I know I promised a post about David Schonthal’s Kellogg lectures, but that will have to wait. I was leafing through my notebook trying to find my notes from Keith Murnighan’s lectures on Leadership.. I’ve been reading his book and wanted to write a small post. Instead I came across notes I had from a guest lecture at INVO on due diligence. Which is rather pertinent considering some of the stuff I have been up to recently. Due diligence is something you perform to understand the world in which your invention resides. There are many tools which can help you perform due diligence. Instead I will list some of the questions you need to ask to understand whether your product is viable.

Due diligence is understanding several things including: market opportunity, the technology & the intellectual property (IP) that surrounds it, your management team and the finances. One of the things we learnt was that you need to figure out the things that could be a big problem for you early on. The longer you leave it, the more you bury your head in the sand, the more money you will burn for potentially nothing. This first post is about the questions you need to ask and answer about the market you will be entering.

Market Opportunity

• Use a bottom-up approach, not top-down. It’s all very well the fact that the potential market globally is worth €1 trillion. The likelihood of you capturing that entire market is low. Instead you need to figure out who would buy your product by asking potential customers (actually this relates really well to what I’ll write about David Schonthal’s stuff..)
• Does the product address the problem better than the alternatives?
• Is the market ready for the product? Check out these technologies that were way ahead of their time
• Validate the existence and the severity of the market problem you are trying to solve
• Who are your competition? Market leaders? Newcomers? Who are their investors?
• What about your customer? Do they have authority over what they purchase? If not who does and what does that mean for your pricing model? A good example is the pharma industry. Some makers of amazing wound healing products are struggling because Medicare has capped reimbursement levels for certain product types.
• What about external factors influencing the market? Regulatory, environmental, legal, political factors?

There are ways and means of doing this. You can buy expensive market reports which may or may not save you some time. You can hire consultants. You can use the internet. When it comes to your customers, in the words of Steve Blank you need to “Get out of the building” go and talk to your customers, find out what they really need, not what you think they need,