Customer & Team Development Pt. 1 (NEF workshop)
Last week I attended another 2day workshop organised by the NEF and hosted by UCL at their Idea campus in Shoreditch, London. The theme for this workshop was how do we identify, on board and develop our customer base and key team. This threw up some great discussion and covered some challenging issues faced by modern entrepreneurs.
The first day was led by Chris Coleridge of UCL and we kicked off by looking at our business ideas and taking time to identify our “Critical Uncertainties”. This is a valuable exercise, picking out and writing down those key issues and unknowns around your business which have the potential to topple the idea or cause the biggest headaches as you start down the path of building a startup.
Maybe you want to go for investment, bring on board a new business partner, test your product or build your skillset to move the venture forward. Knowing the critical uncertainties surrounding the business and/or idea is key to facilitating these things and not finding it all coming to a grinding halt 2 months down the line. After all, you don’t want to find yourself stood in front of investors for them to throw in the one critical question identifying a key flaw with your idea, and for you to not have at least thought it through and planned a response to it.
A quick way to help identify the big ticket issues are to think “Where are the critical uncertainties across the 9 boxes of my Business Model Canvas?”
To recall, the 9 boxes of the Business Model Canvas:
- Key Partners
- Key Activities
- Key resources
- Cost Structure
- Value Propositions
- Customer Relationships
- Customer Segments
- Revenue Streams
I did this exercise quickly in the back of my notepad and used it to help – identify the key uncertainties for an idea I have and would like to launch in the near future. Until you have those issues and uncertainties written down and in ink, you aren’t really facing into them on tackling them.
We then looked at how you can use the concept of Analogs and Antilogs to compare your business or idea to existing ones, as a way of helping identify common uncertainties and to see how others might have tackled them in the past.
Analogs (& Antilogs)
- (Analogs) Who do you want to be like?
- (Analogs)What uncertainties can you cut out by researching how they did it?
- (Antilogs) Who do you want to be unlike?
- (Antilogs) What lessons do they have for you about differentiation?
For example, if company X came forward and said “Oh, we’re going to be the ‘Apple’ of market Y”, there are certain connotations or associations we are going to make. We might expect them to be design led? Best at what they do? Ahead of competitors on innovation? Etc. etc. In that way, company X has identified Apple as being their ideal analog.
It’s important when choosing or identifying desirable Analogs though, to maybe not look to your direct competitors or those too similar! Why? Because we want to be able to differentiate of course!
Here’s a quick exercise we all did based around picking a key uncertainty and then taking that, and planning out a test we might undertake to prove/disprove that uncertainty. It’s quite simple, but very useful…
Task: (For my idea) – identify / sketch out the following tests to undertake…
- Uncertainty: identify / write out any particular uncertainty in the form of a question
- Test: test the uncertainty – what will you physical do to test it?
- (Hypothesis): What do we think we might find will satisfy us that we should move forwards with the idea, or send us back to the drawing board?
- Timeline: plan out the timescales associated with implementing the test and getting all the results.
We then took a quick look at how we might estimate the financial opportunity of our business ideas. It’s critical to startups and established companies alike, to establish their:
- Gross Margin (estimate of)
- CAC (Cost to Acquire Customers)
- CSC (Cost to Serve Customers)
- LTV (Lifetime Value – of customer)
- Size of Opportunity
- How will you get customers and what will it cost?
Again, some of these things (possibly all at an early stage!) might be critical uncertainties to a startup. Again though, we can use analogs to try approach an answer and resolution. We might research the existing market to find appropriate analogs, similar businesses/business models and identify their relative costs, gross margins, channels to market and payment mechanisms etc.
Remember that SEO/SEM costs are moving up all the time. – How much will it cost you to serve the customers? – Should you (and can you) outsource anything? – LTV, again research through analogs. Significance of heavy users and cross-selling is enormous!