Editor’s note: This is the first piece in a 12-part series exclusive to Inc.com featuring excerpts from the recently published book, The Startup Owner’s Manual, written by serial entrepreneur-turned-educator Steve Blank and co-author Bob Dorf. Come back each week for more how-tos from this 608-page guide.
For most of the past 50 years, finding the successful formula for repeatable startup success has remained a black art. Founders have continually struggled with and adapted the “big business” tools, rules, and processes taught in business schools when startups failed to execute “the plan,” never admitting to the entrepreneurs that no startup executes to its business plan. Today, after half a century of practice, we know unequivocally that the traditional MBA curriculum for running large companies like IBM, GM, and Boeing does not work in startups. In fact, it’s toxic.
By the beginning of the 21st century, entrepreneurs, led by Web and mobile startups, began to seek and develop their own management tools. Now, a decade later, a radically different set of start-up tools has emerged, distinct from those used in large companies but as comprehensive as the traditional “MBA Handbook.” The result is the emerging “science of entrepreneurial management.” Steve Blank’s first book, The Four Steps to the Epiphany, was one of its first texts. It recognized that the classic books about large-company management were ill-suited for early-stage ventures. It offered a re-examination of the existing product-introduction process and delineated a radically different method that brings customers and their needs headfirst into the process long before the launch.
Today’s entrepreneurs finally understand that startups are not simply smaller versions of big companies. Unlike their larger, established brethren, who “execute” business plans, successful startups operate in “search” mode from day one: seeking a repeatable, scalable, profitable business model. The search for a business model requires dramatically different rules, roadmaps, skill sets, and tools—some of which we’ll examine in these Startup Owners Manual excerpts for Inc.com (buy the book for the complete guide).
While The Owner’s Manual is not a formula for guaranteed success by any means, we’re confident it will help reduce the failure rate of most startups that use our Customer Development process. Or, as we like to say, “in our joint 50-plus years of entrepreneurship, we’ve made all the startup mistakes ourselves…and we’ve catalogued them in The Owner’s Manual so you don’t have to make them too.”
If we had to summarize the Owner’s Manual in a single sentence, it’d be simple to choose: “Get out of the Building!” Why? Because today’s startups seldom fail for lack of technology or product; they fail most often because of their inability to find customers. So the core of Customer Development is blissfully simple: Products developed by founders who get out of the building early and often, win. Products handed off to sales and marketing organizations that are only tangentially involved in the product development process will lose.
The Owner’s Manual and the Customer Development model it details push startup founders out of the building, where customers live, to transform an entrepreneur’s guesses about his or her business model into facts. Getting out of the building means acquiring a deep understanding of customer needs, and combining that knowledge with incremental and iterative product development.
And when you blend Customer Development with Agile product development, the result is a product that evolves over time based not on the opinions of founders or investors, but on feedback from the folks who will ultimately buy it—the customers! In the process, it reduces the need for massive early infusions of capital and eliminates wasted time, money, and effort.
Face-to-face customer feedback refines or validates every component of the startup’s business model, not just the product itself. Who are my target customers, where will they buy my product, how much will they pay, and how will I “get, keep, and grow” my customers are among the many key questions posed by the startup business model—and answered with customer feedback.
Stay tuned for more excerpts from The Startup Owner's Manual.