December 15, 2017

Mistake #9 – Trying To Be Too Many Things For Too Many People

All companies have limited resources and must make decisions of where best to apply those resources.   But way too often I see companies from start-up to large trying to spread those limited resources across too many opportunities because they are trying to be too many things for too many people and are unwilling to say no to some of the opportunities.

Some typical scenarios can include:

  • A new opportunity was presented to the CEO by a senior executive at another company.   The CEO was convinced on the idea and started to dedicate resources to the new opportunity without ever validating that it made sense to invest in it.
  • A start-up sees so many opportunities for their new product and they try to invest resources in all of them because they are afraid of saying no to the wrong opportunity.
  • All new opportunities are treated equally and thus resources are spread across each opportunity, without committing the right resources to any of the them.
  • A sales person presents a new potential market segment for a current product and starts to pursue that without getting any approval from the organization on their ability to support it.

These scenarios how examples of where no one was willing to say no to potentially good opportunities so that the organization could more appropriately focus on the best opportunities.

How Does a Company Focus Their Resources On the Right Opportunities?

Clearly Defined Business Strategy

The starting point for making these decisions is having a clearly defined business strategy to guide these decisions.   These decisions can include:

  1. What markets your company will serve
  2. How you serve these markets
  3. What are your core competencies
  4. How do you create a competitive advantage
  5. How is your company positioned in the market
  6. What is your brand promise

Based upon a clear definition in these areas, the first step of saying no is validating that the opportunity aligns with the business strategy.

I understand that in the start-up world, sometimes you are still trying to discover the right strategy, but you should always at least have a hypothesis of what you think your strategy is, based upon evidence and analysis, and then test and refine that as you learn.   Having at least a hypothesis on your strategy will still help focus your efforts.

Prioritization Strategy

Even if an opportunity aligns with your business strategy, you still might want to say no because there are other opportunities that deserve more investment.   When you are in a start-up mode, this decision is going to be about which market is your initial target market and how does this decision drive you toward defining your minimum viable product (MVP).  Points that you should consider and rate for prioritization could include:

  • How big is market segment
  • How big is the problem to them (are they willing to pay to solve it)
  • How much is the market (segment) growing
  • Is there an easily identifiable group of early adopters
  • Can they be reached
  • Can you develop a reference-able ecosystem
  • How strong is the current competition
  • Can you create a strong competitive advantage
  • Does the opportunity create synergies with current products or markets
  • What is the technical risk
  • What is the size of the required investment to pursue the opportunity
  • What is the potential return on that investment
  • How well does it support strategic initiatives in the organization

Depending on how complex you want to make this, you can choose the criteria that are most applicable to your situation, possibly weight each criteria and then rank each opportunity on a scale of 1 to 5 relative to each criteria.   That’ll give you a reasonably objective (and somewhat subjective) perspective on which opportunities make the most sense to pursue.   Once you select the best opportunity (or opportunities), you want to fund them adequately to make sure they have a chance for success.

Business Case Process

A business case helps you evaluate and analyze the details of a potential market opportunity, helping you make a well informed decision about the potential market opportunity.   Having some process ensures that the analysis work is doing for each opportunity and each opportunity gets the right scrutiny from the right decision makers in the organization and it reduces the chances of a rogue opportunity occurring.  In a start-up environment, you won’t want to create process, but you still need to do the analysis work to help you make well informed decisions about which opportunities or market segments to pursue.

Summary

By applying these three concepts, your organization will do a much better job of saying no to the good so that you can focus for success on the best.

Mistake #8 – Failure to Stay the Course, Reacting to Pressures and Temptations

I have too often seen and experienced cases where early stage companies are unwilling to put a stake in the ground about which markets they are going to focus on or they chase deals “opportunistically”, resulting in spreading their resources too thin and investing in opportunities that have little chance of success.

Some scenarios I have seen include:

  • The company started off with a well-defined market segment, but when sales didn’t start happening as quickly as they hoped for, they started second guessing their decision and brainstorming other potential markets and start spreading their efforts across multiple market segments.
  • Someone in the company identified a market segment that had strong potential upside, and even though the product was not developed for that market segment and there were well established companies already in that market area, the company ” opportunistically” chased after RFPs in that area, when in reality the chance of winning the RFP was very small.
  • While still trying to ramp up initial sales, executives or investors start throwing out other ideas of where the product might fit.  E.g., asking questions such as, “why aren’t we pursuing this opportunity or don’t you think that these people they might be able to use our product?”   Since the question (or perceived directive) is coming from someone in authority, you bend a little and say, sure, we’ll take a look at that, taking your away from your original focus.
  • Most commonly, though, is that the company thought they had a great idea and never did any market validation or put any thought into who would be the best target markets, so their marketing and sales efforts are like throwing spaghetti on the wall, hoping that something will stick.

