lead to win bootcamp - day 1

Welcome to Lead to Win

Lead to Win

October 25, 2011

Day 1

Janice Singer & Deborah Dexter (IRAP)

Welcome

Tony Bailetti (Carleton)

Program overview, portfolio snapshot & blueprint to growth

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Tom Duxbury (Wesley Clover)

Running on a shoestring

Corien Kershey (Magnitude Partners)

Segment & target market segments

Tony Bailetti (Carleton)

Day 3 opportunity reviewsDay 1 takeaway messages

Welcome

LTW for Women to:

• Increase number and success of women owned business in National Capital Region (NCR)

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• Make the NCR the premier location for women to start businesses

• Create an ecosystem of growth oriented women entrepreneurs in the NCR

• http://ltw-women.ca/home

Program Overview

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October 25, 2011

Tony Bailetti

Highlights of LTW

• Become largest source of technology and knowledge jobs in Canada’s Capital Region

• Community driven• First phase selects right people and opportunities to which we can add value

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which we can add value • Second phase is six day Opportunity Development Program, cuts in Day 3 and 6

• Each business in Phase III to generate a minimum of 6 knowledge/technology jobs in next three years

• Fourth phase for businesses with more than 6+ jobs and wish to lead a target market globally

Lead to Win

Company founders get:• Stronger business opportunity quickly

• Knowledge to establish and grow successful business

• Confidence, encouragement

Region gets:• 6+ good paying jobs per company over 3 years

• Healthy ecosystem to launch and grow successful businesses

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• Confidence, encouragement and motivation

• Access to large and diverse business network

• Foundation to sell to first customers, raise funds and attract talent

businesses

Free to founders

Ottawa-Gatineau experience

1 2 3

4 5 6

4 wks

Jun 09

Aug 09

Nov 09

Mar 10

Jun 10

Nov 10

Nov11

Total

Applicants 82 66 98 69 41 49 52 457

Day 1 accepts 62 46 55 49 35 29 41 317

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Opportunity development

Deal development

4 5 6

75 start-ups active as of October 15, 2011

Day 4 accepts 51 35 44 37 22 18 207

Admitted to Phase 3 (passed Day 6)

Founders 39 27 34 26 14 13 153

New startups 30 19 21 18 11 11 110

Ottawa-Gatineau start-up groupings

1. Content2. Hardware & systems3. Health services & technology 4. Hosted services5. Mobile applications


5. Mobile applications6. Services, consulting & applied technology7. Software applications 8. Social & collaboration9. Intellectual property10.Specialty (do not fit in any group above)

Strategic Associates


Criteria to enter Phase III

1. Offer solves significant problem or pain to identifiable target customers

2. Offer delivers more value to target customers when compared to alternatives

3. Company provides good value to channels and go-

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3. Company provides good value to channels and go-to-market partners

4. Can generate 6 knowledge jobs in region 5. Sound financial plan for company and founders6. Develops options for growth in region7. Core team has what it takes to deliver objectives

Points of difference that add value to participants

• Experienced entrepreneurs and risk-sharing service providers deliver Phase II

• Expert and diverse reviewers provide substantive feedback on business opportunity multiple times

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multiple times• Focused on reducing time to cash from first customers

• Uses ecosystem approach to launch and grow companies

• Immediate application to venture

Points of difference that add value to Canada’s Capital Region

• Success = number of local knowledge jobs created + amount of capital attracted

• Large number and high diversity of volunteers• Stakeholders set strategy

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• Stakeholders set strategy• Content is freely available for use by others• Platform on which to grow other initiatives

Blueprint to growth

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October 25, 2011

Tony Bailetti

Agenda

• Two distinct functions of entrepreneurs

• Four key skills

• Blueprint to grow revenue

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• Growth formula

Distinct functions of entrepreneurs

1. Responds to existing or future profit opportunities, all of which consists of price differentials

P1 P2 Sales of:

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2. Acts to move away or destroy her/his present state– Seeks autonomy– Authors relationships– Makes declarations

Resources & processes

Decisions to employ resources & processes

Expects P2 > P1

Four key skills

• Make decisions when future is unknowable• Identify, create, shape, develop and refine opportunity

• Acquire and combine resources

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• Acquire and combine resources• Champion customer adoption of your firm’s products, services, solutions, processes

Blueprint to grow revenue

Revenue for 6+ jobs

Get house in order

Secure commitment

Close deals

• Raise bar• Divest what adds no value• Get legal, cash, IP & personal affairs right • Act based on results/facts

• Implement growth formula

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for 6+ jobs commitment• Create mind share around offers & “why” company does what it does• Lever talent, technology & resources worldwide• Lower cost of customer acquisition & go to market• Skills

