by Bill Aulet
Often people refer to this approach as “a solution looking for a problem” or the metaphor “a hammer looking for a nail,” which is an apt description. It can be challenging to take a technology and find a true customer pain. Some teams get too enamored with the technology, and they don’t focus and drill down to understand how to get paying customers. Use “technology push” with caution, and pursue only if the knowledge, skills, and passions of your founding team are more inclined toward starting with a technology, and your team understands that paying customers are more important to a startup than cool technology.
Regardless of whether you choose a market pull or technology push, there is a lot you won’t yet know about this general problem: How urgent is the problem? How much will the customer pay for a solution? How many people have this problem? What does the competitive landscape look like? What will be your competitive advantage that makes you stand apart from all other companies? How profitable a business can be built solving this problem?
You will explore those questions, and many more, throughout the 24 Steps, starting with Step 1, Market Segmentation, where you’ll put an idea to the test by doing extensive primary market research to determine whether such a customer pain exists from the idea.
For now, your goal is to come up with general ideas where, if you focus and spend sufficient time, your team can produce a product that could be the basis of a scalable business you will be excited about. Use the Idea/Technology Brainstorming Notes table (see page 7) to guide your brainstorming. Then, fill out the appropriate Mini-Canvas (see page 7), and begin the 24 Steps.
There are entire books, courses, conferences and even companies focused on the “ideation” process, so I will not try to comprehensively summarize it here. But I have a few key points related to brainstorming in general based on my secondary research and experience:
Brainstorming is best done as a team with diverse perspectives. Without the whole team involved, some members may feel less invested in your success. Without diverse perspectives, your ideas may not be broad enough to find a truly great market opportunity.
Use improv (improvisation) training techniques with your team. They’re effective at getting people to think in the kind of “yes, and…” mindset that fosters effective brainstorming. In “yes, and…” you don’t immediately scrutinize and criticize each idea that comes up, but instead you build on each other’s ideas. Only after you’ve come up with a lot of ideas do you start a critical analysis.
Brainstorming and the subsequent filtering of ideas is also an excellent way to determine who should be and shouldn’t be part of your founding team. While not the expressed purpose of this exercise, this is every bit as valuable, if not more valuable, than coming up with the idea. Since the real work of the new venture has not yet started in any meaningful way, I find this process is more useful in determining who you don’t want to work with as opposed to measuring the strength of the founding team.
Take brainstorming seriously, but understand this is a small part of the overall process. An idea is necessary to start with, and it gets your team in the right general neighborhood. But I often refer to the initial idea as the single most overrated thing in entrepreneurship. The quality of your team, having a clear target market, and having a sound process for execution (like the 24 Steps) are much more important factors in ultimate success than your initial idea, which often changes dramatically over time.
Idea/Technology Brainstorming Notes
Use this chart to help identify your team’s knowledge, skills, and interests, which can help you come up with market pull (or tech push) ideas.
Knowledge: What was the focus of your education/career?
Capabilities: What are you most proficient at?
Connections: Who do you know with expertise in different industries? Do you know other entrepreneurs?
Financial assets: Do you have access to significant financial capital, or will you be relying on personal savings to start?
Past work/life experience: In previous jobs you’ve held, or in previous experiences in your life, what inefficiencies or “pain points” existed?
Passion for a particular market: Do you want to improve healthcare? Education? Energy? Transportation?
Market Pull Mini-Canvas
1. WHAT:
What is the general problem we are trying to solve or the opportunity we are looking to capitalize on?