Not defining and sticking to a clear target market segments creates multiple problems for the company.

  1. Early stage companies have limited resources and they cannot try to market and sell to a broad market and they can ill afford to do hit and miss marketing until they finally find something that sticks.
  2. Too often, the company creates a flurry of wasted activity as marketing creates new marketing materials, development adds new capabilities to the product and many people invest a number of cycles in chasing opportunities or responding to RFPs, all in the name of making it look like you have a product for a particular market or opportunity, but in the end, it is all for naught because you never really had a chance.
  3. You aren’t communicating clear and consistent messages to the market about who you are as a company and what you do.

Keep The Course

If you have diligently completed your market validation work up front and have continually validated the work with your target market segment, you should be confident in your decision, even in the face of heavy pressure pushing you or temptations pulling you into non-targeted markets, and stay true to course.

When to Change Course

There will be times when it is valid, and necessary, to change the course (or Pivot, using Lean Start-up terminology).  The key is that this decision to change course should be done with thoughtful consideration and evidence and not as a knee-jerk reaction to the above mentioned temptations and pressures.   The market can be fickle, and in spite of all of the hard work you did via market validation and by continually validating your approach with your target market, you may still miss the mark, since the markets true intentions and perspectives are only discovered once they actually have to put money on the table.

Here are some examples of situations that are evidence that a course change may be required:

  • The Pain (problem) the target market expressed was not nearly as critical as originally indicated and when asked to pay, they balk.
  • The problem is important, but there are other investment areas that are a much higher priority.
  • In the time that you took to get the product to market, market conditions have changed such that your product is not nearly as important as originally believed to be.
  • A competitor has beat you to the market and staked the claim of where you thought you were going to compete.
  • The Pain exists but your approach to solving doesn’t resonate with the target audience.
  • Any other execution issue on your part where you missed getting the right product for the right market (Product/Market Fit)

Steps to Stay the Course

  1. Do your upfront market validation work to ensure you clearly understand the problem you are solving and the target market with the biggest Pain.
  2. Continually validate your product development efforts with this target market until you have a Minimally Viable Product (MVP) that they are willing to pay for.
  3. Stay the course and keep focused on this target market until clear circumstances tell you to change course or that you are ready to expand your efforts.

 

Rise Austin 2013 Presentation – How to Create Products That Don’t Suck

PeopleFund Innovation Week – How to Create Products That Customers Really Want to Buy

Mistake #7 – There is No Clear Plan on How & Where to Sell the Product

Two of the significant decisions that entrepreneurs and companies must make when launching a new product are:

  1. Too whom they are going to sell the product
  2. How are they going to sell the product

I’ve heard way too many people say that there are many market segments that could benefit from their product and they don’t want to restrict their sales efforts to just one segment as they don’t know which market will be the most successful, so they end up spreading their limited resources across many different segments.   The reality is that unless you are a very large and well established with an extremely large marketing and sales budget, you can’t effectively reach out to many market segments and the impact of your marketing and sales effort will be weak.   So you must focus your initial marketing and sales efforts on one or a very limited number of market segments until you’ve established a beachhead.

Choosing That First Market Segment

Believe me, this is a painful decision, especially when there appear to be many potential markets and there is always the risk of being wrong.  So how do you choose that first market segment?

If you’ve done the upfront market validation work that I’ve recommended, then you’ll already have identified a market segment that has expressed a significant need and is willing to pay to solve that need.   Characteristics that I recommend that you look for are:

  1. Has greatest pain
  2. Willingness to try something new
  3. Willing to pay now
  4. Multiple early adopters in that segment
  5. Reachable via your current marketing and sales model
  6. Referenceable

If you haven’t done the upfront market validation work, you need to quickly evaluate a small set of market segments and choose which one has the highest the potential.  What I would do is to select 3 to 5 potential markets and do some initial sales efforts into each one.   Within about 3 to 5 sales calls, you should have a sense of which market segment best matches the six criteria I listed above.

How Are You Going to Sell?

Now that you have some focus, you still need to decide how to communicate the value proposition to your target prospects.  Again, your understanding of this should have already been developed from your market validation work and you can quickly build out the right sales tools.   If you are one of the founders of the company (typically the first salesperson), you should already have intimate knowledge of the market you are selling into and the value proposition you are offering, and you could quite likely do the first sales “flying by the seat of your pants”.  But I highly recommend you think through the process and develop the right tools as this will make you much more professional and effective.   If you already have salespeople or are going to hire a salespeople to kick-off the sales of your new product, then you MUST think through the sales process, develop effective sales tools and enable your sales team to effectively sell.  I cannot emphasize this enough as I have too often seen new salespeople struggle with making those first sales as they had no clear guidance where and how to sell the product.

 Effective Sales Enablement (How to Sell)

Here are the key points that must be understood and defined to effectively enable your salespeople to effectively sell your new product.

