Guest post by: Peter Gjersoe Coach & Founder, Dominate Selling
Are you looking for an effective way to develop products? Have you been burned by the traditional product development process before? If you answered yes to either question this article will be of interest to you.
This is to all the great Business Owners and Product Developers in the technology sector that are committing money, blood, sweat, and tears as well as reputation to get great products out the door.
And then what often happens?
Recently 1,000 products that had ‘Failed to meet expectation’ were researched in Silicon Valley (ref. Ash Maurya). It turned out the main problem had nothing to do with the quality of concept or failure to meet the specifications in the business plan.
The problem was: Nobody wanted the products!
Isn’t that interesting? Best laid plans and advice, and yet; Nothing to show for the efforts.
‘Maybe they were just unlucky’ you could choose to think and stick your head in the sand.
Here is another observation, this one from the publication R.I.P. Report*: ‘Companies typically die around 20 months after their last financing round, and after having raised $1.3Million’.
There has got to be a better way, and we have one.
If you have heard about ‘Lean StartUp’ previously, a lot is happening in this space, and it’s time to see how you can benefit to save time and money.
Lean is getting it right for StartUps and at the other end of the scale, getting it right for General Electric (GE). The projects at GE are amongst the largest initiatives in GE’s history.
What is GE expecting by implementing this program? “To speed up new product development, reduce costs and increase customer engagement.”
How should you expect to benefit? Start with the self-evident: In these times of unprecedented change, to survive, let alone succeed and grow, every business must re-invent itself and continually bring new products to market.
So how do you maximise the potential of having a winner on your hands while at the same time minimising the risk of wasting the resources you have been entrusted with?
For starters, you need to change the way you think and do things. Start by getting very comfortable with becoming a StartUp again, and expressions like: “Getting out of the building” and “The Canvas”.
- For StartUps: You may choose to jump ahead and continue reading from: “The biggest benefit of a StartUp”.
- For established businesses: You have two issues to deal with. Interestingly, both stem from being successful and having great products.
Do not be lured by ‘the arrogance of your success’, believing that what was sufficient yesterday will be sufficient for tomorrow.
Add to that an even more worrying disease: “Believing that disruption and competition are bad, interfering with predictable cash flow”. The reality in today’s consistently changing environment is that you are already about to become a ‘has been’.
Your biggest problem is “The Innovator’s Dilemma”* which stresses what a challenge it is for successful businesses to cannibalise (sorry: innovate) current successful products. But you must innovate. Because unless you do, hungry competitors will take your business away.
Traditionally we expect competitors to attack our dissatisfied customers; our badheadache-customers and non-core products that are not that lucrative anyway; ‘So who cares?’ This is the wrong attitude.
Trust Steve Jobs to put it in the right sentiment: “Eat your own lunch, or somebody else will!”
Today, as you measure and start noticing that the bottom end of your customer pool is moving away: Be very afraid, somebody else is eating your lunch. Unless you continually innovate, you are falling behind and risk being destroyed.
* Clayton M Christensen brilliantly covers “The Innovator’s Dilemma”. For a starting point: http://en.wikipedia.org/wiki/Clayton_M._Christensen
The biggest benefit of a StartUp
In comparison to big companies, StartUps have nothing to lose, and they can fail. Was there ever a single word like ‘fail’ which illustrates the huge changes in business attitude from the old ‘fear of failing’ to today’s environment?
Today failing is encouraged, to the point of being a must - as long as you get up fast and learn from the experience: ‘Fail fast, Fail small’.
In other words, have constructive failings. That is how you move forward.
Using many constructive failings is how StartUps can try out all sorts of new and innovative ideas that a big company would never even consider.
When was the last time you heard of a big company coming out with a new innovative product that was not acquired but had been developed in-house?
Today Ross Perot’s principle of: Ready => Fire => Aim and Learn, is the norm.
Get out of the building
A quick reminder of how most products have, and are, being developed. First an individual or group visualized a solution to a problem. Then focus groups and possibly consultants became involved. Then the concept was created, and focus groups and possibly consultants were re-engaged. When everybody was satisfied; the product was released with much fanfare and celebration.
The problem with in-house developed products: They only work if you know the future.
You must get out of the building
You need to meet and get into the mind of your clients. Understand what it is that they truly want and bring the vision back. You cannot outsource or focus group this. However, there is a trap: People do not know what they want to the degree you need to know!
