First of all, it’s important to remember this:
The product that you are building, must bring value from the moment it’s in the marketplace.
Everything in this world is based on causality and effect.
By asking the right questions, you get to the right answer.
I’m listing here some basic steps, questions, and tips that one should answer when creating any business, in any part of the world. These are based on business courses that I have taken from the University of Pennsylvania’s Wharton School – Business School – a private ivy league school in the US.
Amongst its alumni, you can find:
- Donald Trump
- Elon Musk
- Ivanka Trump
- Sundar Pichai
- Warren Buffet
- John Sculley
- and many more.
Brainstorming – Strategy
- 1 What are their strengths?
- 2 What are their weaknesses?
- 3 What are their basic objectives?
- 4 What market strategy do they use?
- 5 How can you take market share away from their businesses?
- 6 How will they respond when you enter the market?
- 7 Steps to gather information
- 8 Distilling Competitive Intelligence
- Don’t do it in a room full of people
- Get people to come with ideas and discuss them together
- Senior members must not shoot down new ideas!
- A new environment increases creativity. Get outside of the office.
Idea generation questions:
- What are we really good at?
- What are our core capabilities?
- What are some things that we are really world-class in, that we can really build on?
- What are some underserved needs out there in the market?
- What do current competitors not address?
- What would it be like to be the Amazon of our industry?
- Core strengths
- Consumer understanding
- Product innovation, research, and development
- Brand building
- Work with mass psychology
- What problems are people having?
- What are the current products addressing?
- What is the match between what the user needs and what the product offers?
An important shift in mindset:
What should we do? -> What might we do
A possibilities-based approach to making strategic choices
- The cross-functional team generates a set of truly distinct, integrated strategic possibilities
- The team agrees on the “burden of proof” required to select one integrated possibility over the others
- The team conducts the required analysis
- The team chooses a possibility based on the analysis.
Reverse engineer each possibility:
- What must be true for this possibility to be a terrific choice?
Important! Don’t argue about what is true or not. Use the first principle thinking to find the fundamental truth, and build upon it, the structure.
- What has to be true about the external world?
- What has to be true about customers?
- What is their WTP ( willingness to pay )?
- How many segments are there?
- Their capabilities?
- Other factors in the industry:
Overall, what needs to be true ( from the above statements, facts, and questions ) so that the selected possibility to be a good one?
What needs to be true about us, for this particular possibility to be a good possibility?
What needs to be true about:
- our capabilities
- types of activities we have in place
- human capital
- skills required
What would have to be true about the world in a couple of years for this possibility to be a good one?
What would have to be true about how competitors react or do not react to our strategy?
What would have to be true about our technologies?
What new technologies would be required for this possibility to be a good one?
How to validate an idea:
- Order conditions and design tests
Order conditions: at the top – have the “least likely” condition
Sceptical group members must raise concerns.
- Let the most sceptical person design the test
- Sometimes more than one test is required.
- Conduct required analysis
- Sequence the analysis by starting with the one that the group feels least likely to hold. If it doesn’t, no further analysis required.
- Not getting into technical details
- Not getting into all the features, functions, and pricing
It only has to state the value.
Answer these questions:
- What is it?
- Who is it for?
- How is it useful?
Important: Clarity first. Very brief! 1-2 sentences, but brief.
What makes your offering unique and different?
For ( target customer ) who are dissatisfied with ( current alternative ), our product is a ( new product ) that provides ( key problem-solving capability ) unlike ( the product alternative ).
Gain / Pain ratio:
- Competitive advantage
Inertia / Risk:
- Switching costs?
- Default = do nothing – state
- Risk in a startup
- Find – how to find us?
The key to a successful new venture is to seek non-disruptive disruptions.
Solutions that offer game-changing benefits with minimal modifications to existing processes or environments.
Because psychologically, people don’t like changes. People like comfort, they like the “known” part of their life.
As Steve Jobs used to say:
“Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'” People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
Finding a problem:
- Is the problem urgent?
- Is the problem underserved?
- Is the problem unworkable?
- Is fixing the problem unavoidable?
Now that you have defined a list of problems in the world. Next question:
Is the problem worth solving?
- Are there enough customers willing to pay?
- Who is your customer?
- What are their needs and wants?
- Are there enough customers?
- Who is your customer
- Who is the best customer?
- Who is that customer that is going to be the easiest to sell to? Aka motivated buyers.
- Narrow down the list!
- What are their needs and wants?
- Why do they need your product?
- What benefits will they gain?
- Can they make money?
- Can they save money?
- Can they save time?
- Other benefits?
- Are there enough customers?
If you have a real customer and you can deliver real value, then ask:
- How many people experience this problem now?
- How many people might experience this problem in the future?
- Are there enough people who care about the product for you to be financially successful by solving their problems?