  • Target market segment (see above)
  • Buyers within that segment
  • Key pains/problems that you can solve for those buyers
  • How you solve those pains/problems
  • Expected benefits from using/buying your product
  • Evidence that you can actually achieve these benefits
  • Key competitive advantages of your offering (v. alternatives)
  • The 3 to 4 most relevant messages that you want to communicate to each buyer profile

Once you have this well defined, it’s a pretty straight forward process to create sales tools (presentations, demos, questioning guides, etc.) that will make your sales people much more effective.   Please see my presentation below on creating the core sales enablement tools.

 

 

Mistake #6 – Your Product is Ready to Launch, But Your Company Isn’t

I’ve experience too many start-ups and early stage companies that are so “heads down” on getting the product developed that once the product is ready, no one has thought about the go-to-market strategy.   This often occurs because working through all the issues and challenges of developing a new product is pretty intensive, and there is no bandwidth to think beyond product development.   This also occurs because the founding team has little go-to-market experience and lacks awareness on what needs to be done.

The product launch is about much more than the product being functionally ready, it’s about the company being ready to engage in a new product launch.  This requires these points of readiness:

  • Product Readiness – is the product functionally ready, in that it provides at least the Minimum Viable Product (MVP) expected from the market and has it been adequately tested to make sure that it works as intended.
  • Marketing Readiness – is the marketing team ready with a marketing launch plan and marketing tools to start creating awareness and demand in the market.
  • Sales & Channel Readiness – has the sales team or channel been properly prepared to represent the product to the market (I’ll discuss this more in the next post).
  • Delivery Readiness – are all parts of the organization involved in the delivery and support of the product ready to execute.   This includes manufacturing, support, professional services, etc.

An effective product launch requires readiness in each of these areas and failure in any of these areas can leave your company with a black eye and a lost opportunity.

If you are a start-up, you most likely won’t have much of an organizational structure in place, but you need to start thinking about these readiness issues and ask questions, such as:

  • How are we going to acquire those first customers?
  • Who is going to do the selling?
  • How are we going to make potential customers aware of our offering?
  • What happens when someone buys the first product?   How will we deliver it?  Who is responsible for these steps?
  • How do we handle a support request when it comes in?  Who will handle it?

These questions are just a starting point, but if you haven’t thought about them and made some plans around them, then you won’t be “ready” when the time comes.

Launch readiness is more than just about the product, it’s about the company being ready for the launch.

 

Mistake #5 – A Market Message for Everyone is No Message at All

One of the challenges a company of any size (but especially start-ups and early stage companies) faces as they launch  a new product is to communicate a clear consistent message to the market.   The following are a couple of scenarios that I have seen where companies fail to do this.

  • As a start-up, you are trying to close those early sales and your desperate to find anyone that will listen to you and so you change your story based upon what you think they want to hear, so that each person has a unique perspective of what your company does and nobody in the market really knows what you do.
  • You know that your product can meet the needs of multiple markets, so to make things simple, you create a story and messages that you think apply to all markets.   When you do this, you end up with a message that doesn’t resonate with anyone.
  • Senior level executives have not been properly briefed on the right story and message (or they have been briefed, but they’re the founder and can say what they want), so when speaking in the market, they might make statements the that imply that your products do things they really don’t do or can be sold into markets for which they are not ready, and then the marketing team has to play spin-master to cleanup the mess.

So the end result is that your try to be everything to everyone, but in reality, you have no message at all.

The starting point for correcting this problem is defining a clear messaging platform.

  1. Target Markets & Positioning:  The number one set of decisions is choosing your target market segments and determining how you will position your product in each market segment.  As a start-up, you have limited resources and you can not afford to pursue all market segments, so you must focus on the 1 or 2 market segments that give you the best chance of success.   As your grow, you can expand into additional market segments, but you must still proactively choose those market segments.
  2. Buyers & Influencers:  The second set of decisions is clearly defining the buyer and influencer roles in each target market.  Define who is the economic buyer, technical buyer, influencers and users.
  3. Targeted Messages:  Finally, you want to create messages that are specific to each buyer role in each target market.  This is important because it is much more powerful when you communicate a message that is specific to your target buyer v. trying to communicate a generic message that might fit all (which it doesn’t).   You market messages must support and defend your positioning in the market (Point #1).
  4. Consistency of Message:  Make sure that all market facing personnel understand these messages and their target audiences to that they use them appropriately and consistently.

For more on creating compelling messages, please see my presentation below.

