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Uploaded on December 2, 2006 by Stuck in Customs

Something that makes an appearance fairly early in a business plan is the addressable market size. This is usually the point where after some mumbo-jumbo you’d end up with something like “…and thus we only need 1% to secure $100m turnover.”

Mark Davies has a good post on the subject from a VC perspective but I thought I’d add some examples from real life. The first benefits from solid data, the second is more speculative.

An enterprise I’m working with have a new game for the education sector (and several others but for the purposes of this example I’m concentrating on the education sector). Education is great (as are most public sectors) because there’s so much great data out there to use. Tt doesn’t mean they’re any easier to sell into but that’s another post.

So this enterprise happens to be in Canada, and one of their markets is Quebec. Helpfully for me, the Ministère de l’Éducation du Québec has most of the data I need. With a bit of digging (and guess work, some of the better data is in French) you can find the 9 English School Boards, and 17 French School Boards. Between them there are 512,515 students in Secondary education (enrolled for Academic Year 2007/2008). Which is nice and big.

Trouble is, we’re not selling to all those students. We’re actually only interested (at the moment) in two of their 5 years at Secondary School, so we need to divide that number by 2/5 to get a more accurate number (371,739) which is still nice and big.

The next bit needs a bit more knowledge about the fundamental business model. The game is sold to a school, or school board, on a tired license model. The more licenses you buy, the cheaper the per student price. So one addressable market is to sell a single license to the whole of Quebec, ka-ching!

However, more likely is that we’ll sell to each school board separately (or even each school). Again, data is our friend here as we can find the enrolled student numbers for each School Board. Time to fire up Excel.

And so on…

Now I can apply our tiered pricing model to each School Board and see what our ‘true’ addressable market is for Quebec. Of course these numbers include special schools that might not purchase a license; equally, it doesn’t include the private school sector which hopefully will.

I could drill down to individual schools (I have the list of schools, sizes, locations, who the Principal is and contact info) but we don’t really want to cold call each school and try to sell them each a separate license as we’re in bootstrap mode and the cost-benefit just isn’t there. Early conversations have indicated that School Boards are the most likely point of purchase so that’s enough detail.

This means I can say with high confidence that our addressable market for Public Schools in Quebec is $350,250. Shake rinse and repeat for the other Provinces and Territories in Canada and (for this business model) the Public Sector education market is $3,415,300.

How confident are you of the numbers behind your addressable market forecast?

What do you do if you don’t have those numbers? Stay tuned for my next post.

What makes successful companies different? What a great research question, and one that the University of Strathclyde posited a couple years back. They followed up with 37 companies, in 8 EU countries and gathered over 1,000 stories (interview descriptions of processes and activities).

Catherine Maguire from Strathclyde was presenting their findings. They began with the CIM-OSA model of business processes (one I’m very familiar with as it formed a good chunk of my research career). Turns out my supervisor was on the advisory panel for this work also, small world!

Basically, CIM-OSA identified three key processes that all businesses do: Manage, Operate, and Support. The research focus has been around Operate (and to a lesser extent Support). The research group I was with in Plymouth did most of the early work developing a reference model for the Operate Process. Catherine was looking at the Manage process.

Being a very industry orientated researcher (probably why I wasn’t very good as an academic) I always suspected that the actually process maps were less interesting that the activities and practices they represented. In my own research I concentrated more on these activities and the social systems around them, than the formal modelling (drawing boxes & arrows).

Catherine’s group has now confirmed what we all ‘knew’ but hadn’t ‘proved’. The actual processes in successful companies are the same as for less successful companies. Successful companies are a bit more integrated; the big difference is in the “how”.

Hugh MacLeod from The Hughtrain

Or as the song goes, “It ain’t what you do it’s the way that you do it”…

There are a hundred+1 jobs to do when you’re running a business, and they’re all important. Fulfilling Orders and Getting Orders (to use process speak) are probably the most important, but I was talking to a HR exec a couple nights ago that insisted that hiring the best people was the most important because they’d then make the business work (might have been a vested interest there).

So where do you start?

The more successful companies were generally more mature in all their Manage activities but Strathclyde did find that there were around 15 activities that seemed to differentiate more successful from less successful companies.

What Catherine’s research has found is that given equal resources, and for their 37 companies, higher maturity in these 15 activities was a reliable indicator of a successful company. Catherine flashed the activities up on screen and they were largely around communication (as I’d expect) but I didn’t get a chance to write them down, hopefully I’ll be able to update this post shortly with that list.

I did ask if they’d looked at how the Manage Processes that these activities represented subsequently interacted with the Operate Processes. From a business change perspective you’re generally presented with a whole load of symptoms operationally and have to analyse your way back to root causes. This research could really help by making explicit some of the implicit links that are learned from practice.

I’m following up with Catherine to see if I can reproduce that list of Activities here together with links to the online tool they’ve developed to help companies self-rate themselves.

Personally I can’t hold 15 things in my head simultaneously; what 5 activities are embedded in your organisation that differenciate you from the competition?

Uploaded on May 22, 2007 by s_harding_uk

David Gilroy from Conscious Solutions nailed it at a Bristol Enterprise Network event last week when asked what changes he was making to his product to sell better in a recession.

“Absolutely none”. The pitch to clients is changing, however, from how a great website can enhance your offering to one that points out how a great website can retain and generate more revenue from existing clients. Moving from selling vitamins to pain relief.

Angel investors have always asked what pain you’re addressing. This advice was been given by Greg McAdoo - Partner, Sequoia Capital at Y Combinator’s 2007 Startup School, more recently by Mark MacLeod, and before and since by many others.

Which is great if you’re thinking up your new killer app. What was interesting with David was that he has a successful business and is quickly positioning his product to be that pain killing pill that people will spend money on.

I’m not working with David, but a company I am advising (Heliotrope) has a game that promotes soft skills in the education market (I’ll come back to education in a later post on markets, and we’re looking at other markets than just education). At the moment it’s a pretty vitamin offering, helping kids understand themselves and their group and getting ready for the school term ahead. However, Canada is suffering a major pain with kids dropping out of school. Part of the extensive piloting for the game was with kids at risk of dropping out. The feedback on their increased self-esteem and desire to re-engage means we’re nuancing the emphasis from vitamin benefit, towards pain relief.

We’re also looking for new sources of pain that the game can address. The game and it’s holistic benefits haven’t changed, but people buy pain relief now when they’ll pass up an opportunity to perhaps make things better in the future.

How are you positioning yourself to be an indispensable pain relief pill rather than a nice-to-have vitamin pill?

Disclosure: This was originally published on TechCrunch UK, I’ve made some edits at the end in response to comment on TC, Underscore, Twitter etc.

Uploaded on March 29, 2007 by pictopedia

Its not all stovepipe hats and clay dogs in Bristol, these days its more location aware gaming, mobile media and building businesses. As a relative newcomer to the city (5yrs and loving it) this is a quick peek around some start-ups.

Two Bristol startups you will have heard about are Glasses Direct (James Murray Wells, a UWE graduate) and MyBuilder (Ryan Notz, a Bristol Uni graduate). But what else is going on…

The Watershed, a digital media & arts complex in the heart of the city, has been mixing up creativity and technology for over 20 years.The place for start-ups is their new Pervasive Media Studio, headed by Clare in partnership with HP Labs & with heavy involvement from both Bristol University & UWE. The Studio launched with it’s Media Sandbox competition. Several of the projects came from larger established companies (including Aardman, HMC, BDH, Plot, etc) but the winning project brought together two startup companies, Thought Den (Dan) and Mobile Pie (Richard), to create Happy Packages. After some early PR from the Guardian, Mobile Pie have knuckled down to turn out a number of games and have picked up some awards along the way. They’ve also since been confirmed as one of the first 4,000 iPhone developers and are working with Futurelab to find funding for an exciting e-learning project.

Another Sandbox success is the Comfort of Strangers from the eponymous Simon + Simon. Using a heavily modified mscapes platform, two teams have to ‘discover’ matched players while avoiding opponents. A soft voice in your ear is all that alerts you to the fact that ‘a dancer is nearby, you have lost a life point…’ This ARG team game has been showcased at New York’s Come Out & Play. They now organise the monthly igLab to explore collaborative and social gaming developments. 19-21 Sept they’re turning Bristol into one giant playground… everyone is playing - running, hiding, seeking, finding, escaping, tagging…. igFest.

Just north of the M5, Chris & Craig at BexMedia have been developing a video platform for mobile devices, recently expanding into interactive video after developing a mobile map & video experience for freshers to quickly acquaint themselves with Anglia Ruskin University. On a slightly bigger scale is the Visualise project from 3C Research to bring unprecedented levels of personalised streaming data & video to mobile devices at live sports events. Currently with the World Rally Championships, Nigel’s actively spinning out new startups to commercialise the software & services.

Round the beck end, The Web People started up coding websites like everyone else but Tom quickly developed a web-services management system that made it simple for him to manage lots of websites, with lots of different services, for lots of clients all in parallel. Co-founder Mark saw the opportunity, they’ve just launched an open beta, and on track for some stellar growth (clients are already beating a path to their door). Also working behind the scenes to spread and gather the word virally is Team Rubber with Andy at the helm. Though not strictly a startup, having survived the dot-com boom, Andy’s a staunch supporter and is actively helping the ‘new guys’ get off the ground.

Behind all these successes lies a growing entrepreneurial ecosystem mixing startups, future clients, partners and investors. This mixing covers everything from the fun & interesting (Dorkbot / igLab), learning & technical (Skillswap / BathCamp), business & sectoral (OpenCoffee / Media Tuesday) to University sponsored (BEN). Its not just the geeks & designers either, lawyers, accountants and exec recruiters are getting behind the start-up scene in Bristol like never before.

Update - following the TCUK comments, I’ve added some more thoughts below - Update

Matt Jukes pointed out the education leadership that Bristol has shown with the work of Futurelab and JISC in the region. He also got a name drop in for Beanbag Learning (where he’s based) and pointed up Science TV. BeanBag are getting more attention from Jemima Kiss at the Guardian’s tech blog which is great news.

Perhaps this is another focus area for Bristol to consider? There have been a couple posts on the education start-up scene including another guest post from Al Briggs on TCUK. The comments section of that post goes into some discussion on the UK education sector, including a great mini-post by David McAll from sums.co.uk. One of David’s points is the need to build relationships slowly which probably reflects most ‘real world’ applications but makes it harder to justify the hockey stick returns beloved of VCs.

I also advise Heliotrope, a start-up in the education sector. They’re based in Toronto, Canada and have been doing this slow burn relationship building for over 3 yrs (during the last 18 months we’ve been actively seeking investment). The first real success is just now beginning to take hold with a School Board in Quebec adopting Prelude for multi-school roll-out. It’ll be tight (and we’d still like the investment) but it looks like there’s a sustainable revenue model from this approach.

Bristol has a strong democracy and participatory culture, good technology and software development, and track record in educational innovation. Perhaps it would be a good primary focus for some of the city’s digital innovators? In the fields of informal learning, games as learning, soft skills, etc (i.e. non-curriculum examined subjects that translate well between geographies and school systems) there are opportunities.

With a global focus and patient investment, might this be the next big thing…?