Product development trap you should avoid

Life & Work

Product development trap you should avoid


Many entrepreneurs fall into the typical product development trap that catches budding entrepreneurs. PHOTO | SHUTTER LOCK

Debate rages about the prevalence of start-up success. Rumors suggest that nine out of every 10 new businesses fail. However, the actual research shows less depressing but still challenging results.

In Great Britain, The times estimates that every third start-up does not survive the first three years of operation. In the United States, the US Bureau of Labor Statistics states that 30 percent of new businesses fail in the first two years, 50 percent in five years, 66 percent in 10 years, and 75 percent fail in 15 years or more.

Researchers at Bradley University and the University of Tennessee find that the probability of business start-up failure varies by industry, with information-based companies failing at twice the rate of insurance, real estate and finance start-ups.

Many entrepreneurs fall into the typical product development trap that catches budding entrepreneurs. They come up with what they think is a brilliant idea. They then secure financing from family, friends and the bank.

Next, they rush to develop a prototype and seek the opinions of family and friends. Does such a product development cycle sound familiar? Sometimes the cycle leads to success. However, triumph under the above model comes more from luck than anything else.

Stanford University professor Steven Blank argues that such a cycle may work for well-established, brand-name companies, but it is the bane of start-up entrepreneurs. Instead, one should follow the Colorado State University-Stanford University hybrid model.

First, explore the range of challenges facing society. Perhaps food security, children’s nutrition, access to information or export promotion you experience as challenges for society are of interest to you. Think carefully about what challenge could keep you interested in helping to solve in the long term. An entrepreneur must exercise restraint so as not to force their ideas into the challenge issue too early.

Once you have solved a grand challenge facing your community, Kenya, the region or the world, start narrowing down several possible solutions to that specific challenge. Start formulating solutions that are not based on your own ideas in your office, but rather go into the communities affected by the challenge and seek their ideas for solutions as your potential customers.

When you first go into communities to find solutions, listen, observe and decide if the community is really suffering from the challenge, or rather the difficulty exists only in your mind as an unrealistic challenge. Then make sure you don’t give them your ideas as biased possible solutions on the first visits. Just listen. If you feed ideas into the community’s mind too soon, you distort honest customer feedback. Active listening and observation must happen first.

Then start noticing gaps in potential customers’ responses and your observations from the field. Are there gaps where a logical solution can emerge? Research shows that an entrepreneur’s ability to spot gaps in the market holds critical keys to new business success. Based on your listening, observations and gaps, build a small team to help you develop some possible solutions.

Serial entrepreneur Sam Gichuru says start-ups succeed exponentially better when a team works together rather than an entrepreneur working alone. Here in Kenya, we often fear sharing our original business ideas with a team for fear of someone stealing the idea. Many point to the conceptualization phase of mobile money transfers as possible idea theft, whereby the idea generator is theoretically lost and others are won.

But ideas come gradually. Real success occurs through implementation. So relax, get others to sign nondisclosure agreements, keep the team small, and hope for the best, because you need others to succeed.

Before constructing a prototype, take your solutions back to the community for feedback. Don’t rely on the biased feedback of family and friends. Ask the actual potential customers who don’t know you, as their input remains critical to your success throughout the process. Most entrepreneurs hubristically neglect customer feedback until after a prototype and then ask the wrong questions.

Ask communities general demographic questions first about age and occupation and so on, then enter questions related to the challenge itself, their use of competitive products, and finally give your ideas for your solution to their challenge.

Even entrepreneurs who follow the client-first approach often ask misleading questions, such as “you like my product, right?” Do not allow yes or no or sympathy questions.

Ask open-ended questions such as “what methods have you used to address the food security crisis in your area” for example. Then ask questions based on a seven-point scale regarding your product: “On a scale of one to seven, how would you rank the usefulness of the proposed product?”

Score one as “extremely dissatisfied”, then two as “dissatisfied”, all the way up to seven as “extremely satisfied” with four as “neither satisfied nor dissatisfied”. Asking clients questions at such intervals provides a wonderful depth of knowledge beyond yes or no questions. Customers who answer four in a row like this may have answered a yes or no question with a “yes” but would not have enthusiastically purchased your product solution.

Now, considering all the feedback you received, you need to develop the prototype product. When developing your prototype, start with the necessary requirements, move on to the design, and then implement it. In short, involve unbiased customer feedback before, during and after product development or risk becoming Kenya’s latest startup failure statistic.

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