 

Mistake #4 – Everyone Owns The Product, No One Owns the Product

Ad hoc requirements lead to products that try to serve all, but serve no one at all.  But too many companies from start-ups and early stage to established companies develop inferior products because the products are defined via an ad hoc structure and process.   Just a few of the examples that I have seen include:

  • A salesperson or executive returns from a meeting with a prospect or client and directs an engineer or developer to work on a specific (and urgent) feature to meet the prospect’s or client’s need.
  • An executive walks by a developer and suggests an idea they thought about over the weekend.  In one company at which I worked, we called these “drive-by” requirements.
  • Developers sit around discussing “cool” features that they could put into the product and pick the coolest ones to include.

In any of these cases, the engineer ends up working on the suggested feature or capability as they have no clearer guidance.   This ad hoc approach to defining products leads to a number of problems that result in ineffective and unsuccessful products.  These include:

  • Features get partially done and then the dev team is off working on the most recent urgent request.
  • Feature creep occurs and the product release continuously gets pushed out to a later date.
  • No one has a clear vision of what features are being developed and therefore not everything gets properly tested, resulting in defects and poorly functioning features.
  • Conflict occurs amongst team members as each person thinks their idea for a future should have a higher priority.
  • New features only get partially defined, so what gets developed is incomplete and does really meet the market need.

The end result is a product that does not adequately meets the needs of the market place and diminishes its chances of success.

This problem occurs because everyone thinks they have the right to guide the direction of the product, but in reality no one really owns the product.   And this occurs because there is no structure and process in place to receive, vet and prioritize market requirements and then communicate these as clearly defined requirements to the development team.

In a start-up environment with a very small team, you can often get by with shared responsibility as long as there are regular discussions around product development, but even then, your small team needs to agree upon how requirements will be managed, prioritized and communicated as you receive them from the market.   As the company grows, you need to establish a clear owner (typically a product manager) that has decision authority on the direction of the product.

All companies will benefit from having a clearly defined requirements management process and designating an owner for each product that is responsible for ensuring this process is followed.

Mistake #3: A Market of One Does Not a Market Make

Way too often, an executive or salesperson comes back from visiting a major customer and communicates that the customer just identified a big need that the customer needs to solve and it would make a great product opportunity for the company.  Based upon this evidence, the company begins down the pathway of developing this new product, then implementing it for the major customer, only later to discover that the major customer was the only one in the market that had this specific problem.

Let’s change the context to an entrepreneur.  The entrepreneur identifies a specific problem that they are experiencing and thinks of a product idea to solve it.  Based upon this brilliant idea, they determine that they need to turn this into a product and sell it to many others in the market.   Once they develop the new product, they wonder why so few other people want the product.   Again, the problem is that the entrepreneur identified a very small opportunity where they, and maybe a few others like them, might be the only customers.  Or it could be that others do have the problem, but it’s not an important problem that they want to pay to solve.

How do we get around this mistake of creating products for a “Market of One”?  What we teach in the “From Napkin to Revenue” workshop is that when you identify a potential opportunity as described above, at this point, it is only a hypothesis.   Now you must speak to potential customers and validate that many others have the same problem and are willing to pay to solve that problem.  If you go through this initial step of the process and confirm that, yes, many others do have this problem and are willing to pay to solve it, then you have taken a significant step forward in improving your chances of success in the market.   There are many other things you must do right to be successful, but identify a significant and important market problem is the starting point for all great products.

Successful Products Begin With a Big Problem

That Many People Are Willing to Pay to Solve!

Mistake #2 – It Solves a Problem, But it’s Not Important to the Buyer

Several years ago, I was helping a company that had just launched a new product to the market, but was having a difficult time closing sales. They had identified a market opportunity where the target “user” had a significant challenge and they were looking for solutions to solve it. There were many potential users of the solution and there were no real competitors at that time. On the surface, this sounds like an excellent market opportunity.

So why were they having a problem selling this solution? The reason was that the business executive (buyer) who could make the purchasing decision for the solution did not feel the impact of this problem. So they had no reason to approve the purchase.

I have seen multiple companies face this problem. What seemed like an obvious market opportunity in reality wasn’t because the person that had to pay didn’t feel the pain and it wasn’t a priority in their overall business objectives.

How do you avoid this problem?

  1. When you are researching the market, don’t just speak to the user that is having the obvious problem, but also speak with the buyer and anyone that can influence that potential buying decision.
  2. When speaking with these other influencers/buyers, make sure to gain a clear understanding of how the user’s pain impacts them. If they can’t identify or express any clear impact, that should be a red flag to you.
  3. If this situation occurs, you need to dig deeper to see if you can help uncover a clear and urgent impact on the buyer and influencers. If you still can’t uncover a compelling business impact on these parties, this is most likely not a good opportunity to pursue.

Summary: In a typical B2B situation, you need to speak with users, mid-level managers, executive management and other influencers to make sure you understand how each are impacted by the problem you are trying to solve. In a B2C situation, many cases, you only need to understand the needs of one person as they are the buyer and user, but there are situations where the buyer, user and influencers are different, so the same concept applies.