Please explain the following principle in the Customer Development Model:

“Preserve all cash until needed. Then spend”

Startups need own tools that can guide the learning process and searching process.
Customer development is a tool for searching for the business model which suits
the startup the best. In the search process, startups are trying to discover the
customer and validate the customer. This process is pivoting until a viable business
model is found. It is crucial to preserve cash in the search process while searching
for a repeatable and scalable business. Once the business model is found, spend
like there is no tomorrow because after the search now the business is at the
execution phase.

While in the searching phase, the company and the business model are purely
based on hypotheses. The goal of the founders is to turn these hypotheses into
customer data. The process includes rapid iterations and pivots. In the search
process, if the startup has the cash, it is easy to pivot on its changes and mistakes
by spending some money, but if the company does not have cash, making mistakes
can lead to high bankruptcy risks at the search stage itself. When founders discover
the customer and validate after many pivots company can spend like no tomorrow.
This means the company has found the business model by turning the hypotheses
into facts and discovering a viable product that fits the market. Now the company
can start investing and spending to create an end-user. At this stage, demand and
drive the customers to the company’s sales channel. This is now not a one-time
revenue but a pattern that generates revenue and profits in a cycle.

Please discuss two fundamental differences between the New Product Introduction Model
and the Customer Development Model?

The New Product Introduction model focuses on product, execution, where the customer
development model focuses on customer search and pivoting.
The New Product introduction model assumes that building a startup company is a step-by-step
sequential and execution-oriented process. It also assumes the process is smooth and success is
measured by reaching milestones along with the model. In the customer development model, it is
a two-way process that searches for customer and validation. This model learns from failures and
missteps and pivots till the possible market fit is found. This model might take a longer time, but
there is a high probability of success.

The new product introduction model assumes that customers and other facts are known
beforehand. So there is no trial and error learning. With the hypotheses and facts, directly
execute the business plan with no errors. The customer development model is open for
experiments and focuses on hypotheses testing to validate all business model components. The
customer development model triggers the failures/risks before losing all investments. The
progress ultimately lands on a viable business model with long term revenue-generated plan.

Please use the Value Proposition Canvas to explain how to develop a deep understanding of
customer jobs and how to design solutions to help customers get their jobs done.

Value proposition canvas has six elements that describe customer discovery on achieving a
problem-solution. Six elements are product and services, gain creators, gains, pain relievers,
pain, and customer jobs. These elements should be satisfied, and the customer profile and value
map should be fit to discover the optimal solution for the job.

Customer jobs are tasks that they are trying to perform and complete. The problems they are
trying to solve or the needs they are trying to satisfy. These jobs can be functional, emotional, or
social. Few key questions can be asked to understand customer jobs, such as what is the one
thing that customers cannot live without and the steppingstones to help customers achieve it?
What are the emotional needs customers trying to satisfy? You may also need to track customer
interaction with products or services throughout the lifespan to understand how critical the job is
to the customer.

Then we should layout the customer pains. Once the customer job to be done identified correctly,
it is crucial to understand the issues and barriers that customers are running into. This pain
includes negative thoughts, high cists, situations, risks, and experiences that annoy or prevent the
customer from achieving the specific task. These pains can have functional, emotional, or social
dimensions. In this section, we can ask customers questions like how you define too costly, what
makes you feel bad, the top difficulties you have to go through to achieve the task, the negative
social consequences you encountered, and many more questions. Once all these pains are
uncovered now, we can uncover customer gains.

Customer gains are expected or desired benefits for the customer once the job is done right.
These gains can include functional utilities, savings, social gains, and positive emotions. Some of
these gains can be things that customers expect exactly and others that are entirely unexpected
but positively impact them. By uncovering the gains, it is easy to understand how to delight the
customers. Some of the questions we may ask are which savings make you happy, the specific
features of the product customers enjoy, and the social consequences customers desire?

Moving to the value proposition side, which focuses on product and service. This value map
describes the features of a specific value proposition in the business model. It can be identified in
products and services, pain relievers, and gain creators.

