This morning, I had breakfast with 2 French friends entrepreneurs who are starting up an enterprise software company in Brussels after two years working, respectively, as a financial auditor and a consultant in Luxembourg and London. Both are 25. Starting an enterprise software startup when you’re so young is extremely difficult. Not that the older, the smarter, but large companies (not to mention venture capitalists), especially in Latin countries, tend to trust youngsters less when it comes to big business. In enterprise software, my guess is that the young crowd makes it perfectly when sales cycles are short (inexpensive apps sold to mid managers or silo-ed clusters like R&D labs or subs). Large accounts feel you can’t be a heavy weight sales exec. if you don’t have grey hair. I think that’s a shame, but what can I do…I won’t reveal the name of the company here, nor the nature of its business, because I am not allowed to, unlike asking for you people to help here on Tech IT Easy. Indeed, my two mates came to Paris to meet with many software guys as well as friend-contacts at potential clients. They came to me to brainstorm on sales materials they need to start nurrishing their sales pipeline. I told them I have absolutely no serious experience in sales – although I will at some point in my career, but they insisted on us three to spend two hours together, an hour on their business plan that I won’t talk about here, and an hour on their sales materials.

Here’s the perfect sales exec. package we came up with while brainstorming:

- A corporate overview document - 4 pages max.

- A functional product data sheet - 4 pages max.

- A technical product data sheet - 4 pages max.

- A price list (including prices for the different versions of your application + price of additional modules + consulting costs + deployment costs + service prices + hosting prices, if applicable). Keep in mind to update your price list frequently and mention the date of the last update in the document.

- A customizable standard value proposition document including all the above just in case you feel the client is willing to proceed during the meeting. This document should include a corporate overview, the vision behind your product (pain tackling / must have or comfort enhancer / nice to have? The former will sell better), the pain / lack of comfort identified at your client, your functional value prop, technical matters, option catalog, service catalog, price & delivery. My call is that this document shouldn’t exceed 20, 25 pages for very complex products for your client to be able to read it during lunch time, while in the toilets, before they go to bed and go through another time in an internal meeting to make a purchase decision. Any higher format will increase the decision cycle.

- A white paper on the benefits of your solution vs. the competition. Don’t forget to explicit the methodology. 25 pages max. excluding miscellaneous.

- Client testimonials (once you have clients) – 2 pages max. each

- On your website, allow the prospect to get a hint on the ROI of your solution by entering a few parameters

- For ‘cheap’ enterprise solutions (eg software below the capex line ie business line or business center P&L-friendly, roughly USD 30K upfront or 50K yearly per monthly payments), same thing with price: allow your prospects to type in a few parameters on your website and come up with some pricing. In case your pricing isn’t fully accountable and transparent (ie price depends on the client, it happens…) then make sure you have a commercial NDA ready to be signed by your counterpart prior to the second meeting.

Guys, none of us have a clue on the quality of our brainstorm. Did we get it right? What would you improve, add, remove? Why and how?

Addendum: we’re to meet again in Brussels in November once they have recruited their two first sales execs to think about how to organize a sales force. Something I think I can’t contribute on but the entrepreneurs want to turn the tables, do something fresh of advice from the grey hair type. I think this is sort of risky, and I told them so, especially in enterprise software, but the two guys have the stubborness of success…As for this post, they required that I blogged for advice when effective.

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One of the difficulties of technological markets is that, in most cases, technologies are developed and then have to find a customer’s need that they can fulfill to be marketable. However, the reverse process, meaning identifying a need and looking for a technology to fulfill it, is often key to succeed, at least in the short term. But traditional market research methods fall short in indentifying customers’ needs far in advance: typical customers have trouble conceptualizing ideal products and are often stuck in the boundaries of current technologies.

For one of my course, I recently had to analyze a case on 3M innovative methods. One of them, called the Lead User Methodology (created by MIT’s Eric Von Hippel), is a well-known methodology aimed at creating breakthrough products by identifying the needs of the most advanced users, who often develop themselves some solutions to fulfill their current needs because no company already develops these solutions. The best example of this consumer-generated product is the sports drink Gatorade developed with input from athletes, or the “liquid paper” invented by a secretary for correcting typos. The Lead User Methodology proposes to leverage these users’ knowledge by offering a process for companies to identify them in their sector and translate their ideas into concrete products. You probably already know some examples of the application of the LUM but I will simply provide more details about the framework.

The LUM is a 4 stages process lasting approximately 5 to 6 months in total. It is a project team based approach, involving 4 to 6 people from the marketing and technical department. The project team is required to commit up to one third of their time to the project, with the aim of encouraging the commitment of the project team and fostering a sense of ownership of the project and its final outcome. The first stage is the Project Planning stage. This generally lasts 4 to 6 weeks and involves general research and identification of areas of interest and the level of desired innovation in the selected area. The second stage is Trends/Needs Identification. At this stage, the information gathered in the earlier stage is consolidated to identify areas for further development. This would take approximately 5 to 6 weeks and would involve discussions with experts in the relevant area. The third stage, lasting 5 to 6 weeks, involves Preliminary Concept Generation and Lead User Identification. At this stage, the project team would be working closely with lead users to gain an in depth understanding of the need and generate a preliminary concept to meet this need. The final stage is the Final Concept Generation. At this stage, the preliminary concept is further developed. A workshop is held, with participants consisting of the project team, in-house experts and lead users to discuss and improve on the final concept. It is important at this stage to evaluate the feasibility, appeal and priorities of the final concept to ensure that the final outcome is commercially viable.

At 3M, this methodology has been first implemented in the Medical-Surgical Division, and has led not only to new products in surgical drapes but also to some strategic shift: Lead Users, picked in all the relevant areas of expertise, including a make-up artist for his expertise in the application of materials to the skin) identified the need of providing a solution to keep infections from happening by precautionary upstream measures, whereas entering the upstream containment market was a departure from 3M traditional strategy of working only on incremental innovations. But the LUM was so successful for the Medical-Surgical division that it was then adopted by 8 of the 55 other divisions. According to the article “Performance Assessment of the Lead User Idea-Generation Process for New Product Development” (Lilien, 2002), the lead user method generated breakthrough new products at a higher rate than methods traditionally used at 3M. Annual sales for the average funded LUM project idea was forecasted by management to be $146 million in year five—more than eight times higher than projected sales for contemporaneous traditional projects. They also found that funded projects emerging from 3M Lead User studies had significantly higher novelty (usually being judged “new to the world”), addressed more original newer customer needs, and also had significantly higher forecasted market share in Year 5 (on average, 68% vs. 33% for non-Lead User ideas) than did those from more conventional methods.

However, even if this methodology is especially designed for technological products, some specificity can reduce its applicability:

• Highly secretive industries where lead users may not feel comfortable or may not be able to disclose information and knowledge are not suited for this process;

• The lengthy process can prevent this methodology from being applied effectively in industries with really short term innovation cycles or where quick turnaround from research to market delivery is required;

• The LUM is better suited to meet the needs of the industrial goods market rather than consumer goods market as lead users of industrial goods can typically be identified more reliably than lead users of most consumer goods.

And eventually, it goes without saying that the major obstacle to the implementation of this kind of process is simply the resistance to innovation in some large companies, afraid that Lead Users could identify disruptive needs forcing the company to evolve, which exactly the purpose.

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