Turning Good Ideas into Great Products
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Transcript of Turning Good Ideas into Great Products
Zero to 60
Turning a Good Idea into a Successful Product
Agenda
• Ideas & Opportunities• Markets• Exercise• Business models• Features• More exercise
One Word: Plastics
Why the one word?
• Opportunity• Brand Completeness• Blocking competition• Raising money• Curiosity
Return on Investment
All your CEO cares about …
Returns (measurable changes)– Increased sales– Reduced costs– Achieving the mission (for a non-profit)
Investments (cost of making change happen)– Keeping headcount low– Using resources more effectively– Only bringing in consultants if necessary
Types of Opportunities/Ideas
Better Cheaper Niche New
I can do itbetter
I can do itcheaper
I can do itfor you
You neverknewyou needed it
How big is the opportunity?
Total Available Market (TAM)
Total Available Market (TAM)• How many people would want/needthe product?• How large is the market be(in $’s) if they all bought?• How many units would that be?
How Do I Find Out?• Industry Analysts – Gartner, Forrester• Wall Street Analysts – Goldman, Morgan
How big is my slice?
Total Available Market (TAM)
Served Available Market (SAM)
• How many people need or can use product?• How many people have the money tobuy the product• How large would the market be(in $’s) if they all bought?• How many units would that be?
How Do I Find Out?• Talk to potential customers
Served Available Market (SAM)
Your idea is worthless alone
Idea Execution Timing Dumb Luck
MARKETSWhat business will you be in?
Customer Development
Customer Development
CompanyBuilding
CustomerDiscovery
CustomerValidation
Customer Creation
Steven Gary Blank, Four Steps to the Ephinany
• How many of them are there?
• Are they price sensitive?• How big is their problem?• How often do they have
the problem?• How do they solve it
today?
Who are your customers?
New Product Conundrum
• New Product Introductions sometimes work, yet sometimes fail– Why?– Is it the people that are different?– Is it the product that are different?
• Perhaps there are different “types” of ventures?
Three Types of Markets
• Who Cares?• Type of Market changes EVERYTHING• Sales, marketing and business development
differ radically by market type
Existing Market Resegmented Market
New Market
Existing: founded 1938
Competitor founded 1972
Competing in an Existing Market
• Faster/Better • High end• Somewhere else
Resegmented
Gap’s new entry
Competing by resegmenting
• Niche = marketing/branding driven
• Cheaper = low end
New Market?
New
New Existing Resegmented
New Market
• Cheaper/good enough can create a new class of product/customer
• Innovative/never existed before
John Gourville, Eager Sellers and Stony Buyers (2006)
Deadpool
Type of Market Changes Everything
• Market– Market Size– Cost of Entry– Launch Type– Competitive
Barriers– Positioning
• Sales– Sales Model– Margins– Sales Cycle– Chasm Width
Existing Market Resegmented Market
New Market
• Finance• Ongoing Capital• Time to Profitability
• Customers• Needs• Adoption
Choose your idea
From Guy Kawasaki, Art of the Start
Ability to provide unique product or service
Value to customer
compete on price
stupid
bankrupt
The holy grail
WHAT IS YOUR IDEA?Exercise
Who are your customers?What is your market?
How big is the opportunity?
BUSINESS MODELSHow do we make money?
WHAT DO YOU USERS HAVE TO DO?
Who are you users?
Marketplace ModelAdvertising Model
Affiliate ModelCommunity Model
Subscription Model
I have always been a woman who arranges things,for the pleasure–and the profit–it derives.I have always been a woman who arranges things, like furniture and daffodils and lives.
Marketplaces bring buyers and sellers together and facilitate transactions. They can play a role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a marketplace charges a fee or commission for each transaction it enables.
I’ll go where the buyers are
I want to find things!
I want the best price!
Can I trust this seller?
Users must find products, evaluate seller, and make a purchase
Advertising ModelThe web advertising model is an update of the one we’re familiar with from broadcast TV. The web “broadcaster” provides content and services (like email, IM, blogs) mixed with advertising messages. The advertising model works best when the volume of viewer traffic is large or highly specialized.
Users must:•Notice advertising•Interact with ad
Preconditions: User must visit advertising locationShare their demographic information
Types:CPMCPCCPA
Community ModelThe viability of the community model is based on user loyalty. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.
Open Source Red Hat, OpenXOpen Content Wikipedia, Freebase
Users need to •Create an identity •Connect with other users •Build a reputation•Create and share content/work/etc
Users must care
Subscription ModelUsers are charged a periodic—daily, monthly or annual—fee to subscribe to a service. It is not uncommon for sites to combine free content with “premium” (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined. Content ServicesSoftware as a ServiceInternet Services Providers
User must:•Able to evaluate the offering• Subscribe and unsubscribe to offering•Realize value offered
Combos
Advertising Community
Combos
Advertising Community
Subscription
Combos
Marketplace Community
Affiliate
1, 2, 3Prioritize and Sequence
Pattern:User gets valueUser returns, gets more
valueUser reciprocates
User adds contentUser contributes money
Wikipedia:Looks up contentKeeps finding more
contentSees error, correctsUser donates
HOW DO YOU MAKE MONEY?Exercise
Marketplace ModelAdvertising Model
Affiliate ModelCommunity Model
Subscription Model
FEATURESAnd now let’s do less
The AOF Method
1. Defining your Activity2. Identifying your Social Objects3. Choosing your Features
Courtesy of Joshua Porter. Check out bokardo.com!
