Market Validation Plan

‘market validation plan’ Tags

30 considerations for getting tech to market: Part III

This is the 32nd article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

By Francis Moran and Leo Valiquette

While there will no doubt be the occasional post that will still fall into the Commercialization Ecosystem category, today marks the official end of this series with which we launched our new blog back in February. Next week, we will introduce several new series, but first, let’s conclude our three-part recap of what we have learned about getting technology to market.

Two weeks ago, we began with insights and practical advice on securing investment capital and finding champions to help get your technology to market. Last week, we continued with commercializing university IP, the value of mentor capital and what it means to be lean. Today we conclude with the strategic role marketing must play from day one of a startup, engaging with your community and what role government should play.

21: Practise good IP hygiene

Consider having in your organization someone who educates themselves on all matters related to managing your intellectual property. This “IP coordinator” is not a replacement for outside legal professionals. Their job is to see that the things that need to be done do get done and done properly.

“Your IP coordinator can help maintain cost control over your IP expenses; is this technology really worth patenting? Do we really need to obtain trademark registrations in Australia? Your lawyer, when questioned, is likely to reply, ‘I’ll get you the best IP rights that you deserve wherever you require.’ But your lawyer is unlikely to tell you whether your product is a good business investment and whether having a patent on a feature of that product will be money well spent,” wrote guest blogger and senior Canadian patent attorney David French.

22. Have an MVP for your MVP

A Minimum Viable Product is an essential component of a lean approach to market which allows you to test the waters and solicit the feedback to iterate product development in the right direction. To solicit that market feedback, it must be combined with an effective Market Validation Plan.

“An MVP is simply the minimum set of features that provide the initial value to the user of your product. It is crucial that this first incarnation of your product show your value differentiation. In other words, not only must it provide that initial functionality for your first users, it also needs to show off why your product is different or unique in the marketplace,” wrote Peter Hanschke, one of our associates.

23. Engage early, engage often

Getting technology to market is all about engagement. Entrepreneurs need to get out and talk to people, lots of people. They must get involved with networking organizations and go to industry events where they can meet with veteran entrepreneurs, potential investors and partners. Most important of all is to seek out and listen to potential customers and the pains they express which you hope to solve.

“Your success is not based on your core ideas, it is based on how fast you can respond and reiterate the feedback coming back from your market.” Entrepreneurs must “get their heads out of the sand to see what competitors are doing, what is happening in the market, and where there are dead ends and emerging opportunities,” said John Stokes, partner with Real Ventures.

24. Don’t undervalue strategic marketing

“Companies that can’t clearly articulate their customer and market are not real serious companies, they are research projects … Engineering and marketing need to work together from the get go,” said Ronald Weissman, chair of the Software Special Industry Group at Band of Angels.

For Weissman, defining the market opportunity and ensuring a product is the right fit is so important from the outset that when he is building the management team for a startup, he will often hire a head of product marketing and head of business development before a CEO.

“More new ventures fail because of poor marketing than because of poor engineering or poor financial management,” Denzil Doyle, founder of Doyletech, wrote in his book, Making Technology Happen.

25. Have a clear sales and product migration strategy

A product migration strategy is crucial to keep the market engaged with compelling new products as older products mature.

“Any new venture which starts out with only one product in its portfolio is probably doomed … follow-on products should be clearly visible at the outset,” Doyle wrote.

Startups often “don’t think about the post sales support infrastructure sufficiently to scale the company. This is where growth is hindered or delayed … sprinters must hand off to the middle-distance runners,” said Phil Newman, CEO of Pergali and one of our U.K.-based associates.

26. Don’t be the biggest barrier to your success

“You have to be a well-centred individual. If I am a highly insecure individual and I need you to stroke my ego, then that’s likely going to cause all kinds of problems downstream. I’m not saying those people don’t become successful business people … but nine times out of 10, people who are not centred in their own personality create all sorts of wasted baggage,” said Andrew Fisher, executive VP at Wesley Clover.

“I would much rather work with someone with a good idea who is coachable, than someone with a great idea who is not,” said Iain Klugman, president and CEO of Waterloo’s Communitech.

27. Take advantage of whatever public programs are available to you

Jason Flick, co-founder and president of YOU i Labs and president and CEO of Flick Software, blogged about the importance of landing that initial customer and providing them with the first mover advantage as an incentive to take the risk on your venture. But what’s the next step once you have them?

