Experienced mentor teams accelerate development in high-tech ventures

By Thomas Klem Andersen, Published on February 22nd 2016

During the past two years Scion DTU has developed the mentoring program Scion TeamMentoring in collaboration with the MIT Venture Mentoring Service (VMS MIT) in Boston. In Scion Team Mentoring +60 experienced business professionals have helped 37 technology-based companies accelerate their development.

The mentor program differs primarily because an entire team of mentors is involved in each mentoring session. This model is based on solid experience as MIT VMS has been around for 16 years and provides mentoring to about 200 entrepreneurs annually with a mentor network consisting of 180 mentors. One of the reasons that MIT VMS is the successful mentoring program it is today is the meticulous care invested in building the mentor network:

“A key to success for MIT VMS is vetting the mentors. This involves extensive screening and a rigorous interview with program executives to ensure they have relevant business experience. They also have to be willing to, openly collaborate in a team-mentoring environment, which is quite a foreign concept to almost everybody. People are used to just one-on-one mentoring” 

- Jerome Smith, mentor Co-director to MIT VMS

A need for qualified mentoring among technology-based SMEs

Scion DTU's hardware focused environment houses +200 companies. Several of them are high-tech SMEs, who have placed themselves close to the Technical University of Denmark in a development environment where innovation is on top of the agenda. Among these companies, we experience a demand for qualified advice from experienced business people.

SMEs has to cover the same tasks as larger companies. No matter the size, someone needs to be in charge of product development, production, sales, service and management. If there are only few employees few will have to play several roles. In addition - high-tech companies are often run by engineers and engineers are technically very competent, but who do not necessarily have the same business skills.

A fledgling venture is more likely to thrive when an idea, good business planning, and an entrepreneur are matched with proven skills and experience

- One of the Core Principles of MIT VMS

For the manager of an SME it can take a while to realize all the tasks needing to be taken care of in order to build a healthy and sustainable business. When resources are scarce, and the ones that are available are technically specialized you need qualified advice within the areas outside your own expertise. Here is what one of the companies at Scion DTU says:

"Our mentoring process has been an amazing journey. To begin with, I was unsure if growth was possible, and whether or not it was relevant for us at all. With the mentor teams’ help, we have redesigned the organizational structure and we have grown 60% within one and a half years. I am now confident that we are on the right track to secure the future of the company. The sparring I have received has been a tremendous help! 

- Christian Mammen, Director of JJ X-Ray

Mentor teams and a comprehensive framework makes all the difference

Like MIT VMS, in the Scion Team Mentoring program we also group mentors in teams for each company and offer a structured framework for the collaboration between mentors and mentees.

There are many advantages to putting mentors together in teams. The challenges of companies in Scion DTU are diverse and they change quickly. There is rarely one person who has the answers to all questions a company face. When we put mentors together in teams with complementary skills, we can offer a competence mix that can handle multiple challenges. For this reason a mentor team really can accelerate the development of a technology-based SME.

The composition of teams can be adjusted on an ongoing basis as the company's challenges changes. Mentoring does not cease if a mentor exits a team or cannot attend a meeting, and the meetings themselves become extremely dynamic, as the mentors have different perspectives on the same issues.

"Once again a super meeting! Our mentor team contributed with sharp analyzes of the product, particularly in relation to how the business model can be improved. It is excellent with a mixed mentor team - we get topics covered from all angles"

- Gustav Erik Skands, Director of SBT Aqua

A mentor team works somewhat like a flexible advisory board that can offer 360-degree sparring but without the formal relationship which characterizes an advisory board or a professional board. We find that a mentor team can help a company avoid many time-consuming and costly mistakes that can be committed at all stages of the company life cycle.

It obviously requires a little extra when coordinating a meeting between this many people where the mentor competencies has to match the company's challenges. There is a risk that an otherwise good match between company and mentors doesn’t lead to anything for the simple reason that both mentors and mentees are too busy to coordinate meetings, prepare agendas, or write decision summaries.

In Scion DTU, we take responsibility for the coordination, the structure and the process of mentoring. We have well described guidelines for companies and mentors, and we have solid and proven procedures for matchmaking and coordination of meetings. In this way we ensure effective and valuable mentor meetings for both companies and mentors. It is important for us that no one  is wasting their time.

