Ten Questions for Technical Entrepreneurs
[This article was originally posted on LinkedIn Decemer 5, 2014]
I work frequently with technical entrepreneurs—scientists or engineers aiming to build a business around a technology based innovation. These can be a small group of technologists forming or working within a startup, or it they might be individuals or a team within a larger organization charged with introducing a new product, or launching a new business.
Generally speaking, these are smart—often brilliant, ambitious, and highly motivated people. At the same time, they often come from strongly technical backgrounds, and may be less familiar with some of the things that they need to think about if they wish to launch an innovative new product or form a new business.
When I work with folks like this, I recommend that they consider a list of 10 questions that I give below. These are very deliberately organized around a specific idea that I first learned from Rebecca Henderson, a classmate of mine at MIT who is now at the Harvard Business School, in her then MIT Sloan School course on Technology Strategy. The idea is this: your business strategy should address three issues: value creation, value delivery, and value capture. Here are the questions:
- What, precisely, is the idea behind your product or venture? This is the heart of the innovation you propose, and it will provide the vision you will need both to win customers and to recruit others to help with your business.
- Why do you have a great product? This is an umbrella question for at least 10 sub-questions—like, “What, precisely, is the product you plan?”—that are intended to help you convert your idea into a concrete product that customers will love.
- What is the market for your product? To quote Guy Kawasaki, looking at this question will help you understand, “Who has your money in their pocket?” (this is the market in the sense of, “Who will buy your product?”). And, more than that, it will help you understand the environment in which you will be selling your product (for instance, “Who are your competitors?” or, “What are your customers’ alternative solutions?”).
- How will you go to market? This question aims for clarity in that part of your business plan that considers things like channels, strategic partnerships, etc. Generally speaking, your product will not sell itself. Also, how will you differentiate yourself from others? Customers need to understand why your product is a unique value.
- How will you communicate with the market? The very first step in the process of adoption for any innovation is for the intended users to become aware of the innovation. Then, once aware, they need to somehow be convinced to change what they currently do by adopting your new product. This cannot be overlooked!
- Given your idea, product, market and plan… Is your approach a sustaining or disruptive innovation? This turns out to be a critical question, and it will feed back to your business plan and overall strategy. Disruption Theorystrongly suggests that sustaining innovations need to be carried out by, or in collaboration with, incumbents, while disruptive innovations need to be carried out by autonomous organizations. Go the wrong way here, and you may be courting disaster.
- What is your business model? This is your strategy for capturing revenue, with a positive margin. Recently there have been a proliferation of business modes going beyond the older, simple paradigm of design, manufacture, sell. Which approach will work best for your product?
- How will you erect competitive barriers? As Peter Theil has stated, “Competition is for losers.” Your goal should be to make it as hard as possible for the competition to match your position (while continuing to abide by applicable laws, of course!).
- What is your elevator pitch? If you can’t get your idea across in a single sentence, you need to give it more thought.
- Are you really sure you want to do this? This question is mainly here to get to 10 questions; still, it is a valid question. As Machiavelli said, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.” So, you should think carefully before you head down this road.
This post is just a summary of the questions, if you want see a more in-depth treatment, See my white paper on this topic.