• $• Access/reach• Time

• Implement growth formula• Increase # & diversity of players that make money when you sell • Develop differentiators for which customers pay• Keep pace delivering value to customers & players• Select right competitors• Embrace customers’ changes

Overcome consumption barriers

Overcome four barriers that constrain consumption of your market offer

Skills • Make offer easy to consume• Provide simple rules for non-experts to solve problems themselves using your offers

$ • Reduce price & cost structure• Help customers & partners make money

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Access/reach • Make offer available in locations & contexts where customers want to consume them

Time • Reduce time to consumption• Reduce latency & delays

Good structure to order benefits from consumption of your offer

Define & implement growth formula

Growth formula• A guide to replicate & guide behaviour that makes a company money

Benefits • Makes it easier to make decisions that deliver growth

• Provides strategic clarity

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money• Ties & aligns work of people

• Lodged in company’s experience

• Provides strategic clarity • Reduces complexity • Learn through repeatability• New employees become productive faster

Inventory of growth formulas for small companies

1. Help strong customers grow2. Bring innovation to market as complementary offer

to strong players’ offers 3. Apply good technology developed by others to

different markets 4. Sell services to niche first & then develop & sell

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4. Sell services to niche first & then develop & sell product

5. Demonstrate offer works, sell to first customers, & identify profitable business model at the price first customers are willing to pay

6. Demonstrate that offers provides value to users & economic benefits to customers & can be delivered at a profit

Inventory of growth formulas (continued)

7. Make competition irrelevant by concurrently delivering 2X the value at half the cost

8. Sell to narrow niche, cross-sell, then fill higher order needs

9. Sell to customers in mature markets abandoned by

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9. Sell to customers in mature markets abandoned by incumbents

10.Fill gaps that occur when migrating from an old to new system

11.Resell services in geographies that are too expensive for other service providers

Lead to Win

Running on a Shoestring

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Running on a ShoestringOctober 25, 2011

Tom DuxburyEntrepreneur in Residence, Wesley Clover

[email protected]

Running on a Shoestring

• Upon completion, you will know about

• The Zen of a cash-conserving mindset

• What needs to be done to get up and running from Day 1


• What needs to be done to get up and running from Day 1

• What can wait

• Common pitfalls

Agenda

• Getting Operational

– The Basics

– Philosophies


– Philosophies

– The Nuts and Bolts

The Basic Flow

Team works together for ‘sweat equity’ & future considerations

Team works together for minimal pay, attracts others

Early prototypes,customer interest

Team fully operational,

Customers,revenue


attracts others

- Your Cash+Friends,Family- IRAP, etc -Angels+other seed

cash- IRAP, etc

operational, starts to look normal

First major financing

Philosophy of Lean for Startups

• Conserve cash– Cost avoidance or deferral

• Work smarter– Minimize wasted time+effort

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– Minimize wasted time+effort

• Focus on what matters now– Customers+funding

= prototypes, engagements, referrals

Slide 30

10 Bootstrapping Startup-Life-Hacks


From Ben, Craig, Adam via MaRS

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It’s all about runway

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• The more you have, the easier to get off the ground• Cash is not just King – it’s the lifeblood• Cash/Burn rate = Time to Live

– You need more cash , or lower burn rate, or ideally both

Slide 42

Basic Shoestring Principles

• Value creation with the lowest possible cash outlay– Buy (new) only as a last resort- be creative and open– E.g. team members provide own laptops, cellphones, etc. initially

• Negotiate everything against the ‘day when you get big’

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• Negotiate everything against the ‘day when you get big’

• Don’t be afraid to ask for what you want or help you need– A little humbleness goes a long way– Your infectious enthusiasm will win over converts– Network Network Network

Slide 43

Negotiating Basics

• Treat everything as an asking price– E.g. Leases, salaries, software licences, payment terms

• Understand the BATNA for both sides– Best Alternative To a Negotiated Agreement– Startups have surprising leverage

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– Startups have surprising leverage– Do not go too far: the outcome has to work for all parties

• Many vendors offer considerable concessions to new companies– Cost of customer acquisition high– Pay forward: once established, a vendor tends to stay in

• “If you can’t find the fool in a deal, it’s probably you”Slide 44

Getting Running: The To-Do List

1. Mobilize a team and method for work2. Basic incorporation3. Assemble basic corporate tools4. Build a corporate presence5. Focus on the next milestone

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5. Focus on the next milestone

Slide 45

Mobilizing the Team

• Work together when possible– Home offices work surprisingly well– Borrowed/shared office space– Many companies are coffee shop based initially- that’s OK

