So, what’s needed to increase the potential for your new venture’s success?
Really just three things!
Answering these three issues will position your venture so that investors will listen to you. Answering these three criteria with well-honed responses will get you over the first hurdle of gaining the support needed to undertake pre-commercialization. The three items to be addressed are:
How are you going to create a market-driven venture?
Articulate the explicit growth strategies for the venture.
Define the tactics and tools that will gain and maintain a strategic advantage for the venture.
Let me share with you a true story about the first time I applied the i2P Problem-Solving Model to a venture and the outcomes from that experience.
Originally developed in 1987 as a tool for IBM management staff to use as they entered their middle management training program, “Success,” as it was then called, was designed to encourage the sharing of ideas, help participants acquire tacit skills and provide a vehicle to identify formal learning opportunities.
Teams played the game over the lunch hour and the players did learn where they needed to expand their knowledge base and who of their colleagues had experience in that area. In many cases, they exchanged ideas and learned on the spot how a similar situation was dealt with.
The “Success” interactive simulation program was a success as a board game application, but with an IBM mandate that all training should be put into a computerized interactive format, we decided to move the venture in a new direction.
“Success,” was morphed into “The Essence of Success,” a multi-faceted commercial endeavour built around direct selling to a specific demographic and at a price point three times higher than any other interactive game product on the market at the time.
Yes, there was an offer from a major game company to market it at $19.95 and pay a 3% of gross sales royalty, providing we allowed Selchow and Richter to make it into an extension card pack of their most successful game at the time.
Research quickly showed that the royalty offers would go up if The Essence of Success Game Company first test-marketed the game then sold it to a major distributor. So, the project was challenged with the problem of how to sell 5000 games at a price of $69.95, three times higher than the traditional retail market, because our cost of production was higher. More importantly, funding was limited, and investors wanted to see sales first.
The game market was booming at the time and there was a lot of competition for the retail game consumers’ attention. We quickly determined from primary and secondary market research and over 50 focus groups that our major target was a group called “Yuppies” (Young Urban Professionals, a term first coined in the late 80’s) and that our secondary market was senior managers and leaders of companies.
The research showed that people had to experience the product to appreciate its value as a self-improvement and entertainment tool. Therefore, the question that had to be addressed was, “Where do we find these two captive audiences looking for something to do for at least half an hour so we could get them to have a positive experience with the concept?”
A ride on the GO train quickly showed that this was not it, but a one-hour flight from Toronto to Montreal demonstrated that most travellers were bored with in-flight magazines, especially if they were on the plane several times a month. So, adding value to their flight time could be a good way to talk to our audience when they were trapped and looking for something that would add experiential value to their otherwise lost time.
The Essence of Success in-flight magazine insert concept was developed. Then the challenge of getting an airline and its magazine publisher’s approval to insert it into their in-flight magazine arose. This was further complicated by the cost of creating and printing a monthly fourteen-page six-colour insert. Again, back to market research.
Which airline would be amenable to putting this in their in-flight magazine?
Who had a significant business traveller load factor?
Which airline had a stated goal of improving the business traveller’s experience?
How could an in-flight magazine company see this as an addition to its content?
Why would the in-flight magazine publisher allow The Essence of Success to not only direct-sell the game to their passengers but also to sell advertising inside the insert to defray our costs?
In the end, Air Canada was targeted. The Essence of Success team knew that approval at the most senior levels would be needed to encourage the in-flight publisher to go along with this venture. The Key Leverage Issue was to get to the president of Air Canada and to get the authority to talk to the right people in his company.
Our team tracked him down at parties and business functions and when the opportunity to talk to him presented itself, the team members knew exactly what to say to get his attention. The EoS team had the right information at hand because of research they had developed using the problem-solving model outlined in the next chapter, and finally, they won the opportunity to succeed.
The EoS team wanted the airline president to do a mental checklist of attributes and say yes to each one, thus working on his “gut feel.” If his gut feel were positive, then the referral down the organization would be effective.
When he asked what Essence of Success did, the response was, “We have created a product that will add value to the business traveler’s airtime.” This was quickly reinforced with the statement: “A service that will make the airline money without any additional investment and that will also enhance your publisher’s business potential.” The EoS team then asked a clarification question, “Are these the outcomes you are looking for, Mr. Taylor?” Of course, they knew his answer would be “YES.”
So, what they did next was ask who they should talk to in his senior management team to determine how to achieve these outcomes. The name was given and a confirmation letter was sent to the president reminding him of the discussion, saying that they would be following up with the senior VP he recommended.
The next step was to contact the SVP and get a meeting. Their first statements were a recounting of those attributes agreed to by the airline president. Throughout the development of the joint venture, they used these as value statements in all presentations. From start to finish, the project was negotiated and launched in less than four months.
The outcomes were:
EnRoute readership increased, and this added value to the sales messages delivered to other advertisers by the publisher’s sales team.
EnRoute’s publisher’s relationship with the airline was greatly improved.
Air Canada and EnRoute gained extra revenue.
The Essence of Success Game Company made advertiser revenues and profits on each of the six inserts produced.
Most importantly, we sold 5000 copies of the game at $69.00 per copy.
With a new, more expensive product or service, it's important for you to be prepared to reinforce your values in your message to the customers. The Essence of Success leadership team put a buyer’s guarantee on the packaged product that stated the buyer would get at least thirty good business ideas or we would refund their money no questions asked. They did not ever have a single one returned!
Yes, the model worked this time, and it has worked on over 100 different projects since that first experience.