"All the other factors that influence success are nothing without a product."
Would you like to have the MIT course material for entrepreneurship?
Well, if you read Disciplined Entrepreneurship by Bill Aulet, Senior Lecturer at the MIT Sloan School of Management and managing director of the Martin Trust Center for MIT Entrepreneurship, you’ll get his complete toolbox of steps and an integrated framework for creating a product and minimizing risk during the chaotic process of starting something nobody has ever done before. It’s the same information his students receive (except they might get a little more detail and more exercises to do.)
Aulet’s 24 steps are logical enough to get you started, but they are meant to be an iterative process where you may need to revisit previous steps and refine your work once you have more knowledge or information. Each step has been rigorously evaluated and proven on the main criteria of whether a customer would benefit from your product, not other periphery factors that can distract entrepreneurs from what should be their main goal: creating innovative products.
That is why the focus of the book is around product creation, even though Aulet realizes there are other elements to consider when starting a new venture, such as leadership, culture, sales and financing. The foundation of an innovative enterprise is the product created. And Aulet provides real examples around every step. This book is a great handbook (or even textbook) for any entrepreneur.
"…you need to start by first answering the following question: What can I do well that I would love to do for an extended period of time."
Some of the first steps to Disciplined Entrepreneurship are about knowing who your customer is and identifying a target market, but then you need to figure out how you can create the most value for your customer. Aulet also covers other aspects such as product acquisition, business model development, product design and build, but here I will focus on what you can do for your customer.
One of the first steps is to diagram a full life cycle use case. This shows how your customer determines they have a need, how they find out about your product, how they analyze, acquire, install, and use your product, along with receiving support, and spreading awareness of your product (if they like it). When you do this, you may find parts of the process you haven’t considered that if don’t go well might negate certain benefits you were expecting.
Another step is to create a high-level product specification, which is a visual representation of your product that can clarify understanding among your team without getting into too much detail about the technology or underlying details.
The other steps in this theme of creating value for your customer include quantifying the value proposition, defining your core, and charting your competitive position. Two of those I’ll cover as my Insights.
Knowing what you can do for your customer lies at the heart of your business. When you’ve nailed your value, the other parts will come naturally.
Quantify Your Value Proposition
"When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it… your knowledge is of a meager and unsatisfactory kind."
Of course your product is going to be valuable to somebody, but to be successful, you need to quantify how valuable it will really be, and to whom. This turns the benefits of your product into a tangible metric. When you have this metric you can see how much it aligns with your customer’s top priorities, or what they want to improve.
Benefits mostly fall into three basic categories: “better, faster, cheaper”, so your Quantified Value Proposition will show how much your product improves the life of your customer. Aulet explains that “Customers must justify the investment required to acquire your product by offsetting this against how much money your product will make for them, or how you will improve their life in a way that really matters to them.” If your product lowers the cost for the customer to make their product, but what they really want is to be able to make their product faster and improve their time to market, then your product won’t be as valuable to them.
Aulet shows how to set up a comparison between the ‘as is’ state of the customer, where they don’t use your product, and the ‘possible’ state, where they are using your product. When you make both scenarios a quantifiable as possible, the difference in value between them is your Quantified Value Proposition.
One tip is to make sure you under-promise and over-deliver, meaning, don’t be too aggressive with the numbers of how much improvement your product can attain in the ‘possible’ state or you will lose credibility if you don’t deliver.
Define Your Core
"The Core is something that allows you to deliver the benefits your customer’s value with much greater effectiveness than any other competitor."
What is your “secret sauce”?
What is the thing you do better than anyone else? This is what will make it hard or impossible for a competitor to duplicate. Once you have this figured out, you can focus on refining it to get even better, or protecting it so that it stays your own.
There may be multiple options for a core. Aulet gives some examples from categories to help inspire your possible core, such as network effect (your product has the most users), customer service, lowest cost, and user experience. He says that your founding team should be aligned so that the Core is what the business will continually work to develop and will always put first when planning and executing any strategy.
Defining your core must take into consideration what the customer wants with what assets you have and what you really like to do, along with what others outside your company can do. And it must be sufficiently accurate so that you don’t consider changing it when tough circumstances appear.
Intellectual property isn’t always your core, but it depends on your industry. “Capability is generally better than a patent” says Aulet, “but it is best to have both for sure.” That is because patents are static, but markets are dynamic, and business success depends on your ability to seize opportunities in the market.
Once you define your core, you should be continually trying to make it stronger, not changing it.
With plenty of real life examples, Bill Aulet’s 24 steps to disciplined entrepreneurship will be a comprehensive guide for any entrepreneur who’s either just starting out, or who wants to know what they might be missing.