3rd 5

Entrepreneurship
High‐Level Product Specification

(Disciplined Entrepreneurship: STEP 07)
Six Themes of the 24 Steps
• Who is your customer?
• What can you do for your

customer?
• How does your customer acquire

your product?
• How do you make money off

your product?
• How do you design and build

your product?
• How do you scale your business?
What can you do for your customer?

6. Full Life Cycle Use Case
7. High‐Level Product Specification
8. Quantify the Value Proposition
10. Define Your Core
11. Chart Your Competitive Position
Recap (Step 06)

• Full Life Cycle Use Case
• Why Do This Step?
– Provides valuable information for future steps; Understand potential barriers to
adoption from a sales perspective; Provides context
• Building Full Life Cycle Use Case
– (10 Stages: Who is involved, When, Where, How)
• Worksheets
– Sketch of How the End User Currently Solves The Problem (or Doesn’t)
– Full Life Cycle Use Case Worksheet
– Sketch of How the End User Will Use Your Product
– Reflection on Full Life Cycle Use Case
• Useful First Draft

STEP 7: HIGH‐LEVEL PRODUCT
SPECIFICATION
• A High‐Level Product Specification is a visual representation
of what your product will be when it is finally developed
based on what you know at this point of the process.
– It is something you draw without understanding all the underlying
details, but which gains consensus within your team on where you are
going.

You need to make sure that all your team has a common agreement
on what the product is.
Why High‐Level Product Specification?
• Drives a common understanding, on the team and beyond, of
what product the company is thinking of producing.
• Creates a focus on benefits rather than features and

functions.
• Begins the process of prioritizing which benefits are more

important than others.
• Gives you something concrete to discuss and iterate on with

the Persona (and later, other customers) while staying in
“inquiry mode.”
Creating
In this step, you will build a High‐Level Product Specification and
ultimately a first draft brochure (which can be physical and/or
digital, but the concept and content is essentially the same).
– Complete the Visual Representation of Product
– Check Product Alignment with Persona
– Create a Product Brochure

Creating
Visual Representation of Product
• Visual: If it is hardware, this is easy and surprisingly clarifying. For

software, use a series of simulated screenshots to form a storyboard that
shows how someone would use the product.
• Focus on benefits: Focus on the benefits and not the technology or

functionality. In particular, focus on the benefits that are related to the
Persona’s top three priorities, with special focus on the top priority.
Creating
• High level: Don’t include too much detail! Just enough to show high‐level
functionality that will drive the benefits.

Visual Representation of Product
• Hits the spot: Make sure the product specification resonates deeply with
the Persona and other customers in the target End User Profile group.
Conversely, don’t be influenced by people outside your Beachhead
Market, because they won’t help you achieve a dominant market share in
your beachhead.
Creating
• Flexible: Make sure your product specification builds in the ability to
iterate with the Persona about key features, functions, and benefits.
Some people make multiple versions and show them side by side to the
Persona.
Worksheets
• Visual Representation of Product
• Product Alignment with Persona

Summary
• Visually laying out your product will allow your team and your potential
customers to converge around an understanding of what the product is
and how it benefits customers.
• Staying at a high level, without too many details or a physical prototype,

allows for rapid revision without investing too much time and resources
this early in the process of creating your new venture.
• Building a visual representation of the product will likely be harder than

you think, but will get everyone on the same page, which will prove
extremely valuable going forward.
• A brochure with features, function, and benefits to the customer
further clarifies your product offering and is a great complement to the
pictures you create.
Summary (Step 07)

• High‐Level Product Specification
• Why High‐Level Product Specification?
– Develops Common Understanding
– Focus on benefits rather than features and functions
– Prioritizes which benefits are more important
– Concrete to discuss and iterate on with the Persona

• Creating High‐Level Product Specification
What can you do for your

customer?


Entrepreneurship
Quantify the Value Proposition


customer?

your product?

your product?

your product?

Recap (Step 07)

• High‐Level Product Specification
• Why High‐Level Product Specification?
– Develops Common Understanding
– Focus on benefits rather than features and functions
– Prioritizes which benefits are more important
– Concrete to discuss and iterate on with the Persona
• Creating High‐Level Product Specification

STEP 8: QUANTIFY THE VALUE

PROPOSITION
• In as concrete and concise a way as possible, summarize the
value your product will create for the targeted end user.
• In simple terms, benefits fall into three categories:

