As Director of the U.S. Army’s Rapid Equipping Force Pete Newell delivered innovation at speed and scale in the Department of Defense. Pete is now CEO of BMNT, a company that delivers innovation solutions and processes for governments.
Here are Pete’s 5 principles that will accelerate innovation.
To help a large Defense organization wrestle with how to increase the velocity of innovation in their ranks Steve Blank and I spent the better part of last week with our heads together reviewing everything we learned in the five years since we merged the concepts of problem curation and Lean while launching the innovation pipeline.
The original Innovation Pipeline sketch – 2016
I spent yesterday sifting through the most recent lessons learned and results from a series of accelerators BMNT is running for the intelligence community. Then last night I watched the final presentations from the inaugural Hacking for National Security course in Australia before jumping over to teach Stanford’s Hacking for Defense® (H4D) class.
Looking back on the week I’m blown away by how far we’ve come since we merged the two methodologies five years ago and by how fast we are discovering the pathways toward solving incredibly hard problems. Some examples:
In less than six weeks a Stanford H4D team has redefined a problem related to security vetting and radicalization while also describing the pathway a solution could follow to deployment within the Department of Defense and the Intelligence Community.
A Navy team recently sourced 80 problems, then curated down to one priority problem to solve. In less than 60 days they created 26 MVPs while interviewing over two dozen companies. They then incubated and delivered a solution that will help get large vessels back to sea faster, potentially saving the Navy $20M-$30M a year.
In just three weeks, the DIA MARS team sourced 100 problems from nearly 400 people, then curated and selected five priority problems to focus on. In eight weeks, five teams conducted more than 125 interviews (across 53 stakeholder organizations) and 12 experiments to deliver five validated proofs-of-concept and the evidence needed to confidently invest resources to prototype three of the five based on their user desirability, technical feasibility and organizational viability.
What I observed from the week’s deep dive: Whether it is an agency cross-functional team or a university-based “Hacking for” team we are accelerating, five key concepts drive the foundation for this increasing pace of learning and solution delivery. They are
The power of Lean Methodology is supercharged when discovery begins with a well-curated and prioritized problem. Getting to one well-curated problem requires access to a source of hundreds of them.
Problem curation doesn’t stop until discovery is complete — the process of trying to discover the solution to a problem helps define the actual problem (and for .gov folks the actual requirement for the future solution).
Stakeholder mapping and nailing the value propositions for beneficiaries, buyers, supporters, advocates and potential saboteurs are critical to building a pathway through the phases of the innovation pipeline and transitioning a solution to deployment.
The key to understanding value propositions is in building interviews that are based on a set of hypotheses (about the problem, the stakeholder and potential solutions to be explored) and data to be captured while using minimum viable products (just enough “product” to increase the efficacy of a conversation and increase the speed of learning).
Innovation happens because of people and it takes a village. Whether academic-based like our Hacking for Defense teams or internal organizational Integrated Product or Cross-Functional Teams (IPTs/CFTs), accelerator teams perform best when supported by:
Teachers – who can ground teams in a common framework and language for the discipline of innovation and entrepreneurship.
Coaches – who can walk teams through the practical application of innovation tools in context with the problem they are trying to solve.
Mentors – who will provide relentlessly direct feedback to teams and challenge them on the quality of the hypotheses, MVPs and the analysis of what they’ve learned, while driving them through each pivot rather than letting them get bogged down in “analysis paralysis.”
Advisors – who will provide alternative viewpoints that will enable teams to see clearer pathways through bureaucracies.
Connectors – who will help teams rapidly grow their networks to gain new insights from unique partners not yet discovered.
If your organization is running innovation activities or an accelerator and these five principles aren’t part of their program they are likely wasting your organization’s time and resources, and contributing to Innovation Theater instead of deploying solutions to real problems.
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Next up we’ll dig into how the innovation pipeline serves a parallel process for managing innovation
Enterprise Innovation for the 21st Century
Today’s environment requires separate systems for innovation and execution that operate with parallel and sometimes overlapping processes
I first met Shawn Carolan and his wife Jennifer at the turn of the century at 11,000 feet. I was hiking with my kids between the Yosemite High Sierra camps. Having just retired from a career as an entrepreneur I had started thinking about why startups were different from large companies. The ideas were bouncing around my head so hard that I shared them with these strangers around a campfire, drawing out the four steps with a stick in the dirt. Shawn immediately said the name I had given the four steps was confusing – I had called it market development – he suggested that I call it Customer Development – and the name stuck. What I didn’t realize was that both were graduate students at Stanford and later both would become great VCs – Shawn at Menlo Ventures and Jennifer at Reach Capital. (And Jennifer is now my co-instructor in the Stanford Lean LaunchPad class.)
The MVP Tree Over the last two decades Shawn has seen hundreds of startups use the Lean Methodology. Many of them get hung up on understanding how to select the right minimal viable product. He came up with the concept to simply the search for product/market fit by using an MVP Tree.
Shawns guest blog post describing describing the MVP Tree is below.
(Note that if you’re familiar with the business model canvas, Steps 1-4 below are equivalent to a visual map of the choices a founder makes as they develop a business model canvas. Step 5 and 6 leads you to selecting the right MVPs.)
It’s commonly believed that the top two reasons startups fail is because “there’s no market need” and “they ran out of cash.” These reasons are mental gymnastics to avoid a plain truth: startups fail when they don’t build a simple solution to a problem many people have.
Many startups fall into the trap of building toward a “mission” rather than a minimum viable product (MVP).
Your mission is your baby. It’s the North Star that got your people on board and inspires them daily. However, solely focusing on your mission is the same as being unfocused.
Bridging the gap between a big, ambitious dream and the reality of what you can accomplish with limited resources isn’t fun because it requires saying no (for now) to a lot of things that have you excited. Paradoxically, resource limitations are the secret to success; they teach lessons that experienced entrepreneurs have harnessed. Constraints force you to pause—or even permanently shelve—certain aspects of your mission in favor of proving that you can deliver one specific thing that really matters to customers.
During the crucial mission-to-MVP planning phase, the objective of a startup is to solve one job for one customer group such that customers consistently use your minimally viable product for an important part of their work or personal lives. In other words, you prove retention. It’s really all that matters at the earliest stage.
The tool for doing this efficiently and effectively? We call it an MVP tree.
Solution: Build an MVP Tree Company missions tend to fall to the extremes: either the mission isn’t ambitious enough or it’s too ambitious to build with your current resources.
It bears repeating: an early-stage startup must focus on making one customer group excited by a mission-aligned product. Doing so is usually a long way away from realizing your full mission statement, and that’s okay.
