When developing and ultimately selling an idea, entrepreneurs must do considerable leg work, then be able to distill their idea into a simple, compelling story.
The story goes an eager entrepreneur walks into the office of a potential investor. Eager to present his pitch, the inventor sits in front of the investor’s desk and gets ready to start his well-rehearsed pitch. Before he could get out the first word, however, the investor throws a match book across his desk and quietly says, “On the back of that, describe your idea.”
While there are unique challenges and characteristics of new bioenterprises, fundamentally the elements of success are the same as any other business.
The first task is to define your position based on the target segment you intend to dominate. Too often, particularly with technology based companies, the inventor or scientist discovers or invents something. They then start the process of a solution looking for a problem. Instead of being problem solvers, a more successful strategy is to be a problem seeker, design a solution that is better than what is presently offered and execute a plan to commercialize it.
Once you identify a large, growing, important, potentially profitable unmet need, the next step is to define a value proposition that describes how you intend to dominate the market you’ve identified. Value is the difference between the tangible and intangible benefits of buying a product or service minus (or divided by) the tangible or intangible costs. Your value proposition is the promise you make to your customers to provide them value if they buy or use your product.
The third element of success is to construct a business model, i.e. provide your product or service in such a way that it costs less to make it and sell it than what people are willing to pay for it thus generating a profit and sustaining the business.
Finally, your value proposition and business model will need to be better than the competition. Otherwise, there is no reason for customers to switch or consider your product.
There are several models for articulating your value proposition and they are typically used to create an elevator pitch.
One model, described by Geoffrey Moore in his book “Crossing the Chasm”, is to use the following template and just fill in the blanks:
• For (describe the target customers-beachhead segment only)
• Who are dissatisfied with (describe the current market alternative)
• Our product is a (new product category)
• That provides (key problem solving capability)
• Unlike (the product alternative or competition)
• We have assembled (key whole product features and benefits)
Another similar model is the NABC model:
• Define the NEEDS of the target segment
• Say what APPROACH you are taking to eliminate the market pain
• State clearly the BENEFITS /Cost of using your product
• Differentiate your product from the COMPETITION
The development of your feasibility, commercialization, or business plan should result in a clearer and more precise, compelling value proposition as you go through several iterations of analysis.
Researchers have discovered what works on a first date. (HINT: Women like it when you listen, guys.) You’ll know you are getting close to connecting with your idea when you can tell someone with a 6th grade reading level your value proposition in the brief time it takes to go up a few floors in an elevator, in 30 seconds at the bar, or on the back of a matchbook.