In this post, I want to update our readers and subscribers on the current thinking about how new ventures move from an early idea to launch. I have been teaching topics associated with innovation for over 30 years, focusing on new product innovation. Over the years, my interests have evolved to include new venture creation and growth. There is little doubt that my work on product innovation has influenced my thinking about the process one must follow to innovate in any context successfully.
Over the last decade, I have focused on understanding what entrepreneurial thoughts, behaviors, and actions are common in successful innovation outcomes. The resulting educational programs have now been applied to hundreds of ventures across many contexts, from startups to family businesses to corporate innovation projects. Associated courses have been delivered to many educational and professional levels, from high school to doctoral students, from emerging leaders to senior executives.
With all this said, I want to discuss our core new venture realization roadmap and the thinking behind its components. Hopefully, you find it interesting, and it helps you think critically about your innovation journey.
There are many excellent new venture and innovation frameworks in both academic literature and popular business books. And I want to say up front; I have learned a great deal from each of them. So much of what I am going to say may feel familiar and almost commonsensical. However, as with any complex process, things are dynamic and ever-changing. Some aspects of any process framework may hold up for decades; others need to be viewed anew due to changes in economies, technologies, business practices, and culture. This article attempts to check my thinking and encourages you to consider how this may influence your future innovative activities.
Principle #1. Multistep processes are rarely linear. Nonlinearity complicates the articulation and demonstration of how the process works, moving from one step to another, both forward and backward. Innovation is never linear. Identifying a problem and finding an effective solution is a long and winding road, with many wrong turns and redirections. From a project management perspective, there is much concurrency, tasks happening in parallel, overlapping, and iterating. There can be quite a bit of redundancy, sometimes vital, other times wasteful. At times, it is hard to tell the difference. Specific redundancies are positive as they serve as reminders to check for areas that need revision based on changes in the business model or overall venture goals.
Principle #2.Innovation generates quite a bit of noise. There are so many essential tasks to accomplish in short periods. The innovators can quickly become overwhelmed by all the demands, making it difficult to focus and prioritize. But these two behaviors are critical for successful innovation outcomes. Many frameworks provide a long list of required steps and tasks. Trust me; it is easy to add to the entrepreneur’s task list continually. The demands come from multiple directions, and all seem to need a response immediately. I have been just as much at fault with this as others. Earlier versions of the new venture realization roadmap had 16 modules. I have struggled with my demons to bring it down to eight. In the end, the process is only as good if entrepreneurs follow it.
Principle #3. Complex processes create excessive cognitive load. A practical approach optimizes the innovator’s mental and behavioral efforts. Throughout the process, some activities require deep thinking about select aspects of your venture. For example, it takes great effort to understand the customer’s experience, create iterative solutions, and delve into the intricacies of a venture’s economics. Placing intense intellectual effort in these areas pays off, but it is vital to find the time and mindset to focus effectively. To help navigate this effort, I provide prompts to guide an entrepreneur through these deep dive activities.
Principle #4. Structured check-in points are essential. In product development, many practitioners refer to these checkpoints as “gates.” I have designed each module to stand independently as a learning experience and provide natural checkpoints so a venture team can assess their progress against performance criteria or other venture milestones. Every practical innovation roadmap creates opportunities to check team progress against pre-determined criteria. Throughout this new venture realization process, there are many opportunities to set goals and monitor them frequently. For example, in our module about your customer, the innovator plans for customer engagement activities, teams can establish how many target customers they plan to reach and interview each week. You can easily monitor your progress on how many customers you reached out to for interviews, the number of interviews scheduled and conducted, and so on.
In association with the progress checkpoints, I provide an end-of-module series of reflection questions. These reflections are designed for founders to consider how they are applying the venture process. Here, you can evaluate each step and determine how the structure works for your venture and if you need to revisit the approach. Of course, there are always aspects of the process that innovators view through a specific industry or business model.
Principle #5. The process must be repeatable. One of the more vital elements of any structured process is that it must be repeatable. Similar to how entrepreneurs must strive to create a repeatable business model. The fact that these outcomes are aligned is no coincidence. Throughout the venture realization process, you need to go through aspects of the process each time you add a target customer segment or develop a new product.
In some cases, you review current assumptions and actions in light of new information or pivot direction. But specific activities will need to be repeated in light of these new activities. For example, once you have validated your business model for your early customer, your most enthusiastic adopters, you will need to review, revise and act upon it again as you move to scale towards a more mainstream customer. You will not only check your business model for these new customer categories but will need to look at possible changes in other areas of the process. These areas include competitive positioning, product attributes, brand messaging, promotional channels, and unit economics, all of which need to be reviewed and refined to serve these mainstream customers best.
