The Business Plan Is Overrated

After conjuring up a brilliant business idea, I would immediately start writing a business plan. Like a skilled magician, I could make a marvelous business plan appear before your eyes in just a few days. It would be complete with colorful graphs, in-depth market research, and detailed financials. The plan would be ready to execute. And I was sure it had as many pages as possible. Why? I once heard an investor say that he only considers investing in companies with plans that make a thump when you drop them on a table. After years of practical business experience, I realized that I didn’t make a good magician and  I was only fooling myself. Now I know better.

Experience has taught me that when I get a new business idea, working on the business plan is one of the last things to do. The three crucial steps I follow before even thinking of writing a business plan will work for you, too. First, examine the competitive landscape to see what companies are already there.What do they do poorly? What can you do differently to create a competitive advantage? Second, discuss the idea with potential customers, asking basic questions that determine how much they would value your product or service, which is perhaps the most important preliminary step to writing the business plan. Third, develop a sketch or basic prototype of the product. If it’s a service, map out vital steps and describe customer experiences.

By the way, when you are finally ready to write the business plan, make sure that you find professional help in areas that aren’t your expertise. If you don’t understand how to project cash flow for the next five years, don’t attempt it. Likewise, if you don’t know anything about marketing, which is likely the most important part of your plan, you shouldn’t be writing that section. A business plan should be a collaboration, not a solo endeavor. As a well-respected serial entrepreneur once told me, investors are skeptical of any business plan written by one person.

Even the academic world, known for resisting change, is reassessing the importance of the business plan. Candida Brush, chair of the entrepreneurship division and director of the Arthur M. Blank Center for Entrepreneurship at Babson College in Wellesley, Massachusetts, put it best in a recent interview withEntrepreneur magazine:

“Students come in here saying they want to write a business plan, but that’s the last thing they need to do. The only way to get to a point where you have a truly entrepreneurial idea is to use a creative approach. Observe. Reflect. Do mini experiments, as opposed to sitting in the library reading case studies. . . . And for us, even that plan is about the process, not creating a 50-page action plan. If you get married to a bad idea, a business plan means nothing.”

Babson students are encouraged to do three feasibility studies before moving forward with an idea or writing a business plan. The studies are similar to the steps I mentioned above. More universities and entrepreneurs should adopt this approach.

In short, too much emphasis is still placed on writing a business plan when you have an idea. There is an epidemic of “Frankenplans,” business plans that are a sloppy amalgamation of various business plans or templates; having the document itself seems more important than the quality of the actual plan. Instead of rushing to finish the document, make sure you take the crucial preliminary steps before you begin writing. If done thoroughly, these steps make your business plan stronger and greatly improve your chances of success and funding.

 

Posted on April 21, 2013 by Kevin D. Johnson in Business Plan, Competitive Landscape, Strategy

source: http://theentrepreneurmind.com

TRL – Technology Readiness Level

TRL Model

Technology Readiness Level (TRL) is a measure used to assess the maturity of evolving technologies (devices, materials, components, software, work processes, etc.) during its development and in some cases during early operations. Generally speaking, when a new technology is first invented or conceptualized, it is not suitable for immediate application. Instead, new technologies are usually subjected toexperimentation, refinement, and increasingly realistic testing. Once the technology is sufficiently proven, it can be incorporated into a system/subsystem.

Original NASA TRL Definitions (1989)^[8]

Level 1 – Basic Principles Observed and Reported

Level 2 – Potential Application Validated

Level 3 – Proof-of-Concept Demonstrated, Analytically and/or Experimentally

Level 4 – Component and/or Breadboard Laboratory Validated

Level 5 – Component and/or Breadboard Validated in Simulated or Realspace Environment

