Helping Others Is Good Business

Helping Others

This article was originally posted on Inc.com.

When you decided to become an entrepreneur, what reasons motivated that decision? For some people it is the opportunity to make a lot of money, the freedom to live by their own convictions, or to live a certain lifestyle. While these are great personal goals, too much focus on these things can lead you down the wrong path.

The decisions we make every day build upon our existing goals, values, and beliefs. We call upon these foundational thoughts to inform the decisions we make so that we don’t need to re-evaluate every detail and consequence every time we make a decision. Imagine how your product or service offering might be affected if your decisions are driven primarily by a desire to become wealthy or to set yourself free from mundane work. Do you immediately filter the options by what has the biggest immediate profit margins? Or, do you limit yourself to opportunities that you could do from a laptop while traveling the globe? If this is your focus, then are you actually solving any problems? Are you contributing value or focusing on extracting value?

Contrast this with setting your attention upon helping others. If you start by talking to prospective customers to understand their pain and find a problem they need solved so badly they will pay you for a solution, that’s a customer who not only will be thankful and loyal over time, they’ll likely spread the word and do your best marketing for you. That loyalty and vitality is startup gold, but is rarely accounted for in our early calculus of the best opportunities.

If you’re focused on calculating profit margins, you will likely miss the nuance of what problems truly need solutions. You’re also less likely to connect with a base of customers so deeply that they spread the word on your behalf or stick with you after competition enters the market. You’re less likely to realize the real opportunities, because you are less likely to be solving a real problem.

If you’re focused on high margins and high volume, this will often lead you to a market that is already peaking and nearing consolidation. Volume usually comes from the market having matured and high margins attract competition. One should be wary of this scenario-if it’s too good to be true, there’s a good chance you’re late to the party. This is the classic problem with chasing money: You’re one step too late and end up facing market consolidation before you’re ready to contend with it. Any value you may feel that you are contributing is likely redundant or inferior to others already entrenched in the market.

A similar challenge awaits if you limit yourself to looking for opportunities that fit your lifestyle. If you limit yourself to opportunities that you could pursue in your free time or while trekking the globe, for example, there’s a good chance you’ll land upon a thin business model that’s easy to setup and quick to generate cashflow, but never invests in building your value chain (better sourcing, delivery, customer service, etc). Affiliate marketing, drop-ship e-commerce websites, and “me too” mobile apps that add minimal new value to the market are examples that come to mind.

With these businesses, you are only contributing a thin layer of value over the top of other businesses who have made the necessary investments and own the entire value chain; you are putting a metaphoric cherry on top of someone else’s ice cream sundae and pretending it your own. But this won’t last for long. Businesses that facilitate your profit margins will eventually capture the inefficiency you’re exploiting, particularly if you do not make significant investments to reinforce your long-term value and capability to stand on your own as a business.

Neither chasing money nor chasing a lifestyle gives you the opportunity to build a lasting or meaningful business. They are temporary opportunities that only exist because of a gap between market demand and what suppliers are yet able to provide. Once the inefficiency of the market is corrected and there’s no longer that temporarily gap between supply and demand, the jig is up. And if you are focused on enriching yourself rather than helping others, this is the sort of opportunity you will most naturally align yourself with.

If you are serious about starting a lasting business, stop focusing on your own goals and instead focus your attention on serving others, discovering their needs and how to help them. Think about how to create significant value for a core group of people and how you can help them live a better life or accomplish their goals. This approach will naturally align your efforts with the market and put you a step ahead of competition, rather than always being a step behind. Who knows, you may even sleep better at night, knowing you’re making a difference somehow.

Framework for Evaluating Marketing Opportunity

poem

This article was originally posted on MindTheProduct.com.

How do you know whether a product idea is going to succeed if you build it and take it to market? If you’ve ever been part of a startup, or if your organization has launched a new line of products, you know how precarious the effort can be.

Some would advocate using the ‘Lean’ method to arrive at a product market fit. The basic premise is to seek input from customers early in the process to ensure you are building a product people actually want. This allows you to challenge your assumptions and go see for yourself what the problems are you purport to solve.

While there is a lot of validity to this approach if you have identified a viable market and are merely seeking product-market fit, it may not be the best tool for discovering market opportunity. Lean is a great approach to optimization, but it does not help you determine risks or propensity for success when evaluating a brand new product or market concept.

One of the biggest challenges faced with new product innovation is the lack of heuristic models or best practices for discovering product opportunity. This is partly because the market is dynamic and it is difficult to pin down anything truly actionable before the opportunity has changed. But it is also because no heuristic models (set of best practices) has really been defined.

That is the challenge that led to the creation of the ‘product opportunity evaluation matrix’ or POEM framework. It is a conceptual framework that accounts for fundamental market dynamics in order to help startup entrepreneurs and product managers to think through the conditions of the market, to determine if an idea is likely to be successful or not. It can be used to identify strengths and weaknesses for an individual idea or to compare overall strength of several ideas to determine which opportunities are most likely to bring success. By taking this approach, one can take a more informed approach to determining whether to build a new product in the first place, rather than building it, hoping customers show up, and iterating and ‘pivoting’ repeatedly until they do.

The framework is comprised of five forces that drive market opportunity:

  • Customer
  • Product
  • Timing
  • Competition
  • Finance

Five generally accepted truths are stated for each of the five forces and the practitioner is asked to grade their product concept (A-F) for each of the five truisms. An averaged score is then derived for each of the five forces. By going through this exercise, the practitioner is required to account for all of the significant dynamics that may determine the propensity of a product to succeed in the market.

scorecard

To illustrate how this is useful, consider the metaphor of how cell phone service providers detect location of a device. Each cell tower can detect an approximate distance of a cellular device from the tower, but can only determine a radius around the tower. Adding a second toward provides directionality and by the time you add a third, you have the basis by which to triangulate a location with a fair degree of confidence.

poem-triangulation

It is a similar concept in that opportunities in a dynamic market are always moving and changing, and you need a few points from which to reaffirm where opportunities might currently be. Doing a reasonable evaluation of externally facing factors such as customer, timing and competition will tell you where opportunities are. And by looking at internally determined considerations such as what product you are proposing and your financial means to provide this product to the market (at this time in the maturity cycle), will give you a much stronger understanding of where the best opportunities are for you or your company to pursue.

The purpose and application of the POEM framework is similar to other open source conceptual frameworks such as SWOT and The Business Model Canvas. In the case of SWOT the practitioner loosely define the strengths, weaknesses, opportunities and threats they face in their current market, relative to their competition. This is helpful for strategic planning within an organization. Alexander Osterwalder’s Business Model Canvas, meanwhile, has become a popular tool for defining key elements of a business such as partners customer segments, and applicable channels. With POEM, the purpose is similar, but its application is to provide structure and guidance to the discovery of new product opportunities in the market.

poem-infographic

The POEM Framework is a free-to-use open source resource that has been published under the Creative Commons license. To learn more, please visit POEMFramework.org. There you will find a detailed explanation of each of the criteria and how to use them. You can also take an interactive quiz for an easy and fun way to try applying the framework for the first time.