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• Ensure co-workers have attitude and commitment– People may hold other jobs; set expectations– Shared enthusiasm for the mission is key

• Seek out diverse expertise– Someone just like you is probably one too many– Looking for creative sparks

Slide 46

Mobilizing on a shoestring (2)

• Guerilla recruiting good people…– Twitter/Facebook/LinkedIn– Online web forums, user/discussion groups– Friends & Colleagues (the weaker the ties the better)– Investor references

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– Networking organizations and events• eg. LTW, TON, OTI, Ottawa Clusters, OCRI

• Job sites an option but costly (e.g. Monster, Workopolis)– Professional recruiters rarely appropriate at this stage

• Convene an advisory board– They will help for the positive association

Slide 47

Basic Incorporation

• Should you incorporate now?– Pros:

• Bona fide entity for opening bank accounts, transactions• Can issue shares• Can enter agreements, e.g., NDAs, assignment of IPRs• Limited liability to you

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• Limited liability to you• Taxes may be lower• Prestige: easier to raise money, attract customers

– Cons:• Some expense and housekeeping

• The pros outweigh the cons for all serious startup ventures ( == LTW candidates)

Slide 48

Basic Incorporation (2)

• Decide on a unique name– Often the hardest part but most fun!– Do your own search: NUANS, Google– Avoid obvious confusion with typos– Check out online synonym, name generators!

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– Never buy Your_favourite_name.com from someone

• No need for complexity– it all can (will) be changed• Costs online – $300-700• You can do this yourself… or some lawyers will defer the fees in exchange for future business

Slide 49

Basic Incorporation (3)

• Keep a minute book– Director’s register– Member’s register– Securities register– All corporate bylaws

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– Minutes of company meetings– Copies of any forms filed with the government

• No obligation for a corporate seal, but nice to own

• Request a business number from CRA– You must start charging GST over $30,000 in revenue

Slide 50

Shoestring Banking

• Open a Corporate Bank account– Shop around for rates– Meet your Business Advisor – a big ally– Bring your Articles of Incorporation– Nominate a treasurer

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– Consider who has signing authority (2 is safer)– Consider who gets banking cards (full access limited)– You might photocopy the starter cheques instead of buying numbered

– Initial deposit will probably be your own!

• Open a Paypal account as a payment option

Slide 51

Assemble Basic Tools

• Reuse templates for– NDAs– Assignment of IPRs– Offers of employment– Share subscription agreements

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– Promissory Notes– Get these from your personal network, cyberspace or (deferred payment) lawyer

Slide 52

Open Source Seed Documents

• http://www.marsdd.com/entrepreneurs-toolkit/Topics/Sample-funding-documents.html

– Term sheet– Subscription agreement

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– Subscription agreement– Articles of amendment– Shareholder’s agreement– Founder’s agreement– Independent contractor agreement

Slide 53

Finance Operations 101

• Keep all receipts!• Customize a standard expense form• Do your own bookkeeping or find someone willing to take it on– Keep a detailed spreadsheet, or buy an accounting package

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– Keep a detailed spreadsheet, or buy an accounting package (eg, Simply Accounting, Quickbooks) < $200

• Do not get over focused on this aspect– Maintain records + pay bills on time = good enough

• Do not think about hiring a CFO yet – there are many options– Smart bookkeepers– Virtual CFOs

Slide 54

Guerrilla Marketing

• Gaining mindshare can be virtually free– Online forums, LinkedIn Experts– Speaking engagements– Blogs, online newsletters– Twitter/Facebook fans

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– Submit print articles, commentary– Community events– Drive traffic to your website every chance– Paint your car, etc

• Consider Google Adwords later

Slide 55

The Basic Corporate Presence

• Corporate Phone– VoIP - eg. Vonage Entrepreneur plan, OneConnect, Skype Out

– Should have a central phone number– not your cell

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• Email– Google Apps– free for first 50 users– includes calendar, mobility, intranet

• Web domain name registration, hosting– Many low cost providers, eg. GoDaddy

• Business Cards – moo; uprinting; vistaprint; zazzleSlide 56

Common Pitfalls

• What worked before in an established company… needs to be the same now– e.g., private cubicles… instead of open working space– e.g., bias for deep thought… instead of bias for action– e.g., ISO, TQM, Six Sigma, waterfall processes.. instead of lightweight

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lightweight– “There is nothing so useless as doing efficiently that whichshould not be done at all.” *

• Not thinking of cash alternatives– e.g., hiring…instead of contracting for short term needs

Slide 57

Common Pitfalls

• Focusing too much on the inside semantics…– e.g. Structure, processes, documentation– Your job is to create an adaptable learning machine