A strong and committed network of mentors

We started from scratch in 2014 and scaled the program gradually to the +60 highly qualified mentors we are today. MIT VMS stressed that the gradual scaling was important to ensure the quality of the program. The Mentors in Scion Team Mentoring are people with solid professional, industry or business experience. They are serial entrepreneurs who have been there themselves, managers with years of experience in management, operations and development who understand what it takes to get a business to thrive. There are specialists in sales, marketing, legal issues, HR, finance and industry experts within hardware, cleantech, medtech and life science. They can challenge the companies in relation to pricing, B2B selling, commercialfeasibility and market validation among many other things. What is most unique to our mentor program is that we have mentors who are experienced in product development and production, which is required for our hardware based companies.

Mentors in Scion Team Mentoring show great enthusiasm and they create tremendous value for the companies who participate. The mentors are excited about the opportunity to offer their experience and thus help SMEs in their development. Of course it is also exciting for mentors, to keep abreast of new technologies that are emerging in the industrial growth layer and they expanding their network by meeting other mentors in the respective mentor teams they are part of.

"You get really inspired by the energy of startups. They must have more than 24 hours in their day. I can bring that energy with me back into the large corporation where I work: Well of course we take the US market in a year! Conversely, I can help the startups become a little more realistic in their approach to the market. Their energy has to transform into concrete results – it shouldn’t be exhausted in a blaze, just because it's fun to run fast" 

-Dorte Thulstrup, Regulatory Affairs Manager at Phillips Healthcare

We look forward to setting the stage for even more mentoring for high tech companies in 2016!

The secret to succesful B2B selling

By Thomas Klem Andersen, December 4th 2015

Explain why it matters

It’s often a challenge to explain what we do and why it matters to people. When it comes to our selves we tend to focus on function/role and when it comes to our products we tend to focus on features and we forget to explain why those are super interesting. Variations on this refrain is “I’m an accountant…” or “This computer has 1,2 GHz…”. Boring right? What you are really selling is the value that this role or these features provides. They will let you do something cheaper, faster, smarter, different, less, etc.

The product itself is not interesting to people. More often than not, they will be too busy or too absorbed in habitual ways of doing things to bother listen to you.

Your target customer doesn’t care if your fancy plate is round or square as long as it is full!

You need to convince your potential customer that the ground is burning underneath her feet and that you can provide a preferred alternative!

Help your customer to succeed

You don’t want to let your selling proces be driven by hunger or neediness. You don’t want it to to be driven by manipulation either, which might happen if your main focus is you and how you’ll meet your sales KPI´s. Rather your selling process should be driven by your ambition to help your customers to success. If that is your outset your sales meetings will be about the customer, the customer’s needs and whether your solution might be the right one to help your customer meet them. Your meetings will be much more calm and honest. You’ll earn more and feel better at the same time.

Your primary initial objective will be to ask your customer to help you help them by clarifying their needs.  

Spend your time well and involve the right people

Let’s get into the nitty gritty of the actual sales process. So you have the customer meeting scheduled… It’s important that you stay in control of the process. This is the trick to close the deal.

In order to do this you should divide the customer meeting in two. On the first meeting you talk to the stakeholder who owns a particular problem and on the second meeting you present your solution to the problem owner AND the decision maker!

On the first meeting you go through two phases:

1. The gentleman’s phase

Like a true gentleman you honsetly present yourself but without neglecting your merits. This is when you establish trust and earn your position as potential partner. You make it clear to your customer that you are here to help them:

”My ambition today is in colaboration with you to assess what the right solution is for your company. To this aim I’d like to begin with asking a few questions. Is that alright with you?”

1.1 The opportunity phase

The questions you ask you can structure in accordance with the CORE model:

• Context: Get the big picture and start a dialogue about relevant problem areas.
• Obstructions: Explore potential problems and evaluate whether the problems that you can provide solutions for are present. What are the related costs?
• Results: Determine the specific consequences of the identified problems.
• Expressed Needs: Let the customer confirm that it would be valuable to solve the problem.

Nice and slowly you build a business case and get your customer to describe a problem for which you can offer a valuable solution.

Your success criteria is to schedule a second meeting where the key decision makers can participate. This second meeting is crucial, because a written proposal or a telephone conversation can easily give rise to misunderstandings and jeopardize the communication at a critical stage.

”I won’t send you a written proposal, but I will prepare a presentation for you and others who will have to take part in this decision. It’s an important decision and we need to make sure that it make the right one.”

The mindset you’ll need to have in order to secure this second meeting is that you are both equally important partners in a negotiation and therefore you need to frame it accordingly. They need to comit as do you. Your time is equally valuable.

”At this point we also need something from you… We need a ”go” from your boss or whoever will have to make the final decision, that your company is interested in seeing a solution proposal for this particular problem.”

