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HOW TO CREATE PRODUCTS THAT DON’T SUCK © Copyright 2012 to 2014, The Lûcrum Group, Inc Tom Evans The Lûcrum Group @napkintorevenue www.napkintorevenue.com

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Most start-up companies begin with what they think is a brilliant idea and they immediately jump to building the product, and most of these products suck. Established companies sit around conference rooms staring at their navels, dreaming of the next great product and end up wondering why their products also suck. Creating innovative products that result in market breakthrough requires a process of multiple iterations of discovery that drive you deeper into understanding the market problems and how to solve them with a differentiated solution. Breakthrough products are based upon solving a significant Market Problem with a Product and Business Model that create a competitive advantage and a Market Strategy that motivates buyers to purchases your product. In this session, learn this iterative discovery process that leads to breakthrough products and how to apply it to your own products (in startups as well as big enterprises).

TRANSCRIPT

HOW TO CREATE PRODUCTSTHAT DON’T SUCK

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Tom Evans

The Lûcrum Group

@napkintorevenue

www.napkintorevenue.com

High New Product Failure Rate

• Robert G Cooper: One out of four development projects succeeds commercially. (i.e., 75% failure rate)

• Jack Gordon: …somewhere between 80 percent and 95 percent of new product introductions fail.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

High New Product Failure Rate

• Robert G Cooper: One out of four development projects succeeds commercially. (i.e., 75% failure rate)

• Jack Gordon: In the world we live in, somewhere between 80 percent and 95 percent of new product introductions fail.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Why Do So Many Products Suck?

1. Fallacy of the GREAT PRODUCT

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Why Do So Many Products Suck?

2. Customers don’t know what they want

© Copyright 2012 to 2014, The Lûcrum Group, Inc

“If I had asked people what they wanted, they would have said faster

horses.”

“A lot of times, people don't know what they want until

you show it to them.”

Why Do So Many Products Suck?

3. Build a better mousetrap and the world will beat a path to your door."

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Why Do So Many Products Suck?

4. Landgrab Economics – Profit Later

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Why Do So Many Products Suck?

5. What is Product-Market Fit?

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Keys to Products That Don’t Suck

• Compelling Market Opportunity– Big painful issues

– That many in your target market

– Are willing to pay to solve

• Compelling Solution– Differentiated Value Proposition

– Profitable business model

– Time to market

• Compelling Market Strategy– Motivates target market

– To solve problem with your solution

Discovery+

Validation

Model for Discovery

Four Key Steps of Discovery

Validate

Hypothesis

Validate

OpportunityValidate Solution Validate Market

Fou

r K

ey P

illar

s

Market Problem

Product

Business Model

Market Strategy

Validation Valid HypothesisValid Market

OpportunityReady to Launch Market Growth

From Napkin to Revenue™ Discovery Model

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Four Key Pillars

• Market Problem – if you’re not solving a problem, there is no need for a product!

• Product – How do you solve the market problem in a valuable and differentiated manner?

• Business Model – How do you deliver the product and profitably capture the value?

• Market Strategy – How do you motivate your target market to solve their problem with your solution?

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Model for Discovery

Four Key Steps of Discovery

Validate

Hypothesis

Validate

OpportunityValidate Solution Validate Market

Fou

r K

ey P

illar

s

Market Problem

Product

Business Model

Market Strategy

Validation Valid HypothesisValid Market

OpportunityReady to Launch Market Growth

From Napkin to Revenue™ Discovery Model

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Market Evidence (of Market Problem)

• Sources of Market Evidence

– Customers

– Non-customers

– Market trends/shifts

– Unexpected occurrences

– New technologies

– Competitors

– Personal experience

– Etc.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Market Evidence (of Market Problem)

• Sources of Market Evidence

– Customers

– Non-customers

– Market trends/shifts

– Unexpected occurrences

– New technologies

– Competitors

– Personal experience

– Etc.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Market Evidence (of Market Problem)

• Sources of Market Evidence

– Customers

– Non-customers

– Market trends/shifts

– Unexpected occurrences

– New technologies

– Competitors

– Personal experience

– Etc.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Start With Hypothesis

– Buyer/User ‘W’

– In Market Segment “X”

– Has problem “Y”

– That happens when “Z” occurs

– We can solve it by creating/delivering solution “A”

E.g.: Owners of small manufacturing operations that use hot water & steam are unable to manage manufacturing costs due to the volatility of fuel prices.

We can solve this by providing a high temperature solar heating system under a lease agreement.

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Validate the Hypothesis (1)

• Market problem and market segment(s)• Speaking to potential customers (buyers & users)

– Most companies don’t and won’t do this• Significant time investment

– Requires many conversations (cold calling)• Minimum: 20 conversations• May take over 100 conversations

• Iterate until validated or rejected

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Validate Hypothesis (2)

• Create product & business model concept

– Low cost way of presenting product concept

– Mockup, prototype, wire frame, story board, presentation, product description

• Validate product & business model concept

– Present concept and receive feedback• Does the problem still resonate?

• Does the approach solve the problem?

• What is the Minimum Viable Product (MVP)

• Iterate until validated or rejected

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Validate Opportunity

• Define & discover at greater depth

• Competitive research (strategy, position, strength)

• Validate the market opportunity

– Business Case - Can it be profitable?

• Detailed design of product & business model

– Market requirements, product requirements, user stories, etc.

– Pricing model, delivery mechanism, costs to deliver, etc.

• Iterate until validated or rejected© Copyright 2012 to 2014, The Lûcrum Group, Inc

Validate Solution

• Define Minimum Viable Product (MVP)

– Just enough functionality to solve the most important market problems

– For small segment of market (early adopters, etc.)

– Willing to pay for this functionality

– Fast to market

– Learning

• Continue to discover, validate, refine!

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Validate Market

• Sell your first customers

• Based upon market validation work

• Targeted Market Development Plan

– Well defined target market

– Clear understanding of buyer roles and their challenges/goals/needs

– Compelling reason to buy from you• Value Proposition – what we do for you

• Positioning & Differentiation – why buy our solution

• Continue to discover, validate, refine!

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Model for Discovery

Four Key Steps of Discovery

Validate

Hypothesis

Validate

OpportunityValidate Solution Validate Market

Fou

r K

ey P

illar

s

Market Problem

Product

Business Model

Market Strategy

Validation Valid HypothesisValid Market

OpportunityReady to Launch Market Growth

From Napkin to Revenue™ Discovery Model

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Key Principles

• Hypothesis – Discovery – Validate

• Continuous engagement with target market

–Validate important decisions

• Planning is good, but learning is better

• Fail fast – discover fast!

© Copyright 2012 to 2014, The Lûcrum Group, Inc

Thank You!

Tom Evans

The Lûcrum Group

[email protected]

@napkintorevenue

www.napkintorevenue.com

+1.512.961.5267

© Copyright 2012 to 2014, The Lûcrum Group, Inc