Ideation To Validation

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Ideation to Validation:Hitting the bull’s eye

Ankur Gulati

Delivered on 21st Aug. at:Ideaz 08,The Entrepreneurship Cell,IIT Bombay

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What do these terms really mean?

Personal experiences

The next Richard Branson

How to think about go-to-market?

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THE UTOPIAN PATH OF ENTREPRENEURSHIP

• Think “Opportunity”

IdeationFeasibility checks

Full-blown Validation

Funding/ Team

Execution

• Think “Sanity checks”

• Think “Proof”

• Think “Enablers”

• Think “Just do it”

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THE UTOPIAN PATH OF ENTREPRENEURSHIP IS NOT SO EASY!

• Think “Opportunity”



Funding/ Team

Execution

• Think “Sanity checks”

• Think “Proof”

• Think “Enablers”

• Think “Just do it”

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THINK OF VALIDATION AS THE FIRST ROUND IN A MULTIPLE-ROUND DART GAME

A

B

C

“Were you smoking dope?”

“Nice try, maybe it’s a bad day today”

“How much equity for $1 million?”

A

B

C



Funding/ Team

Execution

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ROUND 1

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THREE POSSIBLE END-STATES OF VALIDATION

C

1VC Route: You have convinced the VC to invest a significant amount of money (>$0.5 million)

2Pilot Route: You conducted a pilot project in controlled surroundings and it was a reasonable success

3Jumping-in Route: You left your job/ditched your college and jumped-in full time with no regrets

Incr

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THREE KEY ENABLING MINDSETS FOR RIGOROUS VALIDATION

1The “Action” mind-set: Validation is not about knowing, thinking and being willing. It’s about doing.

2The “Change” mind-set: Be ready to adapt. Don’t love your idea too much.

3The “Facts” mind-set: Don’t nuke Iraq because of your gut-instinct. Be fact-based.

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APPLY FIRST FILTER: Simple Scoring Criteria for Ideas Based on One PageNeeded: One page description of business idea (several sentences per topic)

Topics Key questions

Product/service • What are we selling?

Customer • What role in value chain will purchase product/service(not which target segments)?

Value propositionto customer

• Why will customers buy product/service?• What is the hook for a customer?

Business model • How will we make money?

Barriers to entry • What are the main barriers to entry?

Main hurdles • What main hurdles/showstoppers can be identified?

Key success factors

• Thoughtful articulationand team problem solving

• "Back-of-the-envelope" economics

• Responsible: idea owner with idea development team

• Time required: max.4-8 hours

Key success factors • What are the critical points of success for this idea?

Market size, time to market, risk expected, net sales expected, investments expected, and costs expected are scored through reference scoring system and require a one sentence explanation

Competitive advantage

• What is our advantage over our competitors? wdfwefwefwef

Fit with strategy • What is the fit with the BG/BU strategy?

Fit with competencies

• What specific competencies does this idea need?

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OUTLINE VENTURE BRIEF

Topic Description

Executive summary

Key points of venture brief1

Market analysis

Provides a brief summary of potential market in terms of size, its state of development, customers, and competitors

2

Product and services

Provides brief summary of the potential products and services

3

Potential forward scenarios

Describes forward strategies and organizational resource requirements

4

Next steps Describes next steps5

Financial analysis

Estimates cost and benefits for this venture

6Venture brief

is created in 2-4weeks by idea evaluation team

6 - 10 page venture brief

APPLY SECOND FILTER: Refine the Idea – Evaluate Ideas in a Six- to Ten-Page Venture Brief

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PERSONAL EXPERIENCES: HOW CAN YOU NOT RE-INVENT THE WHEEL

• The Conversion story!• The bottoms-up story!

FACT-BASED

• The IT story!• The Segmentation story!

DON’T BOIL THE OCEAN

• The Networking story!MAKE IT PUBLIC

• The Living with the customer story!

EXPERIENCE-BASED

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WHAT IS A GO-TO-MARKET STRATEGY?

Define relevant segments

Design actionable circle specific “Go

To Market” strategies

Size & prioritize segments to

identify champion segments

Identify a preliminary positioning approach

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Source:NetMBA.com