Product and services are the most precise segment of value proposition canvas. It lists the
products and services you offer. Those can be existing development or working on to add value
to existing products and services. These products can be tangible, intangible, digital, or financial
services. Whatever the offering, it helps the customer get a job done or satisfy the customer's
need.
Pain relievers help eliminate pains, remove risks, and avoid annoyances while achieving the goal
of getting the job done. To understand the pain relievers, we can ask whether the solution or
service you provide benefits customer expectations, desires, or surprises. We can even fix
underperforming solutions by introducing new features and better performance. These relievers
end difficulties and challenges customers face and help the customer customers better sleep at
night.

Once the pain relievers are fixed, we can look and the benefits and positive outcomes of the
solution we made for the customer. This is called gain creators. This is the way which makes the
customer life better. The simple way to understand is to describe how the products and services
create benefits customer expects desires or surprised by. By asking a few questions, does the
solution make the customer happy or life easier? Does the solution create positive social results
that the customer desires? Does the solution fulfill something the customer is looking for?

Finally, you should ensure the fit of the value proposition and customer profile. Companies
might not achieve 100% between both sides, but it is essential to cover both sides' key aspects.
These elements on the value proposition canvas can be highly linked together, so it is essential
not to look at the canvas as a one-dimensional framework. And it is also important to keep in
mind that paints attract more attention than gains. So companies need to account difference
between pains and gains while designing the value proposition canvas.
Please discuss the four methods/tools (i.e., surveys and interviews, observations,
participation, and experimentation) that can help identify customer jobs to be done.

Surveys

Surveys are essential to quantitative validation of the problem company is trying to solve. Early
surveys are very much essential to validate jobs to be done with the customer. When company
know the job and the unit of analysis is the job not the customer, surveys are used to understand
how customers get things done currently. First, the company needs to understand the nature of
the problem independently without jumping into solutions. Before doing the survey, it is crucial
to understand the segmented customers who have the problem which company is trying to solve.
Then the company needs to plan how exactly the company will reach the potential segment of
customers and the specific questions going to ask. The company might think of early adopters as
the segment that want to test first with other related interests. Companies can reach segmented
potential customers by in-house lists, panels, website visitors, survey tools, partners, or by hitting
the pavement. Then it is time to design the surveys and questions. This section is the most
exciting and challenging part as results are mainly dependent on this activity. Companies can use
checklists, multiple-choice, or open questions when designing surveys. Now it is time to test the
survey. Before sending to a mass segment of customers, the company may test with a small
group of people which may help makeup errors or identify gaps at an early stage. This testing
process makes sure that the mass customer segment understands the words, responds without
confusion. At the last stage, the company runs the survey to the pre-identified customer list.
Lastly, analyze in order to validate jobs-to-be-done that company is looking for. The analysis
needs to focus on the customer, the problem, and the jobs to be done. It is essential not to be
biased by thinking about the solution at this stage.

Interviews

Through the interview method, the company can get a deeper understanding of the job that
customer is trying to fulfill or complete. Just like in surveys the job is known and company is
trying to understand the current pains and gains customer go through while getting the job done
currently. When conducting interviews, the company's focus should be to understand the
functional job customer is trying to get done, not about the sales, products, or customer behavior;
To get a deep learning first company should choose whom to interview. Been more specific and
target the customers can drive insights easier, even from 10-20 interviews. Companies can even
start with loyal customers or target an entirely new base. The company can then reach to
interview base and set up dates and times for the interview. Script and questions for the interview
are the most challenging part of the process. People may open up with you, but paying strong
attention and sub-setting what is needed is crucial. It needs high listening and attention to detail
skills. These questions should cover the entire customer journey map, the company may have a
script, but it is better not to stick to a plan. The final step is to drive insights from the notes and
recordings of the interview. The company might hear things that already know, but this is
qualitative research, so it is essential to group similar concepts under different key phrases. At
the end of this process, the company knows much better about the customer job to be done.
Observations
Observations include observing people. Through observations, the company can get to the
bottom of the customer's functional, social and emotional jobs that the company is trying to
solve. It is important to observe first and then define the jobs to be done, not the other way
around. While observing customers, an observer should focus on the job, not the product or
service. Focusing on the end product may make the company lose the big picture. Product and
service will magically come if the right pains and gains are found. The company should note
down what is observed, how the customer is doing it, and why it is following the particular way.
It is important to empathize with the situation from the customer's perspective. Through
observing right company can discover behaviors previously unknown job. These insights will
drive the companies to successfully identify and fulfill a job to be done for customers.

