Slides from the Software Guru Virtual Conference - presented on Feb 28, 2013. Most start-up companies begin with what they think is a brilliant idea and they immediately jump to building the product, and most of these products are crap. Even established companies sit around conference rooms dreaming of the next great product and end up wondering why their products also crap. Creating innovative products that result in market breakthrough requires a process of multiple iterations of discovery that drive you deeper into understanding the market problems and how to solve them with a differentiated solution. Breakthrough products are based upon solving a significant Market Problem with a Product and Business Model that create a competitive advantage and a Market Strategy that motivates buyers to purchases your product. In this session, you will learn this iterative discovery process that leads to breakthrough products and how to apply it to your own products (in startups as well as big enterprises).

1. Cómo Crear Productos Que
No Sean Una Porqueria!
A Discovery Process for Creating Great Products
Tom Evans
The Lûcrum Group
@napkintorevenue
www.napkintorevenue.com
© Copyright 2012 to 2013, The Lûcrum Group, Inc

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 Suck?
1. Idea to Product
2. One point of market evidence to idea to
product
© Copyright 2012 to 2013, The Lûcrum Group, Inc

6. Why Do So Many Products Suck?
1. Idea to Product
2. One point of market evidence to idea to product
3. Market evidence & validation to product
© Copyright 2012 to 2013, The Lûcrum Group, Inc

7. Why Do So Many Products Suck?
1. Idea to Product
2. One point of market evidence to idea to product
3. Market evidence & validation to product
4. Market evidence & validation, product
validation, no clear market strategy
© Copyright 2012 to 2013, The Lûcrum Group, Inc

8. Why Do So Many Products Suck?
1. Idea to Product
2. One point of market evidence to idea to product
3. Market evidence & validation to product
4. Market evidence & validation, product validation, no clear market
strategy
5. Market evidence & validation, product
validation, no profitable business model
© Copyright 2012 to 2013, The Lûcrum Group, Inc

9. 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
© Copyright 2012 to 2013, The Lûcrum Group, Inc

10. 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 Discovery
– Differentiated Value Proposition +
– Profitable business model
– Time to market Validation
• Compelling Market Strategy
– Motivates target market
– To solve problem with your solution
© Copyright 2012 to 2013, The Lûcrum Group, Inc

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

12. 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

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

14. 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

15. 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

16. 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

17. 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

18. 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

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. 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

21. 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

22. 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

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

24. 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

25. Gracias!
Tom Evans
The Lûcrum Group
tevans@napkintorevenue.com
@napkintorevenue
www.napkintorevenue.com
+1.512.961.5267
Skype: tevanstx
© Copyright 2012 to 2013, The Lûcrum Group, Inc