*CPS = Customer-Problem-Solution
As shown in Figure 2, customer development and product development are two distinct, but interrelated and iterative processes. As Eric Ries describes, the Customer Development team works on testing the problem-customer-solution assumptions, while the Product Development team tackles the solution. The product development process receives input from customers indirectly through customer development, and (in the web world) directly through measurement of product usage. The product development process actively iterates on the product, releasing new or different functionality directly to the customer as quickly as possible.
The customer development process receives input from customers indirectly through product development reports on feature usage, but also directly from customer development processes and analytics. The customer development process iterates on core business assumptions, product functionality, and acquisition and conversion assumptions, resulting in updated hypotheses, honed messaging, positioning, marketing tactics, and feature requirements.
In the Customer Discovery context, a lean startup is not one that necessarily uses lean manufacturing precepts per se, but rather one that uses fast, iterative development practices in conjunction with customer development methodologies in order to:
1) Validate core hypotheses (customer-problem-solution),
2) Produce an MVP,
3) Achieve Product-Market fit,
4) Produce a development and marketing roadmap for scaling.
Creating a proper iteration loop requires you to predefine success and failure for each stage, and a means to measure your progress. For example, in the web-based world, Dave McClure’s AARRR metrics (Acquisition, Activation, Retention, Referral, Revenue) might be applied to measure the stages from concept to product-market fit.
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