• And not enough on the outside…

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• And not enough on the outside…– Customers, opportunities, products, relationships– Sales are what makes everything else possible

“A business exists to create a customer” *

* Peter Drucker

Slide 58

Questions

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Speaker contact:

[email protected]

Slide 59

Select and Target Market Segments

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Corien KersheyMagnitude Marketing/Magnitude Partners

Topics

• Segment the Market• Create Segment Profiles • Identify Critical Flaws• Assess Variables• Select Target Segment

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• Select Target Segment

Segmentation Divides Markets into Addressable Chunks

• Segmentation separates potential customers into groups according to different buying criteria– Mobile Knowledge does not address all possible uses of GPS

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• They focus on managing taxicab resources

– Spartan does not address all possible uses of on-demand DNA testing• They focus on genetic testing for metabolizing Plavix

– Corel tried to address everybody when they bought WordPerfect• They failed.

Target Segment is The Chunk That You Can Dominate

• A startup has a much better chance of success if it focuses on a single, unserved or underserved segment that they can dominate fast

• The target segment is the one that gives you the best chance to dominate– Shopify is building success by focusing on small companies or individuals looking for easy, low-cost e-commerce solutions

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individuals looking for easy, low-cost e-commerce solutions – Lululemon built success at first by focusing on wealthy urban women who invested in yoga and gym memberships

– DELL built early success by selling computers to the price-sensitive and convenience-sensitive home/home business market

• These were unserved or underserved segments before• Of all the possible segments that were available, these came out on top after analysis of qualifying criteria

Choosing a Target Segment is Critical to Success

• In general, studies show that between 70% and 90% of all startups will fail in the first two years

• Most startups fail as a result of poor segmentation and targeting practices

Good Knowledge of the Market and Single-

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Good Knowledge of the Market and Single-Minded Focus are the Number One

Reasonsfor Startup Success

Model Illustrates Startup Challenge

Applies to product categories, NOT to companies

A mature product in a mature

Compete

Refine

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Introduction of the product andearly buyers

Growth of sales as the product starts to gain acceptance by the larger market

mature product Educate

The Challenge Is to Avoid THE GAP – the Graveyard of Startups

A mature product in a mature

Compete

Refine

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Introduction of the product andearly buyers

Growth of sales as the product starts to gain acceptance by the larger market

mature product Educate

Let’s Look At This Another Way

Most unwary startups look at their entire addressable market and then take pot

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and then take pot shots in the hope of hitting something good

Ready, Fire, Aim Doesn’t Work

• Most common start-up error is to attack a number of segments to see which will work best– Often no “whole product” is ever delivered to one market

– Resources are distributed among too many

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– Resources are distributed among too many segments and sales, marketing, development is done poorly

– No segment can be dominated fast– Defenses are weak and competitors can breach the segment walls easily

– The people who buy your product first because it’s either cool or they have a red-hot issue do NOT reflect the majority of your market

Segment 4

Segment 3

Beachheads Provide Defendable Points of Attack on the Addressable Market


Segment 2

Segment 1

To Mix Our Metaphors: A Beachhead Builds the Bridge Across THE GAP

• Focus limited resources to establish leadership in a single segment

• Gives strategic sales direction even in the very early market

• Leadership in a single segment helps build credibility with– Analysts and media

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– Analysts and media– Investors– The pragmatic majority market– Employees– Board

• Everyone, from consumers to high-tech companies, prefer to buy from segment leaders

• Reduces the risk of failure – go find another beach• Much better chance of being first in the “mind”

Seven Steps to Successful Segmentation for Startups

• Step 1: Determine where you really, honestly are within the startup life cycle

• Step 2: Regardless of Step 1, create as broad a definition of an addressable market as possible and then break it down in to all possible sub-segments. Even if your idea is based on a target segment, it’s probably still too big

• Step 3: Create customers profiles for all remaining sub-

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• Step 3: Create customers profiles for all remaining sub-segments

• Step 4: Assess profiles again critical flaws criteria and eliminate those that fail

• Step 5: Assess remaining profiles against selection variables continuously until top segment remains

• Step 6: Test target segment against SWOT and performance goals

• Step 7: If no segment apparent, repeat process

Stage 1: How to Know You’re Really Selling to Friends – The Very Early Stage

• New company or technology with first product still in development or at early release stage

• Angel, seed or small first round financial situation• No customers or small set distributed widely across different vertical or horizontal markets who are often friends, acquaintances, people you’ve done business

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friends, acquaintances, people you’ve done business with before

• Sales are growing but VERY slowly• In the case of tech startups, buyers are technology people within customer organizations