An MVP tree is a way of methodically breaking your mission into smaller components and formulating MVP candidates that may get your company sustainable and scalable. Using the tree structure outlined below increases the chance that your first step forward (the MVP) will be successful with a small team, while taking you in the right direction to achieve your company’s big mission. An MVP tree has three main components—customer archetypes, jobs to be done, and execution—and we’ll walk you through them step by step with a case study of Roku, a former portfolio company we’ve been fortunate to see execute from a $20 million first VC round to what is now a $50 billion public company.
(To get started, we draw our tree out using Whimsical, a product that I’m a big fan of.)
Step 1: Define Your Big Mission in a Simple Statement
In the day-to-day fray of prioritizing features, considering customer input, and handling people issues, it’s easy for a team to lose their bearings. The world is full of great products and it’s essential to be crystal clear on your reason for being; to avoid wandering in circles, you need a mission statement. A few examples:
Roku: “To be the TV streaming platform that connects the entire TV ecosystem around the world”
Chime: “We believe everyone deserves financial peace of mind”
Your mission statement needs to stand for something specific and impactful. It may change as you build and learn from your customers, but aim for it to conjure up an image of a better future with your product at the center.
Your mission statement is the center of your MVP Tree.
A motivating mission statement inspires action. It may be tempting to jump right into coding, but slow down—remember, the goal of this exercise is to determine how little you can do to acquire and retain customers. With both growth and retention, you earn the right to build more.
Step 2: Customer Archetypes
A customer archetype is a category of similar people with similar needs (e.g., segmented by age, gender, profession, personality type, etc.). While it may be tempting to want to build a product for everyone, everywhere (7 billion TAM, right?!), doing so will distract you from building exactly what one group needs. Each new segment you attempt to serve can increase scope, adding to your workload and demanding more of your limited resources.
The intent of this branch of the tree is to identify one group of potential customers who would be highly motivated to fix their pain as part of your MVP. Draw out a few customer archetypes that might be a fit for your startup, (we’ll discuss later how to prioritize the one group to tackle first.)
Step 3: Jobs to Be Done
Clayton Christensen’s Jobs to Be Done framework proposes that focusing solely on customer data leads founders on a wild goose chase. Founders should understand what the customer hopes to accomplish, or what their job to be done is.
Break down your mission statement into different “jobs”; this itemization will likely narrow your product scope considerably, while still allowing you to create something of significant value.
When consumers have a job to be done, they’ll look around at their choices and select the best tool for the job. Your goal is to build the best tool for meaningful, reoccurring jobs that people face. Map out the jobs that you believe exist for the customer archetypes identified in step 2.
The more common jobs may apply to several of the archetypes, while the more esoteric jobs may apply to just one. There will be plenty of overlap, which is why jobs have their own branch of the MVP tree rather than attaching directly to the archetype branches.
Step 4: Execution Branches
Execution branches will vary based on the company, but think of them as the components of what gets built and where it gets sold. These branches of the MVP tree comprise the components of market expansion that urge founders to explore the tactical side of getting a solid product in front of the right people. This first product launch can either be a costly mistake or an ingenious first step that shows traction with early customers and gives your team and investors confidence. Map these out now as part of the tree and reduce the odds of a headache down the road.
In the Roku case study we’ve chosen three execution branches: (1) delivery platforms, (2) sales channels, and (3) chip platforms.
Delivery platforms Delivery platforms are the vehicles through which customers come to interact with your product. For software products, they would be the operating systems with big market shares: iOS, Android, web, Mac, and PC. While supporting each additional platform expands your addressable market or breadth of customer touchpoints, it can dramatically increase scope. Developing for multiple platforms at once spreads already-thin resources, which ultimately harms the creation of the best product possible for a specific customer segment.
The fewer platforms you choose to support, the smaller the scope. Pick one delivery platform to save resources and prove your value. Investors will recognize that a successful app on iOS will also work on Android with more capital. Focus your precious time on making one platform sing.
Clubhouse, a recent startup darling, has quietly grown to over 2M users exclusively on Apple. Some early users might be frustrated because they can’t invite their Android peers, but the strategy to focus on iOS helped Team Clubhouse minimize their initial scope and meticulously learn from early users without the distraction that may come from opening the floodgates.
For hardware companies, delivery platforms are essentially the potential SKUs you might consider shipping. Steve Jobs once said that if you are really serious about software, you should build your own hardware. You can think of these hardware form factors as software delivery vehicles. Most people only know Roku for their TV devices, but Roku initially shipped an audio device for Internet radio stations and a PhotoBridge product to get digital photo libraries to the TV. Even when moving to video, consumers had the choice between a stand-alone box or a smaller plug-in stick. Today, Roku has become an operating system embedded in other brands’ TVs.
Sales channels Sales channels are the paths through which your product lands in customers’ hands. For software products, the channels are typically through the mobile app stores or directly over the Internet. For hardware products, it’s D2C e-commerce, online retailers, or physical retail.
Some sales channels may behave similarly; more often than not, they each pose unique challenges. Every additional sales channel costs resources and increases scope. Pick one channel, prove traction, then experiment with the next.
Chip platforms Unique to hardware companies is the choice of which chip to use, and it’s a big one. The choice of semiconductor has profound implications on system requirements like how much memory is needed, how much power is required—and ultimately, the end system cost. Owners of the new Mac M1 laptops are taking advantage of a decade of Apple’s mobile chip development, which is finally robust enough to run the MacOS. The Roku OS has come to run on several different chipsets over time, but in the beginning they had to choose one.
Other branches There are several other execution branches that may be relevant to your business. If you are an office productivity tool, the data ecosystem you pick is a big one: Google or Microsoft? It’s lazy thinking (and expensive engineering) to try to build for both at the same time. Pick one, show success, then raise more money to address the other half of the market. Again, the fewer of these branches (ecosystems, etc.) you choose to support, the smaller the scope. If your startup doesn’t need to access customer data, the choice of consumer-grade vs. enterprise-grade is a big one that adds scope. The theme remains the same: be selective and pick the branch you have the best shot at success with before adding more.
Step 5: Scope Out Your Candidate MVPs
If your map looks like Roku’s, you’re probably now staring at something that has grown to become quite complex, with many “leaves” at the ends of your branches. A single leaf chosen on each branch is what makes up an MVP. The reasonable permutations are your candidate MVPs.
Remember, an MVP is the minimally scoped product that gets some job done for your chosen customer archetype.
Step 6: Evaluate Your Candidate MVPs
How do you know which MVP to build first? Choose wisely: This will be the next several months of your life.
A successful MVP satisfies three criteria:
It addresses a meaningful job to be done. A customer spending their own time or money to do a job chooses your solution as the best option for them. Pick a meaningful job—the more frequently occurring the better—and offer a significant advantage (better, faster, or cheaper).