Participation
In some situations, customers unable to discover what jobs to be done. Maybe customers are
very interested in new technology and methods, but the situation may be complicated, and
customers may not have prior experience in a similar situation. In this case, we need to get into
customers' shoes and discover the product and job together. The start-up company needs to get
into the market quickly with the flexible product and discover with the customer. The
participation method is also known as the evaluation, and it is also an innovation process in
researchers. It created its data. The company may follow other methods such as surveys,
observations, interviews, but the participation method can also be used to understand customers'
actual situations when the situation is in place.

Experimentation
In some situations, customers do not know what jobs they want to fulfil with the new product. In
this case both company and customer may need to discover the solution. This might start with
very flexible product and then iterate/modify with customer desires. Modifying the product or
service may take time but it is usual to land to exact solution for the pain of the customer. This
method can move fats, break things and fix things.

Please discuss the major types of prototypes (i.e., theoretical (paper) prototype, virtual
(faked) prototype, minimum viable product, and minimum awesome product) that can be
used to test product solutions

Theoretical (paper) prototype

The theoretical prototype outlines the general shape of the solution. This is the fastest and
cheapest of all prototypes. It provides a cheap and easy way to adapt solutions with customers. It
is drawn on plain paper and sometimes with colored markers. Most companies use this method at
the first stage of communication between designers, developers, stakeholders, and users. It is to
observe the interaction with the users before the solution is developed. Before making the paper
prototype company should know what the solution is and what problem is expected to be solved.
Most companies have a list of tasks before drawing and then check whether all tasks are fulfilled.
A significant limitation of this prototype is hard to interpret design as it needs a great deal of
imagination from the participants. Participants should imagine how the solution looks like in the
future just by looking at a paper.
Virtual prototype

As the name says, a virtual prototype fakes in a way that makes it look realistic. Cardboards,
legos, and other mock-up tools can be used to build a virtual prototype. This prototype provides
people a definite sense of the solution and letting users change if they want. If the virtual
prototype is built nicely, people can think that it is the actual prototype solving it. Today most
companies use this method as designers can quickly explore the performance from lots of design
alternatives without investing in a high amount of time and money. Today most companies use
software tools to design virtual prototypes.

Minimum viable product

This is a prototype developed to address the core problem and the solution. It has a minimum
feature list, but it is usable. It tests vital assumptions and features on what customer wants. The
goal of this prototype is to drive purchases by focusing on features. This prototype is also known
as the lightweight early version of the solution. This prototype attracts early adaptors and
validates the product early in the product development cycle. With this prototype, it is easy to
receive feedback as quickly as possible from customers and iterate and improve the product. This
prototype is the foundation of what will become the actual product.

Minimum awesome product

This product aims to deliver a minimum solution that is extraordinary to attract customers to love
the product. It is both minimum and awesome. The prototype is awesome in dimensions that
matter. It is a narrow focus and minimum. This awesome prototype does unexpected things
which positively surprise the customers. If we look at the larger picture, MAP is beyond
releasing products which customer needs or with enough user-friendliness. It also has something
unique, wow factor which is beyond the standard familiarity. We can see MAP as an extension
of MVP. MAP is capable of providing a great user experience in terms of quality, designs, etc.
and tends to build curiosity among customers at the early stage.
Please discuss what determines the market value of a business. Please explain why it is
difficult to assess the market value of a new business.

Market value of a business is determined by market size, estimated market share of the business
and historical/financial data, but mainly on future cash flows.

For a start-up predicting future cash value is difficult. The market value may fluctuate very
widely for a start-up. The ability to generate future cash flow depends on the business's
durability and growth of the business. It takes time to build a valuable product for a start-up,
hence generating revenue and profit is not immediate. Some tech companies may start generating
revenue and profit in 10-15 years in the future.
To be valuable in the future, a start-up should survive and grow at a stable level. Moreover, a
start-up should not focus on profits; instead, think of growing the brand and surviving for a more
extended period. For that, the business should be able to increase future cash flows. To predict
market value, companies need lots of data like total market and estimated market share, which
start-ups do not have. This lack of numbers leads to predictions depends on narratives. At the
early stage of a business, the company has ideas but not explicit business models. Hence it is
challenging to assess the market value for a new business.