• Product “story” revolves around the “coolness” or innovation factor – much market educating to do

• Sales-led with little marketing communications effort

How to Know You’ve Run Out of Friends and You’re on the Edge of The Gap

• Sales growth has slowed• Starting to see some competition perhaps that seem to be doing better than you are

• You have to product changes every time to close a deal• Prospective customers fail to understand the product’s “technology” story or don’t understand why it’s different or better

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or better• Buyers are not coalescing around any particular vertical or horizontal market

• Getting more investment in proving very difficult• Often many partners and resellers signed up but little or no results

• Struggling to identify product roadmap and technology roadmap

Step 2: Define the Total Addressable Market and Then Narrow Down

• Brainstorm the possible broad applications for your technology OR brainstorm the possible sub-segments within the segment you have defined

• Build hierarchies for each one until you have multiple “application trees”– Vertical waterfalls

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– Vertical waterfalls– Cross-horizontal segments – vertical cuts on horizontal technologies

– Suppliers and channels– Think in terms of the buyer, NOT the organization

• Layer reasonably but go at least four deep if possible

• Some startup ideas will have many applications or uses: others will have a more limited application scope

Use Variables/Qualities to Determine Segments – Business Marketing Factors

Environmental influences:

• Level of primary demand• Economic outlook for the

industry and the company• Cost of money – interest rates

and cost of borrowing• Supply conditions – scarcity and

Organizationalinfluences:

• Company objectives – profit maximization, budget constraints• Policies and procedures

governing purchasing• Organizational structure –

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• Supply conditions – scarcity andreliability of supply

• Rate of technological change• Political and regulatory

developments• Competitive environment

• Organizational structure –impact on buying centre dynamics• Systems – evaluative criteria for

purchase decisions

Use Variables/Qualities to Determine Segments – Business Marketing Factors

Interpersonal influences:

• Authority to make the buying decision• Status – impact of the purchase on

buyer’s status in the organization• Empathy – seller’s relationship with

Individual influences:

• Age• Education• Job position• Personality

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• Empathy – seller’s relationship with buyer• Persuasiveness

• Personality• Risk factors – fear of making a

poor decision or choice and the consequences of that choice

Good Segmentation Narrows the Focus and Leverages Resources

Anyone Who Needs to Locate Anything that Moves and that is Big Enoughto Carry a Receiver and That is Outside for Any Length of Time

GPS Segmentation Example

Vehicles People Animals Cargo Icebergs

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Trailers PlanesCars Rail Cars Earth Movers Ships

LivestockPressTankTankersDry CargoReefersContainer

Freezer Refridge

High Perish Low Perish

Flowers Produce Meat

Indies Carriers Corporates

Topics

• Segment the Market• Create Segment Profiles• Identify Critical Flaws• Assess Variables• Select Target Segment

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Create Segment Profiles

• Upon completion– You will know about

• Using customer profiles to understand segments

– You will know how • To create a profile of a typical customer in a segment• To determine the customer’s pain point

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• To determine the customer’s pain point• To create a before/after picture of the customer’s pain after adopting your solution

• To focus on the customer as an individual rather than as a company

• To determine the potential value of your solution to the customer and the segment

• To group segments into related segments

You Can’t Really Know What the Beach Looks Like Till You Get There

• Beachheads have no ‘hard data’ • Company has little or no experience with the beachhead target segment

• No similar products are serving that segment• No credibility with which to gain information directly from pragmatists in segment

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from pragmatists in segment• Very early buyers are different from the more pragmatic, sceptical majority market and cannot be used as models

• High-level market size projections are generally untrustworthy and erroneous

Step 3: Create Multiple Target Customer Profiles

• In most startups, the product is looking for a target segment– Usually begun with a technology bias– Were this not true, far fewer startups would fail– Even when the idea is based on a target segment, the segment is initially too big to be an effective beach head

• With little useful and specific market data available,

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• With little useful and specific market data available, turn to building a profile of the potential customer– “informed intuition” rather than “analytical reason”

• Be wide and ranging in your approach– Current early customers, lost deals, profiles in related categories, your own experience, ask friends and family for ideas, brainstorm, look at related companies and their history, read analyst reports

Define the Prospect’s Current Problem with These Questions

• What problem causes the pain or frustration? Sketch a scenario in which the customer attempts a task and feels pain as a result.

• How does the customer try to cope with the problem now?

• What is causing the problem? What is interfering

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• What is causing the problem? What is interfering with a speedy solution? What goes wrong and why?

• How much money is the customer losing, either in additional costs or lost revenue? Quantify the pain.