– Better
– Faster
– Cheaper
• The goal of the Quantified Value Proposition is to clearly and

concisely state how your product’s benefits line up with
what your customer most wants to improve.
Why Quantify the Value Proposition?
• Customers will be much more likely to buy your product if
the value it provides lines up with their highest priorities.
– Customers must justify the investment required to acquire your
product by offsetting this against how much money your product will
make for them, or how you will improve their life in a way that really
matters to them.
• Quantifying your product’s value proposition will validate

that you are headed in the right direction and that your
product is in line with the customer’s needs.
Process
• Find out what is Persona’s Highest Priority and how to
measure it.
• Find out how Persona currently operates in the “as‐is state”.
• Define the “possible state”.
• Finally, create a visual, one‐page diagram, because the

customer can easily see the Quantified Value Proposition and
can show it to others for validation.
Highest Priority
• Start by taking your Persona’s Highest Priority from the
Persona Profile worksheet.
– Talk with the persona about how to measure that priority
quantitatively, and what unit to measure it in.
Highest Priority
Your Quantified Value Proposition converts the benefits your
persona gets from your product into tangible metric that aligns
with the persona’s top priority, or in some cases priorities. •
Time to market for producing goods (Value: Time)
• Gain addition sales for their own products (Value: Money)
• Simplify a process or reduce their environmental impact

(Value: Improvement)
• Reliability (Value: percentage rate of failure, errors per

thousand products, downtime per month, etc.)
“As‐is” State
• Next, take that quantitative measurement and map out how
the Persona currently operates in the “as‐is state.”
– Interview the Persona to get this information, and use the Persona’s
own words when describing the as‐is state.
– Once you have mapped out the as‐is state, review it with the Persona
to make sure you clearly understand how things currently stand, and
the Persona agrees with the terminology and the data.
– If the Persona does not understand the as‐is state, you will have
trouble demonstrating how your product can benefit the Persona.
“Possible” State
• Next, define the possible state in the same terms as you just
did for the as‐is state with your proposed new product.
– Explicitly show how your proposed product will better satisfy the
Persona’s #1 priority in detail.
– Express the possible state by using the same units with which you
measured the Persona’s top priority.
Worksheets
• Axis to Measure Value Proposition
• Visual One‐Page Summary of Quantified Value Proposition
Summary
• The Quantified Value Proposition is framed by the top priority
of the Persona. You first need to understand and map the
“asis” state in a way familiar to the customer, using the Full
Life Cycle Use Case. Then, map out the “possible” state of
using your product, clearly indicating where the customer
receives value based on the Persona’s top priority. A visual,
one‐page diagram is best, because the customer can easily
see the Quantified Value Proposition and can show it to
others for validation.
• When done well, this will be of immense value to you
throughout the process of launching your business, so extra
effort spent to get this optimized is well worth it.
Summary (Step 08)

• Quantify the Value Proposition
• Why Quantify the Value Proposition?
• Process
– Persona’s Highest Priority
– Persona’s “as‐is state”
– Define the “possible state”
– Visual One‐Page Summary of Quantified Value Proposition
• Worksheets
– Axis to Measure Value Proposition


Who is your customer?
1. Market Segmentation
2. Select a Beachhead Market
3. Build an End User Profile
4. Calculate the Total Addressable Market (TAM) Size for the Beachhead
Market
5. Profile the Persona for the Beachhead Market
9. Identify Your Next 10 Customers

Entrepreneurship
Identify Your Next 10 Customers


customer?

your product?

your product?

your product?


4. Calculate the Total Addressable Market (TAM) Size for the

Beachhead Market
Recap (Step 08)

• Quantify the Value Proposition
• Why Quantify the Value Proposition?
• Process
– Persona’s Highest Priority
– Persona’s “as‐is state”
– Define the “possible state”
• Worksheets
– Axis to Measure Value Proposition
STEP 9: IDENTIFY YOUR NEXT 10

CUSTOMERS
• Create a list of the next 10 end users after the Persona who
closely fit the End User Profile.
• Engage them in a dialogue on your plans and validate or

invalidate what you have done so far.
Why We Need This Step?
• In addition to being able to validate or invalidate many of the
assumptions you have made, this step will provide you with
extremely valuable data points to refine the work you have
done in previous steps
• Either you will end up having greater confidence in your

selection of Persona or you will have to change your
selection.
Process
• Start by identifying what you want to gain from talking with
additional end users. What hypotheses about your work thus
far are you looking to validate during this step?
Hypothesis
• Hypothesis: a supposition or proposed explanation made on
the basis of limited evidence as a starting point for further
investigation.
– Step 2: Beachhead Market
– Step 3: End User Profile
– Step 4: Beachhead TAM
– Step 5: Persona
– Step 6: Full Life Cycle Use Case
– Step 7: High‐Level Product Spec
– Step 8: Value Proposition
– Other Key Assumption
Process
• Next, make a list of potential end users to contact.
– List of Potential Contacts
• As you start to talk with the people on your list, take notes about
each contact.
– Notes from Conversation with Potential End User
• Fill out the summary of information collected from each person you
contacted in the same table.
– Summary of Next 10 Customers
• Finally, analyze the information you collected and reach
conclusions about your hypotheses as a result of your discussions.
– Lessons Learned from Identifying the Next 10 Potential Customers
Summary
• Identifying and interviewing your Next 10 Customers now
ensures that your Persona description and other assumptions
hold true for an array of customers.
• If you have completed this step properly and made

modifications to the other steps from what you learned here,
you should have great confidence moving forward to build
the plan for your new venture.
Summary (Step 09)
• Identify Your Next 10 Customers
• Why We Need This Step?
• Process
– Identify hypotheses you want to validate
– List of Potential Contacts

