Graham Horton

What characterizes the perfect business idea? The '5U' questions every founder should answer before starting to build their product

Transcript

1. The Ideal Business Idea The '5U' questions that startup founders should answer before starting to build their product Graham Horton © Zephram GbR 2014
2. The Ideal Product What is an ideal product (or service)?  One with a maximal chance of success Can we predict success for a business idea?  No But...  We can name five criteria that are a good indicator.
3. Three Kinds of Customer Need Jobs to be Done  Everyday tasks that the customer must carry out Gains  Things the customer would like, but does not need Pains  Problems that the customer has
4. Three Kinds of Need: Examples Jobs to be Done  Accounting, cleaning, maintenance Gains  Office parties, entertainment, luxury goods Pains  Illness, lawsuits, sinking profits
5. Startups Should Solve Problems Which category is best for a startup idea?  Reducing pain Why?  Less competition  Easier to get customer attention  Easier to get a purchase decision  Easier to charge a premium price
6. The Five 'U's Five attributes of the ideal customer problem:  Untenable  Unavoidable  Unsolvable  Urgent  Underserved
7. Untenable What does it mean?  Customers cannot afford to ignore the problem. Consequence:  The customer must obtain a solution. Examples:  Weak eyesight, declining sales in a core product
8. Unavoidable What does it mean?  The customer cannot sidestep the problem. Consequence:  The customer is forced to seek a solution. Example:  Contractual requirements
9. Unsolvable What does it mean?  Customers cannot solve the problem themselves. Consequence:  The customer must seek a third-party solution. Examples:  Lack of expertise, lack of a resource
10. Urgent What does it mean?  The customer needs a solution fast. Consequence:  The customer is motivated to act quickly. Examples:  Migraine, sudden drop in sales
11. Underserved What does it mean?  No (adequate) solution is available on the market. Consequence:  The first solution to appear will have a monopoly. Examples:  Cure for cancer, nuclear fusion energy generation
12. Evaluating the Idea Problems seldom have all five attributes. Therefore, treat each criterion as gradual.  For example using a scale from 1 to 10 Determine your condition for attractiveness.  Example: Idea scores at least 6 in all dimensions.
13. Evaluating the Idea 0 2 4 6 8 10 Underserved Untenable Unsolvable Unavoidable Urgent
14. Low Scores Does a low '5U' score imply future failure?  No! (Facebook and Twitter would have scored low.) It does mean that success may require…  deep pockets  extensive marketing  difficulty finding product/market fit and a USP  luck
15. Low Scores Each low score indicates a potential difficulty:  Not Underserved: Strong third-party competition  Not Urgent: Hard to gain attention and interest.  Not Untenable: Doing nothing is your competitor.  Not Unsolvable: Your customer is your competitor.  Not Unavoidable: Avoidance is your competitor.
16. Examples Penicillin:  Fulfilled all five criteria when introduced in the 1940s. A divorce lawyer:  Scores low in Underserved, otherwise highly. A data recovery service for failed disk drives:  Scores highly for Urgent, Unsolvable and Untenable.
17. A Common Error The most common cause of startup failure:  Building a product that nobody wants The same is true for inventors  Many patents are "solutions without problems".  For example the dust cover for dogs.  USPO: Only 0.2% of patents have commercial value.
18. Caveat The '5U' do not provide a comprehensive check. There are other important criteria!  For example: Market size, defensibility However, a high score in the '5U'…  does suggest a very valuable business idea.
19. Impulse für Innovation Der deutschsprachige Blog für Ideen und Innovation www.zephram.de/blog/ Ideenfindung Weitere Themen in unserem Blog: Ideenbewertung Geschäftsmodellinnovation Produktinnovation Innovationsworkshops