Get out of the building.
That’s our instruction to aspiring entrepreneurs as they close out the initial session of Ventureprise Launch, the program we created to help innovators through the technology commercialization process.
For many, it is an unnerving admonition. Engineers want to stay in the design lab to add one more feature. Finance types want to crank another iteration of a spreadsheet forecast. Corporate staffers would rather refine their carefully considered business plan.
The phrase was coined by Steve Blank, developer of the National Science Foundation I-Corps program for university researchers (including here at UNC Charlotte) to explore the commercial possibilities of their inventions. In essence, it means that the critical information the entrepreneur needs is out there — with users, customers, suppliers, influencers and competitors.
To find it, you have to get out of the building.
Promising new ventures begin with a good idea based on a founder’s experience and insight. The hard work of transforming the idea into a successful business may follow one of two approaches: the traditional business plan or the lean startup.
The traditional approach begins by developing a comprehensive business plan. This has its roots in classic MBA, large organization behavior. It is a reasonable approach when an initiative is incremental, not transformational, and when considerable relevant data is available. For instance, the traditional business plan works well for a typical consumer franchise business and is exactly what a bank lender will require. When the business plan is complete, the team moves forward with execution.
The traditional approach, however, fails for many startups because there are too many unknowns, and founders typically assume that their opinions about customer needs and behaviors are facts. The lean startup approach tests hypotheses, learns and iterates toward a viable business model.
Think of a startup as a temporary organization designed to search for the problem-solution fit that leads to a successful business model. This search effort begins with customer discovery followed by customer validation. New learning leads to revisions and sometimes requires a substantial change known as a pivot. The startup team repeats discovery and validation to achieve a clearly understood value proposition and business model. Only then does the startup begin the execution phase of customer creation and company building.
While to some this sounds like common sense, it is revolutionary for entrepreneurs. Every successful business depends on finding and serving customers. It is only common sense to start your business by understanding customer needs, pains and desired gains. Yet the process is revolutionary because it requires you to go beyond your own thinking through systematic engagement with customers and the marketplace. It is all about replacing your opinions with facts before you launch the business.
Consider a brilliant UNC Charlotte researcher who invented an environmentally friendly material that is high-strength and lightweight. The researcher thought it might replace fiberglass in automotive and roofing applications. Fortunately, the researcher teamed up with a business mentor to complete over 100 customer discovery interviews through our NSF I-Corps program. It became clear that roofing companies did not care about the material’s benefits, and that automotive companies had such a long lead time that a startup could not survive. Ultimately, the researcher learned the material had great appeal for a particular construction application — thanks to effective customer discovery. The company created to pursue this opportunity is progressing successfully.
We see similar results from intensive customer discovery engagement that creates the fact-based understanding of target customer segments, value proposition and business models that are scalable and repeatable.
To learn more, check out the book “Business Model Generation” by Alexander Osterwalder and Yves Pigneur.
You can read the first article in our series on customer discovery here. In the next installment, we will describe effective customer discovery techniques that lead to well-understood value propositions.
Paul Wetenhall is the executive director of Ventureprise, UNC Charlotte’s innovation and entrepreneurship center serving the UNC Charlotte campus and Charlotte region.
For more stories like this, subscribe to StartCharlotte’s free weekly startup newsletter.