– Notes from Conversation with Potential End User
– Summary of Next 10 Customers
– Lessons Learned from Identifying the Next 10 Potential Customers
Market


Entrepreneurship
Define Your Core


customer?

your product?
• How do you make money off your

product?
• How do you design and build your

product?

Market

Recap (Step 09)

• Identify Your Next 10 Customers
• Why We Need This Step?
• Process
– Identify hypotheses you want to validate
– Next, make a list of potential end users to contact.
• List of Potential Contacts
– As you start to talk with the people on your list, take notes about each contact.
• Notes from Conversation with Potential End User
– Fill out the summary of information collected from each person you contacted in
the same table.
• Summary of Next 10 Customers
– Finally, analyze the information you collected and reach conclusions about your
hypotheses as a result of your discussions.
• Lessons Learned from Identifying the Next 10 Potential Customers
STEP 10:
DEFINE YOUR CORE

Define Your Core
What is Core?
• Determine the single thing that you will do better than anyone
else that will be very difficult for others to copy.
What is Core?
• You are looking for that single thing that will make it very
difficult for the next company that tries to do what you do.
• It could be a very small part of the overall solution, but

without it, you don’t have nearly as valuable a solution.
• The Core also provides a certain level of protection, ensuring

that you don’t go through the hard work to create a new
market or product category only to see someone else come in
and reap the rewards with a similar business of their own.
What is Core?
• While many other steps are dominated by primary market
research and viewing the world through your customer’s eyes,
this step is primarily focused inward.
• It is important to keep in mind that a Core is not a benefit. It

is an asset or a capability.
– Your customer does not really care about your internal assets or
capabilities; they just want benefits (i.e., value that matters to them).
– For instance, lowering time to market for their own products is a

benefit. If that is the desired customer benefit, the Core will be an
enabling technology (a function) that creates this benefit.
Elements to a Strong Core
There are three fundamental elements to a strong Core:
1. Unique: This asset will be difficult for anyone else to replicate.
2. Important: This asset ties directly to your ability to produce something

your target customer values very highly.
3. Grows: To be a strong Core, it should increase in strength over time

relative to competitors.
Moat –vs– Core

• The third element is often forgotten, and it is very important.
If your advantage is that your competition does not
understand what you are doing today but once they figure it
out, they can catch up quickly to you, that is not a Core, but
instead a moat.
• A moat is a competitive advantage that slows down

competitors but can be overcome.
• Moats are good, but a Core is better.
What May Not be Your Core

• One common starting point when determining your Core is to
conclude it is your intellectual property. Its effectiveness as a
Core depends heavily on your industry.
• One of the most overused and incorrect terms used when
defining a Core is “first‐mover advantage.” The term refers to
a company being successful solely by being the first in the
market.
• Like intellectual property, locking up key suppliers is a good

strategy to slow down your potential competitors and should
be aggressively used when appropriate, but it is not your
ultimate Core, just a trap along the way for those who might
follow.
Define Your Core

• To determine the Core, you will start by inventorying your
asset and potential assets.
• You will then identify weak moats, strong moats, and Core
candidates, ultimately choosing one.
– You choose only one because you do not want to diffuse your focus.
– One great Core is sufficient.
– If it is strong, the value of the second is relatively unimportant.
– You would rather have one very strong Core than two of medium
strength.
Define Your Core

• The decision on the Core can take a while and may seem a bit
frustrating as you want to move ahead and continue to make
progress.
• So even if you aren’t sure what is the best selection for Core,
pick a few candidates for the Core and realize you must solve
this riddle soon. Some of your potential Cores may end up as
strong moats, but the most important thing is that you are
thinking ahead and protecting yourself.
• Worksheet: Defining Your Core Worksheet
Summary (Step 10)

• What is Core?
• Elements to a Strong Core
• Moat –vs– Core
• What May Not be Your Core
• Define Your Core
– Worksheet: Defining Your Core Worksheet


Entrepreneurship
Chart Your Competitive Position


customer?

your product?

your product?

your product?

