(2023-08-09) Schmidt Customer Focus Isnt Enough

Daniel Schmidt: Customer focus isn't enough. To thrive long-term, companies must be customer-focused and business-oriented at the same time. It might seem that these two ways of operating are in tension with each other. They are not.

I made this 2x2...

• Whim-driven (low customer-focus, low revenue-focus)
• Over-monetizing (low customer-focus, high revenue-focus) teams squeeze every ounce of profit from their current user base to the detriment of the user experience.
• Customer-reactive (high customer-focus, low revenue-focus) teams listen to customers and scramble to solve their problems, but they lack principles for deciding which problems to solve.
• Customer-centered & business oriented (high customer-focus, high revenue-focus) teams focus on solving the right (compelling) customer problems that unlock long-term business value.

An important concept is that you could be solving the wrong customer problems.

The customer problems in the highlighted area connect to inputs tied to a North Star metric and long-term revenue goals. The other customer problems, while legitimate problems for real people, don't tie into the strategy

Here are some examples of customer problems that you should probably not prioritize:

• The problem, while prevalent, is experienced by users who are not in the ideal customer profile (ICP).
• The problem, while maybe an annoyance, doesn't prevent the user from getting value from your product or sticking with your product
• The problem, while important to the ICP, is outside the agreed upon focus of the product strategy.
• The problem isn't serious enough to justify the effort spent to fix it.
• The problem only applies to a small percentage of companies in the ICP.