From Ideation to Validation
This article is part of a case study “From zero to profitable business within 3 months”
In the last post, I applied the Ideation process and decided to focus on an intelligent time tracking solution.
In the last days, I took some time to think about this idea. This is a very important step in the whole process of building a sustainable business. Professor Günter Faltin describes in his book “Brain versus Capital”, that good ideas are not coming out of the blue, but are the result of systematic thinking. And I would totally agree to that! Or as Abraham Lincoln said once:
Give me six hours to chop down a tree and I will spend the first four sharpening the axe. — Abraham Lincoln
In my opinion, this preparation before starting with building an idea is important and oftentimes ignored. I could observe many times that people don’t put in the time and effort to develop a good concept for an idea and instead start with building something. And very often, this either doesn’t become a business or they lose the passion after a few days and stop to work on it. The preparation and development of a concept can prevent this.
So in the following, I will describe the steps in detail.
Please note:
I am doing my best to share what I have done and try to clarify this by adding excerpts of the documents and everything I have created. However, this blog post would bloat up extremely if I shared everything I have created. So I am still looking for a solution on how you can get access to everything in detail. Maybe I can create a public notebook somewhere, I’ll try to find a solution for this.
Thanks!
💡 1. Brainstorming on the idea
This time, I focussed on the idea which I have decided to focus on. I used several Ideation techniques to come up with anything that came into my mind about this idea. This includes more related problems in this field, more solutions, etc.
For me, it is always a very positive feeling if I can come up with a large mind map in this step. This is an indicator that there are many possible directions which could be explored. In contrast, if my mind map had only one or two bubbles, maybe this idea might be too small or I don’t have enough passion or background experience.
As you can see, I came up with a bunch of things that came into my mind while brainstorming on this “Time Tracking” topic.
👓 2. Doing some research
Clearly I can’t see my idea out of context. I want to get an initial feeling in what environment I am moving. What is the current state in this market? How does the competition look like? How many competitors are there? What problems are solved currently in this environment? Are they solved well? How many people use such solutions? What innovative / new products exist in this segment, e. g. on ProductHunt or AngelList?
Additionally I had a look at the user reviews for these products and tried to learn more about what the users want.
The focus here was to learn about this topic / domain (= time management, productivity, personal development), the users in this segment and what current solutions look like.
I added these insights to my mind map. These learnings will help me when I’ll create a business model, because for example I need to differentiate myself from the competition.
📝 3. Organising the mind map
At this time, my mind map was full of stuff regarding this idea. In the steps before I didn’t want to focus on organising but rather on creativity. This mind map will always be a place I can come back to. It somehow is the vision of my product. And maybe I will expand it in the future. But for this I need some kind of structure, so I organised my mind map into several groups, e. g. for large feature groups, general insights, interesting articles or designs I have found and an idea place with random ideas.
🌌 4. Create a vision & mission statement
I think it’s important to have a vision statement and a mission statement for a project. It’s a like a guiding star which continuously leads me into the correct direction and it allows me to think big.
There are many definitions available, but for me the key differences between a vision and a mission are the following:
Vision:
- Key question: Where do we want to be in the future, what impact do we want to make? (5–10 years)
- Purpose: Should be inspiring and motivating
- Sounds more vague than the mission
Mission:
- Key question: Why, how and what are we doing (remember the Golden Circle by Simon Sinek) in order to achieve the vision?
- Purpose: Should create a guiding orientation
- Sounds more concrete than the vision
For me these two statements are really important and really motivate me! They accompany me during the whole process, and certainly there will be always up and downs. So they help to remember why I do the stuff I do. In my case, I formulated these statements as the following:
Vision
We believe we can make the world a better place by starting right with the humans and helping them to become the very best and most authentic version of themselves through innovative solutions.
Mission
Because time is our most valuable asset in life, we want to help people to plan, manage, track, visualise and optimise their time through innovative, elegant looking, powerful, playful and easy-to-use digital solutions. When people think about personal time management, we want to be the first solution coming into their mind.
🏙 5. Creating the business model
I already expanded the idea with many things in the mind map and I have a vision and mission now. But this alone is not a business yet. So the next step is to create a business model, a real concept, out of these ideas. It’s like piecing together a puzzle — first we collected all the possible pieces, and now we need to find out how and what pieces fit together.
The main tool we will use for this is the business model canvas. Here is a short video that explains what the business model canvas is about. It basically allows us to describe our business model within 9 building blocks on a canvas.
🙋 1. Customer Segments
We start right with the customers and their problems.
I have done quiet some research online and collected some person types which could be possibly customers. A great way to find this out is to look in social media networks such as Twitter or Facebook. People share so much information about what they are doing, what problems they have and so on. So I only needed to search for hashtags related to “time tracking” and I could find various groups of people who are tracking their time. Some examples include:
- Customer Science Students
- (Business) Consultants
- Freelancers (e. g. Copy-Writer, Designer, Developer, …)
- Developers in general
- Online Marketing people
- Makers / Indie-Hackers
- “Quantified self” people
Now, each of these people may have different needs, but probably they also share some common characteristics. I have created a persona for each of these people. I used a persona canvas to aggregate the information for each persona.