If it is not possible to have the decision maker at this second meeting you need to seriously consider if you want to buy this lottery ticket by sending a proposal or spend your time somewhere else. This of course depends on how many interesting leads you have.

”What is holding you back from saying yes to this? …so if we can fix this such and such will you arrange the meeting or buy the solution?”

Respect the three essential principles of selling

Thoughout this entire process, in order to to sell well, you need to keep an eye on three essential principples for selling. These are the fire triangle of selling:

With all this in mind, you should consider inverting the traditional sales process. Traditionally you spend the most time presenting your product and closing the deal. With the explorative mindset described above in which the ambition is to help your customer to success you’ll have to divide your time like this and in the following order: Introducing (40%), exploring (30%), presenting (20%), closing (10%).

Now go help your costumers be successful!

The ABC of value based pricing

Value based pricing

Last week Casper Mønsted from Incentive gave a really interesting talk on pricing and offered 1:1 coaching on pricing issues for the participants in Danish Tech Challenge.

  

Here’s what I took with me from his talk:

You need to consider four aspects when pricing your product or service.

1.     The pricing strategy (which is the overall price model)

2.     Optimizing the price (basing the price on experienced value, price differentiation, price regulation and estimating the experienced value for customers)

3.     The pricing processes (control and monitoring, definition of roles and responsibilities)

4.     Realizing the price (mapping and optimization of discounts and discount policies)

There are three basic ways of determining your pricing:

	Cost based	Competition based	Value based
Pros	Easy to calculate Avoids loss on products	Easy to estimate Secures competitive prices	Maximizes profit
Cons	Doesn’t leverage knowledge about the customer Doesn’t leverage knowledge about competitors Doesn’t maximize profit	Doesn’t leverage knowledge about the customer Doesn’t maximize profit	Can be complex

According to Casper Mønsted value based pricing should always be preferred. Otherwise you risk cheating yourself. The value you provide might be much greater than the price you take and the cost of production.

To base your price on value you have to understand the value you are creating for your customers. And your customers might be diverse and experience different value from your product, which is why you should consider differentiating your pricing.

Compared to cost based pricing where the price is calculated on the basis of the cost of production value based pricing is calculated from the perspective of the experienced value of the customer.

Price differentiation: Can you put a price on water?

A simple example is the price of water which varies dramatically when comparing tab water, water bought at a super market (AquAdor) as opposed to 7-eleven (Kildevæld) or a five star restaurant (bling H2O).

Another illustrative example of price differentiation is Microsofts office package which are sold in three different packagings with different prices (home&student, home&office, professional) but with the same costs of production. The experienced value is different because many companies can’t do without the office package but private persons can.

A small feature change can mean a significant value leap that some customers are willing to pay for. A good example for this is the Weber charcoal grill which can be bought in two versions the budget model without ash tray and premium model with ash tray. This is a small difference in cost of production, which creates a value difference that makes tangible price differentiation possible ($100 vs. $150).

The ABC of value based pricing

1.     Identify the advantages of your product from the customers perspective.

2.     Estimate the value of the advantages.

3.     Set the price so that the value of the advanteges exceeds the price.

4.     Repeat 1-3 for different customer segments.

What you need to do to master value based pricing:

·         Map out what your customers are willing to pay

·         Ask your customers in surveys

·         Know the value drivers of your product and map the value creation

Are the value drivers of your product delivery time, quick service after purchase, warranty, service and support prior to purchase, high reliability, low noise level, product aesthetics (visual design), the possibility to buy add-on service, low energy consumption size and dimensions?

·         Calculate the cost reductions your product makes possible

·         Analyze sales data

·         Ask distributors or industry experts

As yourself the following questions:

·         What’s my product? (remember service), know the value drivers, remember the entire package (incl. service)

·         Who are my competitors? How’s your product different from theirs, how do they price their products? How will they respond to your pricing?

·         Who are my customers? Does your product deliver different value to different customer segments? Can this be used for price differentiation?

·         Will my price be experienced as fair? Can you explain your pricing? Which reference price do your customers have?

Price differentiation 

	Premium	Standard	Budget
Characteristics	All inclusive Few people buy this, but the package exists as an anchor and benchmark for the price you actually want people to pay.	The typical package The package you want people to buy Has to have the most important features	Low fidelity There are good reasons to choose the standard model
Price ratio	15	5	3

When differentiating price always create the reference for comparison yourself, otherwise your customers will find one themselves, and that one you can’t control. And make sure that the price your customers see first is the premium price, so that becomes the anchor and benchmark for your lower prices.

