ICEHOUSE market validation executive Mark MacLeod-Smith recently returned from a research trip to the US with more valuable insights on how to successfully launch to market.
Mark MacLeod-Smith is fired up. When I caught up with him in mid-May the market validation executive at The ICEHOUSE Business Growth Centre had just returned from a fact-finding mission to the US, New Zealand’s third biggest export market, where he gained further insight on how to match products to customers.
Much of this insight is through Mark’s association with Dr Rob Adams, a Texas-based market validation expert who will be conducting a number of workshops on these shores in July. Mark has communicated regularly with Adams since first meeting him in 2011 and now regards him as his personal ‘market validation advisory board’.
“Rob works with us to ensure we’re up to date, following due market validation process (see ‘Ready, aim, fire’ sidebox, page 27), and providing the best outcomes to help our clients make objective decisions off the back of their validation efforts,” says Mark.
Following this latest visit, Mark’s keen to share his knowledge with innovative Kiwi firms looking to take a bright idea to commercial reality.
At The ICEHOUSE he and the team work with start-ups all the way up to large corporates.
The mechanical engineer, who started off helping build bridges for Fletchers, is today building bridges of a very different kind.
One of the first things Mark noticed during his US visit was the different way in which the best American companies innovate. “Their approach is about testing cheaply and quickly before investing heavily,” he says. Kiwis here, on the other hand, often follow a pattern of idea/spark and business plan; if it all ticks the right boxes with the board or senior management, a cheque is written and the whole amount invested in the business. “Sometimes it works, other times it doesn’t, but the stats don’t lie – around 65 percent of new products developed by established companies will fail; for start-ups the failure rate jumps to 90 percent,” says Mark, “which doesn’t exactly paint a great picture.”
This is why The ICEHOUSE is leading the quest to apply leading-edge techniques – the aim is to increase the odds of success for New Zealand companies.
Mark’s US trip had a two-pronged focus. “The first was to develop capabilities around testing and validation of new business opportunities for both start-ups and established companies,” he says. “The second was around developing relationships and networks. I’d been to Austin in Texas last year and was looking to reinforce and extend those – as well as educate Americans on what we’re all about at The ICEHOUSE, and look for additional business partners to work with.”
Mark’s tour took in Austin, New York, Boston and San Francisco – all epicentres of innovation and entrepreneurship – and he reports that it far exceeded his expectations.
In Austin he observed the work of Adams – whose business accelerator matches up university student skillsets with business start-ups. “They also run the Global Venture Labs Investment Competition, which is known as the ‘superbowl’ of university business plan competitions,” says Mark. “There was no New Zealand contender this year, and we’re out to change that too.”
Further insight came in New York where Mark caught up with Fahrenheit 212 – an innovation consultancy started by Kiwi Geoff Vuleta which helps Fortune 500 companies to innovate.
In San Francisco Mark spent two days at a workshop run by Marty Cagan, a former head of product at eBay who is now “a consultant to the Facebooks and LinkedIn’s of this world”. “One seminar was about how to create products that customers love, and I’m keen to share some techniques that will translate really well to the Kiwi environment,” says Mark.
Test, then plan
The word ‘test’ comes up a lot in Mark’s conversation. Top of his ‘takeaway’ list from the trip is the need to “test early and test often”. Adams and Cagan both emphasised this he says – the need to engage with customers, understand their
problem, test your solution with them and then get a prototype in their
hands as quickly as possible for real, live feedback.
“But it’s one thing to say it, another to do it, and that’s where people need help. Implementation is a bit of an art and requires both buy-in and a culture shift,” says Mark.
Rather than writing a business plan for your new venture, he believes you should be documenting assumptions – working out which hold the most risk. Then testing those to gather evidence and facts to support and build your business plan. It’s no use writing a business plan based on faulty assumptions he says.
“Now, the new playbook is document your assumptions; work out which are the riskiest; test and prove those; quickly produce a prototype of first-version product; understand how people are engaging and using it and then iterate, iterate, iterate, quickly and often.”
This, he hopes, should resonate well with Kiwi start-ups – getting that ‘first-version’ or prototype quickly
into users’ hands for testing and feedback is paramount.
De-risking over time towards a scalable and repeatable business model is achieved through determining your assumptions and then checking them off through what has become known as ‘validated learning’, says Mark.
There should be no fear of failure either, he says. “If you’re going to fail, fail fast – better to fail in month one than month 12.”
While entrepreneurs the world over are known for their hard work ethic, Mark was especially impressed by what he saw in the entrepreneurial centres he visited in the US. “The ones I saw got things done quicker and committed to their venture earlier. Kiwis often keep their day jobs and ease into the business.”
US entrepreneurs score higher when it comes to communication, networking and pitching too he says, “their pitches, for example, are much crisper and well-articulated.”
Tapping the US
The ICEHOUSE has a project known as the ‘B-IQ’ (Business International Quality) which looks to define what export success and domestic market protection looks like for Kiwi companies. This framework will enable The ICEHOUSE to realise its goal of enabling 1,000 businesses of international quality by 2020. The ICEHOUSE research suggests that excellence in six areas (see sidebox) consistently leads to success; leadership, market, offering, governance, processes and capital.
The vital one for the US market, Mark believes, is ‘offering’, more specifically having a clear, competitive differentiation. “Especially in this age of a digital, weightless economy where you can go global from day one.
You can target customers anywhere in the world that have the biggest problem and will see the most value from your product or offering.
“The US, however, is a big market with a lot of participants – it’s a hundred times bigger, with a hundred times the competition. So test it first. Understand the dynamics of the market before you make the decision to go there.
“Spend a little to learn whether you should spend the rest,” is his advice.
If you have a business idea or are an established business looking to develop a new offering or enter a new market, contact the team at The ICEHOUSE. www.theicehouse.co.nz. For specific enquires contact Mike Stokes on 09 308 6221.
Glenn Baker is editor of Exporter.
Ready, aim fire!
‘Ready, aim, fire!’ is the effective but simple three-step market validation process developed by Dr Rob Adams. Mark MacLeod-Smith explains it as:
Ready = Understanding the market. How big is it? Who’s playing in it? What are the trends?
Aim = Engaging with potential customers. What is the problem you’re going to solve for them? What is your solution? Testing those assumptions that are the backbone of your business model
Fire! = Using all the information gathered to get a product quickly into the hands of your target market to get real live feedback on how they value and use your product.
The ICEHOUSE BIQ definition
Leadership
A BIQ is led by a strong and diverse leadership team that fosters a positive company culture. It is aligned around a long term strategic direction, excels at strategic execution and is able to respond quickly to changing market conditions.
Offering
A BIQ has a clear and explicit competitive advantage that is valued by its customers, properly protected in the markets it operates in, and translates into sustainable profitability. A BIQ focuses on its core competencies and avoids distracting activities.
Market
A BIQ has a deep understanding of the market it participates in. It focuses on specific customer segments and designs its business model around these segments. It has a deep cultural understanding of the customers it serves and the markets it operates in. Its sales and marketing strategy is professionally implemented.
Processes
A BIQ invests in processes and systems across people, operations and financial functions that scale with growth, create transparency, enable rapid and informed decision making, and drive operational excellence.
Capital
A BIQ’s leadership displays strong financial management capability and is expert at making decisions related to capital structure. This leads to a strong balance sheet and the ability to attract external capital to fund growth. It is aware of financial implications of operating internationally.
Governance
A BIQ is governed by a growth-focused board with strong sector affinity that supports the management with strategic decision making.
