Libraries as Strategic Partners

The Lean LaunchPad methodology emphasizes primary customer research.  Set aside Googling and arms-length secondary research:  “get out of the building" and complete those 100 interviews!  Of course, customer discovery is actually a nuanced process.  In fact, it makes sense to integrate insights from primary and secondary sources.  Your research library can be a powerful strategic partner.

While many of us continue to think of the library as a building containing shelves full of books, in fact it is a value-added data center that you may never physically enter.  The value-add comes in two forms: 

1. Information in the form of articles, reports and databases worth many thousands of dollars – way beyond what can be obtained via Google, or what any individual research project or startup could afford.   
2. Navigation in the form of advice from research librarians who understand the sources, quality and structure of the data.

As we prepare for the next cohort of Value Proposition Design Workshops for applicants to the NIH-funded MN-REACH medical innovation commercialization research program, I’ve had the pleasure of being part of what one colleague calls “the trifecta:” 

1. Myself from the Carlson School of Management and MIN-Corps
2. MN-REACH colleagues from the UMN Academic Health Center and College of Science and Engineering
3. Our amazing librarians specializing in biomedical and business information.  The UMN Libraries will produce a series of reports customized for each team. These reports (distillations of secondary research) will enable and augment primary customer research, not replace it.  

The relationship between library-generated market research and Do-It-Yourself customer research can be conceptualized as follows:

The basic idea is that the library research equips you to identify whom to speak with, what to say, and what to look for.  This information may be drawn from industry analyses and databases, a Bloomberg terminal, directories of associations and advocacy groups, a practitioners’ decision support tool (in the medical space: DynaMed), as well as articles in specialized trade journals.  Also, the University of Minnesota and many other universities and companies maintain searchable databases of in-house experts (at UMN it’s called Experts@Minnesota), who are often very connected people who may be a starting point for the customer discovery process. 

One challenge is that these masses of data can be very difficult to navigate and interpret.  That’s where your friendly reference librarian can be incredibly helpful.

While this post has focused on the medical space, research librarians can add value to the customer development process in any vertical.  This spring, we’ll also be testing this approach in Value Proposition Design Workshops focusing on environmental technology commercialization.

What if you’re not at a Research I university?  First, many secondary campuses of state universities share library resources with the flagship campus.  Second, you’d be surprised at the quantity and quality of data at public libraries in major metropolitan areas (many of which extend free access privileges beyond local residents and workers to people across their states and regions).  Finally, here in the Twin Cities, we are lucky to have the James J Hill Business Reference Library, whose reading room is pictured at the top of this post.  The JJ Hill Center not only delivers traditional reference services for members (individual rates start at $50/year; you don't have to be in Minnesota to belong) but also provides coworking space, hosts multiple entrepreneur-oriented events such as the 1,000,000 Cups program, and is a cool concert venue!

Pitching a Complex Business Concept

Pitching is always hard, especially for ground-breaking or complex business concepts.  The shorter and easier the pitch is to understand, the harder it is develop. But simplicity, clarity and emotional connection are all necessary when presenting your concept to potential investors and partners.  Consider the following advice:

Vinod Khosla of Khosla Ventures: 

Guy Kawsaki on his famous 10-20-30 rule:

David Rose on pitching to VCs:

Dave McClure of 500 Startups: 

Here are a couple of great examples: 

Evernote elevator pitch:

Here is Airbnb's pitch deck.

For more thoughts on communicating with nonspecialist audiences, check my earlier blog post:  Clear, Concise and Compelling is NOT Dumbing Down.

Intellectual Property Seminar February 23 4pm

We are delighted to have Intellectual Property litigator and Maslon partner Terry Newby return to the University of Minnesota to share his expertise with participants in our STARTUP course, innovators from across the University of Minnesota, and the Twin Cities business community.  The session will be at 4pm at the Carlson School of Management.  For more information and to register, click here.

Use the Business Model Canvas to Avoid Big Mistakes

The business model canvas is a core tool of the Lean LaunchPad methodology.  On one level, it’s organized common sense:  the nine categories that all ventures must address in order to succeed.  But isn’t it amazing how often entrepreneurs and product developers manage to take leave of their senses?  Rather than thinking comprehensively, they focus on one or two things that they are just positive will make all the difference, while ignoring or downplaying other factors that turn out to be fatal flaws after product launch.  Famous examples:

• Pets.com – a dot.com era venture that did a great job of building warehouses designed for a large-scale business and generating consumer awareness (the famous Sock Puppet in a Super Bowl commercial) but a terrible job in convincing consumers to buy pet food online and a cost structure that lost money on every transaction 
• Olestra – a Procter and Gamble fat substitute that produced great-tasting, cholesterol-reducing, low calorie chips with the unfortunate side effect of causing diarrhea   
• Edsel – a  beautifully designed, but shoddily manufactured car introduced at the start of a recession http://classiccars.about.com/od/classiccarsaz/a/Edsel.htm
• Iridium – a Motorola-backed global satellite phone company, which filed for bankruptcy after burning through $5 billion to put multiple satellites into space to enable communications throughout the world, just not settings where the phone signal is blocked (like inside buildings or vehicles)

The Business Model Canvas, developed by Alex Osterwalder, enables structured consideration of all aspects of a venture.  As my colleague Kirk Froggatt puts it, the BMC forces you to think about Can We Do It (i.e. economic and operational feasibility) but Should We Do It (i.e. customer value and financial upside).  The BMC looks like this:

You can get the details from the Business Model Generation book or the Strategyzer website.  The nine elements are:

• Value Proposition: The collection of products and services a business offers to meet the needs of its customers

• Customer Segments: Who the business is serving and what they need/want

• Channels: The means by which a product or service is sold/delivered

• Customer Relationships: To ensure the survival and success of any businesses, companies must identify the type of relationship they want to create with their customer segments

• Key Activities: Operationally, how the product or service will be produced and delivered

• Key Resources: Human capital, intellectual property and physical assets 

• Partner Network: Suppliers, joint ventures, alliances - external organizations you will depend on operationally

• Cost Structure: Operational expenses and capital expenditures

• Revenue Streams: How a company earns money from paying customers 

As we emphasize in the MIN-Corps classes and clinics, the trick is to drill down on the right elements at the right time.  The very first consideration is value proposition design – the intersection between customer needs and your product/service offering.  The value proposition is at the core of “should we do it” – if there is no significant value, you are done. This can take a long time to get right, and you may not like what you hear during customer discovery.  It is very tempting to ignore the voice of the customer, and assume that somehow the market will appreciate you once the right people understand you better.   

The value proposition is just the beginning.  Next comes the heavy slog of the operational challenges of figuring out HOW you’ll deliver value, as well as how much it will cost and where the revenue will come from.  Manufacturing, product quality, service reliability, efficiency not only matter, but can be sources of breakthrough innovation, as Larry Keeley et al. explain in Ten Types of Innovation.   Don’t give short shrift to the less glamorous boxes in the Business Model Canvas!