It has a growth engine. Build or price growth into your product. There are two viable growth engines for tech companies:
Viral, or “inherently viral” growth: Customers either intentionally or unintentionally recruit new customers by using your product. Social platforms use intentional virality; this occurs when users get a more fulfilling experience as more of their friends join the same platform. Unintentional virality happens when customers inadvertently introduce others to the product experience, similar to how shared bike or scooter riders serve as mobile billboards for the experience.
Economic paid acquisition: Contribution margins from customers are recycled into advertising, marketing, and other PR activities that successfully drive additional customers. Note well, though: this engine is “economic” because it must fuel itself. It’s easy to simply buy customers, but only real value makes them stay. Your product must collect far more value over the lifetime of the customer relationship than the cost of acquiring that customer in the first place.
It has a rapid time-to-value: How long must customers wait for the “aha” moment? With my first Uber ride in late 2011, it took about two minutes for that moment to arrive: I installed the app, entered my credit card, ordered a car, and it was waiting for me by the time I walked down one flight of stairs. Aha! I knew I’d never wait for another taxi in San Francisco again. The faster and more simply your product can prove its worth, the higher rate of conversion from tire-kickers to retained customers. For software startups, ask yourselves this question: What’s the one screen that will make your customers get it?
Step 7: Pick, Beta, Ship
Now’s the time to let the rubber meet the road and get a minimal product into a customer’s hands. Can it do the job better than their prior solution? Keep iterating until you’re getting that one specific job done.
Roku’s first two MVPs weren’t a success (sound bridge + photo bridge). It was however, through the process of mapping out MVPs candidates, testing, and learning that brought intense clarity to and laid out the infrastructure for what would ultimately work — a delivery platform for Netflix. Even if the first MVP isn’t a hit, you’ll be building the muscle needed for the company such as making key hires.
Don’t pivot to a different job unless you’ve learned something new that causes you to reconsider your initial hypothesis. This may take a lot of time, but that’s perfectly fine. Stay focused on solving that job until you prove your hypothesis right or wrong. The world is littered with failed companies that never got a product right. Where there’s a job to be done, you can build a solution with enough time, talent, and focus.
Roku’s Winning MVP:
Step 8: Double-Down
When you finally find your product getting a recurring job done better than any other tool, stick with it. Don’t take your eye off the prize and move onto new things too quickly.
Earn the right to increase scope and move on to other jobs, platforms, and customer archetypes after solidifying your position among this first set of customers―and creating a sustainable growth engine.
Final Thoughts
Founders become infatuated with a bold and ambitious mission—as they should. However, what separates a startup that actually brings its mission to life from one that doesn’t is the ability to shed the rose-colored glasses and solve for a small job to be done.
A proper MVP framework, such as our MVP Tree presented here, is a critical first step in fulfilling your mission, even though it might seem like you are selling it short. Be patient. It won’t be easy realizing your mission, and it shouldn’t be. If your mission were easy, it would already be done by someone else!
Want to see an MVP Tree for another startup? Tweet @Shawnvc to nominate a company!
Over the weekend I got asked the best way to teach students the principles of Lean via Zoom.
One of the key lessons from our Educators Conference is that when teaching online complex information needs to be delivered to students in small, easily processed parts.
I realized that pre-pandemic I had put together a series of two-minute videos called “See Why.” They’re not only helpful for a formal class but for anyone who wants to review the basics. Here’s what I suggested they offer their students:
With a terrific crew of instructors, TA’s, and mentors, we successfully concluded Session 1 of our Hacking 4 Recovery summer series – with 20 teams sharing their final presentations last night. Slides for these presentations are in this folder, and we will be editing and sharing videos of each presentation shortly.
Alivia – Telemedicine service bringing healthcare to middle income people in Peru
AllAboard – Remote onboarding services to help organizations establish a sense of belonging
AntiCovidAI – Mobile app for testing COVID-19
BBOM Preschool – Teaching social and emotional learning (SEL) to preschoolers
Collegiate Cost Busters – Delivering innovation to make college education more affordable to all
COVered – Crowdsourcing app to monitor risk for visiting public spaces
CoworkingSpace – Redefining coworking spaces in the post-pandemic world
Cratiso – Sourcing diverse patients for clinical trials
Florence Health – Telemedicine app to prevent hospitalization of congestive heart failure patients
HomeDoc – Central hub for connecting telemedicine platforms for nursing homes
Mango Lango – Mobile app that allows small businesses to reopen safely
MatchBook – Hiring platform structured similarly to dating apps
MemLove – Helping people grieve for lost loved ones
MUSTA – Telemedicine platform for patients in the Philippines
Remote Daily – Simplified employee feedback for small businesses
Resilience Gym – Online education and virtual reality to enhance mental health
Safe.ly – Mobile app for making reservations to visit your local stores safely
Sani-Team – Consulting service to help local restaurants reopen safely
Screen360.tv – Cross-cultural education platform using international films
Voyage – Global travel advisory platform for pandemic information
The pandemic has upended the business models of most startups and existing companies. As the economy reopens companies are finding that customers may have disappeared or that their spending behavior has changed. Suppliers are going out of business or requiring cash-up-front terms. Accounts receivables are stretching way out. Revenue models and forecasts are no longer valid.
In sum, whatever business model you had at the beginning of the year may be obsolete.
While there’s agreement that companies need to adapt to changing markets, rapidly find new markets, new customers and new revenue models, the question is how? What tools and methods can a C-suite team use to do so?
While the Lean Startup was built with Business Model Canvas, Customer Development and Agile Engineering, there’s an additional tool — the Market Opportunity Navigator — that can help entrepreneurs discover new opportunities.
Here’s how.
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Companies have rapidly responded to Pandemic Needs When COVID-19 first emerged established companies rapidly pivoted. Some focused on remote work, others offered new ways to learn online. Swiss smart flooring startup Technis now helps supermarkets regulate the flow of shoppers. Large companies like GM, Ford and Rolls-Royce began to produce ventilators. Companies in cosmetics and perfume production pivoted their production lines as well. With ethanol and glycerin on hand and equipment required to fill bottles, French luxury giant LVMH has started to produce sanitizer – just like gin and whiskey distilleries across the US and UK have done.
Although the large firms made the headlines, startups also pivoted. For instance, Italian additive manufacturing startup Isinnova used its 3D-printing equipment to produce a crucial valve for oxygen masks. New York-based startup Katena Oncology discovered that a cancer detection tool under development could be adapted to test for coronavirus..
Capture opportunities by building on or repurposing your start-up’s abilities In these examples CEOs instinctually figured out, 1) their core , and 2) market needs where their competencies/abilities could be used.
