From the course: Becoming a Product Manager: A Complete Guide

What is customer development?

From the course: Becoming a Product Manager: A Complete Guide

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What is customer development?

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- Hey guys, welcome to the next section, super proud of you for making it this far. Now in this section we're going to cover a very prominent concept and startups in large businesses today called customer development. Customer development is one of the number one tools a product manager will use to get any sense of whether or not you're building the right thing, what the market will accept, and what the market will absolutely just reject. So it's something you have to know. Now, a lot has changed since this book, The Lean Startup came out, companies startups. Even small businesses are looking at their markets and looking at their customers as well as their business ideas in a radically new way. If you're unfamiliar with The Lean Startup, we'll cover that later in the course so don't worry. But the old way of thinking was that you would sit around come up with the best idea for what you think your market will accept, then what you would do is you would build that and push it out to the market. The attitude in general was that some products and some new features succeed and some fail, such is life. You go from concept, to production, to promotion, and that's the entire lifecycle. Now, if there's one thing we've learned from The Lean Startup, it's that you can't come up with product ideas in a vacuum. There's a lot more that goes into what makes a product successful and what makes a product unsuccessful. And that information nugget that you wish you had before you started building your product and before you launched it, is actually held by the customer. So customer development in a nutshell is the practice of establishing a continuous and iterative communication line with your customers, so that you can come up with ideas, come up with hypotheses, try them out with your customers, get feedback and use that and feedback to inform your product decisions going forward. By establishing a line of communication with your customers, you can on a constant basis test and validate your product ideas with regards to who's going to buy it and the market in general. Now, I know a lot of you guys out there have heard of customer development and you probably are thinking that's part of it, right? Well, let's talk about customer development really quickly from an academic sense. Now, customer development is actually a framework and was developed by a man named Steve Blank. He is a professor at Stanford and a thought leader in startups and how small companies can disrupt large industries. The concept as he teaches it, was expounded in his book called The Four Steps To The Epiphany. That's any hint there are four steps to his customer development framework. Step one is discovery, step two is validation, step three is creation, and step four is building. Now, he teaches the customer development mindset as something that permeates every single section of your product lifecycle, from coming up with the idea all the way to growing your business. And this is absolutely true and product managers do use customer development in every single section of their business. But for our purposes in this course, we're going to focus on the parts of the customer development framework that are actionable, and are the most useful, and that is the customer interview. As you manage a growing product or even a budding brand new product, you're going to want to increase your product IQ by understanding the real reasons why your customers use or do not use your product. And by doing customer interviews, we can hear it in their own words, which is incredibly valuable. So for a product manager or a founding entrepreneur, customer development is going to look like this. Now, the first step in the process is that you're going to come up with an idea, this is the core nugget that you're going to build your enterprise or your product on. And that means that you're going to instantly go into the process of validation, try to figure out whether or not this is a good idea to build. At this stage, you're going to use customer interviews to figure out whether or not your product is needed, whether or not the problem you think you're solving is a real problem, and whether or not customers actually have that problem and are interested in your solution for it. You're going to constantly reintroduce this feedback that you've received into your validation process, eventually landing at the MVP stage, and then on to the next stage, which is the actual development of your first version one product. Now during the development phase, you're going to be using customer interviews and customer development as a way of figuring out what features are the correct ones to build and how should you prioritize what goes into your version one, so that you can be efficient and save resources. After your version one, you go into a process whereby you're going to start iterating on your product. You're going to start improving it, adding features, changing things that don't work out. And at this stage, you're going to use customer development constantly to figure out things like, are customers enjoying the product? Are they using it correctly? Who exactly is using the product and getting the most out of it? Is it the group that we thought it was? You'll use this as a tool for figuring out whether or not you're targeting the right people, figure out if there's anything that you are missing and to give you clues as to what new features or new avenues might be open to you. Customer development is primarily a tool for two things. One, risk mitigation, and two opportunity recognition. And that is what you are going to use customer development for as a product manager. So in this section, we're going to focus on how do we do that iterative process? How do we do it correctly? How do we know if we're getting the right feedback? Who exactly do we talk to? And what insights can we get from all interviews? Alright guys, hope you're excited. This is an incredibly useful skill you will use regardless of whether or not you become a product manager. See you in the next lecture.

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