Important: Engage with customers pre-prototype
- Get insights on what features and value matters to them. ( Don’t make any assumptions of your own. You may not be the “majority”. Be open to any possibility. Be ready to pivot your strategy. )
- What is their WTP? (willingness to pay)
Action steps of customer discovery
- (In)validate the problem / solution fit
- (In)validate business processes and hypothesis
- Begin to identify and test MVP
- Get insight for pattern recognition, not statistical relevance.
- Understand the strengths and weaknesses of your competition
- Including potential competition
- Including substituents
Be proactive, not reactive!
Develop a repeatable process
- Determine…(the strengths and weaknesses of the competition)
Do initial and recurring analysis – monthly at least!
What are their strengths?
- Other features or functions
- Their brands
What are their weaknesses?
- Identify their weaknesses
- How can you take advantage of them?
- How can you leverage your strength to solve their businesses?
What are their basic objectives?
- See your industry through their eyes
- Do they seek to gain market share?
- Do they attempt to capture premium clients?
- What are they trying to achieve?
What market strategy do they use?
- Public relations?
- Create a long list of ideas.
How will they respond when you enter the market?
- And what will you respond?
- And how will they respond?
Steps to gather information
- Analyze their website and marketing materials
- Visit their locations
- Evaluate their advertising campaign
- Google the @# social media
Competitive analysis does more than help you understand your competition!
- It helps you to identify changes you should make to your business strategies.
- You learn from competitor strengths.
- Take advantage of the competitor’s weaknesses
- Apply the same analysis to your own plans.
Distilling Competitive Intelligence
- Who are my current competitors?
- What market do current competitors target?
- Are competitors businesses growing or scaling back their operations?
- How will your company be different from your competition?
- What will you do if competitors drop out of the marketplace?
- What will you do if new competitors come into the marketplace?
Who are my current competitors
- What are their products and services?
- What are their prices?
- What is their market share?
- How successful are they?
What market does the current competitor target?
- Do they focus on a specific customer type?
- Do they focus on serving the mass market?
- Do they focus to serve a particular niche?
Are competitors growing or scaling back their operations?
- What competitor weakness can you exploit?
- What competitor strengths will you need to overcome to be successful?
Investment stage 1
Product validation and customer usage
- 1 to 3 founders
- Mentors and peers
- Prototype -> Alpha state
- Minimal Critical Feature set -> get it to “it works!”
- Improve design and usability by setting up conversion metrics.
- Test small scale customer adoption ( 10 to 1000 users )
Reduce Product Risk
Test functional use
Develop Metrics and Filters for possible future investments
Investment stage 2
Market validation and revenue testing
- 2 to 10 executives, with 100k to 1M invested
- Angel investors / small VCs
Improve product, expand customers, test revenue
- Alpha state -> Beta state
- Scale customer adoption -> “Many people use and pay for our product/service”
- Test marketing campaigns, customer acquisition cost
- Test revenue generation, find profitable segments
- Prove solution / benefits
- Assess market size
- Test channel cost, revenue opportunity
- Determine the organizational structure, key hires.
Investment stage 3
Revenue validation and growth
- 5 to 25 executives, with 1M to 10M investment
Market Money ( or “Go Big” ), get to sustainability
- Beta state -> Serial Production
- Revenue / Growth => “We can make a lot of money!”
- Marketing plan => Predictable channels / campaigns + budget
- Scalability and infrastructure, customer service and operations
- Connect with distribution partners, expand growth
Prove / Expand market, operationalize business
Future milestones: Profitable / Sustainable, Exit options
Other supporting steps
Clearly describe your product that your business will provide
- Use simple words and avoid industry buzzwords
- Avoid highly detailed or technical description in your overview
Describing how your products differ from your competition is critical!
- What is unique?
- Why is your product needed if no market currently exists?
- Patents, copyrights, and trademarks of your own or have applied for – should be also discussed
Don’t say there’s no competition!
Either you haven’t looked outside of your “box” or you haven’t invested enough in research.
There is always competition:
- Customers are serving themselves
Key questions of the product
- What makes your product different?
- How will you build your product?
- Is cost a major issue?
- What is the stage of your product?
What makes your product different?
- How is your product unique vs competitors?
- What are the competitive advantages vs competitors?
- Are there competitive disadvantages you will need to overcome? If so, how?
How will you build your product?
- Are you the manufacturer/developer?
- Do you assemble the product using components provided by others?
- Do you purchase products from suppliers or wholesalers?
- If your business takes off, is a steady supply of products available?
Is the cost a major issue?
- Are you cost-driven or value-driven?
- Will your operating costs be low enough to allow a reasonable profit margin?
What is the stage of your product?
- If not, time? Cost?
- Tested with customers?
- Are you selling the product?
How to Product-Market-Fit
- Determine your target audience
- Identify underserved customer needs
- Define your value proposition
- Specify the MVP feature set
- Create the MVP prototype
- Test the MVP with customers
Let me know what you think, in the comments below.
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