What is a prototype for? In terms of customer development it is there to help us discover the scalable business model that best meets our customer’s needs. The first 30 slides or so of this presentation summarise the key points really well:
- Fail early and cheaply – don’t wait until launch to find out if your idea works, start now. The idea is to cycle through as many cheap, disposable prototypes as it takes to discover what your customers want. If you invested so little time in your prototype that you don’t mind throwing away and starting again…you are on the right track
- Make it real – don’t just talk about your idea, show people. The prototype is how you communicate your idea to others
- Test your assumptions – business models are based on a series of assumptions, e.g. ‘these are my customers’, ‘this is the product they want’, ‘they will pay $X for it each month’ … the prototype is where you test these assumptions. It’s also where you change (or pivot) your business model until you have something that works. Doing a survey is not enough, you need to actually verify your plan with a testable product of some sort.
- Iterate fast – each time you bust an assumption, start again. Build another prototype that does support your assumptions… or change your assumptions
According to the Steve Blank model of customer development the purpose of the startup is to find a business model that works and will scale. Using this approach your key activity in the early stages is to discover who your customers are and what they want. A quick and dirty prototype is the best way of moving beyond your initial guesswork and finding out for yourself what really works. This requires getting outside of the building and interacting with your customers from the start.
Alex Osterwalder explains the way in which businesses can adapt their business model as they move through this customer development cycle here.
In my next post, I’ll track down some different example prototypes and look at how they go about validating your business model. For now, Steve Blank explains the approach for both web products, and physical products in this extract from the startup owner’s manual.