Entrepreneurship
Glossary
SECTION 4
YOUR SOLUTION
This section is useful to answer the following questions:
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What is your solution (product, service) and what are the benefits to your customers?
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What is your competition?
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What is different/unique about your solution?
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What is your value proposition?
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Is your solution scalable?
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What stage is the opportunity/technology at?
(Features Advantages Benefits Analysis)
(Minimum Viable Product)
(Intellectual Property)
(Technology Readiness Level)
(Unique Selling Point)
(Supply Chain)
SOLUTION
01
In business context, a solution is the way a business solves a specific problem. The solution can be a product e.g. that customers buy or rent or a service that customers pay for. There are multiple ways to solve a problem, so you need to be open minded on what your solution will become. There is no point in pushing your business idea if nobody will buy your product / service or if they can’t afford it.
Clearly describe your solution so the listener understands what they would get, either a physical thing or someone providing a service, if they buy your solution and if that will address their problem. This is called problem - solution fit. Or in other words: your product or service needs to address the pains and also provide gains so the customer will buy it.
PRODUCTS AND SERVICES
02
The items which you bring to the market, for purchase by your customers.
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Product is usually used to describe physical or tangible objects i.e. things which can be seen and touched.
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Services are intangible, for example expertise or time.
Simply put, products are things people make (or in some cases grow). Services are things people do. Services are often linked to a product, for example contracted maintenance of the product.
FEATURES, ADVANTAGES & BENEFITS (FAB) ANALYSIS
03
A FAB analysis describes the features, advantages and benefits of the solution – a product or service – and how they work together to help differentiate a product / service within the market. Features create advantages, and advantages bring benefits to a customer.
FEATURES
04
Features are the elements or characteristics of your product / service.
Features are those characteristics that you can see or use. e.g. handheld, red, made from memory foam, an app that edits and stores your photos etc.
Clearly defined features are essential when you come to develop your product / service. It is the benefits of those features which will sell the product / service to customers. It is not always easy to make the leap from a feature to a benefit - so it is worth articulating.
ADVANTAGES
05
An advantage is what a specific feature does, and how it helps. These are factual
and descriptive but do not yet make a connection as to the benefits or how it will
make users' life better.
BENEFITS
06
Describe the ways in which your product / service will make things better for the people who buy it and / or the community at large.
The benefits of your product / service are the reason why customers will purchase it and thus have a direct link to the profitability of your proposed business.
When you are speaking with people who may not understand the technical detail of your product / service e.g. prospective investors, shareholders, customers, it is very important to ensure that the benefits are well understood.
By focusing on describing the benefits, you also do not give away the “secrets of your solution”. And at this point in the process, the details of how the product works are not important.
PROBLEM-SOLUTION FIT
07
It is important to achieve Problem-Solution fit. This occurs when you have evidence that:
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the problems which your product / service are designed to address are real
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your prospective customers care about solving them
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your product / service will provide a solution to these problems.
To validate your problem-solution fit, you can use a range of tools - you can create a prototype, an explainer video, a demo or a presentation based on that. You can invite a group that belongs to your customer segment, to take part in a survey or focus group and get their feedback.
INTELLECTUAL PROPERTY (IP)
08
Intellectual property is an umbrella term for assets that are the creation of the mind or intellect e.g. the original ideas or invention behind the development of your product. Your product / service will be the tangible outcome of the IP assets that you create. Common ways of protecting your IP include patents, trademarks, copyright and trade secrets.
Please note that the definition of what constitutes IP and the rules / laws around it, differ from country to country. It is very important that you seek local legal advice to insure that your work is protected.
Ownership of IP can be complicated. For example in UK, postdoctoral researchers are considered employees, which means the IP belongs to the employer, likely to be the University or funding body.
To gain ownership of your IP, you will have to arrange for the IP to be offered back or transferred to you (which may or may not be possible). Likewise, if you work for a commercial or public sector, it is usual for the IP for employees to belong to the employer, not the individual(s) who developed the technology.
PhD students are not employees and often own their own IP, but that also depends on how much prior knowledge and how much on university resources they relied on and used, so always start discussions with technology transfer offices early to clarify ownership.
It is always better to clarify IP ownership at the idea stage, than later on when you are seeking investment. Unclear IP ownership will make you less attractive to prospective investors.
PROTOTYPE
09
The original model of your product or service from which future versions are developed.
A prototype is typically created to test the functionality, viability and / or saleability of the product/service, in the expectation that changes will be made, sometimes in several iterations, before the product/service is released to the market.
Prototypes can range from paper based, all the way to functional interactive prototypes. These could be mocked up interactive PowerPoints or 3-D printed versions of a product.
