In the UK, new business and start-ups are at an all-time high. Companies House registered 217,895 new businesses in the year 2016-17 alone. In an age of crowdfunding and Dragon’s Den, more people are coming up with ideas for new products and services. But how do you turn your idea into a saleable product?
What problem are you trying to fix?
For many successful entrepreneurs, their success came because they experienced a problem themselves and came up with a solution to address it. However, this doesn’t always happen. Sometimes you just have an idea, but to turn that idea into a saleable product, people have to want or need it.
To be sure that you are solving an actual problem, you need to engage with your potential customers.
This does not necessarily mean that you need to launch a full-scale focus group. You can start by identifying people in your life who could be a potential user of your idea and asking them. Try to avoid the ‘do you think this is a good idea?’ approach though, particularly with family and friends, who may just say ‘yes’ to make you happy. Instead, ask questions that help you better understand the ‘jobs to be done’ or the tasks to be undertaken, so you get a better idea of what motivates your potential customers.
When you are sure you have identified an actual problem, write it down. Keep it somewhere prominent, so you are reminded what the problem is that you are trying to solve.
Is the problem big enough?
Even when you identify the problem to be solved, a new product can still fail if you misjudge how significant that problem is. The idea might have come to you because you are fed up with dealing with a particular problem, but does it bother other people as much as it does you? Are they bothered enough to pay for your solution?
One of the aspects that makes people prepared to pay for a product or service is the perceived value it has to them. In theory, the greater the perceived value, the more a person is prepared to pay for something. If your product or service has a cost that is disproportionate to the impact it will have on the customer, the perceived value is likely to be very small and you will not have a viable business proposition.
This isn’t simply about keeping costs for your product/service down to maximise your gross margin. It is about really understanding how significant the problem being faced is and consequently how much your target customer would be prepared to pay to have it resolved.
Again, the way to address this issue is through research. Ask your potential customers about the impact the product/service might have on them and their lives, not just if they like it and how much they would be prepared to pay for it.
One of the biggest mistakes you can make when turning an idea into a viable product or service is to assume you know the answers. Whilst it is ok not to know everything when your idea is still new, if you want to make it into a saleable product or service, you need to understand the assumptions you are making and the impact they have on the viability of your solution.
Not all assumptions are critical to the success of your product or service. One of your earliest tasks when turning your idea into a saleable product is to identify which are the riskiest assumptions and make sure you test them. The best way to identify how risky an assumption is to use a matrix like this:
Place a mark on the horizontal Known/Unknown axis that corresponds to how confident you are in your knowledge of the assumption. Then place a mark on the vertical Critical/Not critical axis that relates to the impact of the assumption on your end product. When you join these two points up, if the section where they cross is within the grey circle, then it is a risky assumption. Test any that fall in this section to be sure your product or service is viable.
Another reason why an idea fails as a saleable product or service is because the solution you are proposing does not properly address the problem. Being specific about the problem is an important factor in getting your end product right, but equally as important is making sure your product actually solves that problem. With digital products and services, in particular, it is tempting to focus on the features themselves and less on the benefits these features deliver.
To help you focus on the value to the customer or end user, you can use a Value Proposition canvas. You can find many different versions on the web, but there is one example below.
To use the canvas, think about your customer. On the right-hand-side of the canvas, list out all the activities they have to do that link to whatever role they do that has made them a target customer for your idea. Then think about all the problems or obstacles that prevent them from doing these activities and list them in the ‘pains’ segment.
Also, think about what the customer might achieve if they complete the tasks and list these in the ‘gains’ segment. Now think about the pains and gains you have identified and come up with ways your idea can either help the customer get over their pains or achieve their gains. List these in the ‘pain reliever’ or ‘gain creator’ segments of the box on the right-hand side. Try to find a pain reliever for every pain you identified and likewise for the gain creators. You can now think about these pain relievers and gain creators in relation to your idea and turn them into tangible products or services.
By going through this process, you can track back and be sure that the features of your end product actually address the problem and so have confidence in your problem-solution fit.