Pricing is important for any business. Give it the consideration it deserves and price it smart!

Prototyping -what and how?

By Thomas Klem Andersen, Published on september 28th 2015

Last week DTU Skylab hosted an inspiring event on prototyping. Here are some insights that helped me wrap my head aorund the concept.

We so often get sucked into the trance of specifications and feature building forgetting actual user needs in the process. Engineers tend to build maximum viable products before testing them in the market and thereby risk building products that no one will ever use.

Instead you should ask yourselves: What’s the least we can do to satisfy people using only the most needed features? That will be your minimum viable product (MVP). You need to identify what it is you want to validate and then focus on that. What is the least we can do in order to validate the most critical assumptions of our value proposition? Next you find the people having the need our are building a solution for and go test whether you are actually solving their problem.

What is it and what is it not?

When talking about prototypes most people associate with it an early version of the final product which looks like the final product and have some of the same functionalities. Today however the entrepreneurial gospel seems to be that you should prototype as soon as possible and that you can do so successfully in very low fidelity (which is the case with the MVP).

At the Danish product development company Kapacitet they distinguish between functional models and prototypes. Whereas a prototype in their terminology has all the functionalities, the right size, the right materials but is not produced with the right production methods a functional model has some of the key functions but does not necessarily look like the end product.

A functional model can let you test some key assumptions about your value proposition before even building the first version of the final product. As such it can help you reduce risk, save time and money and fail fast if failure is inevitable.

According to Thomas Olund Kristensen, R&D Engineer at Kapacitet you should test commercial feasibility long before you finish your technical development. To emphasize this Anders shared the following ratio: If an idea is worth $1, and the development $100, the advertising is worth $1000 in matter of importance. You have to be quite confident that you have customers before you finish your technical development. You might spend a whole lot of money building something for which you can’t find any customers for in the end.

Serial entrepreneur Jakob Konradsen from DTU (Le Vego, NoviPel, Eupry) agress with Thomas and introduces a thrid concept to the development vocabulary: Pretotyping. Pretotyping is all about testing commercial and technical assumptions as early as possible and even before you are able to present a prototype.

“If you can’t sell the product without a prototype you shouldn’t even build the product. You need to be able to convince people in a 30 sec pitch and you can go far with just a powerpoint slide.” Jakob Konradsen

When pretotyping a simple powepoint slide can serve as your MVP to test commercial feasibility. Jakob elaborated further by saying that engineers are very perfectionistic in relation to technical solutions. In his view better is the enemy of good. No matter how much time you use, there will always be a new version of the product. You’ll never be finished developing.. At one point you just need to stop and take it to the market and see if it can make it.

In the case of the startup Eupry (monitoring of vaccines in the cold chain). Jakov and the team test a very early model in Nigeria expecting Africa to be their prime market. The test showed them that the African market is incredibly hard to penetrade because of conflicts of interest between their product and the users (not the buyers). It proved to be too large of a challenge and Eupry pivoted to a new local market: Danish doctors and they have now tested that there is a market feasible market for them in Denmark.

Available tools

Michael Kai Petersen, associate professor at DTU Compute stressed that today there’s there’s so much infrastructure to build on top of when working on entrepreneurial projects. You really don’t have to start from scratch.

• The business model canvas is great to take all elements around the idea into consideration.Prototyping is about making mockups of the business model as well as the technical solution.
• Arduino and electric imp are great for electronic prototyping 
• 3D printing lets you print early versions to present to partners and customers and they will get it right away. 
• CNC milling lets you build robust physical products fast and easily. 
• Fablabs rants you access to these resspurces. According to Nicolas Padfield, lab leader at RUC Fablab, Fablabs are going to do for things what the internet did for communication. They are the frontrunners of a democratization of production. 
• “Pop” lets you sketch out mockup apps on your smart phone. 

But even with all these ressources readily available the prototyping tool of choice for Michael Kai Petersen is still pencil and paper.

So now there’s no excuse. Go build stuff!

Pretotyping	Funcional modeling	Prototyping
Prior to technical development Commercial feasibility Low fidelity Hand held functionality (concierge etc.) Pretending to have the product Fake it ‘till you make it	During technical development Technical feasibilty Modeling functional parts Make fragments to test	After tech-development, before production Usability High fidelity 1st version of final product Present to sell

Test commercial feasibility and do the easy stuff first

By Thomas Klem Andersen, Published on september 14th 2015

This week Jakob Svagin from Scion DTU and Andreas Cleve Lohmann from Copenhagen Lean Startup circle are challenging the participating hardware startups in Danish Tech Challenge on their value propositions and market assumptions. Here are some insights from the kick off talk yesterday when the lean-rubber hit the road.