Henry Ford got it perfectly right when he understood that while his clients wanted ‘faster horses’, faster horses was only a part of what they wanted. Same with Steve Jobs; “people do not know what they want; that is our job”.
The reality is that people and businesses can only imagine a 2x, maybe a 3x improvement on what they have today.
For you to justify the development of something worth investing in, you must have a vision of at least a 5x improvement over what prospects are currently experiencing.
Even better; go for a 10x improvement.
What is a 10x improvement?
Amazon is the perfect example of a 10x improvement.
Everybody knows what bookstores are. When asked what could be improved, most readers would ask for bigger selections, cheaper prices, faster access to new releases, friendlier environment and ability to get buyer benefits when they are away from their local store.
The perfect outcome: Boarders Bookstores, who can justifiably claim they ticked every box on their customer’s wish list.
But what happened?
Boarders Bookstores are gone. Why, when they did everything right?
They are gone because they only visualized a 2-3x improvement on what their customers were already enjoying.
Along came a visionary, Jeff Bezos, who is thinking 10x.
His vision is the world’s largest store. Where the customers always feel welcomed, and are continually met with excellent suggestions about what others, just like them, are interested in, right now. A store that delights in finding the most unusual and rare examples, new or second hand, and where one is made to feel protected ‘only you know what you are buying’.
Best of all, everything happens right there from your favourite chair enjoying your favourite beverage. Shopping can be a joy! And before you know it, a satisfying thump tells you that your treasure has arrived, irrespective of how far away you live from your favourite store.
Was Jeff Bozos’ long-term vision right? Look at the evidence: Jeff founded Amazon in 1994 as an online bookstore. The mid-90s was a time where the US was struggling with depression and Amazon had lots of competitors. Amazon’s 2014 turnover: US$88Billion. And Jeff has even bigger dreams for our shopping future.
Your new best friend; The Canvas
‘The Canvas’ is a single piece of paper with nine building blocks and the perfect format to capture your total business model. It can be used to explain your vision to investors, as well as to attract co-creators. Further, it is equally suitable to keep track of developments, as well as report updates.
The Canvas was conceived by Alex Osterwalder based on the great work done by
Eric Reis in formulating the concept of Lean StartUp.
For more information, please:
- Review the material on: http://businessmodelgeneration.com/canvas/bmc
- You may also be interested in my eBook: “Life is too short to create stuff nobody wants.”
Introduction to Lean Class.
Lean Class is based on Lean StartUp principles combined with the best advice I have come across during my 7 product developments and 26 years in corporate life.
Lean Class is a 4-step process with the objective to minimise the risk while maximising profits when bringing new products to market.
Following is a quick overview:
Step 1: “Just because you can build something, should you?”
This is a workshop to review your concept against the collective experience of industry leaders including the key Lean StartUp guys (Eric Reis, Steve Blank and Ash Maurya), Peter Thiel, Ben Horowitz, Tim Ferriss, Guy Kawasaki, Anthony Robbins, Brian Tracy and using my own experience gained from 7 product developments to guide you through it.
The benefit will be a clear vision of the most critical foundation for your business:
What is the new value you will be bringing to the market?
Step 2: Your Canvas
Using the proven Lean StartUp methodology to build your vision while minimising downsides and maximising upsides to help you validate your ‘secret source’ and business model on a single piece of paper.
This will enable you to more easily explain your vision, identify your micro-niche, ideal client, and attract co-creators and finance, without giving away your IP.
Step 3: Dominate your micro-niche
Using the Canvas to benefit from a common trait amongst strong companies*, you start with a unique market position and ideal clients in a well-defined micro-niche and then grow to dominate.
* Facebook, Google, PayPal, eBay and most recently Tesla
Step 4: Go-to-market in a much larger marketplace
Once you dominate your micro-niche, you must leverage the experience and sharpen your repeatable ascension model to attract and grow clients within the much larger global marketplace.
This is not an easy or quick process. However, what are you risking by continuing on your current path?
Is it possible you have money, blood, sweat, and tears as well as your reputation at risk?
Your best next step: Contact email@example.com or call me direct on 0407 900 939 to find out how we can help you.
Thank you for your time and the best to your success,
Coach & Founder, Dominate Selling. Email: firstname.lastname@example.org Peter Gjersoe spent 26 years in corporate life, during which he was involved with 7 product developments. During the last eight years Peter has worked with StartUps and SMEs. Peter and his wife have been together for 36 years and lives in Brisbane Australia.