Prototypes are a powerful way to receive feedback from users.
Prototypes are non-committal and can be used at various steps in the design process.
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A prototype is a non-viable product from a customer’s perspective. Prototyping is a powerful way to explore concepts, understand usability with potential customers/users, and improve functionality.
MINIMUM VIABLE PRODUCT (MVP)
10
The minimum viable product is a very early, working version of your product / service, which includes just enough features to attract early adopter customers who then provide feedback for future product development.
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Instead of focusing on a perfect product with loads of features which may be over-engineered, you build and sell your MVP to get people using it and extracting value from it.
The MVP is a valuable tool in validating your product, finding product-market fit and prioritising future development, with minimum of time and money invested at this stage MVP should not to be confused or used interchangeably with prototype.
A prototype is a way to rapidly test the basic ideas and assumptions behind the product.
PRODUCT-MARKET FIT
11
Product-Market fit describes the situation when:
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there is a strong market and
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your product/service can satisfy that market
It indicates that your customers will actually buy your product or service, to a degree which will enable your business to be profitable.
VCs are keen to see hard evidence of Product-market fit before investing. Examples of such evidence include surveys of potential customers which show:
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customers who have never used a product like yours understand the benefits and would use it
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customers using similar products would switch to yours
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customers who have rejected similar products would be willing to try yours
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customers understand the unique value your product brings
Product-Market fit is distinct from Problem-Solution fit which occurs when your product will provide a solution to genuine issues which concern your customers /users.
SCALABILITY
12
A business is scalable when products / services can be delivered to significantly more customers without increasing its operating costs (capital, employees, services) proportionally and becomes more and more profitable as it grows.
In other words, it generally means that unit costs decline as your business expands. Digital products, courses, and blogs are great examples of scalable businesses. To be scalable, the business must focus on improving the profitability and efficiency of services even when its workload increases.
It is very important to consider how your business will cope as it becomes increasingly successful and to plan what growth looks like for you. Business models that aren't scalable are potentially profitable as a small business but can't grow in an economical way, hence less attractive for investors who are looking to gain a monetary return on their investment.
TECHNOLOGY READINESS LEVEL (TRL)
13
Technology readiness levels are a method of assessing the maturity of your technology. NASA has developed a system of nine TRLs which are widely used across a range of industries.
Knowing and communicating what TRL your technology/solution is at enables you and stakeholders understand how risky the project is and how much development (cost and time) a certain technology needs before being utilised.
A TRL rating helps in measuring the progress of a project and helps you identify what kind of funding you need for progressing through the readiness levels.
There is a good overview of TRLs here:
https://www.twi-global.com/technical-knowledge/faqs/technology-readiness-levels
UNIQUE SELLING POINT / PROPOSITION (USP)
14
In marketing terms, the unique selling proposition, or the unique selling point, is the strategy of informing customers about how one's own brand or product is superior to its competitors.
Your USP comprises the elements which differentiate your product / service from the competition, making it better than other similar products / services.
Understanding which of the features and benefits of your product are uniquely beneficial to your customers and how you differentiate is extremely important when showing why your business is likely to succeed.
UNIQUE VALUE PROPOSITION
15
A value proposition is a clear statement about the outcomes that an individual or an organization can realize from using your product, service or solution.
It communicates what differentiates your product or service from the competition and positions it as the best possible option on the market. It is not a slogan (“because you are worth it”), it is not about bragging (“we’ve got the best xxx in the world”), it is not information (“we sell xxxx).
A good value proposition should articulate:
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How your product or service solves/improves user problems
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The benefits for the user
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What makes your product unique
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Why people should choose your product or service over a competitor
VALUE CHAIN
16
A value chain describes the full set of a business's interrelated activities from the initial reception of materials all the way through the creation of the product / service to its delivery to market.
A value chain analysis gives businesses a visual model of these activities, allowing them to determine where they can reduce costs and focus on activities that increase value to the customers and establish competitive advantage.
Businesses commonly choose between two types of competitive advantage:
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cost advantage (low cost providers e.g. Poundland, Wallmart)
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differentiation advantage (specialised product/service, with a premium price, e.g. Apple)
Understanding which advantage works for you will help your business to focus activities. Primary activities include:
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Inbound Logistics
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Operations
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Outbound Logistics
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Marketing and Sales
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Service post sales
INDUSTRY VALUE CHAIN - SUPPLY CHAIN
17
An industry value-chain is a physical representation of the various processes involved in producing goods and services, starting with raw materials and ending with the delivered product. It is also known as the supply chain. It is based on the notion of value-added at the stage of production) level. Stakeholders are supply chain partners.