Principle #6. The process must be adaptable to different contexts. A robust structured approach should be practical across many different contexts and use cases. Specific steps and activities must be versatile, flexible, and scalable. The entrepreneurs and innovators I work with apply this realization process across many settings and business models. The objective of the design is to support new ventures by entrepreneurs, the small and medium businesses looking to grow, and corporate innovators. The modules help business owners review existing business models (B2C, B2B, Multi-Sided) and develop new product innovation and market expansion strategies. Many business owners need a structured way to scale their business. Taking a fresh look at their existing business model, including core competencies and operational capacity, can help strengthen the foundation to scale effectively.
The process has been used quite effectively in large corporations. Many corporate leaders adopt startup practices to become more agile to produce incremental and disruptive innovations and quickly enter new markets. While many of the processes may be in place, taking a fresh look at applying specific elements across the stages can be refreshing to an organization. Many large companies integrate the minimal viable product approach into product development roadmaps. I have worked with corporate innovators on getting early solutions into customers’ hands to test and provide feedback. Co-creating solutions are today’s version of integrating the voice of the customer into early product innovations.
Principle #7. Experimentation and assumption testing are essential activities. Since my early investigations on corporate innovation, a culture of experimentation has always been an integral component of sustained innovation. Innovative companies demonstrated inquisitive activity behavior leading to hypothesis testing and continual experimentation. Today, we know that a critical tenet of the lean product development method is iterative testing and refinement. Whether a startup or corporate innovator, you design innovative solutions in small incremental stages step by step. The process must allow for a scientific approach to testing assumptions about a new product’s capacity to provide the desired value to the customer, both functionally and emotionally.
Principle #8. Performance outcomes must be measured and monitored. The process creates opportunities to measure performance to achieve venture goals. There are several points during the process where quantification is encouraged. Right at the start of Module One, entrepreneurs quantify customer pain points or outcomes. Anytime one can quantify these customer needs, it facilitates design specification once the solution becomes the focal activity. In Module Three, innovators attempt to validate these numbers during the interview process, looking to the customer to specify acceptable ranges in a new solution.
Identifying key metrics is an integral part of the venture realization process. Entrepreneurs should consider measures to monitor throughout the process. It is essential to realize what to measure changes as you go through the process. For example, early in the process, you will want to monitor how many customers respond to discovery surveys and request to stay connected. Later metrics shift to actual purchases.
Principle #9. The customer must be central to the process. By nature, the customers are the hero of the entrepreneurial journey. At each step, their needs must influence each decision. As part of this mandate, entrepreneurs continually reflect on how to serve the customer by a particular decision or action. The importance of engaging the customer throughout the process has been a well-recognized best practice in product innovation.
For this reason, I encourage extensive preparation for customer engagement early in the process. Entrepreneurs must learn as much as possible about the customer’s needs. Once you achieve this level of understanding, you can engage them in the creation of the solution. Engaging customers early gives you an empathetic knowledge of their problems, pain points, and desired outcomes. They become co-creators of the solution, thus building a solid bond with your brand.
Modules & Outcomes
With the above principles in mind, I want to share the intent and focus of each module. Additionally, I will highlight the impact that the process has on innovators as they learn it. Finally, specific behavioral outcomes are addressed, including identifying opportunities, developing strategies, innovating repeatedly, and leading effectively.
The new venture realization roadmap is the foundational structure to all of my classes in and outside Columbia University. The roadmap facilitates a deep understanding of entrepreneurship and innovation practices from high school programs to graduate courses and executive education. This knowledge develops by guiding individuals and teams through the new venture creation process as applied to an enterprise idea of their choice. Each module provides the participant with the knowledge and tools required to develop a comprehensive new venture plan. At each stage, entrepreneurs are exposed to critical terms, tools that support research and decision making, and explanations of how each significant planning activity fits into the new venture realization process. Finally, entrepreneurs evaluate their progress at each significant juncture.
Entrepreneurs respond to a series of venture questions and exercises during each module, guiding them through planning. Entrepreneurs identify and evaluate a venture opportunity, develop an initial business model, assess the industry and market attractiveness for their venture ideas, form competitive strategies, develop & test minimum viable products, and generate complete financial statements. The program encourages entrepreneurs to hone such professional skills as creative problem solving, analytical thinking, project management, financial analysis, and effective team leadership.
Modules 1-2: Your Idea & Business Model.
In the first two modules, entrepreneurs frame the opportunity by identifying a customer problem to solve and assessing whether it is worth exploring. The process begins with crafting a problem statement that articulates the customer’s problem or job to be done, followed by what outcomes will meet the customer’s needs. Even at this early stage, defined customer outcomes should be quantifiable and measurable.
Module One also facilitates a preliminary assessment of the venture opportunity. Pre-screening analyses include technical, financial, and resource feasibility. Entrepreneurs assess their knowledge of the customer problem as well as overall access to the marketplace. Additionally, an early screen of the overall ecosystem ensures that innovators know what optional solutions exist in the market.
In the second module, entrepreneurs build the first business model iteration that details early key assumptions about how their venture will provide value to the customer. Key focus areas include:
- the consumer problem or pain point to be solved,
- opportunity or need that the venture addresses;
- the defined value proposition for all relevant customers & stakeholders,
- assessment of preliminary target market in terms of size and segmentation,
- an initial description of proposed product or service,
- identification of distribution channels the product or service will need to reach the market and,
- explanation of unique end-user benefit, why a customer will pay for the said solution.
