One of the good things about trying to build a business is the constant background research and learning one has to do to figure out if there is a smarter and quicker way to do things.
Two main ideas that I have been strongly influenced by in the recent past is “Customer Development Process” and “Sales Learning Cycle” . Co-incidentally, both of these concentrate on learning in the organization, iterating and then ramping up.??
Both of these ideas may seem obvious to a lot of people but as??David Cowan said??”Everything is obvious once it is demonstrated”
The basic idea of a customer development process is to efficiently build a successful business when one operates in an environment of finding an “unknown solution to an unknown problem”. This may be most applicable to firms such as internet and software technology companies but may not apply to cancer drug firms where the problem is real but the solution is??unknown. In such cases, companies should focus on involving customers and getting??validation from customers as early in the life cycle as possible. Simple advise but not followed up by a lot of companies (Stealth companies?). The ideas talk about integrating product development and business/sales activities. I think of it as an agile methodology not just for your product development team but for your entire business. The concept was pioneered up by Steve Blank??(involved in more than 7 startups) who talked about these ideas in his book Four Steps to Epiphany ??(read M‘s recommendation )??
More research and Information on Customer Development here:
- Introduction to Customer Development-??http://startuplessonslearned.blogspot.com/search/label/customer%20development
- What is Customer Development -??http://startuplessonslearned.blogspot.com/2008/11/what-is-customer-development.html
- Eric Ries’s (Founder oF IMVU and now partner at Kliener Perkins) posts on Customer Development-??http://startuplessonslearned.blogspot.com/search/label/customer%20development
- VentureHacks Posts on Customer Development -??http://venturehacks.com/archives#customer-development
The second concept of a Sales Learning Cycle (SLC)??was pioneered by Mark Leslie (founder of Veritas and a prof at Stanford GSB) and??is focused on ramping up the sales force. I have been personally been thinking a lot about the Sales force ramp question as our service has some limited acceptance in our market while using an inside sales model. The Sales Learning Cycle ( SLC ) offers a great framework to think about these different sales models and the ramp up time. The extremely simple answer is: Ramp up only after your sales folks bring in yearly revenue that is 3X sales cost (Sales Compensation and other sales specific costs). If you ramp before that (and try to get big fast), you miss valuable learnings and end up with a bunch of sales folks and no deals. Eventually, the entire sales team gets fired and perhaps the company goes bankrupt or suffers a massive down round if its VC backed.
More information and research on SLC below:
- The Best Startup Advice I have- Sales Learning Cycle-??http://whohastimeforthis.blogspot.com/2005/09/best-startup-advice-i-have.html
- Slides by Mark Leslie-??