Original posted on Medium.

De-Risking Innovation

Anyone building new products wants to make sure that what they are building actually serves a need. However, we often get caught up in building products in isolation of the customer because we are heads down in building out technical specs without truly validating whether there is a clear, urgent problem to be solved — this is a Product 101 mistake.

The idea of building a pipeline to speak to customers if not foreign, but we often treat it as a cyclical part of the product development cycle, rather than one that is continuous in nature. Let’s say a PM is bogged down trying to deliver a specific feature set with their engineering team… they likely do not have the brain capacity to think about prospecting new customer segments to explore new product opportunities with. Now, as the CEO of a company, we have a problem because no one is actively seeking out these new market opportunities. The conundrum lies in that if you have an established product management process already in place, you don’t want to distract your product team from key existing priorities.

Discovery is a Required Competency

If you look at every amazing salesperson, product manager, or founder, the common denominator is that they are all amazing at talking to customers and capturing their needs and wants. Attunement to your customer base is table stakes for being able to build new products. You cannot do that in isolation, yet many PMs think that they can or have the illusion that they have done enough. Further, throughput and learning velocity matters. You can’t have 2 meetings a month and expect to build a perfect roadmap from those learnings.

Over the past 2 years, I’ve helped launch more than 15 ventures by testing positioning and demand before the product team even needs to write any line of code. Enter the concept of “Discovery-Led Sales,” and it’s the idea that a product or venture lead should be able to identify a clear enough problem with the right articulation to a repeatable segment of customers before launching any sort of build. You don’t want to be wasting precious resources building something that customers may not care about. You will be able to queue up a series of pilot customers and evangelists that will even help you co-develop the solution. That is how you de-risk innovation at scale.

Process for Validating Ideas

We at LeapMotiv have built a system that allows product teams to run customer discovery in an extremely efficient manner. You should be able to validate or invalidate a hypothesis within 2–3 months if done correctly.

At a macro level, there are 3 major phases as outlined in the diagram below. Each of the phases has a clear exit criteria and it generally takes about a month in each phase before you can move onto the next.

Customer Discovery Framework

Executing the phases outlined above takes a lot of skill in customer discovery. From our experience as operators, we have documented a process that trains PMs, Founders, and Innovation Leads to be able to practically boot up their own discovery practice. Here are the steps.

Step 1: Discovery Brief

• Write up a hypothesis statement with validation criteria

• Define the customer segment and titles of customers to go after

• List background info, assumptions, and learning goals

• This document serves as the north star for the discovery cycle

Step 2: Building a Funnel

• Create a list of contacts and a ‘universe’ of potential customers

• Put together a matrix of potential messaging against potential segments and titles

• Set up outbound across various channels

• Use response rates as a proxy for how interested folks are in the topic

• Optimize response rates at every cycle based on what is working vs not

• Stay organized with a spreadsheet or a tracker of some sort

Step 3: Running Discovery Calls

• Craft a high level interview guide that includes the hypothesis and validation criteria

• Follow a format that does not bias the convo (i.e. Priorities, Workflow, Challenges, Implications)

• Try to ask for specific examples and dig deeper when relevant; do not ask leading questions; separate facts from opinions

• You should be speaking less than 20% of the time; record your calls so you can reference them later on

• Create call summary sheets so you can stay organized and present the findings to others (for everyone’s learning)

Step 4: Synthesizing Learnings

• After you complete the amount of calls in your brief (i.e. 10 is a good amount for 1 hypothesis because we generally see learning saturation met within this number), run a Segment Analysis so you can compare the hypothesis yes vs no and identify patterns that are emerging

• Finally, you can then use the exact quotes from the customer calls to build a Persona that tells the story of your validation criteria (i.e. customer acknowledges problem, believes it should be solved, has tried to solve it before)

Examples & Benchmarking Data

Over the years we have had the chance to work with many orgs to help them launch new products and have collected some great data on what ‘good’ looks like for building a pipeline of customers. Below is some data that we have taken from 6 ventures that we helped launch, with varying timescales. You will see how many outreach attempts it takes to get net new meetings booked with potential pilot customers.

Across the 6 ventures above, there was:

• Average open rate of 60%

• Total response rate of 8% (which includes positive and negative responses)

• Approximately 2.6 net new meetings / week with prospects per week

Summary

Launching new ventures and building products at scale is difficult, but product innovation teams must figure out ways of validating new ideas quickly and effectively. The most critical piece to that puzzle of finding new revenue streams is creating a high level of learning velocity, which can be achieved through rapid customer discovery. However, if your team is not able to generate enough pipeline fast enough, you will struggle to create any momentum.

Innovation leaders that do not have the resources available to find new market opportunities should get in touch with LeapMotiv to see how we can help you validate and launch new products. If you’re interested in learning more, send me an inquiry at: jvo@leapmotiv.com