Avoid the Seduction of Hidden Needs and Captive Markets
Early stage technology businesses often come about as what looks like a natural progression of leadership’s experience with specific markets. Often the entrepreneur has spent time working with one computing paradigm-for example: enterprise collaboration. Market perception of the entrepreneur’s experience is, more often than not, approving. Perhaps the entrepreneur is considered a subject matter expert. So this individual decides to build a business to service (following our example) the enterprise collaboration market.
The most promising scenarios are built on critically important foundation planks:
1) The entrepreneur decides to build the business to service unsatisfied market needs. These needs are neither “hidden”, nor “dreamed up”. Market surveys, direct experience, etc have led the entrepreneur to recognize the needs. Market participants have clearly evidenced costly pain as the result of not having a method of satisfying these needs. The financial value of offering a solution to stop this costly pain provides a target worth building a business around.
2) The assumed market is not specific to one computing platform. The entrepreneur plans to deliver a solution capable of running on each of the major computing platforms servicing the market. The solution will deliver comparable quality of service, regardless of which platform a customer is using. So the feature plan is closely managed to ensure successful delivery of the quality of service objective.
Neglecting either 1) or 2) can be fatal to the business. Common traps include:
In front of 1) – “Solution Without a Problem” syndrome: “the market doesn’t know they need my solution, but, based on my experience, I am sure my solution will catch on”. A variant on this same trap: “from all the work I’ve been paid to deliver, it’s clear the market needs the solution I have in mind”
In front of 2) – building a solution for only one computing platform. “Oracle has customers at over 70% of very large organizations. I know my business will run very profitably for years and years if I build my solution exclusively for Oracle.”
Once precious resources (financial and human capital) are directed in either the right direction, or the potentially fatal one, it is very difficult (if not impossible) to retract them. Better to get going in the right direction, or take some more time to think the plan through.