How To Approach Market Validation To Minimise Risk
Last week, I had the fantastic opportunity to teach at the Auckland University of Technology (AUT) for their X Challenge, an internal innovation competition for their students.
My topic, a slightly different approach to Market Validation
You see, while I was working in Tech Incubators and Accelerators, I have experienced hundreds of market validation projects and found that there are three distinct stages which I wanted to share.
Most people stop their validation process at defining customers who have a problem. But once you have that, the next part of market validation is figuring out whether you can build the right solution for your customers.
Now, this part sounds easy, but I can recall dozens of business concepts that while being explored deemed unfeasible at this stage.
They couldn't quite deliver the right solution for the right price, which brings me to the third stage of market validation—The Business Model.
When I speak about a business model, I talk about how companies can "create, deliver and capture value" as per Alex Osterwalder's definition.
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Your business model validation needs to show that:
You can generate revenue;
You can deliver the product to your customers;
You can efficiently reach your target audience;
You can find the right partners to help you along the way;
Your customers gain value from you.
A lot of founders are great at the first two stages of finding a problem and developing a solution. The tricky part is finding your market and turning a profit in a way that is replicable, sustainable and scalable.
The Business Model is where I spend most of my time, in figuring out HOW we can reliably get more customers. While a focus on product is essential in the early stages, marketing and sales can help develop demand early before the product is even ready.
Validation is asking the right questions about your product, your customers and your service.
Your validation should take into account what you create, who for but can't forget about How you will get it to your customers. And that is where more startups burn out as they can't find a distribution channel fast enough.
Entrepreneurs and business owners will find more success if they can adopt a love for learning and fact-finding to develop what Carol Dweck refers to as a growth mindset.
Market Validation is about minimising uncertainty through fact-finding.
Especially now, when the entire world has become a little less predictable and more uncertain. Validation helps to learn and move in the right direction without huge risks for founders and business owners.
Grow your mindset and adopt a growth mindset.
Flavio Hangarter
PS: Whenever you’re ready, I help clever founders to set up their sales and marketing systems, generate leads and close more sales.
There are numbers of ways I might be of help to you:
Create a product that stands out.
Get guided through the market validation process to help you figure out your market, your product and your business model.
Sales Strategy and Systems.
Crystalise your sales systems to attract more customers and grow your revenue with stand-out marketing.
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