Innovation Series #9: Business Model Testing

22 03 2009

Recently, I was in a converstion with Kallol, a good friend and Director of HeadStart Network Foundation and we were discussing various aspects of Entrepreneurship. One interesting aspect of the discussion was about Business Model Testing. I was inquisitive to learn more about this when he mentioned the term. Over the course of the discussion I understood that this is what I was trying to do with various people I speak with too.

What is Business Model Testing?

Well, the first thing which comes to my mind when someone has an new business idea is How will it fit? Three years back, I too had a great, facinating and passionate idea. My friend and I came out with a business plan and a colourful presentation to show it to investors 🙂 Well, we were successful to a certain extent. We presented at the first TiE-EAP Program and got an 8 ranking (1 being the least and 10 being the highest) for the idea we had. As expected, we got a 2 in Financial Model. We were techies and thought that our product will be accepted and definitely we will be able to hit the target customer base in the next five years. Well, that was a bit of over-confidence. How many of you are in the same boat?

The key aspect we forgot is the business viability and the research. We did not go to any potential customer and ask if he/she would be interested in a service like what we wanted to provide. We ASSUMED that they would accept. This is the first step to failure.

I wrote about Business Model Innovation in one of my previous posts. What I am emphasizing here is the importance of Testing your Business Model. Here are few aspects of the framework which you might want to consider:

  • Identify your Idea and WRITE it down.
  • Evaluate your idea yourself, as if you are the customer.
  • Take it to your family and friends and ask for their feedback. Remember, you need to accept the feedback as it comes. Do not JUSTIFY your idea at any point of time. JUSTIFICATION RUINS!
  • You would have surely got feedback and suggestions. Make the modification and take it back to the same set of people. REPEAT this step until you have the buy in of at least 95% of your first customers 🙂
  • Now, work on the prototype. Prototyping is very important. You need not have money to prototype, use the various open source tools available on the net to build your prototype.
  • Take the prototype back to your potential customers 🙂 Take feedback and build on it.
  • Ask your potential customers if they are willing to buy your Innovation and how much are they willing to buy it for. Take a buy-in (don’t hesitate to take it in writing too) from all your potential customers that they would be willing to buy your innovation once it is out in the market.
  • Work on the economics of costing. Build your financial model along the lines of the cost which your potential customers promised. This becomes your FINANCIAL MODEL.
  • Make decent and practical projections of potential sales.

You might not be a gauranteed success story, but am sure, you would have definitely averted loads of unpredictable risks if you followed the above process.

Also, you may seek guidance or suggestions from any one who is willing to listen to you too.

On these lines, if you are interested in getting a productive critic for your Innovation, feel free to write to me at harinath {at} dazasya {dot} org {dot} in. Well, I don’t charge anything though 🙂





Shaping future of India

18 03 2009

Yesterday, I read an article on Rediff, illustrating that Singapore ranks number 1 in Innovation and the US is slowing down on its speed. 

If you notice the eco-system trend, US has always been a proactive supporter of Innovation and Entrepreneurial spirit. Singapore has always been one of the best countries in the world which provides world-class education and ecosystem for Innovation. However, due to its size and other limitations, it has never got its due recognition. 

Now, I would like to share my views as to why we in India are not able to stand up to the demands of the growing needs of sustaining ourselves. 

History

As long as the history goes, we have not been proactive in nature. But, as time passed by, we have become more re-active than nurturing ourselves into being proactive. 

If you look at the great Indian Epic, Mahabharatha, Arjuna has not been proactive in the war. Lord Krishna motivates him and enlightens him on the need for the war and why he should fight. This trend existed earlier too, but it has gained a lot of momentum with this episode. Basically, we are the kind of people who need motivation and someone should show direction for us to move. 

Over the period of time, the trend continues. Our ancestors, parents and today we, would love to continue the same way. I am not saying this is wrong, but what we need today is the shift in our thinking. This cannot happen in a day or two, but the seeds of the thoughts need to be planted. 

We have read many articles on how other countries are looking at nurturing themselves to be in this global war for gaining economic independence. Even, we here in India have embarked on this journey. 

What do we need to do?

There are few things which I notice in my daily life and I would like to address them here for us to start thinking as to what we can do. 

  • Ask Questions – We are the kind of people who do not ask questions. We are from childhood taught to obey, rather than question back (to our parents, teachers, family, friends, colleagues, boss etc). Our general tendency and comfort zone is to follow rather than question and understand. We should start inculcating the habit of asking questions when we don’t know rather than just accepting what we see or hear. 
  • Share Information – Around 5 years back, one western in one of the mailing groups mentioned “Indian’s are eager to learn, but they never share their learnings with others”. Even though I had a tough conversation with him after that, I needed to accept that comment, because Yes, we do not share. I have been following various technological and recreational groups on Yahoo and Google. The general trend is that we ask, learn and keep the information to ourselves, but never share anything new what we learn. Why? 
  • Education System – Today, from a kindergarden school to University, we are taught everything. Opportunity to learn, explore and share what we learn is missing (I am sure it is existing in few institutions though). How many of us apply in our daily lives, what we learnt in our school/college days? I am sure, 90% would agree with me, when I say that it is almost negligible.
  • Aspirations – We aspire big, but when it comes to the reality of working on our aspirations, we tend to take a back step. Why? We are not risk takers. Always we have been taught to be careful. “Don’t take a risk, just play safe”. But, how will it be if we shift our thinking to “Take calculative risks”? Playing safe has been our motto and we continue to do so. 
  • Support – Unfortunately, we do not receive support in many things which we want to do. But, if you dare and aspire to do something different, you will receive support…. that too, only after you show success. 

We need to change our thought process and being to learn and share. I am sure, and I am seeing the change in quite a few areas, but still there is a long way to go.   

Do not always follow the path which everyone takes, instead, take a different one and leave a trial.

For all the above what I stated, if we are waiting on someone to come and change things for us, take it from me that it would never ever happen. We need to begin the Change. And as all great things are not accomplished in a day, even this change would take time, but I am sure, that each of us can witness the power this change would create for all of us. 

Jai Ho!





Angel Investors in India

2 03 2009

If you are an entrepreneur and looking for some Angel Funding, the below is a list of Angel Investors in India:

Indian Angel Network
Accel Partners
Ojas Ventures
SeedFund
Axon Ventures
Mercatus Capital
Epiphany Ventures
Garage Again