Rather than running on instinct, the Market Opportunity Navigator can help CEOs figure out their next moves in this confusing recovery. It can provide a big-picture perspective to find different potential markets for your company’s competencies/abilities. This is the first step before you zoom in and design the business model, engage in focused customer development or test your minimal viable products.
Abionic: pivoting a sepsis test to fight COVID-19 Abionic’s tests can detect allergies, cardiovascular diseases, sepsis and other diseases in 5 minutes. As the pandemic hit, the company’s leaders wondered how their tests could be used in the fight against COVID-19. Using the Market Opportunity Navigator, Abionic realized that their test could diagnose sepsis up to 72 hours before a septic shock would occur in COVID-19 patients.
One of the worksheets below from the Market Opportunity Navigator provides a systematic view of Abionic’s market discovery process: The upper part of the worksheet shows Abionic’s technological assets and the lower part shows how these abilities can be used different market opportunities.
You can download the Market Opportunity Navigator and its free worksheets here.
By looking at their technological abilities, especially in the early detection of sepsis, and clinical data showing that septic shock is one of the key complications of a coronavirus infection, Abionic identified a new market opportunity to help patients suffering from COVID-19. Their CEO Nicolas Durand explains: “If doctors are able to diagnose sepsis up to 72 hours before a septic shock would occur in COVID-19 patients they can prescribe an antibiotic therapy much earlier, thereby potentially saving the lives of millions. In order to test this application of our technology, we deployed our machines at the Hospital at the University of Geneva and see promising results!”
Beyond medical needs: Discovering new opportunities with the Market Opportunity Navigator Abionic and other companies were able to act fast, as they already possessed technological abilities that, with limited adjustments, could be pivoted or repurposed to the newly identified COVID-19 opportunities.
Yet, because the crisis and recovery will create a “new normal,” additional opportunities will emerge that wait to be discovered by startups and existing companies. Think about looking beyond the immediate opportunities of existing customers and markets, and take a mid- to long-term view on how you can proactively identify new and emerging market opportunities. The three worksheets of the Market Opportunity Navigator help you to:
Identify new market opportunities stemming from your technology or abilities
Reveal the most attractive domain(s) by evaluating the potential and challenges of each option
Prioritize market opportunities smartly to set the boundaries for your lean experimentations
Lessons Learned
The COVID-19 crisis and recovery creates fundamental shifts in our economies and societies, and a “new normal” is emerging
Winners in this new normal will be able to quickly understand
what are their company’s core competencies/abilities, and
the new market needs where their competencies/abilities could be used
The Market Opportunity Navigator is a framework for this identification process
Worksheets and supporting material can be downloaded at wheretoplay.co
I just had a coffee with Mei and Bill, two passionate students who are on fire about their new startup idea. It’s past the “napkin-sketch” stage with a rough minimum viable product and about 100 users.
I thought they had a great insight about an application space others had previously tried to crack.
But they needed to convince investors that they are Facebook not Friendster.
Here’s what I suggested they do:
Mei and Bill are building a better version of an on-demand help service like TaskRabbit. And “better” didn’t do it justice. They have a unique insight about the nature of interactions between customers and service providers I’ve never heard before. If they are correct, they’ve found a unique combination of customers and value proposition that made these customers want to immediately pay and repeatably engage. The early indication from their minimum viable product is that they found early signs of product/market fit. Even more interesting, their product might have a much higher initial order size and much greater lifetime value than existing on-demand help services.
All good. So what was the problem?
Their immediate problem was that investors, even seed investors, were convinced that the market segment Mei and Bill wanted to enter was littered by failures. And as soon as they described the space, investors rolled their eyes and passed.
Creative Destruction Meets Risk Capital Like all entrepreneurs with an idea burning bright, Mei and Bill thought they were the first to invent water, air and fire.
When you’re young you believe that the world sprang into existence yesterday (or at least when you started college) and anything older than three years ago is ancient history. Ignorance of the past and disdain of the status quo are part of how innovation happens. As companies get larger and individuals get older, most get trapped in dogma and aversion to risk. Meanwhile cultural taste, technology and platforms evolve, and new things are possible that might not have been just years ago. The cycle of creative destruction of the old being replaced by the new continues, fueled by angel and venture capital.
And therein lies the catch – investors have longer memories of failures than new entrepreneurs. When you’re describing the future, most of them are remembering the past.
To See the Future Understand the Past So Mei and Bill were facing two problems. The first was obvious; they needed to know how investors viewed their space. Second, they needed to know how to make it clear that the world had changed and that they had figured out how to solve the problems that cratered previous entrants. To do so they needed to learn six things:
What companies in their space came before them?
Why did those fail?
Which investors got burned?
How has the market/technology/customers evolved since then?
What’s Mei and Bill’s unique insight that makes their startup different?
Who else is playing in their space or adjacent markets? And how could they make that a strength, not a weakness?
What companies in their market came before them? And why did those fail? Which investors got burned? Mei and Bill needed to understand the past so they could fund the future. I suggested they do some research by reading founders’ and investors’ public post-mortems of what went wrong. CBInsights has a collection of 300+ startup failure post-mortems, and Crunchbase has a startup failure database. Both of these are required reading. And others exist.
Finding these lists is just the beginning. Since Mei and Bill were networking, there would be a lot to learn if they talked to the founders of startups that built products similar to theirs, but didn’t make it. I pointed out you can get these meetings if you tell them what you’re trying to build and let them know you’d like to get smarter from them. You’d be surprised how many founders will agree to chat. (At least those who’ve recovered.) Ask them, “What did they wish they knew when they started? What did they learn? What would they do differently?” And most importantly, “Did your investors understand the space? Did they help trying to find scale? Would you take money from them again?”
Out of those same lists (CBInsights, Crunchbase, etc.) keep a list of the investors who lost money on those deals. Not to avoid them, but to call on them when you’ve learned why you won’t make the same mistakes or have a better insight. Getting introduced as a team who solved a problem that they’re familiar with may not get you funded, but if you pique their interest you will get a post-doc of the market and space as it existed. Your job is to process that information and understand what’s changed/what you will do differently to not fall victim to the same fate.
How has the market/technology/customers evolved? What’s your unique insight? Who else is playing in their space or adjacent markets? Once you have a grasp of the past you can realize it’s just a preamble to the present.
Put together a single slide that graphically shows the evolution of the space you’re in. You’re trying to show what’s changed to make your startup economically viable today. What’s changed? Platform changes (web to mobile), faster technology (3G to 4G to 5G), commoditization of tech (Cloud). Has consumer behavior changed? Emergence of the sharing economy (Uber, Airbnb), brands no longer important (Dollar Shave Club)? All these examples ought to point out that the world (technology and market) is a different place now – and the opportunity is even bigger.