“Once you have this first customer, it isn’t time to just buckle down and work hard on the deliverable. Rather, this is the best time to go in search of additional funding from government sources, angels, and friends and family. Don’t wait until the few dollars you’ve secured from the customer are running out to start this search. Government programs such as IRAP, the Investment Accelerator Fund managed by MaRS, and Ontario Centres of Excellence are amazing resources if you are based in Canada,” he said.

“Now the capitalization of a company can be a whole combination of different resources and sources of funding,” said Klugman.

28. But don’t become a taxpayer charity case

“Bad businesses learn how to do a really good job of sucking up a lion’s share of the available subsidies. Instead of working to generate strong sales channels and scalable businesses, they become quite good at wooing various funding mechanisms and taking advantage of various programs. They have to; it’s the only way they know to survive,” said Andrew Fisher of Wesley Clover.

“The good businesses, meanwhile, don’t really have the time to futz around with those government folks and operate at a bureaucratic pace. Instead, they go out and sell their product, raise capital, whatever it is they need to do to get the job done.”

29. Understand what government’s role should be

In his book, The Way Ahead: Meeting Canada’s Productivity Challenge, Tom Brzustowski, RBC professor for the commercialization of innovation at the University of Ottawa’s Telfer School of Management, wrote, “I believe that it is only the private sector that creates wealth.” The public sector, on the other hand, is a consumer of wealth in order to bankroll the two fundamental roles it plays.

First, it provides the “supportive and normative framework for wealth creation by the private sector” through laws, regulations, treaties, incentives and so forth. Second, it is a “concentrator of resources assembled through the tax system” to pay for things like education, healthcare and infrastructure.

“Government doesn’t start companies. Individuals do,” said Klugman.

30. And lastly, be nimble

Take advantage the fact that, as a small company, you can typically react and adapt faster to volatile market conditions than larger companies.

“As entrepreneurs we can redirect our efforts to wherever the opportunities lie. We can redefine our business model. We can create partnerships and alliances with a single phone call. If your plans called for new capital, look for other ways to grow; if your market is shrinking, change sectors; if your market is asking for concessions, add costless value; if your market has no CapEx budget, rent it to them,” wrote Andrew Penny, president of Kingsford Consulting and one of our associates.

Technorati Tags: entrepreneur, entrepreneurship, startup, tech to market, commercialization, marketing, minimum viable product, market validation plan, product migration, Ronald Weissman, Band of Angels, Tom Brzustowski, The Way Ahead, Telfer, Andrew Fisher, Wesley Clover, Andrew Penny, Kingsford Consulting, Iain Klugman, Communitech, Jason Flick, Flick Software, Phil Newman, Pergali, Denzil Doyle, Doyletech, Making Technology Happen, John Stokes, Real Ventures, Peter Hanschke, David French, patents, intellectual property, IP coordinator

Sustainable viable product: The next step

This post is by Associate Peter Hanschke, an Ottawa-based product management specialist. Peter’s post is part of our continuing series about the ecosystem necessary to bring technology to market. We welcome your comments.

By Peter Hanschke

Up until now I’ve talked about getting to your Minimum Viable Product (MVP) and creating your Market Validation Plan. To re-cap, MVP is your product with the minimum set of features and capabilities to satisfy the needs of your early customers. The key is to make sure that the features and capabilities are connected to provide use cases that address the needs of your target market. In other words, your MVP cannot be a disjointed set of features.

The Market Validation Plan is needed to provide a framework to get validation from the various markets you are targeting. Make sure that you include potential customers, analysts and experts related to your target markets and also others who sell non-competing products and services to your target markets. Asking “would you buy this” and “how much would you pay” are essential questions to have answered. (BTW – don’t be shy about asking for an order … you may end up with your first!)

So now what? Hopefully your product is gaining traction in the market. That is, you have users. And hopefully your validation plan is providing some positive and encouraging feedback.

With the addition of users and positive feedback, a new level of product management complexity has been created. Up until now most of the decisions of what to build have come from within. As an entrepreneur, you most likely hold the vision and you and your team are executing on that vision. Prioritization has come rather easily. But now requests to modify and add to your MVP are coming as a result of customer feedback and your market validation activities. The ability to prioritize your team’s efforts has become more difficult.

It’s viable, but how do you sustain it?

So the next step is your Sustainable Viable Product – a product that can grow and morph to satisfy your early customers’ needs and maintain the steady march toward fulfilling your vision. What complicates matters even more is that in most cases funding is tight to the point where not everything can be done. My favorite expression is that if I had 100 more developers I could say yes to everything! But since we don’t have this luxury, we have to make painful choices.

