their business assumptions, discovered the best market for their products, and positioned themselves for the required customer involvement that is essential to continued growth and success. There are often alternative (and simpler) ways of problem solving that can only be discovered through this customer collaboration and refinement of operational concepts.

It can often be difficult to find enough customers that have enough in common to span this technology adoption gap. Each new customer typically wants a solution that is appropriate to their unique environment. Yet often, they don't want to or can't bear the full costs of development and associated lifecycle support for that custom solution by themselves. As a result, technology providers must learn to position their products to appeal to the broadest possible market, and find the affordable sweet spot across all targeted market segments.

According to Steven Gary Blank, author of one of the most popular handbooks for startups in Silicon Valley, the product manager responsible for this customer development requires a unique set of attributes:

  1. The capacity to understand customer problems in the context of their environment and from their perspective
  2. An ability to communicate the utility of concepts to innovators and early adopters while retaining flexibility in the design of the solutions which can be offered
  3. Responsiveness to customer objections to proposed solutions, and agility in being able to incorporate this feedback, rather than spending all their energy on the pitch, the pricing, or the relationship fit
  4. Resiliency to pivot when important to customers, while preserving the ability to take a stand when necessary
  5. Insights about architectural approaches that will minimize the rework required over the longer term, while providing sufficient scalability and robustness in the short term

One might think that this customer development is easier when you are working within a business across organizations, rather than in the broader marketplace. However, as Jim McCarthy reminds us, such internal relationships bring their own challenges:

If you provide software to a captive audience, your ongoing customer transactions are more, not less, psychologically and emotionally complicated than business conducted in a normal competitive setting. Your customers are doing something not unlike doing business with family members. This kind of business is especially problematic - and supercharged with meaning. You must compensate for your customer's lack of choices among several products and the frustration and resentment that can create over time. You must get your customers to 'choose' you in spite of their captivity, not because of it. And since their relationship with you is one institutional commitment rather than a history of successive personal commitments, you begin in a negative posture.

The first step in this customer development process is to arrange to have enough access to a representative set of candidate lead users.  Eric Hoppel has discussed this challenge extensively, and emphasizes the importance of identifying these lead users to help to validate hypotheses about the customer's problems and proposed solutions before investing significantly in developing opportunities. In the Four Steps to the Epiphany, author Steven Gary Blank discusses the importance of identifying such 'lead ducks' (er, users) to help cross this chasm. Blank identifies 5 desired characteristics for these 'Earlyvangelists':

  1. They have a problem
  2. They know they have a problem
  3. They have been actively looking for a solution to their problem
  4. They have parts of the solution (but have not overly constrained the design space for a total solution)
  5. They have or can acquire budget to help develop the solution into a useable form for their purposes

Since it typically will take several iterations of this collaboration to find an acceptable solution, such lead customers ideally are risk sharing partners who can finance their own participation. If you can't find enough of these kinds of customers to rally around a proposed solution's initial vision, you better spend more time discovering what the silent majority really needs and are will pay for, and incorporate that pull into your product's vision.

The second step in the customer development process is to conduct a series of structured interviews of your candidate lead customers across a target set of market segments, in order to frame the problem statements that will be pursued. These interviews should consist of a uniform set of prompts to start the dialog dialog, followed by a deeper, more probing set of questions to uncover the crucial aspects of their problems. These questions should seek to identify the set of actions, objects, and attributes necessary to achieve the business results that these customers expect to realize. In larger engagements, workshops may be helpful to generate this information, though this approach is generally not possible when competitors are involved. For example, a series of sessions in workshops might explore user needs within small groups that share a point of view, and synthesize their necessary operations into a series of dependent statements which fit into the following pattern:

As a stakeholder presented with a condition within an environment, I need a capability to reliably transform inputs to outputs.

The third step to crossing this gap of customer development is for subject matter experts to work together to draft statements of these opportunities into a value chain, so that candidate solutions that fit within the above operational scenarios and environments can be evaluated, and so that a sufficient value proposition can be realized to secure the needed resource commitments.  As these needs statements are categorized and refined, it is important for them to capture the underlying limitations which have been encountered by customers in the past (who likely attempted at least some of these objectives); these constraints are usually best revealed by asking the question 'Why' a lot, as each problem's synthesis is being performed. There inevitably will be competing values and interests that will need to be considered as this synthesis occurs, and a framework will likely need to be established so these can be appropriately prioritized and made actionable over time. Critical thinking skills and disciplined definition and verification of the underlying ideas and concepts are essential to perform this refinement, and capture it in written form. A problem statement's definition should:

  • Express the pain that is being experienced in concrete terms
  • Characterize the gain that could be realized by proposed solutions
  • View the situation from multiple perspectives
  • Identify the constraints which preclude achieving these gains today, and connect these causes with the effects they produce on customers

The final step in beginning to bridge this gap between needs and solutions is accomplished by producing a shared vision for the envisioned solution, an elevator speech, and a project pitch to secure sponsorship for the endeavor. Such sponsorship is critical to securing the funding for follow-on work, and will be helpful in navigating the politics within the organization. The materials to describe the investment opportunity must strive for simplicity and balance across stakeholders and time horizons, and realistically assess the risks of implementation and the circumstances which would favorably enhance the endeavor's likelihood of success. The language used in these pitches should be crisp, sticky, and consistent with the investor's mental models, and should focus on the unique capabilities which could be delivered if funding for the effort can be secured. The information should also describe what it will take to achieve the product's vision over time, and highlight the critical functions and performance that will be essential for realizing the targeted business results. Ideally, a description of the the minimum viable product for supporting lead customers should also be provided. There is an art to crafting such material, and it is a great time to bring in others who have been successful in launching new projects in the past, both to leverage their experience, and to incorporate their independent perspective into these materials.

Once the solution development team has determined they have adequately defined the problems for a designated set of stakeholders, they can set about the task of determining how to solve these problems. Unless projects are launched from this agreement across producers and consumers of solutions, they will likely run into many roadblocks and dead ends along the way, and take significantly longer and cost much more than originally forecast. Once this foundation of 'win win' agreements has been established, prototyping can then be used to validate the feasibility of the solution elements, by demonstrating their feasibility and value early in the development, so the rest of the development effort can be performed with confidence and focus. With this preparation, solution developers are more able to draw energy and obtain help from the sponsors who have committed to the endeavor, and will have an increased ability to achieve real breakthroughs by solving the problems of real customers. That helps make the hard work of development far more satisfying for all involved.

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