Finally, given what you’ve learned about the past, what’s your insight about the future? What do all these changes mean? What are the core hypotheses of why this is a potentially huge business going forward?
Understanding how the space has evolved, gets you from past to present. Understanding competitors and adjacent players allows you to map today to tomorrow.
When I asked Mei and Bill if they could draw the direct competitors and adjacent players, they pulled out a trusty X-Y competitive analysis chart which made me want to shoot every management consulting firm that ever existed. The chart not only didn’t say anything useful, it gave Mei and Bill false comfort that they actually understood anything about the space around them.
Instead I suggested they start with a Petal Diagram. Rather than focus on just two dimensions of competition, this allows you to show all the adjacent market segments like leaves in a petal.
You label each leaf with the names of the market spaces and the names of the companies that are representative players in these adjacent markets. You use this chart to articulate your first hypotheses of what customers segments you’re targeting.
Then follow up the Petal Diagram with another slide that says, here’s our unique insight that’s been validated by customer discovery. And why now is the time to seize the opportunity.
If you’re talking to the right investors, this approach can generate a high-bandwidth conversation because you’ve given them an opportunity to critique your analysis of failure, risk, insight and opportunity.
It was a lot of information for a coffee and I thought I may have overwhelmed Mei and Bill with a fire hose of opinions. But the next day I got an email that said, “We’re on it. We have the first two interviews with ex-founders in our space scheduled.”
Lessons Learned
If you’re in a market that previously ate up lots of investor dollars, remember:
Investors have longer memories of failures than new entrepreneurs
When you’re describing the future, most of them are remembering the past
Remove those obstacles by educating yourself and investors about why the time is now
The type of disruption most companies and government agencies are facing is a once-in-every-few-centuries event. Disruption today is more than just changes in technology, or channel, or competitors – it’s all of them, all at once. And these forces are completely reshaping both commerce and defense.
Today, as large organizations are facing continuous disruption, they’ve recognized that their existing strategy and organizational structures aren’t nimble enough to access and mobilize the innovative talent and technology they need to meet these challenges. These organizations know they need to change but often the result has been a form of organizational Whack-A-Mole– a futile attempt at trying to swat every problem as they pop-up without understanding their root cause.
Ultimately, companies and government agencies need to stop doing this or they will fail.
We can build a mindset, culture and process to fix this – what I call an Innovation Doctrine. But first we need to step back and recognize one of the problems.
I just spent a few days with a large organization with a great history, who like most of their peers is dealing with new and rapidly evolving external threats. However, their biggest obstacle is internal. What had previously been a strength – their great management processes – now holds back their ability to respond to new challenges.
Companies Run on Process Once upon a time every great organization was a scrappy startup willing to take risks – new ideas, new methods, new customers, targets, and mission. If they were a commercial company, they figured out product/market fit; or if a government organization, it focused on solution/mission fit. Over time as these organizations got large, they built process. By process I mean all the tools that allow companies and government to scale repeatable execution. HR processes, legal processes, financial processes, acquisition and contracting processes, security processes, product development and management processes, and types of organizational forms etc. All of these are great strategies and tools that business schools build, and consulting firms help implement.
Process is great when you live in a world where both the problem and solution are known. Process helps ensure that you can deliver solutions that scale without breaking other parts of the organization.
These processes reduce risk to an overall organization, but each layer of process reduces the ability to be agile and lean and – most importantly – responsive to new opportunities and threats.
Process Versus Product As companies and government agencies get larger, they start to value the importance of “process” over the “product.” And by product, I mean the creation of new hardware, services, software, tools, operations, tradecraft, etc. People who manage processes are not the same people as those who create product. Product people are often messy, hate paperwork and prefer to spend their time creating stuff rather than documenting it. Over time as organizations grow, they become risk averse. The process people dominate management, and the product people end up reporting to them.
If the company is large enough it will become a “rent-seeker” and look to the government and regulators as their first line of defense against innovative competition. They’ll use government regulation and lawsuits to keep out new entrants with more innovative business models.
The result of monopolist behavior is that innovation in that sector dies – until technology/consumer behavior passes them by. By then the company has lost the ability to compete as an innovator.
In government agencies process versus product has gone further. Many agencies outsource product development to private contractors, leaving the government with mostly process people – who write requirements, and oversee acquisition, program management, and contracts.
However, when the government is faced with new adversaries, new threats, or new problems, both the internal process people as well as the external contractors are loath to obsolete their own systems and develop radically new solutions. For the contractors, anything new offers the real risk of losing a lucrative existing stream of revenue. For the process people, the status quo is a known and comfortable space and failure and risk-taking is considered career retarding. Metrics are used to manage process rather than creation of new capabilities, outcomes and speed to deployment. And if the contract and contractor are large enough, they put their thumb on the scale and use the political process and lobbying to maintain the status quo.
The result is that legacy systems live on as an albatross and an impediment to making the country safer and more secure.
Organizational and Innovation Theater A competitive environment should drive a company/government agency into new forms of organization that can rapidly respond to these new threats. Instead, most organizations look to create even more process. This typically plays out in three ways:
Often the first plan from leadership for innovation is hiring management consultants who bring out their 20th-century playbook. The consultants reorganize the company (surprise!), often from a functional organization into a matrixed organization. The result is organizational theater. The reorg keeps everyone busy for a year, perhaps provides new focus on new regions or targets, but in the end is an inadequate response to the need for rapid innovation for product.
At the same time, companies and government agencies typically adopt innovation activities (hackathons, design thinking classes, innovation workshops, et al.) that result in innovation theater. While these activities shape, and build culture, but they don’t win wars, and they rarely deliver shippable/deployable product.
Finally, companies and government agencies have realized that the processes and metrics they put in place to optimize execution (Procurement, Personnel, Security, Legal, etc.) are obstacles for innovation. Efforts to reform and recast these are well meaning, but without an overall innovation strategy it’s like building sandcastles on the beach. The result is process theater.
For most large organizations these reorgs, activities and reforms don’t increase revenue, profit or market share for companies, nor does it keep our government agencies ahead of our adversaries. One can generously describe them as innovation dead ends.
Between a Rock and A Hard Place Today, companies and government agencies are not able to access and mobilize the innovative talent and technology they need to meet these challenges. The very processes that made them successful impede them.
Organizational redesign, innovation activities, and process reform need to be part of an overall plan.
In sum, large organizations lack shared beliefs, validated principles, tactics, techniques, procedures, organization, budget, etc. to explain how and where innovation will be applied and its relationship to the rapid delivery of new product.
We can build a mindset, culture and process to fix this.