____________________________________
____________________________________
____________________________________
2. URGENCY:
This is a: (circle one)
Vitamin pill (i.e., nice to have)
Pain killer (i.e., solves a critical problem)
Game changer (i.e., opens new market opportunities)
3. WHY US:
Our team has or would have the following assets that would make us uniquely qualified to implement this idea:
____________________________________
____________________________________
____________________________________
4. PASSION:
Summarize why our team cares so much about this idea that we are willing to embark on this arduous & humbling journey:
____________________________________
____________________________________
____________________________________
Technology Push Mini-Canvas
1. WHAT:
Description of the invention/technology: ____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
2. WHY US:
Why we have a significant advantage over anyone else with regard to this invention:
____________________________________
____________________________________
____________________________________
____________________________________
3. LEAP FORWARD:
Compared with the most relevant current alternative, why is it so compelling that it will make people and industries change:
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
4. PASSION:
Summarize why our team cares so much about this idea that we are willing to embark on this arduous and humbling journey:
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
HYBRID IDEA: MIX OF MARKET PULL AND TECHNOLOGY PUSH
When I wrote Disciplined Entrepreneurship, I sought simplicity as much as possible, so I divided starting points neatly into idea or technology. But as the mathematician Alfred North Whitehead said, “Seek simplicity and distrust it.” Now, after seeing hundreds of companies applying the 24 Steps, I trust it more, but I have also found areas that deserve greater explanation, and this is one such area.
The reality is that most often teams start with market pull, but there is some technology push, especially from universities and research and development laboratories. In some cases, however, teams start somewhere in between the two models of market pull or technology push. Over the past few years I have seen increased awareness of market importance at all levels. Today, even the scientist in the lab is thinking early on about the application of the breakthrough he or she is working on. Something that seems like a “technology push” may have been inspired by a “market pull,” and vice versa.
An example of a hybrid idea came from one of my students, Parul Singh, who began with the fundamental concepts that teachers need help, and n
ew technology like the iPad enabled exciting opportunities to do so. The convergence of the demand and the sudden ubiquity of tablets was an opportunity for her to create a company she was extremely excited about. While things changed over time, this hybrid idea was sufficiently compelling to get her and her cofounder, Dante Cassanego, to start the journey toward creating Gradeable, which had the goal of reimagining how grade-school students are assessed in order to increase student engagement in the classroom.
So if your originating concept is a hybrid, which will be true in many cases, you should use both Mini-Canvases, but I would more strongly emphasize the market pull one. Then I would suggest you overlay these Mini-Canvases with the following Hybrid Mini-Canvas.
Hybrid Idea Consolidated Mini-Canvas
1. MARKET PULL:
This idea is relevant to the ___________________________________ market because it will produce significant value by _________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
2. TECHNOLOGY PUSH:
The enabling technology invention is: ____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
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3. WHY US:
What makes us especially qualified to pursue this opportunity?
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________
Your analysis of the customer and the marketplace will lead your journey through the 24 Steps, not your idea or technology, no matter how amazing you think it is now. This step is just the starting point of a long journey. Let’s move on. Onward and upward!
Notes
1 Edward B. Roberts, Entrepreneurs in High Technology: Lessons from MIT and Beyond (New York: Oxford University Press, 1991), 258.
2 I discussed different levels of interest in entrepreneurship, and their resulting Personas, as part of my keynote speech to the United States Association for Small Business and Enterprise 2016 Conference. You can view slides from the speech at http://www.slideshare.net/billaulet/past-present-and-future-of-entrepreneurship-education-presentation-at-usasbe-conference-jan-10-2016.
STEP 1
Market Segmentation
WHAT IS STEP 1, MARKET SEGMENTATION?
Brainstorm how your idea or technology can serve a variety of potential end users. Narrow that list of potential end users to several promising categories, then conduct primary market research to gain more information about each potential end user.
WHY DO WE DO THIS STEP, AND WHY DO WE DO IT NOW?
It is crucial to start the process with a focus on a target customer. Everything else about your business will be based on that focus.
By the Book: See pages 23–35 of Disciplined Entrepreneurship for basic knowledge on this step.
See pages 36–39 of Disciplined Entrepreneurship for an example of how a company addressed this step.
The Market Segmentation step gives you the right frame of mind for the new product right from the start.