Level 6 – System Adequacy Validated in Simulated Environment

Level 7 – System Adequacy Validated in Space

The TRL methodology was originated by Stan Sadin at NASA Headquarters in 1974.^[9] At that time, Ray Chase was the JPL Propulsion Division representative on the Jupiter Orbiter design team. At the suggestion of Stan Sadin, Mr Chase used this methodology to assess the technology readiness of the proposed JPL Jupiter Orbiter spacecraft design. Later Mr Chase spent a year at NASA Headquarters helping Mr Sadin institutionalize the TRL methodology. Mr Chase joined ANSER in 1978, where he used the TRL methodology to evaluate the technology readiness of proposed Air Force development programs. He published several articles during the 1980s and 90s on reusable launch vehicles utilizing the TRL methodology.^[10] These documented an expanded version of the methodology that included design tools, test facilities, and manufacturing readiness on the Air Force Have Not program. The Have Not program manager, Greg Jenkins, and Ray Chase published the expanded version of the TRL methodology, which included design and manufacturing. Leon McKinney and Mr Chase used the expanded version to assess the technology readiness of the ANSER team’s Highly Reusable Space Transportation (“HRST”) concept.^[11] ANSER also created an adapted version of the TRL methodology for proposed Homeland Security Agency programs.^[12]

The United States Air Force adopted the use of Technology Readiness Levels in the 1990s.^{[citation needed]}

In 1995, John C. Mankins, NASA, wrote a paper^[3] that discussed NASA’s use of TRLs and proposed expanded descriptions for each TRL. In 1999, the United States General Accounting Office produced an influential report^[13] that examined the differences in technology transition between the DOD and private industry. It concluded that the DOD takes greater risks and attempts to transition emerging technologies at lesser degrees of maturity than does private industry. The GAO concluded that use of immature technology increased overall program risk. The GAO recommended that the DOD adopt the use of NASA’s Technology Readiness Levels as a means of assessing technology maturity prior to transition. In 2001, the Deputy Under Secretary of Defense for Science and Technology issued a memorandum that endorsed use of TRLs in new major programs. Guidance for assessing technology maturity was incorporated into theDefense Acquisition Guidebook. Subsequently, the DOD developed detailed guidance for using TRLs in the 2003 DOD Technology Readiness Assessment Deskbook.

ESA definition

Instruments and spacecraft sub-systems are classified according to a “Technology Readiness level” (TRL) on a scale of 1 to 9. Levels 1 to 4 relate to creative and innovative technologies before or during the mission assessment phase. Levels 5 to 9 relate to existing technologies and to missions in definition phase.

Technology Readiness Levels in the European Space Agency (ESA)^[4]

Technology Readiness Level	Description
TRL 1.	Basic principles observed and reported
TRL 2.	Technology concept and/or application formulated
TRL 3.	Analytical & experimental critical function and/or characteristic proof-of-concept
TRL 4.	Component and/or breadboard validation in laboratory environment
TRL 5.	Component and/or breadboard validation in relevant environment
TRL 6.	System/subsystem model or prototype demonstration in a relevant environment (ground or space)
TRL 7.	System prototype demonstration in a space environment
TRL 8.	Actual system completed and “Flight qualified” through test and demonstration (ground or space)
TRL 9.	Actual system “Flight proven” through successful mission operations

If the TRL is too low, then a mission risks being jeopardized by delays or cost over-runs. It is a responsibility of the Advanced Studies and Technology Preparation Division to promote the technology readiness at a very early stage in order to make new missions feasible.

Oil and gas industry

The following definition is based on API recommended practice and is used in the oil and gas industry.

TRL 0 Unproven idea/proposal Paper concept. No analysis or testing has been performed

TRL 1 Concept demonstrated. Basic functionality demonstrated by analysis, reference to features shared with existing technology or through testing on individual subcomponents/subsystems. Shall show that the technology is likely to meet specified objectives with additional testing

TRL 2 Concept validated. Concept design or novel features of design validated through model or small scale testing in laboratory environment. Shall show that the technology can meet specified acceptance criteria with additional testing

TRL 3 New technology tested Prototype built and functionality demonstrated through testing over a limited range of operating conditions. These tests can be done on a scaled version if scalable

