There are as many ways to start a business as there are new business ideas. And I suppose, since failing to build a successful business is costly, many entrepreneurs have come forward with philosophical models, proprietary timelines, and methodologies designed to improve one's chances of success in launching a business.
A popular branch of such models that has become popular in the last decade or so tout the iterative start-up model, a process that utilizes market research, in-market iteration, and "lean" organizational discipline. Eric Riess' "Lean Start-Up" book is perhaps of the most referenced iterative models. Others include "If You Build it Will They Come" by our very own Rob Adams, Director of Texas Venture Labs, and Naeem Zafar's "Market Research on a Shoestring." Back to these books in a minute...
From my experience as a (yet unproven) entrepreneur it seems that the goal for any budding business is to first identify a significant market pain. It would seem that this would be the goal for any new product or service at any level, and that may be true. However, this has particular importance for start-ups because they must not only sell a solution to eventual customers, but also they must prove right to exist in the market to financiers, channel partners, and themselves.
It is essential to for new businesses to understand a market pain, especially for the purposes of raising money from VCs, angels, or friends. Yes, the business must also have compelling IP, a sound model for generation cash, advisors, etc... But in the theatre of financing, the first five minutes, where the direness of the market problem is described, is often said to make or break the investment opportunity.
When our Customer Insights class began, I started thinking about how valuable it would have been to understand our customer on a deeper level. I even brought up to Walls that I was kicking around ideas on how we could have incorporated some of the insight process into the research that we had done.
I'm curious about non-traditional, ethnographic or human-centric research methodologies that have, or could be used for the purposes of opportunity identification and market validation. Most of the manuals on start-up research still focus on traditional methods like surveys and interviews. In many ways, these methods make a lot of sense for start-ups: They are relatively easy for a lay-person to put together, consumers are familiar with them, and they can be done quickly (which might be the biggest incentive for a nimble start-up). However, I wonder if the selective use of human-centric methodologies could help to make the disclosure of market pains more compelling and more holistic.
There may be secondary benefits to the entrepreneur in using some of these methods. For instance, new business are most compelling when presenting themselves as a company, rather than a single product or service. A more complete understanding of the target market or markets, could help to position a start-up as a market expert, equipped to evolve with the changing, demanding needs of their customers.
Here's what an outline of a paper on this subject might look like:
I. Why is defining and understanding market pain so important for entrepreneurs?
II. Describe some of the traditional market-research strategies described in iterative start-up methodologies
II. Talk about the potential value of human-centric research additions to these models, and some of the potential drawbacks
III. Recommend specific research methods that might fit entrepreneurs' needs during the opportunity identification and/or market validation stages
IV. Provide 1 or 2 market examples of these methods being implemented by start-up companies and how they were successful
I'll probably want to scope this out a bit further, but I think some preliminary research will provide a nice direction for what can be expanded upon. The aforementioned books all have specific chapters on market-research, so that seems a reasonable place to start. It's more than possible that the choice of non-traditional research method depends more on the industry and scope of the business rather than the size of the firm. I think that's ok. I still believe there may be fast, easily consumable, and affordable research tools that can be identified as positive additions for start-ups.
Hi Dan - I really like the idea of a paper on research methodologies that would be useful to start-ups. I would actually argue that surveys and focus groups are often problematic for start-ups because, without good research design experience, these tools can be very poorly implemented, yield very misleading results, and, yet, be relied upon very heavily for their long histories and seeming certainties. Don't get me wrong, I still love a good survey and, to some extent, focus group, but I think start-ups often benefit even more from immersive, generative, or ethnographic types of research methods. The paper structure looks fine, as a first pass, and you'll have an opportunity to work that out a bit further in the next assignment, the extended outline. Let me know if you want to talk about other resources or anything else related to the paper.
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