So – you have an idea!
All businesses, no matter how big or small were started with an idea, the thought of a product or service that could be sold for a profit.
Hewlett Packard started with the simple idea of making an electronic signal generator they hoped engineers and schools would buy. They were right. Their product sold like mad and from that tiny start today HP has grown to become a business icon.
The Concord supersonic jet airliner was a very expensive first. Unfortunately, it did not win the minds of major airline executives and only flew with support of its creators the Anglo-French alliance. In reality, despite is speed and beauty, Concord was hardly a success story. In the case of Concord political issues may have been the blame as much anything else, but none the less, it was a market failure.
Either way, the above two examples lead to an important question, “What’s the single biggest risk in business”?
I know I can do it
Engineers, technologists, industrial designers and the like are very good at what they do. Indeed, seldom to they fail to deliver the right technical outcome, but if you look at the reason for most business failures, especially early stage businesses, the one overriding reason is in the market.
One may suggest that the issue is in their marketing, a black art if ever there was one, but in fact what many entrepreneurs fail to understand is the value they are delivering to the customer and how to quantify the value message and deliver it in a simple easy to grasp manner.
The term the “value proposition” is often used as the descriptor for this concept.
In essence people only buy something because they perceive the value of what they are getting is more than the money they are outlaying. If that equation does not hold good the product has little hope of success.
Of course, when it comes to products and services targeted at industrial and commercial markets, the value proposition is often easy to demonstrate, but when one looks at more esoteric items such as fashion, art or perfumes and the like, the game changes dramatically.
A good way to look at this is in a simple diagram we developed some years ago referred to as the “Market Risk Map”, this really gives an insight into the whole matter of value and markets.
I’ll talk more about that next month.
Roger La Salle, www.innovationtraining.com.au