The purpose of this is that these personas represent a whole customer group as an archetype and give this group a real face. I don’t know yet if some of these will be omitted or merged later. Probably there are also more groups I didn’t think of yet. But I will find this out when talking to these people.
Now you may note that not everything is filled out yet. I started with my best assumptions from my initial research and my background knowledge, but I will update this persona canvas when I get more information when talking to these people.
Furthermore it’s important to find earlyvangelists later. These are people who believe in your vision, are willing to pay for it earlier and probably spread the word for you.
🎇 2. Value Propositions
The Value Proposition is basically the product or service that you are offering for your customers in order to solve their problems or fulfil their needs. As a starting point, I went through my mind map and identified the largest feature groups which create a value. Then I described each feature in a few sentences. To make sure that each feature really creates a value for my customers, I additionally formulated each feature as a user story from the view of my customers in this way: “As <role> I want <functionality> so that <benefit>”. From this, I tried to derive a value proposition from it, such as cheaper, better, faster, easier, …
The table looked something like this:
🚚 3. Channels
Now after defining the customers and value propositions, the channels are the way how the value propositions are being delivered to the customers.
Probably the time tracking solution will be available on different platforms in the future: App (Android & iOS), Web-App, Desktop-App and Smartwatch-App. So we can derive the following channels:
- Tizen App Store (for Samsung Watch)
- Google Play Store (for Android Smartphones and Android Watches)
- Apple App Store (iPhones and Apple Watches)
- Website for Desktop-App and Web-App
Further channels:
- SEO
- Blog
- Social Networks (Facebook, Instagram, Twitter)
- Google AdWords / Facebook Ads
❤️ 4. Customer Relationships
Each business maintains a relationships to its customers. We can describe the relationships with the AARRR metrics: We need strategies to get the customers to our website or app, make them use the app, keep them and grow them in order to create revenue.
- Acquisition: Create a demand and get user to the website / app.
Possible Tactics: Blog, SEO, E-Mail / Newsletter, Podcast, Webinars, Social Networks (Facebook, Instagram, Twitter), Google AdWords / Facebook Ads (PPC), Online Advertising (e. g. in relevant newsletters, on relevant websites), App Store Optimisation, Partnerships with relevant Blogs etc., Integration with other apps, Referral Marketing - Activation: The visitor gets activated, e. g. by making a purchase, signing up or at least by entering his contact data.
Possible Tactics: Free trial, Freemium download, incentives such as free e-book, Conversion Rate Optimisation - Retention: The activated user / customer keeps coming back and interacting with the app.
Possible Tactics: Try to generate network effects, rewards / achievments for coming back (gamification), Push-Notifications, E-Mails (automated, updates, when user is not coming back, …), Blog, Continuous Product Updates (and considering feature requests / bug reports from users; building in public), Strong public connection / communication to users, High switching costs - Referral: The user / customer refers the app to other users.
Possible Tactics: Rewards or discounts, easy ways to share information, contests - Revenue: The user / customer is generating revenue for the business.
Possible Tactics: Subscription, Upgrade (better subscription, add-ons)
💰 5. Revenue Streams
The revenue streams describe how the business generates cash from the different customer segments.
- Subscription (with free trial)
- Freemium
👨💻 6. Key Activities
These are the key activities that are required that the business model can work, e. g. to create and deliver the value to the customers, maintain the relationships etc.
Since this is a bootstrapped business, the main activities are the following:
- Development
- Marketing
- Design
- Maintaining contact to users / customers
The last point is important for me, since I want to be approachable for my users / customers. If they have good feature requests or find bugs, it’s important for me to check this out and eventually build this feature or fix the bug.
🛠 7. Key resources
These are the key resources, which can be physical, financial, intellectual, or human, that are required for the business model, so that we can create and deliver the value proposition etc.
Physical: Server / Cloud Infrastructure
Intellectual: Branding, User Data Analysis Results
Human: Myself (= bootstrapping)
👐 8. Key Partners
These are the key partners that are required in order to make the business model work. There are four types of partnerships:
- Strategic alliances between non-competitors
- Coopetition: strategic partnerships between competitors
- Joint ventures to develop new businesses
- Buyer-supplier relationships to assure reliable supplies
Possible key partner could be integrations with other apps or bloggers / influencers / companies / communities from this whole “personal development” segment.
➖ 9. Cost Structure
These are all the costs related to the business model. Since this is a bootstrapped business, I want to keep the costs as low as possible.
- Platforms / App-Stores
- IT-Infrastructure
- Paid Marketing
The biggest block here will probably be the paid marketing. In an ideal world I could acquire most of my customers through free marketing, but probably I also need to use paid marketing. After testing out paid marketing channels, I can better evaluate the detailed costs.
⏭️ Next steps
In the next part I will describe my business model environment, identify the (riskiest) hypotheses and create experiments to test these hypotheses.
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