The First Mile: How to Successfully Develop a Business Idea
By: Scott D. Anthony, author of The First Mile: A Launch Manual for Getting Great Ideas into the Market (Harvard Business Review Press, 2014)
Almost every successful company traces success to a process -- sometimes intentional, sometimes accidental -- of trial-and-error experimentation that surfaces a winning approach.
If you study the history of almost any innovation success story, you find a starting point that bears little resemblance to the finishing point, with interesting twists and turns along the way.
It takes diligence and discipline to document a business idea. No matter what approach you follow, watch out for these four common mistakes.
1. Confusing a Concept and a Business
Many innovation efforts start with a simple question. “What if we . . .”
“What if we brought word-of-mouth marketing to China?” asked Wildfire, an Asia-based social marketing company. “What if I could use the internet to sell books at low price points?” Jeff Bezos wondered. “What if we could rid the word of malaria?” Bill Gates asked when he set up the Bill and Melinda Gates Foundation.
A fragment of an idea is a great starting point but an insufficient ending point. Assuming your in- tent is to start a business or create new business growth inside an existing business, the reason you are innovating is ultimately to create revenue that translates into profits that translate into free cash flow.
And you can’t dream of revenues, profits, and cash flow unless you solve operational issues such as production, distribution, post-sales support, and so on.
Financial and operational issues can be intimidating to innovators who lack training in how to read financial statements or design and manage a supply chain. Fortunately, a number of readily accessible tools can demystify the jargon that makes it seem like Wall Street analysts are speaking a different language. I particularly recommend Bob Higgins’s Analysis for Financial Management as a way to get a good understanding of basic financial terms and techniques.
2. Focusing Only on the Beginning or the End
Some innovators paint exciting visions of what the future could hold; others describe in very precise detail what they will do in the very near term. The best innovators, however, can do both.
It is important to have precision about what is coming next. Lofty plans often never get realized.
And since those plans aren’t quite right anyway, a crisp starting point helps to make sure the process of trial-and error experimentation to find the right strategy leaves the starting blocks.
Innovators should be able to explain with some degree of precision what will happen in the next thirty, ninety, and 360 days.
One useful technique to really bring an idea to life is to envision how the company will earn its first dollar of revenue. Who specifically will be the customer? What will that customer be paying for? How will he or she get it? At the same time, it is important to have some kind of viewpoint for what the ultimate destination could be (while recognizing that vision could be 100 percent wrong).
Innovators should be adept at painting a picture of what the world could look like in three to five years if they are successful. Both frames are important.
3. Looking from the Perspective of a Single Set of Stakeholders
The world is a complicated place. Think about all of the people who might touch a new treatment mechanism for diabetes that integrates monitoring technology and a smartphone application that supports regular exercise and healthy eating.
There is, of course, the patient who ultimately receives the treatment. A spouse, friends, and families can influence the patient’s decision to try to stick to a new regimen. Writers for technology blogs could influence the patient too. A general practitioner or specialist doctor might have to prescribe the product. A hospital administrator has to approve its use. An insurance company executive or government payer might determine reimbursement terms. A regulator could approve use, or not.
If a thread in this complicated web breaks, the chances for ultimate success decrease substantially. Not every business is as complicated as health care, but a good description of an idea highlights why it makes sense for all relevant stakeholders.
4. Getting the Head but Not the Heart
Which do you find more compelling? A newspaper story describing the basic plot of a film, or a sixty-second video? If a picture is worth a thousand words, a good sixty-second video is worth a book.
Too many innovators try to pound people into submission through litanies of facts and figures. Please make sure to do your homework and think as comprehensively as you can about your idea. But remember -- if you only win the head but don’t win the heart, you’ve lost the battle. Start by thinking about telling a story about your idea.
As an innovator typically needs to engage with a range of different stakeholders, a well-crafted story can be a captivating way to get people’s attention.
Use complete sentences and paragraphs as part of the story -- bullet points can be superficial or open to subjective interpretation. Support your story with visual elements. Create a simple video. Develop a mock magazine advertisement. Build a fake website. Create a storyboard, a six-frame cartoon that shows how consumers will experience your idea.
Are these solutions beyond your expertise? Go to Elance.com and find some low-cost help. Read books on the subject, like Nancy Duarte’s Resonate. Find a way to make your idea tangible.
Reprinted by permission of Harvard Business Review Press. Excerpted from The First Mile: A Launch Manual for Getting Great Ideas into the Market. Copyright 2014 Harvard Business School Publishing. All rights reserved.
Scott D. Anthony is the managing partner of Innosight, a global strategic innovation consulting and investment firm. Based in the firm’s Singapore offices since 2010, he has led Innosight’s expansion into the Asia-Pacific region as well as its venture capital activities. He is a sought-after strategic adviser and the author or coauthor, most recently, of The Little Black Book of Innovation, Building a Growth Factory, and most recently The First Mile.