• Who is the individual who feels the pain first and how does it “waterfall” up or down?

• Who else feels the pain? The customer’s customers? Suppliers? Partners? Investors?

Profile Example – Pain Scenario

Frustration Point

Costs

Their Pain Your SolutionFleet mgrs misplace 5% of loadedproduce reefers due to admin anddriver problems

Avg. value of lost or spoiled cargo is $250K -- $12 million total for avg carrier + high ins. rate

Characteristic

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Current Solution

Stakeholders

Cause

Insurance pays 75% of value and rest is written off as tax loss. Some use cell to check on drivers.

Produce distributors; supermarket owners; truck drivers; insurance company; carriers

Many trailers being managed at once:Inadequate admin techniques; careless reporting by drivers; late loads

Align Your Product to Their Problems With These Questions

• Define the customer’s changed situation– How does the customer approach the task differently?

– Is the pain removed or is it lessened. For whom? – Are new problems introduced as a result of your solution?

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solution?– Is your solution better than any other way the customer had of solving the problem? Why?

– How does your solution remove the pain? – How much money will the customer gain as result of your solution, either as cost savings or increased revenues?

– Can you determine a time frame for payback?

Profile Example – Solution Scenario

Frustration point

Costs

Their Pain Your SolutionFleet mgrs misplace 5% of loadedproduce reefers due to admin and driver problems every year

Avg. value of lost or spoiled cargo is $250K -- $12 million total for avg carrier + high ins. rate

By using GPS, fleet mgrscan locate trailers before cargospoils

Cost for avg carrier including services is$3 million, providing customer paybackin one quarter and savings of $10.5 M/yr

Characteristic

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Stakeholders

Cause

Insurance pays 75% of value and rest is written off as tax loss. Some use cell to check on drivers

Produce distributors; supermarket owners; truck drivers; insurance company; carriers

Many trailers being managed at once:Inadequate admin techniques; careless reporting by drivers; late loads

Problem is solved easilyCurrent solution

Distributors incented to use GPS-able carriers; driver morale improves; insurance easier and cheaper to get; insurance push?

Root causes difficult to eradicate causebased on human error: GPS-enablingsolves problem faster and cheaper than changing behaviours

Create Groups According to Similarities

• Be creative and open in building profiles

BUT• Unless you have unlimited time and money, rationalize all the profiles into segment groups– Out of 50 or so profiles, about 10 segments will likely coalesce

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coalesce– Look for key similarities

• Vertical markets• Common problems and pain points• Similar economic impacts• Similar groups of users

Topics


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Identify Critical Flaws

• Upon completion– You will know about

• What the binary criteria are for success in a segment

– You will know how • To assess segment customer profiles against each criteria

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criteria• To eliminate immediately segments in which you stand little chance of success

Step 4: Assess Profiles Against Critical Flaws

• Assess each profile against 4 key criteria that can “make or break” your chance of succeeding in that segment

• Ask and answer a series of questions and rate the answers on a binary scale of yes or no. Include a sentence or two on why.

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sentence or two on why.• Eliminate any that fail and set aside all related segments

Do They Have a Reason to Buy?

• You may think it’s great, but will the customer?• Is the financial impact of the problem severe enough to drive the need of a solution– There are lots of problems that pragmatists will live with rather than take a risk that could have worse consequences

• Of all possible ways of solving the problem, is yours the obvious choice from the point of view of

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the obvious choice from the point of view of– Total cost – including “whole product,” installation, services, training and adoption costs

– Speed to implement– Ease of use and adoption– Maintenance and support– Stability of technology and company

What Do They Actually Need to Buy to Solve the Problem?

• Is it practical to deliver the “whole product”?• Do you have the right partners to deliver the “whole” product?

• How well established are those partnerships?• Can you establish the right partners and be productive with them in the time frame needed to

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productive with them in the time frame needed to enter and dominate that segment early and fast?

• Who do you need to partner with and is it reasonable to assume that they will come on board with you?

Who Else Can They Buy From?

• Has someone else beat you to the beachhead?– If yes, reconsider or develop a second-entry strategy

• Are there barriers to entry that protect you in that segment for sufficient time?

• Are there players in related product categories that can move into your space quickly?

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can move into your space quickly?• Is there potential confusion among categories within similar segments?

• Is the segment characterized by a “single vendor” approach?

Can They Buy?

• Does the segment have a ‘target customer’ who has buying power?– Is there a single person who feels the most pain?– Is that pain tied to revenue loss or additional costs?– Does the buyer have a budget for the “whole” product?

• Is the financial pain felt by someone with buying authority?

