Context Matters for Startups

Industries have changed and the way products and services are developed and go to market have changed too.  Today, the startup operates in a world of uncertainty and speed.  Products are coming to market at a rapid pace, it’s no wonder why products are struggling. 

To succeed in this dynamic environment, new products need context.
Startups need to spend as much time understanding the problem they are trying to solve as building the product or service.  New product managers need to understand a potential customer's intent to buy before they commit to building or developing the product. Long gone are the days of "if you build it they will come".

How can startups take advantage of context? Context is the reason why we do anything.  Without context it is hard to know whether we are heading in the right direction and have been successful.  Lack of context has been cited as one of the reasons of wasted productivity and the biggest reason products miss the market.

There are four steps to increase context in your product design & launch. Each step builds on the prior one.

1) First, look at the problem holistically that your product solves.  A broader context will help focus the effort.  Take time to understand all customer segments and how different product features map to each segment.

2) Then validate the assumptions with customers.  Find a dozen companies in your target market to talk to. Be very specific about the potential target market early on and it will pay huge dividends later on. Often missed at this early stage are questions regarding willingness to purchase and price thresholds.

3) Next, segment the market by these different variables.  Segmenting the market this way can provide a useful method for prioritizing product features.  The right segmentation will provide insight into which markets to target and eventually how to position your product offering for these markets.

4)  Finally, plot the information on a value map to reinforce context.  The value map has five components: (1) features, (2) customer needs, (3) Benefits, (4) positioning, (5) and price and intent to buy. 

As you go through these four steps you will determine the value that customer’s place on the features you are developing and start to develop the positioning for each segment. 

It’s time to change the rules for how new products are developed & brought to market.  As a startup you should always strive for context and once you discover it use it as your guidepost to launch successful new products.

Do your competitors' customers hold the key to your pricing strategy?

Setting the price is one of the more complex activities we undertake when launching a new product or service.  As a starting point to evaluate pricing, we tend to triangulate three variables: cost, competition (price), and contribution.  These three dimensions alone are not sufficient, however, and each by itself is limiting.  Product development & management research suggests that many companies struggle with pricing.  Even best-in-class companies are stuck in the 3-dimension mindset and once in the market, raising price is not easy.  Price, in fact, is a way to innovate and getting it right has never been more important.

But, we know there is a fourth dimension that informs value-based pricing and the truth lies in what customers are willing to pay.  Understanding your competitors’ customers will help you uncover answers to the following questions:

• If your product or service is superior to the competition and potential customers view it that way, can you charge a premium?
• Do you know where you stand, beyond price, relative to your competitors’ products?
• How are you positioned against alternatives and what other information might help you set the right price?

For years, companies have been telling us that they collect and monitor competitive pricing. When we review their data, it is usually public information available from published price sheets and their competitors’ websites.  Real competitive pricing is not being collected at the customer level.  If companies had the discipline to investigate what their competitors’ customers actually pay, they would find a treasure trove of information to validate the price/value mix and help inform other key marketing and product management decisions. How you collect this information ethically and where you start are two key questions every company should ask before beginning.  How you use this information is where the power lies.  Customers can value the benefits of a product or service subjectively and this may differ by company and sometimes even by the corporate purchaser.  Understanding how your competitors’ customers measure value and utility will provide you with insight to establish better pricing and promote your product or service to win deals and grow revenue.

What's Next?

When everyone is working pedal to the metal on today’s business, the operative question is “who’s working on tomorrow’s?”  All too frequently, there isn’t enough focus on “What’s Next?”  Businesses are structured to run the day-to-day business and the people focused on the day-to-day business are compensated to make sure things run right.

Whether you work in a large or small company, the “What’s Next?” conundrum confronts most business owners.  Who has the time to focus on adjacent market opportunities?  Will products for those segments really be a better bet than the core portfolio?

“What’s Next?” Adjacent products and services come as an extension of the collection of existing capabilities and competencies from “what you do today.”  By looking for opportunities to create value in accessible markets where your growth investment pays off, you can leverage capabilities and more importantly, extend competencies to new opportunities, thus increasing your return on growth investment.

So “What’s Next?” for your company when growth opportunities are limited in the core business?  I would argue that adjacent market opportunities await!