Customer Discovery is the missing ingredient in deep-tech spin outs
Why are scientists reluctant to talk to customers?
In my previous post, we explored how deep-tech companies can benefit by restructuring towards OKR-driven, autonomous product squads. A crucial element of this approach is integrating customer discovery into the product squads' responsibilities. For deep-tech companies planning to spin out from universities, this customer discovery should begin even before the spinout occurs. Engaging in customer discovery early helps to better define the product and its value proposition before development begins. By incorporating customer discovery both at the spinout stage and within product squads, deep-tech companies can better align their innovations with market needs, increasing the likelihood of commercial success.
However, a persistent challenge remains: why are scientists reluctant to talk to customers?
Common Reasons for Reluctance
To understand this reluctance, let's explore some common reasons why scientists hesitate to engage with customers.
Scientists often worry that talking to potential customers—especially in regulated fields like healthcare—could unintentionally lead to legal or ethical violations.
Without formal training in interacting with customers or conducting market research, many scientists feel they're not equipped to carry out effective customer discovery.
With a strong focus on research and development, scientists might see customer discovery as a lower priority or even a distraction from their main work.
Engaging with customers can feel out of step with the academic culture, which traditionally values research over commercial pursuits, making scientists hesitant to reach out.
The Misconception Between Customer Development, Sales and Business Development
Scientists often mistake customer development for sales or business development, but they are not the same.
Customer Development is about learning. It's a part of product development focused on understanding the target customer's needs and jobs to be done. It involves engaging directly with potential customers to gather insights that inform the product, without pushing or presenting the product as a solution.
Business Development involves strategic activities aimed at creating long-term value for the organisation. It focuses on identifying new markets, establishing partnerships, and exploring growth opportunities. The goal is to form strategic relationships and explore avenues for expansion, not to gather customer insights for product development.
Sales is about generating revenue by converting prospects into customers. It involves promoting and selling a finished product or service, negotiation, closing deals, and meeting sales targets. Sales typically occur after a product has been developed and is ready for market.
Scientists may feel paralysed by the belief that they can't talk to medical professionals about their product due to regulatory reasons. While this may be true for sales activities, customer development is different. We're not trying to sell or form business partnerships—we're trying to learn.
The Role of the Product Manager in Customer Discovery
Customer discovery is the domain of Product Managers (PMs), and having a PM lead these efforts can effectively address many of the concerns scientists face. PMs are trained in customer engagement and market research methodologies, enabling them to conduct customer discovery effectively. By translating customer needs into product requirements, PMs bridge the gap between science and market, ensuring that the developed product aligns with market demands.
However, in the pre-spinout stage, scientists themselves should conduct initial customer discovery to inform the company and product strategy they will pitch to investors. This early engagement is crucial and should be included in any commercialisation grants. Including customer discovery data strengthens the proposal and demonstrates market validation. As a Product Manager and trained scientist, I would be highly critical if I were evaluating any commercialisation grant that did not involve any customer discovery.
By involving a Product Manager once the company is established, deep-tech companies can then ensure that ongoing customer discovery is conducted effectively. The PM's expertise allows for continuous alignment with market needs, which is vital for the product's success.
Overcoming Challenges and Shifting Mindsets
Scientists need to shift their mindset from viewing customer interactions as potential sales pitches or business development initiatives to seeing them as invaluable learning opportunities.
This involves:
Adopting practices that prioritize learning about customer needs over promoting your solution or forming business deals.
Recognizing that the goal is to validate hypotheses about customer problems and needs, not to sell or negotiate partnerships.
Focusing on gathering qualitative insights that guide product development, rather than being constrained by the need for statistically significant data suitable for academic publication.
Understanding that customer development is permissible and essential, provided you are not making promotional claims about your product or engaging in sales activities.
The Importance of Early Customer Discovery
Before a company is spun out, any deep-tech venture should conduct customer development with potential customers to learn more about their needs. Scientists may get hung up on interviewing a statistically significant number of people, feeling that interviews need to meet the standards of peer-reviewed papers. However, we're looking for trends and direction—to be data-informed, not data-driven. You may start noticing trends as early as five interviews. As you approach 20 interviews, the insights become robust enough to inform your product strategy.
Customer development is about testing your assumptions by engaging directly with customers—not about collecting statistically significant data, but about gaining insights that help you make informed decisions.
A Practical Example
An assumption a scientist may make for a bioinformatics cancer platform is that doctors want as broad a range of markers as possible. But customer development with oncologists may reveal they are interested in a small subset of actionable markers and, furthermore, only interested in markers that are covered by private insurance or public access systems such as Medicare. What is legally permissible may not necessarily be what doctors are comfortable with referring. These insights inform the product roadmap, ensuring the product meets the actual needs of its users.
Integrating Customer Discovery into the Product-Led Approach
Connecting back to our previous discussion on forming product squads and setting OKRs, integrating customer discovery is a critical first step in this process. By understanding the real needs and pain points of your target customers, product squads can set more accurate and impactful OKRs that align with market demands.
A Product Manager plays a pivotal role within these squads, leading the customer discovery efforts and ensuring that the insights gathered directly influence the team's objectives and key results.
For example, in the formation of the Clinical Utility Squad, customer discovery led by the Product Manager would directly influence their mission and objectives:
Objective: Establish Clinical Utility of the v1.0 Testing Platform
Key Result 1: At least 20 oncologists interviewed until 80% agreement on biomarker suitability is determined
Key Result 2: 100% of agreed-upon biomarkers integrated into the drug recommendation engine on v1.0 of the test report within 3 months of determining suitability
By incorporating customer insights, the squad ensures that they are focusing on biomarkers that are truly valuable to their target customers, increasing the likelihood of adoption and success.
Conclusion
Customer discovery is the missing ingredient in many deep-tech spinouts. It ensures that the products being developed meet genuine market needs and have a higher chance of commercial success. By understanding that customer development is a learning process distinct from sales or business development, scientists can confidently engage with potential customers.
Engaging a Product Manager to lead customer discovery efforts can address many of the challenges scientists face. By integrating customer discovery both at the spinout stage and as a core responsibility within product squads, led by a Product Manager, deep-tech companies can develop products that truly meet customer needs, enhancing the viability of the product and accelerating its journey to market.