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authority?• Trying to fix bad segmentation with smart selling doesn’t work– Lots of effort spent identifying and winning sponsors and champions

– Endlessly long sales cycle– Uncommitted budgets– Uncommitted management ready to cut projects on a whim

Binary Answers to Critical Flaw Criteria

Criteria Yes No Reason

Segment: Produce Reefer Location for Carrier Companies

Compelling reason to buy √

5% of trailers misplaced, 3% stolenCarrier liable for both, loss per avg. $275K/yr; customers punish carriers with high loss

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Deliver whole product √ Make entire receiver; partnership with mounting

and antenn partners; have installation partners

Buyer with economic power √

Risk managers and CFO feel greatest financial pain; drivers docked for misplacement

No competition Cell-based communications services provide location within acceptable margin of error whereservice available

√

Topics


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Assess Variables

• Upon completion, – You will know about

• What assessment variables are important to selecting a target segment beachhead

• How each of those variables can affect your success

– You will know how

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– You will know how• To rate each customer segment profile against the assessment variables

• To determine your ability to overcome shortcomings or change your ability to satisfy the requirement

At What Price Will They Buy At?

• Can you deliver the “whole product” at a price that is consistent with the segment’s budgets?

• Is the price commensurate with the customer’s financial loss?

• Is there enough margin in the price to ensure all levels in the channel are adequately compensated?

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levels in the channel are adequately compensated?• Can you deliver the “whole product” at a price that will win share rapidly without going under?

How Are They Going to Buy?

• Do you have the right sales channel to reach that segment?

• If not, can you establish timely relationships with the right channel partners/

• Do you have any expertise with the segment or the dominant vertical in the segment?

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dominant vertical in the segment?• Do you have or can you obtain someone with the right rolodex to take you into the segment quickly?

• Can you compensate everyone in the channel sufficiently to keep their interest and loyalty?

Why Should They Buy From You?

• Is the segment reachable?– Is there a set of communication vehicles that can reach them?

– Do you have the resources to market adequately?– Will the channel participate in tactical marketing?

• Do you have any credibility with this segment?

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• Do you have any credibility with this segment?– Can you deliver a “whole product” and can you commit to it?– Can you build credibility fast enough to hold back bigger players in associated product categories?

• Can you talk their talk?

Is the Segment Small Enough?

• Large segments are usually heavy with competition• Choose a segment that is small enough for you to penetrate to a critical mass and dominate– This means capturing 50% of market share measured as dollars and units

– Can you capture 50% with the resources available to you?

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– Can you capture 50% with the resources available to you?– Can you service 50% without burning out?

• Choose a segment that is large enough to meet your revenue projections– If 50% of the segment won’t meet forecast, dump it

Will the Segment Survive?

• Is the segment at risk for its own survival?• Are there signals that the segment is failing in terms of– Product category adoption rates growing or failing– Financial stability– Competitive saturation


– Competitive saturation

• Can you estimate the remaining lifespan of the segment?

• Does the segment exhibit innovation characteristics or is it know for technological conservatism?

Can You Identify Lead Customers?

• Does the segment have identified buyers who have a history of innovation and early adoption?

• Have they deployed their early buys or kept them in the lab?

• Do they have the support of their organizations?• Have they a history of championing early technologies publicly?


technologies publicly?• Is there one or two organizations that feel the pain more acutely?

• Will they participate in the design, development, test process?

• Are they open to an over-time payment model?• Do they have credibility among potential investors?

Are There Adjacent Segments That You Can Jump To?

• Beachhead segment is the “head pin” in the bowling alley

• What close segments are a natural segue? Refer back to the application trees.

• Are they likely to still be available?


• Are they likely to still be available?• At what point can you begin to attack the next segment?

• Are there enough close segments to achieve breakeven and profitability over time?

Step 5: Rate Remaining Segments According to Variables

• Rank each variable on a scale of one to five• Rank all segments and eliminate weakest 50%

– Use totals as an overall indication– Weight variables according to your flexibility or ability to change your situation• e.g. software has much more flexibility on pricing


• e.g. software has much more flexibility on pricing• e.g. no existing channels but ability to establish the right partnerships

• e.g. offered technology will increase segment stability

• Repeat ranking exercise until top one or two segments revealed

Ranking Example

Segment: Produce Reefer Location for Carrier Companies

Criteria Rank Weight Reason

5

Channels

Price

Final

5 25No established price, dev is capitalized,direct sales, 90% software margin, 1 year runway

4 4 16Preferred direct model, upfront cost high, greater risk, no proliferation, totalcontrol


Segment Size

Innovators

4 4 16control

5 1 5

5 2 10

Segment size large to achieve 50% penetration and domination; no ability to change; potential to narrow segment

Trucking industry conservative; satellite technology accepted; 2 known innovative risk managers

Totals 56

Topics




Select a Target Segment

• Upon completion,– You will know about

• The final tests before selecting a beachhead• The importance of a SWOT analysis• The importance of a financial goal• The importance of performance goals


• The importance of performance goals• The importance of assessing risk of failure

– You will know how• To apply a SWOT analysis to the target segment• To establish performance goals

Step 6: Rate Final Segment Against Final Criteria – Can You Win It?

