It's Pronounced Chookshaw

The semi-professional blog of Albert Ciuksza Jr.

Category: Product Development

Validation

Startup confession: I hate validation with a passion. Not the process of it (whatever that process is, anyway), but the expectations that have been placed on it.

Validation is supposed to determine whether an idea is worth commercializing. The theory is that the innovator goes through a series of processes that lead to a black-and-white answer: either yes, this opportunity will obviously make me a zillionaire; or no, this opportunity should die on the vine. Validation becomes the insurance policy against failure and, with failure being a fate worse than death in many innovation circles, it’s be-all, end-all.

Let me be clear: no one ever, ever, ever does this.* Why else do you think that 90% of startups fail?

The problem is that we’re mostly wired to pursue the new and shiny, to say yes rather than no. Consciously or unconsciously, instead of validating the idea (i.e. empirically determining whether to move to the next step using a rigorous, data-oriented methodology), we try to rationalize all of the reasons to move forward. While we usually need about six positive messages to make up for one negative one, in our “validation” process, we tend to focus on all the data that we’ve got that says that we should keep pushing forward with commercialization.

There are plenty of articles about how best to validate (caution: whatever validation is, it is not a five-minute process), so I won’t duplicate the efforts of the many who are trying to sell you some sort of secret sauce. However, there are four big things that tend to be make-or-break when deciding to pursue a new idea. They are:

  • Degree of Differentiation – Your idea needs to be different enough to compete against other solutions while being tough to duplicate (technically or legally).
  • Market Size – The business needs to pursue a market big enough to meet your goals, whether that’s just to put food on your table or to make enough return to attract investment
  • Resources – You need the time to pursue it, a team that can compliment your strengths, and the financial resources to fill in the gaps, all from the first flick of the light bulb to the moment you put out the “for sale” sign.
  • Marketing 4Ps – Product, place, price, and promotion; they all need to work together to make the awareness-interest-decision-action cycle as short as humanly possible.

There’s other stuff, of course, but these are the big four. If you can rationalize this publicly with your right hand on a stack of enter-your-sacred-text-here, then you’ve done great work. This is what most people want when they want validation. They want some data, some third-party information that shows that you’re not a mad scientist.

For extra credit, I recommend one more step — the project premortem. The idea is simple; instead of waiting for things to get to their logical conclusion before doing an analysis of what went wrong, have a session with you/your team to talk about all of the reasons the project will fail miserably. When this is the goal of the discussion, everyone is open to talking through the potential pitfalls that they might otherwise be uncomfortable expressing in the face of the blinding optimism that comes with launching a new venture. It’s a fantastic exercise.

*This isn’t technically true, of course. Like how some people rotate their tires after every 3,000 miles or balance their checkbook every month instead of checking the balance online, it happens, but not often enough to discuss.

Actually, the New iPhones Are Awesome

Five colors to enjoy (plus a gold iPhone 5S)

Five colors to enjoy (plus a gold iPhone 5S)

I’m not an expert in technology and don’t want to give the impression that I’m capable of giving a careful analysis of the new hardware or software in the two versions of the iPhone that were launched yesterday. This post isn’t about the guts, or the new interface, or iOS7.

This post is about looks. And, from that perspective, I think this was a brilliant move.

The mistake that handset manufacturers have made, really since the beginning of time, has been that almost all phones look decidedly masculine. I remember a good friend of mine, Meghan Skiff of Mixy Marketing, complaining about how her then top-of-the-line Blackberry only came in masculine colors. “I’d pay serious money to get this in pink,” she said.

Until these iPhones were launched, the only way to make a mobile phone stylish was to add a case. Given just how long smartphones have been around, that is a pathetic record.

The books are right — when marketing to women, pink is not a strategy. But style is.

That is where Apple got this right. The gold tone iPhone 5S might have been widely panned and the multiple colors of the stepped-down 5C might be considered garish, but for the first time there is an iPhone that can appeal to both style and substance. 52% of adult women carry a smartphone. How has no handset manufacturer taken this into its design consideration?

Good design makes everything better. That means both style and substance. While there can be plenty of arguments about whether Apple has been as innovative in this generation of iPhones as years, they’ve clearly taken a step in the right direction in recognizing that style can be a competitive advantage in the mobile market. With so many women using smartphones, creating a line that appeals to various tastes is long overdue.

To Offshore Or Not To Offshore…

I was discussing with a couple of folks who work with entrepreneurs and startup companies a rough design and production plan my team was planning to use in a venture we’re in the process of launching. One of the strengths of our plan, I said, was the use offshore design and production, which will allow us to sell our product at a beyond-competitive price (more than half than our next competitor). One of the people with whom I was having lunch turned to me and asked, “do you really feel comfortable with using foreign labor?” He was making a significant point with a simple question. I justified the decision, saying that I knew the people involved in managing the manufacturing facility and was aware that each employee was paid well, was provided with health care for themselves and their families, worked reasonable schedules, and worked in a safe environment. However, no matter how well the employees are treated, the fact remains that production isn’t happening in the U.S.