Customer-focused types have a real problem saying “no” to customers. Whether it’s a case of not wanting to hurt their feelings or whether they need to be loved, I don’t know for sure. But with limited funds, you have to occasionally say “no.” I want to clarify that bugs found by customers that hamper their ability to effectively use the product need to be fixed according to severity – high priority bugs that result in data loss or crashed applications need to be fixed ASAP. Moving a text box two pixels to the right can wait. High priority bugs will take up scarce resources, but it must be done.

What I’m talking about is the additional features and capabilities that your MVP does not support, but that your customers (and your validation feedback) are requesting, as well as all of the items you need to move your product towards your vision.

Market share vs. customer satisfaction

Score all of your requests (internal and external) against two criteria:

Market Advancement – how well does the request build out my MVP to be able to reach more within my target markets? A “0” score would mean not at all and a “5” would mean a home run. In other words, the request is essential to capturing more of your target markets.
Customer Satisfaction – how well does the request satisfy my current customers? A “0” score would mean none or hardly any would be satisfied and a “5” would mean that all of your customers would be satisfied. This criterion has two interesting dimensions. First, you can view this as the number of customers who have made a specific request. Second, you can view this as a scale of satisfaction, where a “5” would mean that the customers who have requested this would be absolutely delighted. My preference, especially at this point in the development, is to opt for the first choice.

Next, weight the criteria. For example, you may weight them evenly at 50-50 or give a slight edge to Market Advancement, say, 60-40. What in fact you are really doing is deciding what is more important between the two. This weighting can be changed to reflect your company’s current circumstance. But I caution against changing this on a daily, weekly or even monthly basis. I would suggest evaluating the weighting either quarterly or after some significant milestone (e.g. my 10,000th customer).

By combining the scores and the weightings you end up with your priority list of requests. What’s interesting is that the requests that satisfy both criteria will filter to the top – which makes sense.

From a process perspective, as you receive requests from your external sources and as you think of items to advance your product (i.e. your internal sources), score them immediately. A spreadsheet can automatically keep your list in priority order. Use this list to feed the agile development machine so that your development team is always working on the most important items.

To summarize, in order to sustain the development of your product in a well-focused direction you need to evaluate requests from your customers, your validation feedback and your internal vision-driven perspective. The combination of the scores and the weightings of market advancement and customer satisfaction will keep your product on the road to executing on your vision and keep your customers delighted.

Technorati Tags: market advancement, customer satisfaction, customer engagement, agile development, R&D, minimum viable product, MVP, market validation plan, sustainable viable product, lean, corporate vision

For the last time, they won’t come just because you’ve built it

This is the 11th article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

By Francis Moran and Leo Valiquette

We began this series a couple of months ago with this timeless quote from Band of Angels’ Ronald Weissman. It strikes to the heart of what all of us here take as gospel.

In a recent post, we looked at the findings of two studies into the factors that contributed to the demise of 50 startups in Canada, the U.S., and, to a lesser extent, India and Europe. The first was “Understanding the Disappearance of Early-stage and Start-up R&D Performing Firms,” prepared for the National Angel Capital Organization, by Douglas Barber and Jeffrey Crelinsten. The second was a study by ChubbyBrain. In both studies, issues related to market research and customer engagement ranked high among the reasons for startup failure.

Phil Newman, CEO of Pergali and one of our U.K.-based associates, often finds a high level of “snobbery” toward sales and marketing among many of the inventor/entrepreneurs he encounters on his side of the Atlantic. This is often coupled with a firm, if misguided, belief that a sales and marketing strategy is not fundamental to building a successful company.

Eric Ries, creator of the lean startup methodology, sums up the trap into which inventors and entrepreneurs everywhere often fall:

“When we build products, we use a methodology … but too often when it’s time to think about customers, marketing, positioning, or PR, we delegate it to ‘marketroids’ or ‘suits.’ Many of us are not accustomed to thinking about markets or customers in a disciplined way. We know some products succeed and others fail, but the reasons are complex and unpredictable. We’re easily convinced by the argument that all we need to do is ‘build it and they will come.’ And when they don’t come, well, we just try, try, again.”

This hardly supports a capital-efficient approach for getting to market quickly with the right product at the right time. In today’s environment, in which startups are being passed over by VCs who prefer less risky later-stage investments and angels are acting like VCs and demanding more market validation before they will invest, startups can’t afford to burn cash on “research projects” that don’t have a qualified customer base waiting for their product.

“Great companies constantly test the market for validation and feedback,” said Weissman. “When I look at a new company, I ask where did the product come from? Did it come as a result of a market demand?”

