Early in our program the teams all seemed to trying to solve multiple problems for multiple customer segments. This multi-sided approach is very difficult execute on because your focus is all over the place and customers sense this. And they are certain to ask themselves if you’re serious about their problem. The challenge during the first half of your discovery process is to find the one problem you should be tackling and focus your resources on it. But it has to be the right problem. Fortunately the goal of the LaunchPad process is to help you find that ‘one’ problem. Let’s try and define it:
- It is a big enough pain or pleasure point that it is directly in front of the customer (there are emotions involved!)
- The need is immediate, as in ‘I want it now!’
- A lot of people have the problem
- It needs to be solved on a frequent basis for multiple users
- You can make money solving it, and it is clear how and when
- It is possible to (easily) reach those in pain or seeking this pleasure
- You can actually solve it, in a cost effective manner
Your canvas is really a worksheet for finding this one problem and determining if there is a business you can build around it. As I mentioned in another post, this is why the canvas starts out messy and busy. However, as you refine and learn, you’re also eliminating until a real, marketable problem emerges. When your canvas has clarity, you are nearing a scalable, profitable business model. And you should be able to simply articulate it to others.
Keep piling up those numbers! *
During weeks 4 and 5 of the HTRLaunchPad program we saw confusion reigning with several of our software teams. Two completely changed course and others executed pivots to more defined markets and more focused solutions. During the last two sessions, weeks 7 and 8, things began to noticeably tighten up, in a good way. Minimum Viable Products become much more focused, the value propositions had much clearer value and we started to see the business model canvas worksheets become less complex and more understandable. Progress!
But we also noticed a direct correlation between the number of customer contacts being made and the amount of progress. Simply put, more contacts means faster progress and a much higher likelihood of success. You can understand all the principles of the launchpad methodology, make lots of educated guesses and fill out a canvas but it is all a meaningless exercise if you don’t get out and talk to people, lots of people. It is, to a high degree, a numbers game.
I have contended since my first introduction to this methodology that if any business or organization spoke with 120-180 customers over a three month period (10-15 contacts per week) and made sure at least two people were in on each conversation, they would experience a huge change in their understanding of their business. When you add in the methodology for getting the most out of these conversations, they become even more valuable.
Market research and surveys are great tools but live conversation reveals much more, including what you don’t know, how decisions are made and what people will pay for viable solutions. They will also tell you when your assumptions are wrong, before you invest time and money into them. This is why launchpad stresses that failures are a form of success: They keep you from exhausting resources on dead-end projects.
The message is clear: talk to more people every day.
*Image courtesy of free images.co.uk
Time To Zero In!
This morning I had a long mentoring session with one of our founders and afterwards realized that nearly all of my input was about focus. Specifically, choosing a market, a user-profile and a simple minimum viable product (MVP) with the emphasis on ‘a‘ as in a single one of each. We’re nearly halfway through the classroom sessions and most teams are still struggling with this and looking at pivots, as I discussed in my last post. My general advice at this stage is that you should be starting to understand how to refine your business model down to these segments: One market, One customer/user profile and one example you are showing people.
For the market, consider these filters:
- Ability and willingness to pay
Choose the one that has all of these characteristics and focus your model on it. If you don’t have one that meets these criteria, your idea is probably flawed.
For the customer/user:
- Early adopter
- Technology- friendly (it doesn’t scare them)
- Willing to accept imperfection
- Willing to refer you to peers
- Wants to buy
These are the people within the market that you want to focus on.
For the MVP:
- Only enough to demonstrate how it solves the problem
- Build the user interface, don’t worry about the code and underlying data
- Build your story- in this morning’s case, they needed to populate their demo with content to show how it works
Here’s the deal: Don’t spend time and money building functionality until your business model is complete and validated. Getting the user-interface and story right makes the actual development process much easier.
So, it’s time to focus on these three things. Let everything else go, especially the ideas you love that don’t have a market, a qualified user or an easily understood solution.
Our Roc Control Innovations team posted a blog post about their search for an elevator speech. I’ve done some coaching in the comments (which were in moderation as I write this, but should be live soon). Here’s why this is important. Getting your value proposition down to one sentence means you are very close to discovering your business model. I took their speech and refined it down to a sentence and then added a few variations for when they are talking to non-railroad people (in the comment chain).
So you get something like this:
“We offer railroad operators reliable, cloud-based switch and crossing gate status reporting at a fraction of the cost of existing systems.”
Now if your audience are not railroad people you might want to add a note about safety issues:
“This is a safety issue. Unknown switch positioning and stuck crossing gates are a leading cause of railway accidents.”
The audience will get it.
I would like to see every team phrase your value proposition, on your canvas, as an elevator speech. This one defines the audience/market (railroad operators), the problem (switch and crossing gate status), the solution (cloud-based reporting), and the value/return on investment (fraction of the cost of existing systems, implied safety improvements).
The Business Model Canvas is a visual matrix you use as a tool to build and optimize the effectiveness of your business idea. It is central to the LaunchPad methodology.
Here’s a great video (including a plummy Brit voiceover) from the Business Model Canvas resource site:
If you are participating in the HTRLaunchPad program as a startup or a mentor you are going to become intimately familiar with this powerful tool.
Here’s a PDF download of the basic canvas:
That’s a key commitment our entrepreneurs make when they join the LaunchPad program. And it is the key to succeeding. The concept is simple: Before you assume your idea is good you go outside, talk to as many prospective customers as possible, and use their input to define and improve your business model. And you are expected to report on your progress, with specifics, each week in the class. It’s hard work.
But that hard work is far more likely to result in success than simply guessing that the world wants your widget just the way you envisioned it. And over the course of the program you’re going to have talked to hundreds of people. That means that if you stick with it you’re going to have your pitch down and your product refined to the point where it is marketable. And you’re very likely to find mentors, early adopters, and even paying customers, in the process.
It’s important to stress that there is no selling during the LaunchPad. You describe and listen, refine and show. You learn about the product, the market, the revenue models, the channels for distribution, the costs and a lot more. It is going to be intense but we think it is going to be incredibly rewarding too.
I put this together, as a work in progress, to help me understand the process: