Larry Zentner, Director of Inzenka, recently wrote a great letter to the Financial Times’ editors with the headline, “What successful entrepreneurs share is a ruthless approach to derisking.”
He notes that, “Breakthrough innovations such as.. the iPhone are not simply the result of entrepreneurial luck, but of brilliant commercial management.” He points out that successful launches have a solid pipeline of sales long before launch.
That, my friend, is the essence of derisking a venture. Here are several examples of brilliant commercial management.
#1 – In the past year, we were engaged to help launch a US-based manufacturer of all-electric trucks. For two years in advance of the formal market launch, the company’s investors had funded a full time sales manager who pre-sold the company’s products. For the launch press conference, representatives from three Fortune 500 truck fleet operations attended to show support for this new company and its products.
#2 – During the development of his innovative mutual fund analysis software, Bill Chennault shared the process and the prototype product with an online community that included several prominent financial journalists and notable financial planners. Overlap launched with several key customers and journalists completely engaged with the product. Overlap became an industry standard and continues to evolve today.
#3 – In preparing the launch of the original Macintosh (1984), Apple set the standard for building a pipeline of support long before a formal product launch. In his book, Selling the Dream, Guy Kawasaki details his role as the Macintosh evangelist. His assignment was to sell the third party developers (both hardware and software) on creating hardware and applications for the new Macintosh OS before the product launched. At the time the Macintosh emerged in 1984, the third party developers delivered an array of complementary products that helped make the Macintosh an immediately useful product. The availability of compatible laser printers, PostScript and PageMaker helped to create the desktop publishing category and, ultimately, a huge Apple success.
In launching your product, it is imperative that you start very early engaging the key players in your market space. The more your engage, the more you will benefit from the input from key prospective customers, key prospective distributors, key collaborators with complementary products and key suppliers.
The more you can engage with your key players in your market space, the more you derisk your venture.