Technology ain’t the problem

Ries and Blanks agree on the additional point that, “few startups fail for lack of technology. They almost always fail for lack of customers. Yet surprisingly few companies take the basic step of attempting to learn about their customers (or potential customers) until it is too late.”

And yet, there is plenty of research out there, as noted above, that provides nascent entrepreneurs with the sober heads up they need to avoid falling into this trap themselves.

(This seems like a good spot to once again plug the idea of being coachable, as well as Peter Hanschke’s post on market validation plans.)

A key pillar of Reis’s lean startup is the customer-development theory of Steve Blank, author of The Four Steps to Epiphany. Blank makes the point that “In a startup, no facts exist inside the building, only opinions.” As Ries says, customer development is “an attempt to minimize the risk of total failure by checking your theories against reality.”

For Weissman, defining the market opportunity and ensuring a product is the right fit is so important at the outset that when he is building the management team for a startup, he will often hire a head of product marketing and head of business development before a CEO.

So, as the founder and all around chief development person for a new venture intent on wowing the world with a better mousetrap, look hard in the mirror and ask yourself the following questions:

Who are our customers for this?
What do they need? What do they want? (These are two very different things)
How big is the market opportunity vs. the cost of bringing the product to market?
How do we find out?
How long do we have to get to market before the opportunity is passed?
Who else is doing what we our doing and how must we be different?
What features and functionality must we have in the product when it hits the market?
What features and functionality are not needed and should therefore not consume time and resources to shorten time to market?
Where can we turn for help?

Get out there and talk to people. Engage with networking organizations and go to industry events where you can meet with veteran entrepreneurs, investors and potential customers. And of course, talk to strategic marketing and communications experts about how brand positioning, customer development and public relations facilitate profitable market entry.

Next week, we will look at shortening time to market and the concept of lean startup.

Technorati Tags: marketing, product development, market validation plan, venture capital, angel investment, startup, entrepreneur, lean startup, Band of Angels, Pergali, Four Steps to Epiphany, NACO, National Capital Angel Organization, ChubbyBrain, Ronald Weissman, Douglas Barber, Jeffrey Crelinsten, Steve Blank, Eric Ries, Phil Newman, Peter Hanschke

March Roundup: Do you have the right stuff to get technology to market?

Thank you for being with us for the second month of our new blog. In case you missed any posts, here is a recap, beginning with, in chronological order, the lastest installments in our ongoing series on getting technology to market, The Commercialization Ecosystem, which explored startup incubation, the right stuff entrepreneurs need to succeed and other pearls of wisdom.

March 2: Silicon Valley: a big bright heat lamp for startup incubation by Francis Moran and Leo Valiquette

March 4: Why intellectual property is profitable by David French

March 8: Hug an entrepreneur by Andrew Penny

March 9: Incubation: whose job is it, anyway? by Francis Moran and Leo Valiquette

March 14: Is that person in the mirror standing between you and success? by Francis Moran and Leo Valiquette

March 16: What your business can learn from Chilean wine by Phil Newman

March 21: Words of wisdom: what can you learn from a thunder lizard? by Francis Moran and Leo Valiquette

March 23: Who is the custodian and guardian of Intellectual Property in your firm? by David French

March 28: Words of wisdom: Some things change with time, others don’t by Francis Moran and Leo Valiquette

March 29: What is your Market Validation Plan? by Peter Hanschke

March 31: A leader’s personality: the single most important factor in a company’s growth by Janice Calnan

And on a related note…

In addition to our series, our associates were also busy. Here are our other posts for March as ranked by the enthusiasm of our readers:

March 11: Are you making the most of your communications people? by Caroline Kealey

March 10: Gamification: the new marketing frontier by Alexandra Reid

March 15: Driving social media policy: how to avoid a PR disaster like Chrysler’s by Linda Forrest

March 7: Google is your homepage: startup steps to SEO by Alexandra Reid

March 24: Dogs in our midst by Bob Bailly

March 17: It’s not easy being a marketer by Francis Moran

March 30: How to determine market demand on a startup budget by Alexandra Reid

March 22: How influential is influence? by Linda Forrest

March 25: We’re going to fill the tank when we get there by Francis Moran

March 18: Online communities: the value for startups by Alexandra Reid

March 1: Marketing lessons from the Oscars by Linda Forrest

March 3: Capital angels flock to new format by Francis Moran

Photo: Free booksmarks calendars

Technorati Tags: Silicon Valley, intellectual property, entrepreneur, entrepreneurship, startup, market validation plan, leadership, marketing, public relations, search engine optimization, SEO, gamification, communications, social media, social media policy, online communities, influence, market demand, budget

What is your Market Validation Plan?

