Our four step process emanates from the rigor that research science demands where you:
and other times results aren't as we hypothesised so a change of direction, Pivot, occurs.
A successful business is one that survives, grows and makes a profit. First and foremost there needs to be a large enough customer base to support it. In the validation phase you find out if your value proposition meets or exceeds your target customers’ expectations: we call this the market opportunity. You will need to complete a market intelligence investigation, talk and listen to potential customers and refine your thinking based on what you hear. Develop a detailed knowledge of how large the market really is, how many potential customers are out there and what they would really be willing to pay. Understand what else is happening in the market place, know your potential competition and how they may react. Summarize your knowledge developing a business model which draws out how your business will work.
Plan (not a business plan)
When you have a business model defined and you’re convinced there is a viable opportunity for your product or service you must plan to be ready for execution. Keep it simple initially but know your minimum viable product. Understand your expenses (fixed and variable costs) to get to market, if there are legal obligations that must be addressed, what revenue must be generated to be viable and is the market large enough to support that need. Be realistic about the funds that are available to you under the start-up stage - know how you will fund your opportunity.
Only when you are confident that your product or service development meets or exceeds market expectations and your business model is solid is it time to start building your company. You will continue to seek feedback from your customers as you have done so far and refine your business model as needed. Keeping a close relationship with your customers will allow you react to their needs and help you sustain and grow your business.
Entrepreneurs may have an idea which they wish to pursue to build a business or they may want to generate an idea having made the decision to work for themselves. In the latter case a collection of market opportunities are first identified and ideas are developed. Successful entrepreneurs validate their ideas with rigor and only progress if there is a reason that people will part with their time or money to buy the product or service you will offer: we call this the value proposition. You must know your customers’ needs and wants and test your ideas against your knowledge.
Generally your first idea is not progressed to start-up after a first validation and refinement is needed. With each refinement further knowledge is gained and your product changes. As you develop versions of your product, seek potential customer feedback and refine your business model. At any stage of the process you may return to an earlier stage of development as each stage has an inbuilt review.
Sometimes you will find the market opportunity for your idea isn't big enough to build a sustainable business or your value proposition simply isn't strong enough to gain traction in the market place. This is the time to “give up”, review what you have learnt and transfer your effort into better opportunities that your team can pursue or dissolve the team. You will have gained skills and knowledge that can be easily adapted to pursue a more promising market opportunity. Should you make such a change in direction you have made a “Pivot”.