PROCESS GUIDE
The single necessary and sufficient condition for a business is a paying customer. If people don’t give you money in exchange for your product, nothing else matters. As I discuss in Disciplined Entrepreneurship, the best way for an innovative startup to lay the groundwork for a solid company is to dominate a narrow, carefully defined market that serves a particular end user. To choose the best market, you’ll do a Market Segmentation that uses primary market research to pinpoint the best markets to draw your attention. Later, you’ll select one of these markets and dig deeper in the process of determining exactly who your customer will be.
An end user (the foundation of a market segment) is a category of people who have similar needs and customer pains. End users typically have similar demographics and other characteristics. Rigorously categorizing end users, which is what you want to do, is much more detailed than you may think. For instance, an education startup would be poorly served by targeting the general category “teachers” as their end users, as it is too general. This general description ignores the differences between public and private schools; primary, secondary, and postsecondary education; rural, suburban, and urban school districts; and young, inexperienced teachers and older, veteran teachers.
In this workbook, you’ll go through the three stages of Market Segmentation—brainstorming, narrowing, and primary market research.
Part 1A: Brainstorming
“I already have my idea. Why do I need to brainstorm again?”
The idea or technology is a good starting point because it reveals your interests, skills, passions, and possibly key assets. But it often does not articulate systematically enough a customer pain, a need that is so deep that a group of people are willing to pay you a meaningful amount of money to solve it. The Market Segmentation’s brainstorming stage is designed to broaden the world of possible end users as wide as possible to consider who might benefit from your idea.
Often some of the most interesting Beachhead Markets exist on the fringe of the spectrum and are overlooked by others, so think broadly. Wild ideas are welcome and encouraged at this point.
How do you effectively brainstorm so that you are considering all the possibilities? Keep these tips in mind:
Get the right people in the conversation: You should discuss with not just your founders, but also consider other relevant parties such as domain experts, technologists, creative types, facilitators, and others you deem appropriate. It is helpful to have many of these people in a room together brainstorming, but don’t expect to lock yourselves in a room for a single session of a few hours and have a completed list; you also want to bounce ideas off of potential customers and others you know or can get connected to. To get the best portfolio of options, it will probably take multiple meetings in multiple different locations with multiple different audiences within the time frame you have available for your situation. Don’t let the discussion be constrained by the technology available today. If anything, expand your horizons and consider trends in technology and even brainstorm the possibilities if technology advanced even faster.
Be clear on the dual purpose of the brainstorming: You want to get the right people in the conversation because you’re not just making a comprehensive list of potential markets. You’re also selecting and refining your initial team and then creating alignment for that foundational team. Some of the people you invite to the conversation will become cofounders, and depending on how the conversation goes, some of your current cofounders may drop out. This is natural and healthy if you are executing the process effectively. Cohesion comes from all the members of the team participating in the formation of your organization and understanding its direction. Just knowing the final answer is not as empowering as deeply understanding why the answer was agreed upon.
Get in the right place with the right tools: Find a new place whe
re everyone feels comfortable because it is important that constraining hierarchical relationships and distractions are eliminated or at least kept to a minimum. Disconnect from all e-mails, texts, tweets, and other notifications for at least a half day—a full day is better. Get a lot of sticky notes and encourage participants to jot down ideas as they come up with them and then share them. If you can find a space with whiteboard or chalkboard walls, even better.
Get the right rules to brainstorm by: The renowned design firm IDEO has five basic rules that govern brainstorming sessions. While others have used variants of this and customized them to their environment (quite colorfully and memorably), IDEO’s rules that can be used as a starting point are: Defer judgment
One conversation at a time
Stay focused on the topic
Encourage wild ideas
Build on the ideas of others
Identify, empower, and develop a facilitator: Find or appoint a facilitator to enforce the rules you agree to in #4 above, and empower that person to guide the process. That person should take this responsibility seriously and prepare for the session. It is their responsibility to ensure everyone gets input and to avoid groupthink or dominant personalities controlling the conversation.