• Undergo a SWOT exercise in relation to segment– Involve all internal stakeholders and decision makers– Rate chances of success against corporate weaknesses and strengths

– Assess segment honestly against core competencies• Technology bias• Marketing ability


• Marketing ability• R&D ability

• Build one and two year financial models to assess revenue potential, profitability, share, growth

• Can you live with the risk of failure– What is the cost of failure?– Can the company survive?

Establish Performance Goals

• Set in quantifiable measures – Define the performance dimension e.g. absolute share, increase in share, revenue

– Define the index – units, dollars, percentage– Target – 50% share, $1 million in revenue, breakeven– Time – within a year, a quarter, a month


– Time – within a year, a quarter, a month

• Ensure that goals are compatible and not mutually exclusive– High share goals do not live with high profitability– High revenue goals do not live with short time frames– Taking competitor’s share does not live with increased penetration

And the Winner Is!!

• Critical that everyone buys in• Deal with subversion early and quickly• Promote a “disagree and commit” philosophy• Establish short-term tactical goals to ensure meeting overall product performance and corporate goals


• Begin planning for the next segment as you attack the beachhead– Understand sooner rather than later your next steps should you win

– And should you lose

• Speed is critical to keep competition at bay and win mindshare and real share

Day 3 opportunity reviewsDay 1 takeaways


Day 1 takeaways

October 25, 2011

Tony Bailetti

Day 3 opportunity reviews

• Criteria and process to assess opportunities set by representatives of nine LTW Strategic Associates– Part A - scoring

1. CUSTOMER VALUE2. COMPETITIVE3. PARTNER VALUE


3. PARTNER VALUE– Part B - opportunity’s readiness for Day 4: Operations– Part C - substantive feedback to opportunity proponents

• Scoring of 1/2/3– Green: OK– Yellow: OK with a specific action– Red: Considerable work still required

• Reds are not invited to join Days 4-6

Reviewers

1. Consumer products• Line Brabant (LINE

International)• Chris Cope (City of Ottawa) • Dan Istead (Fed Government) • Christine McCrady (RBC)• Jonathan Wells (Carleton)

3. Internet services A• Hanan Anis (uOttawa)• Mark Antaya (Investors) • Rob Collins (YearOne Labs) • Llynne Plante (IRAP)


• Jonathan Wells (Carleton)

2. HW & SW products• Peter Carbone (PJCI)• John Fielding (OCE)• Farzi Khazai (Tech Gemini)• Raina Sharma (BDC)• Stoyan Tanev (U Southern

Denmark)

4. Internet services B• Elizabeth Gilhooly (Nuvance)• Claude Haw (VentureCoaches)• Harriet Waterman (IRAP)• Michael Weiss (Carleton)

Reviewers

5. Services• David Hudson (Carleton)• Saad Bashir (City of Ottawa) Fiona Gilligan

• (Fiona Gilligan)• Sophia Leong (Industry

6. Special• Diane Isabelle (National Research Council)

• Karen Letain (ETIS Technologies)

• Steven Muegge (Carleton)


• Sophia Leong (Industry Canada)

• Steven Muegge (Carleton)• Ian Scott (City of Ottawa)

Process

• Presentations are made only to panel of reviewers• 20 minutes is allocated to each opportunity. 20 minutes is a hard limit.• Lead reviewer is responsible for:

– Distributing / collecting Opportunity Assessment Forms– Assigning ID codes to reviewers to guarantee reviewer anonymity– Keeping time and smooth running of the reviews


– Keeping time and smooth running of the reviews– Ensuring forms are properly completed– Dealing with issues – Improving the opportunity assessment process

• Each reviewer rates each opportunity independently before the next group/individual is allowed into the room

• If reviewers and opportunity proponents wish to exchange cards, arrange follow ups, etc.; they should do so during lunch or the social and not take time away from the assessment process

Suggested time allocation

• Up to Review Panel

• We suggest– Set up time and niceties: 2 minutes– Presentation: 10 minutes


– Presentation: 10 minutes– Q & A: 5 minutes– Day 3 Opportunity Assessment form completion: 3 minutes

Day 1 takeaways