More in future posts about Innovation Doctrine.
Lessons Learned
As companies and agencies get larger, they start to value the importance of process over the “content.”
When disruption happens, no process or process manager in the world is going to save your company/or government agency
It’s going to take those “product” creators
But they have no organization, authority, budget or resources
We can build a mindset, culture and process to fix this.
A shared set of beliefs and principles of how and where innovation will be used and rapidly delivered
AgileFall is an ironic term for program management where you try to be agile and lean, but you keep using waterfall development techniques. It often produces a result that’s like combining a floor wax and dessert topping.
I just sat through my a project management meeting where I saw AgileFall happen first-hand. The good news is that a few tweaks in process got us back on track.
I just spent half a day with Henrich, the head of product of a Fortune 10 company. We’re helping them convert one of the critical product lines inside an existing division from a traditional waterfall project management process into Lean.
Henrich is smart, innovative and motivated. His company is facing disruption from new competitors. He realized that traditional Waterfall development wasn’t appropriate when the problem and solution had many unknowns.a
This product line has 15 project managers overseeing 60 projects. Over the last few months we’ve helped him inject the basic tenets of Lean into these projects. All are Horizon 1 or 2 projects – creating new features for existing products targeting existing customers or repurposing existing products, tools, or techniques to new customers. Teams are now creating minimum viable products (MVPs), getting out of the building to actually talk with users and stakeholders, and have permission to pivot, etc. All good Lean basics.
AgileFall in Real Life But in our latest meeting I realized Heinrich was still managing his project managers using a Waterfall process. Teams only checked in – wait for it – every three months in a formal schedule review. I listened as Henrich mentioned that the teams complained about the volume of paperwork he makes them fill out for these quarterly reviews. And he was unhappy with the quality of the reports because he felt most teams wrote the reports the night before the review. How, he asked, could he get even more measures of performance and timely reporting from the project managers?
At first glance I thought, what could be bad about more data? Isn’t that what we want – evidence-based decisions? I was about to get sucked down the seductive path of suggesting even more measures of effectiveness when I realized Henrich still had a process where success was measured by reports, not outcomes. It was the same reporting process used to measure projects that used linear, step-by-step Waterfall.
(To be fair to Henrich, his product team is a Lean island in a company where Waterfall still dominates. While his groups has changed the mindset and cadence of the organization, the folks he reports up to don’t yet get Agile/Lean learning and outcomes. They just want to see the paperwork.)
In both managing down and up we needed a very different project management mindset.
Lean Project Management Philosophy So our discussion was fun. As the conversation progressed, we agreed about the ways to manage projects using a few operating principles of Lean/Agile project management (without ever mentioning the words Lean or Agile.)
It was the individuals who were creating the value (finding solution/mission ft) not the processes and reports
However, the process and reports were still essential to management above him.
Having the teams build incremental and iterative MVPs was more important than obsessing about early documentation/reporting
Allow teams to pivot to what they learned in customer discovery rather than blindly follow a plan they sold you on day one
Progress to outcomes (solution/mission ft) is non-linear and not all teams progress at the same rate
Pivoting the Process With not too much convincing, Henrich agreed that rather than quarterly reviews, the leadership team would to talk to 4-5 project managers every week, looking at 16-20 projects. This meant the interaction cycle – while still long – would go from the current three months to at least once a month.
More importantly we decided that he would focus these conversations on outcomes rather than reports. There would be more verbal communication and a lot less paper. The reviews would be about frequent delivery, incremental development and how leadership could remove obstacles. And Henrich’s team would continue to share progress reporting across the teams so they could learn from each other.
In sum, the radical idea for Henrich was tha this role was not to push the paperwork down. It was to push an outcome orientation down, and then translate its progress back up the chain. While this was great for the teams, it put the onus on Henrich to report progress back up to his leadership in a way they wanted to see it.
I knew the lightbulb had fully gone on when near the end of the meeting Henrich asked his team, “Going forward, who are the right team members to manage a Lean process versus a Waterfall?” And I smiled when they concluded that Lean could be managed by fewer people who could operate in a chaotic learning environment, versus a process-driven, execution one.
I can’t wait for the next meeting.
Lessons Learned
AgileFall is a seductive trap – using some Lean processes but retaining the onerous parts of Waterfall
The goal of leadership in Lean product management is not to push the paperwork down. It’s to push an outcome orientation down and translate its progress back up the chain
We just finished our 4th annual Hacking for Defense class at Stanford. At the end of each class we have each team give a Lessons Learned presentation. Unlike traditional demo days or Shark Tanks which are “here’s how smart I am, please give me money,” a Lessons Learned presentation tells a story of a journey of hard-won learning and discovery. For all the teams it’s a roller coaster narrative of what happens when you discover that everything you thought you knew was wrong and how they eventually got it right.
Watching each of the teams present I was left with wonder and awe about what they accomplished in 10 weeks.
The eight teams spoke to over 820 beneficiaries, stakeholders, requirements writers, program managers, warfighters, legal, security, customers, etc.
By the end the class all of the teams realized that the problem as given by the sponsor had morphed into something bigger, deeper and much more interesting.
Our keynote speaker was Palmer Luckey, founder of Oculus and the designer of the Oculus Rift. He’s now the CEO/founder of the AI-focussed defense contractor Anduril Industries.
If you can’t see the video of Palmer Luckey click here
Presentation Format Each of the eight teams presented a 2-minute video to provide context about their problem.
Followed by an 8-minute slide presentation follow their customer discovery journey over the 10-weeks. All the teams used the Mission Model Canvas, Customer Development and Agile Engineering to build Minimal Viable Products, but all of their journeys were unique.
All the presentations are worth a watch.
Team: Panacea
If you can’t see the Panacea 2-minute video click here
If you can’t see the video of the Panacea team presenting click here
Mission-Driven Entrepreneurship
This class is part of a bigger idea – Mission-Driven Entrepreneurship. Instead of students or faculty coming in with their own ideas — we now have them working on societal problems, whether they’re problems for the State Department or the Department of Defense, or non-profits/NGOs, or for the City of Oakland or for energy or the environment, or for anything they’re passionate about. And the trick is we use the same Lean LaunchPad / I-Corps curriculum — and kept the same class structure – experiential, hands-on, driven this time by a mission-model not a business model.
Mission-driven entrepreneurship is the answer to students who say, “I want to give back. I want to make my community, country or world a better place, while solving some of the toughest problems.”
Team: Learn2Win
If you can’t see the Learn2Win 2-minute video click here
If you can’t see the video of the Leanr2Win team presenting click here
It Started with an Idea Hacking for Defense has its origins in the Lean LaunchPad class I first taught at Stanford in 2011. I observed that teaching case studies and/or how to write a business plan as a capstone entrepreneurship class didn’t match the hands-on chaos of a startup. And that there was no entrepreneurship class that combined experiential learning with the Lean methodology. Our goal was to teach both theory and practice.
