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What happens when your product comes down from your ivory tower? 17 April, 2015

Posted by varoom in Management, Strategy.
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I see quite a few entrepreneurs who feel firstly they know best what a customer needs and secondly there is no need to talk to customers before they develop their product. They disappear up into their ivory tower and develop the product in isolation.

Now; who’s to say they are wrong? Maybe they do know best what the market needs. Far be it that my crystal ball is any better than the next persons. However, what if they are wrong and the product being developed is not quite what the customer needs? They could risk all that investment in time and product development and just have to start again.

What’s the harm in talking to a few customers? I believe you always learn something from interaction with real customers, this could be to your advantage, you may discover a killer feature that changes completely your business prospects. You will, perhaps more importantly, learn what you don’t need to do and save yourself some time and money.

Investors will nearly always want to see customer engagement before they invest. So if you need to raise funding that interaction with customers and the development of a product which has early demand from that market will enhance your prospects. Also you will demonstrate that you have invested R&D resources wisely on features that have real customer demand.

The lean startup business model together with agile development techniques can reinforce the need to become closer with your early customers and use them to test out your product features as you proceed with development.

So don’t be afraid of engaging with customers, the right ones will understand the concept of a product in development, they will give you valuable feedback, they will ensure you build the right product and help you avoid wasting time and money on features you don’t need.

Grev

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All they wanted was a faster horse! 23 January, 2015

Posted by varoom in Business Plans, Strategy.
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In my many meetings with early stage entrepreneurs and later stage companies I hear many say that they plan to ask their customers what they want and just go ahead and develop a product that satisfies that request. It is dangerous to purely depend on your customers having the best vision of the future. Henry Ford was quoted as saying…”If I asked my customers what they wanted, they would have asked for a faster horse!”
You need to have a clear vision of the future needs of the market even ahead of what the market demands today. Many revolutionary products and businesses launch products that are truly original and not what the market would have envisaged for themselves.
Steve Jobs once revealed “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” This recognises another side of the problem, time to market, as the marketplace and customers needs are changing all the time you risk always being behind the market if you simply build what you are told the customer needs.
The best approach is to figure out where the market is going or what a potential, unforeseen, problem will face customers in the future. Then conceive of a product strategy that will enable you to launch a product that satisfies a future need just at the right time, hopefully catching your competition out. This has been done many times before and many businesses have succeeded with this approach.
It is a risky strategy, building something that no one is asking for, but if you believe in the future need and can build a business case to go after it. Then go for it.

Grev

Back from your future 31 October, 2013

Posted by varoom in Marketing Plans, Strategy.
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Most early stage companies manage their business looking forward perhaps a year sometimes longer. This can sometimes cause an effect I call “Horizon planning” that is only working towards the business level you can safely see in the future. If you just aim for the business level can safely see you will only ever reach your visible horizon. What early stage companies should do is look beyond their business horizon into the future to define a business goal and work backwards from that goal to see if they are doing the right things today so that the business will achieve the future goal.

For example, let’s say, that your long range goal is to be ten times the size in five years. In year five you should be able to estimate how many customers you need to be serving to reach that business level, how many products will be sold and at what price point would they need to be achieving. From this 5th year view work back and estimate what shape the business needs to be in year 4 to make year five achievable in terms of customers/products/prices and for each year do the same until you return to the current year. Then you put on top of that your best estimates of success rates of turning customer leads into paying customers and then map in the cycle time you should need to turn a lead into a paying customer. If that meant that in order to reach 1,000 customers in year 5 you need to market to 1Million potential customers you can then see what kind of marketing program you must deploy in each year to reach out to enough potential customers that generates enough paying customers.

When this is done you often find that the marketing campaigns, branding strategies, and product roadmaps being envisaged today do not generate the size of potential business needed to allow growth to reach the finale goals.

The choice then has to be made: Either change the 5 year business goal as it appears unrealistic or substantially change the marketing strategy so that it generates the right size of customer base.

Grev