Business Model Questions • Who are your users?• What will they pay for?• What do you need them to do?
Feature Questions• What are your users doing?
• What do people have to do to make you successful?• What are you making people better at?• What are your users passionate about?
2. Identifying yourSocial Objects
What are Social Objects?
• Social objects can be ideas, people, or physical objects.
• By interacting through/with social objects, people meet others they might not otherwise know.
• Social objects can be the reason why people have an interaction or form a relationship.
Joshua Porter (bokardo.com)
3. Choosing your Features
LET THE CUSTOMERS CHOOSEThe roadmap
Customer Development
Customer Development
CompanyBuilding
CustomerDiscovery
CustomerValidation
Customer Creation
Steven Gary Blank, Four Steps to the Ephinany
Voice of the customer Interview
• What we are doing• A lot about you• What we’ve
heard/Problem statement
• Solution Overview• Demo (clickable
mocks!)• Limitations
• Potential roadmap• Justifications• Procurement
– Who’s our competitor– Who’s not here to
decide?
• How would you describe this to a colleague?
• Homerun/strikeout?
SyncDev http://www.productdevelopment.com/
66
Potential Roadmap
• Collaboration space• Speaker features/video
Cap
abili
ty
Soon Later Much Later
What would you move?
• Reporting and advanced Admin
• Community features• E(mail) to attendees
Version 1.0• Un/Official
events list• Network
notifications• Basic Admin
Pricing
• Part of the business model– How do we make money? How much?– Revenue/profit/shipment forecasts
• Supports core value proposition– “Our product/service saves you $$$$…– …and we want 15% of the savings.”
• Often an obstacle to buying– Too complex– Much too high (sticker shock) or too low (desperate)– Free (no reason to trade up)
Designing pricing
• What’s the natural unit of exchange?– How do they derive value? – What does the competition do?– Can you split off a profitable segment?
• How much of customer value can you capture?• Test, trial-close, get your hands dirty
Software Pricing Models
1. Time-based access (e.g. unlimited/month)2. Transaction (stock trade)3. Metered (seats, CPUs, named users)4. Hardware (appliances, dongles)5. Service (virus updates, support)6. Percentage of incremental revenue/savings7. Data-driven insights
Pricing drives customer behavior
• What do you want core customers to do?– No-brainer renewals (small monthly fees)– Big up-front license (lock up marketplace)– Lust for upgrades (cool features are extra)– Freemium model (1% upsold into paid services)– Install latest version (free updates, increasing
service– fees)
WHERE ARE THE USERS?Distribution
Why
• If you build it… they don’t come
Charter Clients
SEO & SEM
SEO SEM
Private Betas
• Works if you know cool people• Classic influence concept of Scarcity• Good for user feedback
Think about how you will pull people in…• How do people share?• With whom do they share?• Where and how many of those tools do you
place?
Distribution Exercise
10 Questions1. Exactly what problem will
this solve? (value proposition)
2. For whom do we solve that problem? (target market)
3. How big is the opportunity? (market size)
4. What alternatives are out there? (competitive landscape)
5. Why are we best suited to pursue this? (our differentiator)
6. Why now? (market window)7. How will we get this product
to market? (go-to-market strategy)
8. How will we measure success/make money from this product? (metrics/revenue strategy)
9. What factors are critical to success? (solution requirements)
10. Given the above, what’s the recommendation? (go or no-go)
Marty Cagen http://www.svpg.com/blog/files/assessing_product_opportunities.html
Questions?
appendix
Return on InvestmentAll your CEO cares about …
Returns (measurable changes)– Increased sales– Reduced costs– Achieving the mission (for a non-profit)
Investments (cost of making change happen)– Keeping headcount low– Using resources more effectively– Only bringing in consultants if necessary
“ROI” is just a fancy estimate accountants use to make decisions
About Business
Things you should know to have a conversation
Profit and Loss
Investment vs. expense
Location Location Location
The Fish MarketStock
Location
Advertising
Differentiation
Diversifying
Pricing
Got Metrics?
Do you know what matters?
Web Experience Metrics
Development: Reduce Costs
• Development Costs• Development Time• Maintenance Costs• Redesign Costs
Sales: Increase Revenue• Transactions/
purchases• Product sales• Traffic, audience size• Customer retention• Appeal• Market Share
Use: Improve Effectiveness• Success rate/user error• Efficiency/productivity• User Satisfaction• Job Satisfaction• Ease of use• Ease of learning• Trust• Support costs• Training/documentation
Return on Investment for Usable User-Interface Design, Aaron Marcus
User Experience Also Influences…Web Metrics• Total page views• Page views per session• Click paths• Unique visitors• Return visitors• Conversion rate (sales,
reservations, applications, etc.)
Business Metrics• Leads• Sales• Retention• Length of sales cycle• Productivity• Development costs• Customer Satisfaction
What market are you in?
Media•Advertising
•Subscription
•Single purchase
Commerce•Profit margin
•Customer retention
Broker•Transactions
•Users
•Liquidity
Why the one word?
• Opportunity• Brand Completeness• Blocking competition• Raising money• Curiosity
Business creates value for which they receive money
Money allows them the resources to provide value
ROIReturn
Investment
Everything You Need to Know About ROI (in one slide)