The same year we started the class, it was adopted by the National Science Foundation to train Principal Investigators who wanted to get a federal grant for commercializing their science (an SBIR grant.) The NSF observed, “The class is the scientific method for entrepreneurship. Scientists understand hypothesis testing” and relabeled the class as the NSF I-Corps (Innovation Corps). The class is now taught in 9 regional locations supporting 98 universities and has trained over 1500 science teams. It was adopted by the National Institutes of Health as I-Corps at NIH in 2014 and at the National Security Agency in 2015.
Team: Embargo NK
If you can’t see the EmbargoNK 2-minute video click here
If you can’t see the video of the EmbargoNK team presenting click here
Origins of Hacking For Defense In 2016, brainstorming with Pete Newell of BMNT and Joe Felter at Stanford we observed that students in our research universities had little connection to the problems their government as well as the larger issues civil society was grappling with. Wondering how we could get students engaged, we realized the same Lean LaunchPad/I-Corps class would provide a framework to do so. That year Hacking for Defense and Hacking for Diplomacy (with Professor Jeremy Weinstein) with the State Department were both launched at Stanford.
Team: Common Ground
If you can’t see the Common Ground 2-minute video click here
If you can’t see the video of the Common Ground team presenting click here
If you can’t see the Common Ground slides click here
Goals for the Hacking for Defense Class Our primary goal was to teach students Lean Innovation while they engaged in a national public service. Today if college students want to give back to their country they think of Teach for America, the Peace Corps, or Americorps or perhaps the US Digital Service or the GSA’s 18F. Few consider opportunities to make the world safer with the Department of Defense, Intelligence Community or other government agencies.
Next, we wanted the students to learn about the nation’s threats and security challenges while working with innovators inside the DoD and Intelligence Community. While doing so, also teach our sponsors (the innovators inside the Department of Defense (DOD) and Intelligence Community (IC)) that there is a methodology that can help them understand and better respond to rapidly evolving asymmetric threats. That if we could get teams to rapidly discover the real problems in the field using Lean methods, and only then articulate the requirements to solve them, could defense acquisition programs operate at speed and urgency and deliver timelyand needed solutions.
Finally, we wanted to familiarize students about the military as a profession, its expertise, and its proper role in society. And conversely show our sponsors in the Department of Defense and Intelligence community that civilian students can make a meaningful contribution to problem understanding and rapid prototyping of solutions to real-world problems.
Team: Deepfakes
If you can’t see the Deepfakes 2-minute video click here
If you can’t see the video of the Deepfakes team presenting click here
Mission-driven in 30 Universities Hacking for Defense is offered in over 25 universities, but quickly following, Orin Herskowitz started Hacking for Energy at Columbia, Steve Weinstein started Hacking for Impact (Non-Profits) and Hacking for Local (Oakland) at Berkeley and will be starting Hacking for Oceans at Scripps. Hacking for Conservation and Development at Duke followed.
Team: IntelliSense
If you can’t see the Intellisense 2-minute video click here
If you can’t see the video of the Intellisense team presenting click here
If you can’t see the Intellisense slides click here
Team: Gutenberg
If you can’t see the Gutenberg 2-minute video click here
If you can’t see the video of the Gutenberg team presenting click here
Steve Weinstein a 30-year veteran of Silicon Valley technology companies and Hollywood media companies. Steve was CEO of MovieLabs the joint R&D lab of all the major motion picture studios.
Tom Bedecarré was the founder and CEO of AKQA, the leading digital advertising agency. Four decades as part of the most successful advertising agencies in the world.
Jeff Decker is a social science researcher at Stanford. Jeff served in the U.S. Army as a special operations light infantry squad leader in Iraq and Afghanistan.
Our teaching assistants Nate Simon, Aidan Daniel McCarty, Mackenzie Burnett and Diego Cervantes. A special thanks to the National Security Innovation Network (NSIN) and Rich Carlin and the Office of Naval Research for supporting the program at Stanford and across the country. And our course advisor – Tom Byers, Professor of Engineering and Faculty Director, STVP.
We were lucky to get a team of mentors (VC’s and entrepreneurs) who selflessly volunteered their time to help coach the teams. Thanks to Kevin Ray, Lisa Wallace, Rafi Holtzman, Craig Seidel, Todd Basche, Don Peppers, Robert Locke, and Mark Clapper.
And of course a big shout-out to our sponsors. At United Nations Command Security Battalion – CPT Justin Bingham, Air Force Air Combat Command – Mr. Steven Niewiarowski, Office of the Secretary of Defense Asian & Pacific Security Affairs – Chief of Staff Julie Sheetz, U.S. Coast Guard – Security Specialist Asad Hussain, IQT – Vishal Sandesara, Veterans Adminstration – Kristopher “Kit” Teague, Chief Operating Officer, IARPA – John Beieler, DNI – Dean Souleles
Modern entrepreneurship began at the turn of this century with the observation that startups aren’t smaller versions of large companies – large companies at their core execute known business models, while startups search for scalable business models. Lean Methodology consists of three tools designed for entrepreneurs building new ventures:
Customer Development – a process for testing those hypotheses outside the building;
Agile Engineering – to rapidly build minimal viable products to test product/market fit.
These tools tell you how to rapidly find product/market fit inside a market, and how to pivot when your hypotheses are incorrect. However, they don’t help you figure out where to start the search for your new business.
A new tool – the Market Opportunity Navigator – helps do just that. It provides a wide-lens perspective to find different potential market domains for your innovation, before you zoom in and design the business model or test your minimal viable products. This new framework can act as the front-end of Customer Development. It helps figure out the most promising starting position – market domain – for your customer development process. And it helps identify promising Plan B’s and new growth options if you have already embarked on your innovation journey.
Over the years, I have seen many startups and innovation projects perform a painful “re-start” to completely new market domains. With a little more thinking up front these entrepreneurs and innovators could have identified more promising business contexts to play in, and thus avoided this difficult pivot down the road. But while the academic literature is full of papers covering market selection and the literature has some popular books (Blue Ocean Strategy, et al.) there is a lack of easy-to-use tools to do so.
In large companies and government agencies the problem is even more acute. Where do we spend our limited time and resources on our next moves? While the Innovation Pipeline tells us how to go to from sourcing to delivery how do we prioritize our choices? The Market Opportunity Navigator is a useful adjunct to the curation and prioritization steps.