By the end of this module, the entrepreneur generates an overall business model. The model articulates the value proposition and rationale for customer selection or product-market fit; the scope and channels for products/services offered by your venture; proposed organizational design including key activities, resources, and partnerships; and initial assumptions on revenue streams and cost structures. Entrepreneurs refine this preliminary business model throughout the program.
Modules 3-4: Your Customer & Market.
These two modules help form the innovator’s strategy to serve the customer and enter the marketplace. Module Three focuses on defining early customer segmentation, actively pursuing a solution to their problem. This target or beachhead customer becomes the primary focus of your initial strategy. With the target customer identified, entrepreneurs develop pre-solution journey maps to enhance their understanding of their current experience with the problem. Customer discovery and engagement are vital components of the entrepreneur’s activities. Extensive customer discovery planning includes identification of early customers to interview and survey. Interviews and surveys are prepared and executed. The resulting customer data helps to validate business model assumptions and drive early product design and testing.
In Module Four, entrepreneurs begin to add secondary research to their market knowledge. Building on early segmentation efforts, entrepreneurs now determine the market size of each target segment resulting in an understanding of how many early customers are available during early market entry. Entrepreneurs conduct a comprehensive competitive analysis of various solution providers, identifying key competitors in their industry sector and exploring their respective business models. Entrepreneurs assess the targeted market size and industry, discover how to obtain market feedback and validation on market acceptance, and learn how to evaluate the industry or niche in terms of maturity and growth potential. From this analysis, entrepreneurs identify a sustainable market entry positioning advantage, capitalizing on internal strengths and mitigating any challenges and threats from the external environment. New venture strategies are developed, emphasizing competition, globalization, sustainability, and market potential for their new ventures.
Modules 5-6: Your Product & Brand
During these modules, product and market innovation comes to the forefront. The entrepreneur shifts focus from the customer’s problem to the design of the solution. In Module Five, entrepreneurs explore product innovation and develop a plan for development and market testing. As a starting point, the entrepreneur reviews the current definitions of validated customer outcomes and benefits. Benefit prioritization is one of the first steps in deciding what part of the solution to design and test first. Once the benefits are prioritized based on customer demand and dissatisfaction with alternative solutions in the marketplace, the innovator can select minimum viable product designs and plan the testing process with target customers. The main activity at this stage is creating a minimum viable product (MVP) and executing iterative market testing. These MVP iterations illustrate the essential features of their product or service through such techniques as concept boarding, sample web pages, and process charts. One plans multiple iterations with increasing fidelity. Customer engagement increases at this phase.
As innovators begin to validate their product’s functionality and value, it is natural to focus on positioning your solution in the marketplace. During Module Six, entrepreneurs develop their go-to-market strategy. This strategy includes product positioning, pricing models, promotional tactics, and channel management. Here the focus is on developing cost-effective customer acquisition strategies leading to optimal market entry. During this stage, entrepreneurs prioritize the promotional tactics they plan to test to reach their target customers. By applying sales funnel strategies, the entrepreneur evaluates each promotional activity regarding potential reach and conversion potential. Finally, entrepreneurs calculate the costs to acquire new customers as they move to more comprehensive financial planning in the next module. Extensive emphasis on best positioning the solution to communicate a compelling message to the customer is the foundation of the venture’s brand development.
Modules 7-8: Your Financial Plan & Launch.
All the research and decisions come together to support the assumptions required to build the business’s overall revenue and profit models. First, entrepreneurs create preliminary financial projections based on estimated revenues, cost of goods, and anticipated operating costs. As a starting point, they are encouraged to build a detailed one-year model to help focus on early revenue drivers and startup costs. Once key assumptions are defined, venture teams generate a three-year projected income statement and cash flow analysis. Finally, entrepreneurs select important startup metrics to measure and monitor as the venture evolves to support goal attainment. By the end of this module, innovators choose the optimal sources of capital for venture fundraising, and entrepreneurs define how much money they need and when.
In this last module, entrepreneurs learn about important startup legal considerations in the final module, including intellectual property management, founder’s agreements, and equity decisions. Team selection and management for new ventures have challenges, especially when many skills are required but limited resources. This module explores strategies and tactics to bring together the right players to provide the necessary expertise and core competencies to meet the new venture’s value proposition and position the company for future growth. Looking for co-founders and partners, managing family relationships, partnering with complementary organizations are addressed to support the business model and overall innovation launch into the marketplace. Finally, the module outlines the steps to enable a startup culture that drives innovation through inclusive leadership and collaboration.
I wanted to take some time to articulate the current thinking and application of this “new venture realization roadmap.” The process will continue to evolve as more and more entrepreneurs, business owners, and corporate innovators apply it to their innovation activities. Future posts will address best practices, specific issues, and new knowledge from research and application.
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