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Where an early stage customer pivot helped us forward

Food for Thought
A message from Leander, co-founder of The Innovation Curve:

“It is common start with an idea and get stuck without understanding what’s blocking you when building a business. As it can get quite frustrating (in addition to it being a lonely journey), I always try to take a step back and do a little reflection. My reflection led me to write this blogpost.”

This is my journey on how I applied the Innovation Curve on a business.

Currently, I am working with a client to help him BUILD his business in window panels. In Holland, it has been a long time tradition to make window panels from wood.
The company I am working with is able to produce high quality window panels against a competitive price. It has sufficient qualified staff for installation but lacks the sales capacity to promote the product and grow the business.

Hence, the assignment given to me was to assist the client to BUILD and SCALE the business.

6 Innovation curve BUILD I want to have

This sounds great, we can’t wait to get started!

Where do we start to build and grow the window panel business?

Yes, this is a right question to ask but there are many other questions we need to answer first before thinking about building the business. Ideas are great, it may work for you but is this a solution that the market needs to solve the problem?

Examples of questions we asked ourselves where:

  • Is there a large market potential in this industry?
  • What is the current alternative solution customers are using right now?
  • Do they need your service when they have an alternative solution?
  • How much are they willing to pay to replace their window panel?

 

Estimated market size

My first step was to estimate the market potential. What could the potential benefit be? What is the margin, cost of sales and how much time needs to be invested?

Using the Bottom Up Calculation method, we managed to gather some findings.

Window Panels Market size

We estimated that a 10% profit would be realistic and aimed to earn 10,000 Euro/month.
Our first question would be:

Would a sales target of 100,000 Euro/month be realistic?

Based on the calculation above and the segment we targeted, we had to contract 5 mid-sized housing associations.

With approximately 120 associations in our market, we were confident with the market size and assumed this was a realistic number.
Step 1. TEST your IDEA – Activity: Can I Earn Money with This Idea?

Window panels Market calculation

Talking to experts we learned find a better customer segment

We highly believe it is important to constantly test the water of the business. Hence, we talked to experts to learn about the challenges and quality of the product. We talked to customers to find out how much they are willing to pay for the product. This allowed us to identify several customer segments and understand their needs.

Window Panels Market selection

Our initial thought was to target the Housing Association Market mainly because of their Market size and relatively little sales effort needed to attract them.
We learned that they have a longer relationship with their suppliers and are usually not looking for alternatives.In other words:

Housing associations don’t have a problem that we can solve.

They are also asking for quality certificates making it less easy to create a prototype.
This was especially the case for the New Construction Market. We decided to leave this market untouched.

However, we learned that homeowners find it difficult to find suppliers and fail to understand their options (Depth/Pain). They searched high and low online for suppliers, product options and cost indications.

What if we :

  1. capture their attention and
  2. provide the information they need?

This would bring significant upsides:
We could solve their first pain by providing the information the needed. It would allow us buildup knowledge by solving their questions.

Talking to experts help us to select our target market:

Owners renovation their house in the Amsterdam area.

What we learned

In assignment is to BUILD and SCALE a company in window panels. To do so we calculated our target market size, selected a customer groups based on the best assumptions we could make in our first view hours at work.
We spend several days talking to experts we happen to know. For us these were housing associations, constructions companies, architects and home owners.
This talks let us in refining our customer segment and finding a problem we could solve.
We formulated new assumptions and started to test them.

 

PROTOTYPE your solution

You are now mid-way in The Innovation Curve. If you are new here, do check out Step 1 (Start a Business) blog post.

 

With the new insights, you have selected the best customer group. You might’ve made the best decision and have selected the right group or you are less lucky and now need to change your initial idea based on your learnings.

4 Innovation curve PROTOTYPE I want to have

Again, this is nothing to worry about. Most successful companies have created many failures before finding the right solution.

 

Step 4 – Prototype your solution

 

In this step, you will experience the great value of prototyping.

This is about creating the mindset of testing to learn and not thrive to build for perfection.

This is where many founders get confused. They try to perfect the idea rather than use a low-fidelity prototype to learn from their future customers.

4. Innovation Curve - prototype your solution

We will help you systematically work towards creating a solution your customers want. It could  be delivering a service, creating an application or building a product. You need to “build”, “measure” and “learn” to find the ideal solution.

Customer feedback will always help you move forward.  Trial and error will help you iterate and improve your solution. You can maximize your learning process by creating prototypes of your idea and test it with your targeted users.

In this section, you will find helpful tools and examples to guide you forward.

 

Journey dilemma   Action
What should my solution look like? 4.1
What’s most risky about by business? 4.2
How do I test my solution, spend little and learn a lot? 4.3
How do I measure and test? 4.4

SELECT your customers

SELECT your Customer

You already have a rough idea of the opportunity you want to pursue. In Step 1 (Start a Business), you have identified a number of assumptions, yet many blanks still need to be filled in. The truth is most ideas you come up with will not work at first, but this is completely fine.

Remember, you are on a journey where it is more important to learn than to be right.

In Step 2 (Test your Idea), you have selected the best target group. It is time to validate if these are your best target customers. It is important to identify the problem they are facing, what they want to solve and what their current alternatives and their needs are.

Step 3 – SELECT your Customers

3 Innovation curve SELECT customers I want to have

In this step,  your focus is to understand your customers’ needs.  

Perhaps you have gained new insights from the earlier steps, this is the opportunity to use these insights to select the best target group. There is little harm to go back one step since the product/service has not be created!3. Innovation Curve - Select your customerWe use various tools, theories and models to answer these dilemmas:

Journey dilemma   Action
How to get good customer feedback fast 3.1
What group of customers should I focus on first? 3.2
I know the pains and gains of my customers 3.3
What customer group do I focus on? 3.4

After this step, you would have successfully applied the tools to learn more efficiently, gain valuable insights and have created the foundation for your business.

START a business

You are at the starting point for your startup journey.
You found this great opportunity and want to build your business around it.
You are passionate about an issue and feel the need to solve the problem or wish to create change for the greater good.
Whatever the reasons are, it is time to bring the idea to the starting line.
Introducing the first Step of the Innovation Curve.

Step 1- START a business

Continue reading “START a business”