Innovation in Business: Am I Doing it Right?

At TwinklHive, we believe that innovative and mission-focused entrepreneurs should be given a platform to succeed. By investing in like-minded entrepreneurs, we provide tangible support that will help turn their ideas into opportunities for success.

“We must learn what customers really want, not what they say they want or what we think they should want. We must discover whether we are on a path that will lead to growing a sustainable business.” — Eric Ries

As an accelerator supporting start-up founders and entrepreneurs, we at TwinklHive see a lot of great innovation in business on a daily basis. However, we also witness a number of start-up mistakes that risk hindering the ability of early-stage companies to scale quickly.

Many entrepreneurs know their product or service inside out, but fail to understand their customers and market in the same amount of detail. This is a significant blocker to sustainable growth and hinders an entrepreneur’s understanding of whether there is a genuine need for their product and if people will want to buy it.

Following on from a talk led by our Resident Growth Manager, Em Scicluna, at Sheffield Digital Festival in November, we wanted to share our three key insights for validating your product idea, de-risking your business and making success within the market.

1. Be customer focused

With customer expectations increasing at record rates and 89% of companies competing primarily on the basis of customer experience, being customer-focused is key to ensuring long-term business success.

But what is customer focus? Customer focus means putting your customer’s needs first and dedicating yourself to enhancing customer experience. It’s offering consumers a product or service that solves a genuine problem and resonates strongly with them.

To do this, you need to become an expert in your customer. It may sound obvious, but many entrepreneurs assume they know their target users without listening to what they’re saying or checking in to see if their needs are changing.

Where to locate your customers?

The best way to get to know your customers is to find out where they congregate to air their grievances and connect with like-minded people. This often occurs on forums, on LinkedIn, in Facebook groups, or at local community groups. By identifying where your customers come together you can gain valuable insights on their needs and wants.

Once you have located your customer, you should interview them yourself to get to know them on a deeper level. To ensure you get right to the individual problem that you’re targeting, it’s important at this stage to ask them open-ended questions rather than about your product idea directly.

Is it an Oxygen, Aspirin or Jewellery product?

Once you know your customer well, you may rush into designing a product that you think solves their problem. All businesses want to solve a critical problem for the customer, but just because you perceive a problem to be important doesn’t mean your customer does.

Asking your potential customers directly will help you assess what type of product your company is building. Is it an Oxygen (can’t live without), Aspirin (makes life less painful), or Jewellery (total luxury)? These categories, discussed by Janet Krays in an interview with Inc Magazine, will help you to understand whether your product is a ‘nice to have’ or a ‘need to have’.

Whilst there’s nothing wrong with a ‘nice to have’ product, you’ll need to bear in mind that it’s not solving a critical problem and think of ways to overcome it. Can it reduce friction in another area of their life? Can it be cheap or free, or really quick to use? A strictly ‘jewellery’ product is fine, but if your ambition is to raise lots of venture capital, it might be wiser to think of an ‘oxygen’ or ‘aspirin’ idea.

2. Be market focused

The first step to becoming market-focused is to analyse your total addressable market. Ask yourself how many potential customers you could realistically reach, or how many you’re attempting to reach. This is all about making a trade-off; you want your total addressable market to be as large as possible without compromising on the specific needs of specific customers.

Alongside this you should consider your market drivers — the underlying forces that will compel your consumers to purchase your product and make the market develop and grow. Keeping an eye on what’s going on and adopting a market-driven approach is key to ensuring long-term sustainable competitive advantage.

How will you stand out?

Once you know your competitors, it’s essential to identify your USP. What does your product have that your competitors don’t, and why does that help to solve the customer’s problem?

At TwinklHive, we often have companies tell us that their USP is the AI used within their product or that their product is more engaging for the user. However, these are insufficient USPs as they don’t offer any sustainable competitive advantage. A company’s USP can’t just be a different technology, or that it’s ‘more engaging’ than competitors, it needs to be a description of why the product is fundamentally better than its competitors at solving the problem being addressed. Is it easier to use? Cheaper? Does it solve an extra, related problem that no competitors do?

Identifying a strong USP, the value you offer and the problem you solve, will define your company’s unique position in the marketplace and identifies why your customers should choose you over competition.

How do you access your market?

Accessing your market shouldn’t be an afterthought, although many companies often see it this way. Considering your route to market should be entwined with getting to know your product and customer.

Here, you should capitalise on what you already have — do you have successful social media channels with a large amount of followers within your target audience? A newsletter that is read by your potential consumer base? A well-known partner who can advertise for you? A large team who can do direct outreach?

These channels should be utilised for the test phase, not just the launch for your product. At Twinkl, we have Facebook groups with thousands of followers and a webpage with lots of daily views, so we know that we can advertise new products or testing opportunities there. Where will you go to access your customers?

3. Adopt and sustain an MVP mindset

Once you’re satisfied with the opportunity, that the customers will want it and the market will allow for it, it’s time to build a prototype, test your product and then release it. But where do you start? And why is an MVP mindset so crucial?

First, you need to assess your leap-of-faith assumptions as outlined by Eric Ries in ‘The Lean Startup’ as those assumptions that you take for granted, you don’t know if they’re right or wrong, but you go with it. Many entrepreneurs make these assumptions with little or no validation, and it’s pivotal to understand and validate these before moving ahead.

Test your assumptions

To test your assumptions you need to find your early adopters — those who want to be the first to get their hands on a product and are happy to see an unfinished version.

Then, test the riskiest assumptions first before moving on to testing two elements: the market and their potential interest in your product, and your product itself along with its different features. When testing various elements of your product you will need different types of tests, which may require different prototypes. These can be as big as a wireframe version of your app or site or as small as a smoke test in the form of a sign up email advertising your product.

And remember, failure is OK. Fail fast and know when you need to change tack — this will always be better than building a product that nobody wants. Failing fast allows you to pivot when things aren’t working to cut losses that may have occurred further down the line.

What’s the smallest and cheapest your product can be?

Finally, base the backlog for your Minimal Viable Product (MVP) on all the assumptions you’ve tested. An MVP is the ‘just good enough’ product that is sufficient to allow you to test your hypothesis and work out if your product is delivering sufficient value.

Think big in the long term and small in the short term — make your product cheap and don’t add lots of extra features. It’s important here to strip it back to basics and get it in front of your customers as soon as you can to test its viability.

Sustaining the Build-Measure-Learn cycle

But, why is the MVP so important? Ultimately your MVP will help you sustain a build-measure-learn feedback loop, an idea also developed by Eric Ries, that is essential to successful and continuous product development. This cycle involves building and running an experiment, measuring the data and determining if real progress has been made, which ultimately creates validated learning.

The build-measure-learn loop ensures that, whilst building your product, you keep in mind that your customer response will need to be measured so that you can build more of what they need, continuously in a cycle. Through this, you will maintain customer focus during your entire product lifecycle, rather than just within the early stages.

Are you feeling validated?

Ultimately, product idea validation minimises the risk of implementing a product that doesn’t solve a critical problem for your customers. However, what makes it difficult is that often your own assumptions are different from the real challenges facing your consumers.

To mitigate this, ensure you keep an ear to the ground when it comes to your customers’ needs, identify developments in your market, and make sure your product is built in a way that means it can continuously adapt to those changes. This is the best way to ensure that your product solves a meaningful and genuine problem for your consumer base.

If you’d like to learn more about the Hive and the services provided to Hive residents, get in touch at hive@twinkl.co.uk or visit our landing page!