In order to build a new technology venture, Corporate Innovators and Start-up Founders have to be prepared to have what we call ‘Critical Conversations’ with Customers, Investors, and other stakeholders including Employees.
The issue is that for many Innovators and Founders such conversations are new to them.
However, they cannot be ignored! As a new venture you have limited time and money, or ‘Runway’ as it is also referred to.
If you handle these Critical Conversations well, you may be able to stay within your Runway or find ways to extend it.
Ignore them, or handle them badly, and you will end up wasting time and money and most likely crash at the end of the Runway. The survival rates for new tech ventures beyond their initial Runway are not good.
Hence we call them ‘Critical Conversations’. Let’s look at some scenarios:
The right customer
Your new and innovative technology that will offer a ‘difference’ to the customer initially is of interest only to business benefit focused enthusiasts and visionaries. This aspect is driven at 'C' level decision maker and influencer, and often the CEO in a smaller/mid size company.
They are the ones open to new technology to benefit their business. They understand their pressing issues, problems, and opportunities.
This means talking to the decision makers in such a business which may be daunting for new Innovators/Founders and this poses another aspect of ‘Critical Conversations’.
These customers are on the left hand side of the chasm in the ‘Technology Adoption Curve’ (customers on the right hand side are not your initial targets as they will not deal with the risk of people and things that are new and unproven in their eyes).
The trick is to find these kind of customers through contacts you may already and/or conversations with the right people that have insight and influence in the line of business or industry you plan to target. You need to have the right conversation with them before they will give you their contact details.
The right conversation
Imagine you’re in front of the right audience, which may be one or more people. Your time will be cut short unless your conversation resonates with the issues on their mind.
Do it right and the opportunity opens up for you. What you learn may be worth ‘gold’. They may commit to ‘next steps’ with you after some more meetings, e.g. a letter of intent, or even an order.
Do it wrong, and that opportunity to progress your venture vanishes. That's why the converstaions at this level are 'critical to your success!
The right answers
Business is about paying customers. The result of conversations with potential customers needs to show that you are on the right track.
That will lead to a ‘go’ for the project, or the money from your investor, or ‘yes’ from a new member of to join the team, or a customer agreeing to commit to a 'next stpe' with you.
Or, it could be a thumbs down. More iterations to find another potential customer, investor, or employee which means more time, more expense and, potentially, the end of your Runway.
In most cases you get just ‘one shot’ at a particular audience.
Let’s focus on preparing for and conducting ‘Critical Conversations’ as part of the Customer Development process.
A Customer Discovery conversation is sketchy and tentative as you and the other party are working each other out. If it appears there is a match in thinking about problems/pain and solutions you can learn a lot by delving deeper during this first conversation. The difficult thing is to know how to keep it going in the right direction for you.
Each additional conversation with other customers or people in the customer’s line of business or industry builds on others you have already had. As soon as you have significant new learning, you need to integrate that into your story for the next conversation. That takes active listening, note taking, analysis, synthezing and practice. of all these aspects
A follow up Customer Validation conversation may be easier in that it is a second contact with the same person(s), but you need to be careful about that as there is no real relationship or performance on your part yet. You need to validate the key points from the previous conversation and other key aspects that you have learnt about through conversations with other customers and people in the customer’s line of business or industry.
And you need to extend the conversation to better understand and quantify pain points in order to identify how your ‘difference’, in terms of what in particular you will do and offer to the customer that others can not. You need to solve real and present pain for the customer and thereby create special value in the customer’s eyes. Remember you need to exploit and be rewarded for your ‘difference’ that you are investing in and stay away from commodity thinking and pricing.
You also need to get to understand the customer decision making process, and how long it takes, as well as explore if/how it can be shortened. Time may not be on your side!
The initial Customer Creation conversation content and format builds on all the preceding and you may be clearer about your ‘difference’ and its value in the customer’s eyes, but is still tentative. You need to prepare for this as it is probably the most difficult conversation if you have not had much prior practice.
This is because it’s not until you ‘ask for the money’ that you get the real indication if the customer understands and appreciates your ‘difference’, and the value that brings to them!
Again, if there is still a gap in mutual understanding it may mean the end of the conversation with that customer, or more iterations going back over aspects of Discovery and Validation. As mentioned above, the extra expense and time involved in more iterations may prejudice your take-off by the end of your Runway.
Other 'Critical Conversations' to be had.
These may be with your own CEO in the case of a Corporate Innovation project, or potential Investors, or key people you want to bring onto your team. As is the case in described above for Customer Development, these conversations also need careful thinking through, planning for, and a practiced approach.
In regard to the need for practice for new tech venture teams, we have found Team / Role Play exercises based on a real or simulated customer situation work well.