On one of my first major projects, I had fought for using for domestic manufacturers to produce some of our components. While the management team believed that we couldn’t get a competitive price in the U.S., I insisted that we price all of our parts domestically. The result? Most everything we priced was four-to-10 times more expensive in the U.S. than through our international suppliers. While there were arguments to be made that the savings weren’t worth the opportunity cost (time between ordering and getting the product in the door, for instance), it was almost universally impossible to make our margins work using domestic suppliers.

Since those early fights, I hadn’t really thought about domestic vs. offshore supply chain. Every project in which I’ve been involved has used an offshore provider in order to be price-competitive. I realized that I had moved on from the ‘Buy American’ value that had been passed down from my grandfather, a foreman in the famous Homestead Steel Works.

It’s not just in physical product development. At a presentation I attended at AlphaLab last year, one of the portfolio companies, a social networking web site geared toward a specific audience, openly discussed their use of Indian programmers. It struck me at the time — for a city like Pittsburgh that is so rich in IT talent, it still made sense to offshore the work.

I’m truly conflicted about this issue. On one hand, I think it’s important to support U.S. jobs in order to maintain a robust economy. On the other hand, few startups can raise the type of capital, and make workable margins, using domestic labor and suppliers. How can entrepreneurs pass on the opportunity to increase their product margins, which will make their companies more likely to be funded, financially successful, and viable? Is this an ethics issue or values issue? Do entrepreneurs really have a choice?

Inventors Should Learn From The Green M&M

Green M&M

Green M&M

During the Spanish Civil War, Forrest Mars, Sr. saw some soldiers eating little chocolate pellets surrounded by a sugar shell, preventing the little pieces of chocolate from melting. He perfected the process, patented it and, along with Bruce Murrie, began production in 1941 exclusively for the military. The candy hooked thousands of GIs and the company began selling to the general public after the World War II ended, establishing M&M’s (Mars & Murrie) as one of the best-selling chocolates in history.

In nearly 70 years, the product has grown from a treat for soldiers to one of the most extended products in the world, with multiple fillings, flavors, customization options, colors and sizes that are sold in stores ranging from gas station stop-and-gos to the massive M&M’s Store on the Las Vegas strip.

What can entrepreneurs learn from Mars and Murrie? The customer’s vision (and money) drives product direction, not the entrepreneur. If Mars had stuck with his original product vision, the product would be relegated the memories of those who fought in World War II. There never would have been the addition of peanuts in 1954, peanut butter in 1990, the blue M&M in 1994 or a wall of “My Color” M&M’s anywhere. Certainly, there never would have been a customer-driven rumor that green M&M’s are an aphrodisiac, which has led to product extensions itself (bags of green M&M’s sold on Valentine’s Day, the sultry female M&M character featured in much of the company’s advertising). While there’s market research behind the moves that M&M’s makes, customer demand drives the vision of what the next M&M innovation will be.

One of the greatest challenges that inventors face is internal. Many inventors, who have invested countless hours and dollars perfecting their product, become so closely aligned to their own innovation vision that they lose sight of the customer. They restrict the vision of the market that they’re creating, which turns off potential customers, investors, champions and referrals. This eventually leads to game-changing technologies dying on the vine because the inventor thinks they’re smarter than the market.

Inventors and entrepreneurs must realize that they lose control of their product the minute they develop it. As soon it goes from concept to execution, the customer dictates whether or not the product is viable and what improvements should be made. Customers are smart. Follow their lead. And always remember that it was the customer, not the inventor, that created the green M&M.

Can you ‘Six Sigma’ a New Product?

I was reminded of my short-lived exposure to Six Sigma this weekend when I came upon an article in the New York Times called Welcoming the New, Improving the Old. It touched upon a challenge that had concerned me when I was going through my green belt training (a level of Six Sigma certification) at the time.

Six Sigma is an incredibly rigorous process focused on statistical measurement in order to make improvements in the delivery of a product or service. I was originally drawn to it as a way to solve some of the process problems I had faced in my own area, expecting that it could be used to address nearly any challenge.

What I learned is that, as powerful a tool as Six Sigma can be, it is also easily manipulated to measure the wrong things to solve the wrong problems. There were countless examples of companies applying Six Sigma to problems customers didn’t care about, which, in the end, wasted gobs of time and money. The point that our instructor hammered home was, “define what is a defect based upon what is important to customers.” This, frustratingly, is often not something easily quantified. Why? For two reasons: sometimes the customer isn’t very forthcoming about what they want; and sometimes the customer just doesn’t know until they see it.

For these very qualitative challenges, enter Design Thinking, defined as a process for practical, creative resolution of problems or issues that looks for an improved future result. The goal (improvement) is the same, but attacks the challenge from a very different perspective. I see Design Thinking as the methodology that creates the “aha!” moment that converts the prospect into a customer.

My favorite quote from the article: Continue reading