Running lean is different than “just doing it” (a mystic approach to entrepreneurship based on intuition) and the approach of traditional innovation management (an approach based on plans, specs and waterfall processes with way too long feedback loops). Running lean is neither about chance or planning rather it’s about optimizing learning under circumstances characterized by extreme uncertainty.

You have to build to test. And there’s a bunch of things you can do without even building anything because it’s crucial that you test your entire business model and not just the technical feasibility. Sure you need to test your technical solution. But you need to conduct commercial experiments and generate commercial data as well. 

Recognize that your big vision is based on assumptions and they all need to be tested. Test your value hypothesis, your market hypothesis, your growth hypothesis – which include sales channels, partners and customers. These are all part of the uncertain context which your technical innovation needs to adapt to in order to achieve problem-solution fit and product-market fit.

You should build minimum viable products (MVP’s) of your actual product. But you should also build and hack MVP’s for how you interact with key partners, suppliers, users and customers. You can do that very early on and long time before you finish your product development (if you ever do). It’s never fun to be sold a bad product, but it’s always fun to be part of building something that can become big, so have an inclusive mindset from the start.

Most likely your potential customers aren’t out there actively looking for you. So the questions you need to ask yourselves are:

•          How can you make them care?
•          Why is your product valuable to them?
•          Do you know their criteria for buying?

Your technical product development might take six months or longer. But testing commercial feasibility can be done in a matter of days and is essential to developing a sustainable business model. So go do the easy stuff first!

The fallacy of secrecy

Excerpt from Founder Institute blogpost by Joe Garza on 9/24 2014  

While it is common among founders to be hesitant about divulging their startup secrets, the truth of the matter is that your company can benefit greatly from telling people what your idea is about and what you hope to achieve. Read on to find out why.

In this exclusive video, Adeo Ressi, Founder and CEO of the Founder Institute, explains why "Nobody is Going to Steal Your Stupid Startup Idea".

Myth #1: “I Should Save My Startup Idea Until It’s Refined”

Reality: You should share your idea with everyone you meet. If you plan on pitching your idea to potential investors, why not practice beforehand? By sharing your idea with as many people as possible, you can get feedback early on to prevent wasting time on an idea that won’t sell. In a Courtney Seiter-penned article titled Why No One Will Steal Your Startup Idea, Buffer CEO and Co-Founder Joel Gascoigne says:

When you build a startup, you’re basically creating something that doesn't exist already. In order to figure out if your idea is actually going to work, it’s essential that you share it with people. You’re going to have to do it sooner or later. The longer you leave it, the more risk there is that you spend a long time working on it, and then eventually you put it out there and find out it’s not something that resonates.

Myth #2: “My Startup Idea Is Too Unique To Be Shared”

Reality: No, it’s not. Just look at the countless companies that offer the same product. If you have an idea for a startup, there’s a very good chance that there are a multitude of other entrepreneurs working on the exact same concept. But don’t let that deter you, as you should focus less on the idea itself and more on how you plan to execute it. Here’s what Cory Levy, Co-Founder at One, Inc., has to say in a Linkedin article titled Startup Secrets: Should I Hide My Business Idea?:

Ideas are a dime a dozen; it’s the execution that will set you apart from the rest. Chances are that there are people developing the same thing that you’re working on now. We plan to compete not by keeping our idea secret, but by building the best possible team and by creating the best solution to the problem we are solving.

Myth #3: “People Will Steal My Startup Idea If I Tell Them What It Is”

Reality: Most likely not. The chances of someone stealing your idea are pretty slim. In fact, sharing your idea with others is a great way to drum up interest in your company and makes getting help easier. Still not convinced? Here’s what serial entrepreneur Alexander Muse has to say in a Startup Muse article titled Should you share your idea?:

If you keep your ideas a secret it will be impossible for anyone to actually help you. Could someone steal your idea? Of course, but as I’ve said before your potential competitors are more likely to become partners. You’re far more passionate about your idea that anyone else – and most people want to partner with people with passion.

If you’re still reticent about sharing your idea with others, take into account the multitude of opportunities that your company can benefit from by simply divulging what it is you do and how you’re going to do it. And remember:

If someone does take your idea, they will never have the passion you have for it because they didn’t come up with it.” - Joel Gascoigne