Recap (Step 10)

• What is Core?
• Elements to a Strong Core
• Moat –vs– Core
• What May Not be Your Core
• Define Your Core
– Worksheet: Defining Your Core Worksheet
STEP 11: CHART YOUR

COMPETITIVE POSITION
What is Your Competitive
Position?
• The Competitive Position is where you take your Core and
translate it into something that produces real value for the
customer, something that they will care deeply about.
• Look at your product, versus your Persona’s alternative
options, through the lens of the Persona’s top two priorities.
– The Competitive Position is designed to quickly make sure you have
fundamentally differentiated yourself from your competition and that
your customer sees you are uniquely positioned to create sustainable,
superior value for them.
– If you have properly defined a strong Core, this exercise turns out to
be relatively easy.
• In the Competitive Positioning Chart, you show visually how
well you fulfill your Persona’s top two priorities versus how
well your competition does so.
• The goal is to show that your Competitive Position both

leverages your Core and that your product satisfies your
Persona’s priorities far better than existing or logical future
products.
• If both of these are not true, you may need to revisit your
market selection or your Core.
Process
• Charting your Competitive Position starts by identifying the
top two priorities of your Persona and then assuming that
these two priorities are all that matter.
Process
• Next, create a simple matrix/graph as follows:
• Worksheet: Competitive Position Chart

Process
• Divide both the x‐axis and y‐axis into two halves.
• On the x‐axis, write the number‐one priority of your Persona.
• On the half of the x‐axis closer to the origin, write the “bad state” of this
priority (e.g., if the priority is “reliability” then write “low” here).
• On the other half of the x‐axis, write the “good” state of this priority (e.g.,
“high” for “reliability”).
• On the y‐axis, place the number‐two priority of your Persona. Write the
“bad state” on the half of the y‐axis closer to the origin, and the “good
state” on the other half of the y‐axis.
• Plot your business on the graph, along with those of your competitors
(current and future). Also include the customer’s “do nothing” or “status
quo” option.
Summary
• Defining your Competitive Position is a quick way to validate
your product against your competition, including the
customer’s status quo, based on the top two priorities of the
Persona.
• If you are not in the top right of the resulting chart, you
should reevaluate your product, or at least the way you are
presenting it.
• This will also be a very effective vehicle to communicate
your qualitative (not quantitative) value proposition to the
target customer audience in a way that should resonate with
them.
Summary (Step 11)

• What is Competitive Position?
• Chart Your Competitive Position • Process
– Worksheet: Competitive Position Chart


How does your customer

acquire your product?
12. Determine the Customer’s Decision‐Making Unit (DMU)
13. Map The Process to Acquire a Paying Customer
18. Map the Sales Process to Acquire a Customer

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Entrepreneurship

High‐Level Product Specification

• What can you do for your

• How does your customer acquire

• How do you make money off

• How do you design and build

What can you do for your customer?

7. High‐Level Product Specification

8. Quantify the Value Proposition

10. Define Your Core

11. Chart Your Competitive Position

Recap (Step 06)

– Full Life Cycle Use Case Worksheet

– Sketch of How the End User Will Use Your Product

– Reflection on Full Life Cycle Use Case

• Useful First Draft

High‐Level Product Specification

• Creates a focus on benefits rather than features and

• Begins the process of prioritizing which benefits are more

• Gives you something concrete to discuss and iterate on with

– Complete the Visual Representation of Product

– Check Product Alignment with Persona

– Create a Product Brochure

• Visual: If it is hardware, this is easy and surprisingly clarifying. For

• Focus on benefits: Focus on the benefits and not the technology or

High‐Level Product Specification

• Product Alignment with Persona

• Staying at a high level, without too many details or a physical prototype,

• Building a visual representation of the product will likely be harder than

Summary (Step 07)

– Focus on benefits rather than features and functions

– Prioritizes which benefits are more important

– Concrete to discuss and iterate on with the Persona

What can you do for your

7. High‐Level Product Specification

8. Quantify the Value Proposition

11. Chart Your Competitive Position

Quantify the Value Proposition

• What can you do for your

• How does your customer acquire

• How do you make money off

• How do you design and build

What can you do for your customer?

7. High‐Level Product Specification

8. Quantify the Value Proposition

10. Define Your Core

11. Chart Your Competitive Position

Recap (Step 07)

– Focus on benefits rather than features and functions

– Prioritizes which benefits are more important

– Concrete to discuss and iterate on with the Persona

• Creating High‐Level Product Specification

STEP 8: QUANTIFY THE VALUE

• In simple terms, benefits fall into three categories:

• The goal of the Quantified Value Proposition is to clearly and

• Quantifying your product’s value proposition will validate

• Find out how Persona currently operates in the “as‐is state”.

• Define the “possible state”.

• Finally, create a visual, one‐page diagram, because the

• Gain addition sales for their own products (Value: Money)