In three simple steps the Market Opportunity Navigator can help you:
Identify a portfolio of market opportunities stemming from your technology or unique abilities
Reveal the most attractive domain(s) by evaluating the potential and challenges of each option
Prioritize market opportunities smartly to set the boundaries for your lean experimentations
I asked Sharon and Marc to summarize why market selection is important and describe an example of how to use it.
Different Playgrounds mean different Rules of the Game There are many ways in which you may have identified a market for your business. Some of you may have identified a market need based on your own experience, or you may have been approached by potential customers, or if you are corporate innovator you may have applied an innovative solution to an existing target market. Yet, are you sure that this is the best opportunity? Could there be greener pastures (larger markets, more profitable markets, etc.) out there for commercializing your technology or unique abilities?
Taking the time to reveal the most promising market – the best starting position – before you engage in a focused customer development process is critical, because market domains vary in their value creation potential, competitive landscape, regulatory regime and risks associated with launching new products. In fact, by not asking “Where to Play” innovators risk choosing an inferior playground – one that does not allow the project to prosper. Beyond the possible loss of revenues, this early decision may be difficult to change, or even irreversible: it influences how you develop your technology going forward, raise money, write patents, recruit employees and pick a brand name. If re-start in another target market is required, such a pivot is painful, costly, and sometimes even impossible.
Finding the best starting position is a learning process that takes time and bandwidth – two scarce resources. So instead of taking a deliberate step back to understand their portfolio of opportunities, entrepreneurs and innovators often just start running. They make a bet and engage in customer development experiments – adopting “local” pivots in a relatively fixed context, until a scalable business model is (hopefully) revealed. This can be a big bet! The search for product/market fit and for a scalable, promising business model should therefore begin with uncovering and understanding the different market contexts in which you can play. In fact, by adopting a wider lens, the search process shifts from 2D (finding a product-market fit) to 3D (finding multiple product-market fits in different market contexts).
Academic research published in Management Science investigated 85 VC-backed startups and offered a conclusion that seems obvious in hindsight: “look before you leap.” The big idea was that experienced entrepreneurs tend to generate a portfolio of market opportunities before deciding where to play, thereby laying the ground for significant performance benefits. In other words, understanding your arena of opportunities is a key asset for entrepreneurs and innovators.
Identifying your Arena and Choosing Where to Play The Market Opportunity Navigator provides a visual framework to discover, compare and prioritize different market domains and business contexts. It helps you to think about your arena, rather than your industry – a key mindset shift in today’s competitive landscape.
The Navigator walks you through a three-step process that helps you to make a more informed choice. It does so in a friendly, intuitive manner, with a visual design board and 3 worksheets to guide the process.
You can download the Navigator and its worksheets here.
Putting it all together: A Superset of Tools Mapping out your market opportunities to understand your most promising starting position generates valuable insights for your innovation journey. In short, the big-picture view provided by the Navigator helps you zoom-out to understand “where to play,” while the detailed views of the lean approach and the Business Model and Value Proposition Canvases help you zoom-in and understand in detail “how to play.” Together, they create a superset of tools that supports you in an iterative learning process until you find a scalable, promising business.
Having a market opportunity portfolio to draw from offers an additional benefit. By having gamed out multiple markets, you can bake agility into the DNA of your venture – a key component in the Lean methodology. It allows you to carefully select and keep open backup and growth options. If a “re-start” is eventually required, it will be less painful and less costly.
Let’s take a look at an example from the startup world to see how the Market Opportunity Navigator works.
We Can Fly Anywhere – but Where Do We Go First? Flyability develops drones to inspect difficult-to-access locations. In theory, they can custom-build their drone to perform different jobs in completely different markets: industrial inspection, search and rescue, entertainment or surveillance – to name but a few. Each of these markets varies significantly in its business context and in its promise for growth. Furthermore, each market would require its own customer development process to reveal a scalable, repeatable business model – clearly a demanding process that is difficult to run simultaneously in multiple domains.
So how did Flyability find its best starting position – the initial market domain where the founders should engage in detailed customer discovery and build their business? They used the Navigator and its three worksheets to guide their process.
Worksheet 1: Generate your market opportunity set The founders’ first idea was to use the drone for observing critical disasters, like the reactor meltdowns in Fukushima, Japan. Yet, by going through the first step of the Navigator, the team began to uncover alternative markets where their drone could add value for customers. Among others, they considered drone-based inspection of boilers in thermal power plants, the inspection of oil & gas storage tanks, and intelligence-gathering by police forces. Overall, five market domains seemed interesting and required further evaluation.
Worksheet 2: Evaluate market opportunity attractiveness Using the second step of the Navigator, the team systematically examined the potential of each market and its unique challenges. This allowed Flyability to map out their options and visually compare their attractiveness. Gradually, it became clear that thermal power plants were a “gold mine” option worth playing in. They could now use the Business Model Canvas and the lean experimentation processes to design and validate a scalable business model within this market.
Worksheet 3: Design your agile focus strategy Once the founders chose their primary market, they could leverage alternatives to create a more agile company by mitigating risk and avoiding locking-in. Specifically, using the third step of the Navigator, the founders designed a small portfolio of backup and growth options that they would keep open. This foresight laid the ground to early key decisions that have long-term consequences, like how they developed their drone or chose their brand name. In addition, it helped them clearly define which options they would place in storage for now (as focusing is about saying no more than anything else).
By employing the Market Opportunity Navigator, Flyability has not only figured out “Where to Play” it has mapped out an interesting growth path that is appealing to investors. To get a better sense of this process, you can view Flyability’s Navigator below, or read the full case study by clicking here.
Insights for VCs, Tech Transfer Officers, and Social Entrepreneurs Identifying your arena of opportunities is not only key for startups and established firms, but for anyone dealing with technology commercialization. For VC’s, the macro-level perspective shows the market opportunities that can be addressed by a startup and lays out a clear monetization process over time. It also offers a portfolio perspective when screening initial or successive investments. If you are working for a Tech Transfer Office, a wide-lens perspective is essential for assessing the value of an invention, and for figuring out in which hands you should put it. Furthermore, if you are trying to address a social problem, the Navigator helps ensure you identify a market that allows you to generate an economic bottom-line in addition to your social impact.
Lessons Learned
Lean Startup tools offer the details of “how to play,” while the Market Opportunity Navigator helps you to zoom-out to understand “where to play”
There are multiple “starting positions” for your customer discovery journey
Each starting point has different challenges to overcome
What would be your most valuable domain?
The Market Opportunity Navigator is an easy-to-apply framework for this process
Worksheets and supporting material can be downloaded at www.wheretoplay.co
The original Innovation Pipeline sketch – 2016
Many startups fall into the trap of building toward a “mission” rather than a minimum viable product (MVP).
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