April 2015

Last week I had a mentoring session with a startup that was wrestling with a couple of critical questions. First, they had identified six potential target markets. Second, they were wrestling with which of several different business models to pursue (sell the product, sell a subscription, sell customer data, or some hybrid/variant). After asking lots of questions, I thought it might be helpful to understand how these issues played against each other, and also how each one played against the new value proposition that they were bringing into the market (they have a handful of dimensions in which their product is an order of magnitude better than the traditional existing solution).

In many ways, I was reintroducing some of the tools that we regularly used in Strategy Labs at TeleChoice a dozen years ago, but with a new twist. I started by drawing on the (whiteboard) wall a matrix/spreadsheet with each row being one of the values where they’ve introduced an order of magnitude improvement (e.g. portability), and each column being one of the proposed target markets. We then went row by row and I asked which of the target markets would most highly value that improvement. In that cell, I wrote a “1” and then in the second most aligned market, I wrote a “2” etc. until we had completed the force ranking for that value. We then moved to the next row and repeated the process. At the end, we summed it up and the lowest scoring target market was the one that was best aligned with the revolutionary aspects of their product.

Although everyone agreed that it was imperfect because it was off the top of our heads, we agreed that it was the basis for now “getting out of the building” and validating what we thought the most aligned markets actually did value. (And everyone seemed confident that the well aligned markets really were rising to the top.) The beauty of this approach is that it not only gets us to the “right” answer quickly, but it helps us understand why it is “right” in a way that we can then make additional good decisions – such as where to focus development, what to emphasize in sales and marketing for each target market, etc.

The energy in the room was contagious as the founding team found themselves able to move off of indecision with a clear path to greater focus in an environment that requires efficient execution. My instructions to them were to now repeat the same process two more times – once matching values with business models and another time matching business models with target markets. (In reality, there are 6 combinations possible – switching the rows and columns since you always force rank across the rows, but you can usually pick which you focus on based on where your indecision lies.)

At the end, the team wanted to know what I called this tool. I was stumped because I honestly had never used it like this before. It’s an adaptation of what we used to call the TeleFilter, but it’s a totally different structure with a different goal. For lack of a better name, I’ll call it the Market-Value-Model Matrix (yes, I am trained as an engineer…).

Maybe this could help you with a hard decision you face, or maybe I can help you identify a different type of tool that will fit your unique situation. Drop me a note at russ.mcguire@gmail.com if you think I could help!