How a project begins often indicates how it will progress. The same is certainly true in the new venture incubation process. Across our work with numerous corporations to launch new ventures, we’ve noticed a pattern among the most effective products that go to market: a fierce focus from day one on what the customer wants and needs.
Our CEO and Founder, Linda Yates, advises global corporations that “Surveys are statistically significant and strategically irrelevant. All you’ve done is outsourced your potential to truly understand your customer at a visceral level and develop empathy for your customer.”
Identifying customer pain is a fundamental element of the Mach49 new venture incubation process, and it can often humble the new venture team, disproving their hypotheses and taking the business in a new direction. This often-overlooked phase is critical to ideation, helping to determine which ideas actually have the potential to grow into a profitable venture.
How Stanley Black & Decker Taps into Customer Pain
Stanley Black & Decker, a Fortune 500 manufacturing company, has completed several incubations with Mach49. This pairing has generated several successful ventures, including Surehand, a hiring platform to connect skilled tradespeople to industrial employers, and DADO, a platform for construction document management and intelligent file search.
Hayagreeva (Huggy) Rao, Professor of Organizational Behavior at Stanford Graduate School of Business and Faculty Partner with Mach49, interviewed Jake Olsen, founder and CEO of DADO, and Kevin Lemke, VP and Strategy Operations Manager at Stanley X, to gain insights on their experience with new venture incubation. Both Olsen and Lemke circled back to the same central tenant for success: identifying customer pain.
DADO’s Olsen explains that connecting with the user was a fundamental step in the new venture incubation process. He highlights “How powerful it can be to get the voice of the user and to really understand the problems that they’re experiencing.” Instead of the standard ideation process -- coming up with a product and assuming it will serve a customer's needs -- the more effective methodology is to actually interact with the customers and gain their insight on the problems they are facing, and then find a way to solve those problems. This is not just a job to be outsourced or given solely to junior team members. CEOs and team leads must conduct these interviews to hear exactly what their stakeholders want. After hundreds of customer interviews, the team’s charge is to turn that data into a product or service concept that is both technically feasible and meets the stated wants and needs of their customers.
What Are the Phases of New Venture Incubation?
Over the last several years, Stanley Black & Decker has perfected the process of understanding what their customers need and providing it to them with new businesses that build future revenue and broader domain expertise. Stanley X’s Lemke describes the three phases of the venture incubation process: understanding customer pain, synthesizing those pains to develop a solution, and designing a business based on that product. He cautions corporations: “There is a bit of a desire to jump through this process, but you can't jump to it. You have to get into those pains, live it, get into those solutions, and take all the learnings out of that to come up with the [product] that you want to take to market.” He pinpoints the fatal flaw of many incubations: jumping straight to the business viability phase without first taking the time to connect with the customer and generate a product that they actually need and will use.
Why Companies Incubate New Ventures with Mach49
Mach49 works with global businesses to drive meaningful growth through creating, building, and launching new ventures generated from within the organization. We take a disciplined, methodical approach to ideation, allowing new venture incubation to move at a rapid pace while still generating viable ideas to promote growth and development within the parent company. Learn more about the Mach49 client experience with new venture incubation and beyond.