Many entrepreneurs and companies begin with what they think is a brilliant idea and they immediately jump to developing a product before they discover if anyone else thinks it’s a good idea, and most often, these products fail. Successful products are based upon solving a significant Market Problem with a Product that creates a competitive advantage and a Market Strategy that motivates buyers to purchases your product. In this session, you’ll learn a discovery process that leads to products that customer will buy.

1. HOW TO CREATE PRODUCTS THAT
CUSTOMERS REALLY WANT TO BUY!
© Copyright 2012 to 2013, The Lûcrum Group, Inc
Tom Evans
The Lûcrum Group
@napkintorevenue
www.napkintorevenue.com

2. 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 2013, The Lûcrum Group, Inc

3. 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 2013, The Lûcrum Group, Inc

4. Why Do So Many Products Suck?
1. Idea to Product
© Copyright 2012 to 2013, The Lûcrum Group, Inc

5. Why Do So Many Products Fail?
1. Idea to Product
2. Not enough people have the problem.
3. May have problem, but don’t like the
solution.
4. Can’t charge enough for the solution to be
profitable.
5. Unable to communicate a clear reason to
purchase the solution.
5© Copyright 2012 to 2013, The Lûcrum Group, Inc

6. 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
© Copyright 2012 to 2013, The Lûcrum Group, Inc

7. Model for Discovery
Four Key Steps of Discovery
Validate
Hypothesis
Validate
Opportunity
Validate Solution Validate Market
FourKeyPillars
Market Problem
Product
Business Model
Market Strategy
Validation Valid Hypothesis
Valid Market
Opportunity
Ready to Launch Market Growth
From Napkin to Revenue™ Discovery Model
© Copyright 2012 to 2013, The Lûcrum Group, Inc

8. 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 – Who is going to buy it and
why?
© Copyright 2012 to 2013, The Lûcrum Group, Inc

9. Model for Discovery
Four Key Steps of Discovery
Validate
Hypothesis
Validate
Opportunity
Validate Solution Validate Market
FourKeyPillars
Market Problem
Product
Business Model
Market Strategy
Validation Valid Hypothesis
Valid Market
Opportunity
Ready to Launch Market Growth
From Napkin to Revenue™ Discovery Model
© Copyright 2012 to 2013, The Lûcrum Group, Inc

10. 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 2013, The Lûcrum Group, Inc

11. 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 2013, The Lûcrum Group, Inc

12. 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 2013, The Lûcrum Group, Inc

13. 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 2013, The Lûcrum Group, Inc

14. Exercise 1
• Create a Hypothesis for a New Opportunity
– Buyer/User
– Market Segment
– Market Problem
© Copyright 2012 to 2013, The Lûcrum Group, Inc

15. 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 2013, The Lûcrum Group, Inc

16. Henry Ford’s Quote
“If I had asked people what they wanted,
they would have said faster horses.”
© Copyright 2012 to 2013, The Lûcrum Group, Inc

17. What Do They Need (To Do)?
“People don't want
to buy a quarter-
inch drill. They want
a quarter-inch
hole!”
–Theodore Levitt
© Copyright 2012 to 2013, The Lûcrum Group, Inc

18. What We Want to Identify
• Problems, Goals, Needs
– What do they want to do that they can’t do?
– What do they want to improve (decrease/increase)?
• Why is this important?
• When does this happen (usage scenarios)
• How do you currently do this?
• What is your current satisfaction?
• What is the impact?
© Copyright 2012 to 2013, The Lûcrum Group, Inc

19. 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 2013, The Lûcrum Group, Inc

20. Exercise 2
• How are we going to get someone to talk to
us?

21. 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 2013, The Lûcrum Group, Inc

22. 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 2013, The Lûcrum Group, Inc

23. 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 2013, The Lûcrum Group, Inc

24. Model for Discovery
Four Key Steps of Discovery
Validate
Hypothesis
Validate
Opportunity
Validate Solution Validate Market
FourKeyPillars
Market Problem
Product
Business Model
Market Strategy
Validation Valid Hypothesis
Valid Market
Opportunity
Ready to Launch Market Growth
From Napkin to Revenue™ Discovery Model
© Copyright 2012 to 2013, The Lûcrum Group, Inc

25. 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 2013, The Lûcrum Group, Inc

26. Thank You!
Tom Evans
The Lûcrum Group
tevans@napkintorevenue.com
@napkintorevenue
www.napkintorevenue.com
+1.512.961.5267
© Copyright 2012 to 2013, The Lûcrum Group, Inc