This post is by Associate Peter Hanschke, an Ottawa-based product management specialist. Peter’s post is part of our continuing series about the ecosystem necessary to bring technology to market. We welcome your comments.

By Peter Hanschke

Here’s the situation: Your development team is busy creating a Minimum Viable Product (MVP). You have people off in all directions trying to secure some funding. But do you have a Market Validation Plan? Furthermore, are you executing this plan along with all the other activities? In other words, is this an activity that you are currently performing?

As the name suggests, a Market Validation Plan (another MVP for those who like TLAs) is about reaching out to your target market to determine whether:

The market likes your product or product concept
The market is willing to buy your product when you have it ready

“Like” is a bit of a weak word. But at this stage of development, the product may simply be an idea or a very early prototype. So “like” in this context is appropriate. As the development process advances and the product and concept solidify, you will require stronger validation. A vital aspect to validating the market is to determine if the market that you are targeting is willing to pay for your product. Are prospective customers willing to part with their cash either up-front or through a subscription model?

The three steps of an MVP

Step One: First, and probably most obvious, is to talk to people or companies directly in your target market. These, in fact, are your target customers. Many companies are reluctant to do this. They feel that they may lose a sale if they don’t have the product just right. It becomes a Catch-22 between sales and development. Sales says, “The product is not ready to sell,” while Development says, “We need to validate with potential customers to make sure the product is ready.” My philosophy is that it’s better to lose some of these early sales and learn what the product needs to be than to develop the product with no validation and lose every sale!

There are many ways to find out who is in your target market. If, for example, your target is the IT group within large companies, look locally for companies that have such a department (LinkedIn is a great resource to find local companies.) If your target is individual software developers, again look locally or ask your development staff about other companies. If your target is the consumer, reach out to your personal network (Facebook is a great resource here.) In addition to asking whether or not they will buy your product, understand their work process and other systems they use. No matter what you are building, you have to fit it into a prospective customer’s existing day; understanding all the potential touch points between your product and their process is key.

Step Two: Next is to find experts who target the same market as you but are not competing with you. They may sell a different product or service but are targeting the same market. For example, suppose you sell compilers to software developers. You may want to reach out to companies that build and sell integrated development environments to the same target, or provide developer training services to the same market. Also included in this group are analysts and well-respected domain experts.

Nowadays, blogging and leveraging social networks (Twitter for example) are critical in establishing thought leadership. In addition to your blog and your tweets, make a list of all the people that blog or tweet into your target market. Be diligent and read their blogs and tweets. Comment where there is a tie between what they say and what you do, making sure to include a link to your blog. The point here is to start and maintain a conversation with others who target the same market you do. Once you have started the conversation, reach out to them to get an opinion on your product, looking for them to link to your site.

Step Three: Reach out to people who used to work for companies that you are targeting. With today’s highly mobile workforce, and by levering tools such as LinkedIn, it is relatively easy to find people who worked for a company that is in your target. Generally speaking, people stay in the same department when they move (e.g. people in marketing tend to stay in marketing), but they may move to companies that are in an entirely different space (e.g. developer tools company to renewable energy company.) If you are targeting the company from which they left, then this person would be a good candidate to talk to.

In all cases make sure to get at least the following answered:

Whether the product solves problems that are pervasive in your target market
Whether or not target companies would buy it
What the overall workday process is

To summarize, an active Market Validation Plan is critical. You must find out if the market wants your product and is willing to pay for it. Reach out to people/companies who are directly in your target market, as well as those who were in your target market, and engage in a conversation with relevant domain experts.

Technorati Tags: market validation plan, minimum viable product, marketing, product development, prototype, customer engagement, Twitter, Facebook, LinkedIn, social media

Michael Pontious : Well said Leo! I also, do not attend Trekkie Conventions (unless one would occur right here in Cedar Park, Texas!) I could 'trek' down memory lane within th...

Nick Stamoulis : From "How to grow an engaged social media community" - "Social media a two way street so foster conversations around your brand and be quick to respond to th...

Gary James : This is an excellent piece. I am going to save and share with both colleagues and clients alike. Thank you for the time you spent in crafting the piece and s...

Anil Dilawri : All is not lost though. Many clients are willing to devote the time, effort, and resources to improve their presentations. The result is a more consumable me...

Anil Dilawri : The living zombies indeed, Richard. The living zombies indeed!

Nick Stamoulis : The article "Meaningful social measurement: A lesson from the underpants gnomes" hits all the right notes. Besides the fact that half of your followers could...

Francis Moran & Associates — We bring technology to market

We Bring Technology To Market