Hi-tech companies are known for their large innovation budgets. SaaS companies spend anywhere from 10% to 23% of their revenue on R&D.   Innovation is not just confined to the tech companies. According to a McKinsey survey, more than 25 percent of total revenue and profits across industries comes from the launch of new products.

Despite major investments in innovation, a very disturbing fact stands out – Fifty percent of launches don’t hit their targets!

As I reflect on and compare my two sets of experiences – my last 20-odd months at early stage startups vs 10+ years, mostly at post-IPO companies – the wide spectrum of product development, iteration and launch models stand out for me. All of these experiences have reinforced a strong belief for me that the Customer Development framework can help larger companies hit their launch metrics or alternatively, fail early so those investments can be redirected to other ideas for better returns.

Customer Development is a four-step framework developed by serial entrepreneur and  business school Professor Steve Blank.

The key tenets of Customer Development (in the context of startups) are

• Products developed by startup founders who get out in front of customers early and often, win.
• Customer validation is not just about the product but the entire business model

Granted,  it’s relatively easy to apply the Customer Development framework at a startup with hungry, scrappy founders and a small team compared to a large, mature organization with more established processes and thousands of employees across geographies.

An organization applies a learning process and a scientific method, rather than merely executing what they assume to be a good version of the right business model.

In the spirit of “it’s-not-easy-but-can-be-done” attitude, here are a few insights and success stories for leaders at a large company looking to implement the Customer Development model.

Pair Customer Development with Agile Development

Remove uncertainty around engineering resources and facilitate quick decision making. Customer development can’t exist without an agile development team that can rapidly iterate on the product based on new insights.

I applied several principles of the Customer Development framework when I led a new product launch at a mid-stage company. A methodical approach to customer recruitment and diligently following up for customer interviews were key. Those activities provided several data points that helped craft an effective positioning, messaging, value prop and pricing for the new product launch. Running a focused campaign with the sales team also helped build a healthy pipeline of deals even before we launched the product formally.

Adopt a Scientist Mindset

Create a culture of psychological safety and encourage your product teams to adopt a scientific mindset. Product owners and product marketers need to develop hypotheses, get out of the building often and early to test those hypotheses in rapid fashion. Failure or invalidation of a hypothesis should be seen as a win.

When you are looking to launch in a new market, you need to understand the nuances of the local markets.

I partnered with two Subject Matter Experts – one who understood the migration challenges of the customers in the new markets and another a field expert who built solid relationships with local market’s regulatory body, customers and prospects. Having these partners on the launch team helped us to quickly (in)validate, understand the challenges and get insights on what the locals cared about on Day 1 – a) different educational content, b) custom migration tool and c) support team with knowledge base different from that handling more mature markets. Successful on-boarding of these early customers led to credibility wins and word of mouth referrals in the local market.

Share the Learnings

It is important for the core customer development team to share the lessons learned outside the building with those inside. There are several tools and forums to share and pollinate learnings not just with the new product group but across the company.

Massively successful large companies like Google and Facebook have championed the use of rapid iteration models to test and launch new ideas for mature products that have billions of active users worldwide. Product teams at Google adopted early versions of the 5-day sprintmodel and shared their learnings to launch the widely used Priority Inbox feature for Gmail and Google Hangout.

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What challenges do you face while applying rapid iteration models for new ideas, campaigns and products? Where can you apply customer development principles in 2021?