The situations businesses find themselves in are variable and challenging. Rarely is it about joining dots. Here are 15 questions, answers to which will take a developed business to the next stage. The questions go beyond fundamentals for a start-up.
Crossing the chasm requires moving out of a start-up focus on invention and creativity. It's a move to a business focus on commercialisation and improving business valuation multiples.
Customer needs differ, writes Geoffrey A. Moore in "Crossing the Chasm - and Beyond". He groups customers into five categories.
The Early Market customers are "enthusiasts" and "visionaries".
The Mainstream Market customers are "pragmatists" and "conservatives". Finally there's "skeptics".
Moore's point is that "enthusiasts" and "visionaries" are early adopters of new products, technologies and businesses.
Moore's punch line is: "pragmatists" and "conservatives" provide the bulk of revenues. This is clear in Moore's graphic. The Mainstream Market is massive relative to The Early Market. Between them falls The Chasm.
To sell to The Mainstream Market Moore emphasises the need to become a de facto standard and make offerings reliable. This is good advice for the IT and technology sellers Moore has in mind.
What about other types of sellers, products, services and markets? Web 2.0, IT and technology businesses are not alone in needing to cross the chasm for business growth.
Our questions have served well for years in work for countless clients in various types of businesses.
Like other professionals our methodologies, tools and process all involve asking our client's questions. Typically we email them in Word in a table format. About 50% of the time we end up doing what our client first requests. In the other 50% of projects, on discussing the questions, our client either realises different work or no work is required of us. This adds value and avoids waste.
|1.||Describe in depth the benefits and functionality of your offering (it may be a product, service, technology, website etc).|
|2.||What insight or industry foresight does your company have that gives it a vision?|
|3.||Who are the key stakeholders? What stakeholder interests are there? Do conflicts arise or is there potential for conflict between roles?|
|4.||What critical dates exist for your company, eg as regarding funding, hiring staff, improving technology, signing up partners?|
|5.||What is your company's core competency? For knowledge sharing, where is this documented, if at all?|
|6.||What are your key financial results over the last few years? Include the gross revenues, net profits/loss, and gross profit margins for the business.|
|7.||What intellectual property protection mechanisms have already been implemented for your company? Here refer to IP provisions in employment contracts, use of confidentiality agreements, use of IP notices on materials, patents, copyrights, trade mark registration for your company, your company domain name registrations etc.|
|8.||What is your company's current commercialisation path? It may include organic development, licensing, trade sale, merger, IPO, or a combination of these.|
|9.||What critical success factors will determine your company's achievement of its business objectives for the next stage? These could include factors relating to streamlined proposal preparation and contracting processes, higher revenue or profit, better risk management, improved governance, improved quality control etc.|
|10.||What key issues does your company expect to face internally in its business and in the external environment in the next 6, 12 and 18 months? These could include the need for finance, strategic partners and alliances, existing and potential competitors, marketing skills and collateral.|
|11.||Given the above foresight, critical success factors, definition of desired customers, offerings, projects, and processes, what then are or should be your company's business objectives in the next 6, 12 and 18 months?|
|12.||What are the problems that have to be overcome for your company to achieve its business objectives? It may be that an existing shareholder, angel investor or venture capital relationship is a problem requiring a specific strategy. Please provide details of the ownership and control documents (eg shareholder's agreement).|
|13.||What are the gaps in your company's core competencies, offerings, business functions and competitive advantage that need to be filled if your company is to achieve its business objectives?|
|14.||What are your company's strategic options for such problems and gaps?|
||Given the above, what is your company's decision regarding its strategic business objectives (eg in respect of revenues, profitability, market position and market share)?|
New clients are often surprised by these questions. They don't expect them from lawyers. They include legal questions as part of a multi-disciplinary approach to business and especially intellectual property legal work. Our experience, is that this adds more value especially for small and medium-sized enterprises. They rarely have complete systems already in place merely requiring focused or niche legal work.
Take preparation of a contract as an example. The questions help not just prepare a legally binding contract. They go further to help select - the type of contract a client in fact needs. Its length, style, format, signature provisions, and use in the overall transaction process. This can involve business proposals, quotes, tax invoices and other transaction documents. The multi-disciplinary approach takes in the big picture. It sets out a transaction schema, like the accompanying graphic for an IT company.
Execute well with this approach and you'll increase revenue and profits and attract improved business valuation multiples and EBITA / EBIT multiples.
Move forward with these three proposals:
"Crossing the Chasm - and Beyond" chapter by Geoffrey A. Moore. This chapter and the above graphic appear in Robert A. Burgelman, Modesto A. Maidique and Steven C. Wheelwright, Strategic Management of Technology and Innovation (McGraw-Hill Irwin, Boston, 3rd Edition, 2000), pp 265-272.