TRL 4 Technology qualified for first use Full-scale prototype built and technology qualified through testing in intended environment, simulated or actual. The new hardware is now ready for first use

TRL 5 Technology integration tested Full-scale prototype built and integrated into intended operating system with full interface and functionality tests

TRL 6 Technology installed Full-scale prototype built and integrated into intended operating system with full interface and functionality test program in intended environment. The technology has shown acceptable performance and reliability over a period of time

TRL 7 Proven technology Technology integrated into intended operating system. The technology has successfully operated with acceptable performance and reliability within the predefined criteria

The United States Department of Energy (DOE) uses the following guidelines throughout the department in conducting Technology Readiness Assessments (TRAs) and developing Technology Maturation Plans (TMPs).

Technology Readiness Levels for the DOE^[7]

Technology Readiness Level	Description
TRL 1.	Scientific research begins translation to applied R&D – Lowest level of technology readiness. Scientific research begins to be translated into applied research and development. Examples might include paper studies of a technology’s basic properties.
TRL 2.	Invention begins – Once basic principles are observed, practical applications can be invented. Applications are speculative and there may be no proof or detailed analysis to support the assumptions. Examples are limited to analytic studies.
TRL 3.	Active R&D is initiated – Active research and development is initiated. This includes analytical studies and laboratory studies to physically validate analytical predictions of separate elements of the technology. Examples include components that are not yet integrated or representative.
TRL 4.	Basic technological components are integrated – Basic technological components are integrated to establish that the pieces will work together.
TRL 5.	Fidelity of breadboard technology improves significantly – The basic technological components are integrated with reasonably realistic supporting elements so it can be tested in a simulated environment. Examples include “high fidelity” laboratory integration of components.
TRL 6.	Model/prototype is tested in relevant environment – Representative model or prototype system, which is well beyond that of TRL 5, is tested in a relevant environment. Represents a major step up in a technology’s demonstrated readiness. Examples include testing a prototype in a high-fidelity laboratory environment or in simulated operational environment.
TRL 7.	Prototype near or at planned operational system – Represents a major step up from TRL 6, requiring demonstration of an actual system prototype in an operational environment.
TRL 8.	Technology is proven to work – Actual technology completed and qualified through test and demonstration.
TRL 9.	Actual application of technology is in its final form – Technology proven through successful operations.

TRL assessment tools

A Technology Readiness Level Calculator was developed by the United States Air Force.^[14] This tool is a standard set of questions implemented in Microsoft Excelthat produces a graphical display of the TRLs achieved. This tool is intended to provide a snapshot of technology maturity at a given point in time.^[15]

The Technology Program Management Model was developed by the United States Army.^[16] The TPMM is a TRL-gated high-fidelity activity model that provides a flexible management tool to assist Technology Managers in planning, managing, and assessing their technologies for successful technology transition. The model provides a core set of activities including systems engineering and program management tasks that are tailored to the technology development and management goals. This approach is comprehensive, yet it consolidates the complex activities that are relevant to the development and transition of a specific technology program into one integrated model.^[17]

 

Source: http://en.wikipedia.org/wiki/Technology_readiness_level

What are some of the most ridiculous startup ideas that eventually became successful?

It is possible to create a good startup with a good idea, but great startups are often the result of ideas that would have seemed ridiculous if you had heard them prior to seeing them working.

Ask yourself, if you were a venture capitalist pitched one of these ideas, what would your reaction have been?

• Facebook – the world needs yet another Myspace or Friendster except several years late. We’ll only open it up to a few thousand overworked, anti-social, Ivy Leaguers. Everyone else will then join since Harvard students are so cool.
• Dropbox – we are going to build a file sharing and syncing solution when the market has a dozen of them that no one uses, supported by big companies like Microsoft. It will only do one thing well, and you’ll have to move all of your content to use it.
• Amazon – we’ll sell books online, even though users are still scared to use credit cards on the web. Their shipping costs will eat up any money they save. They’ll do it for the convenience, even though they have to wait a week for the book.
• Virgin Atlantic – airlines are cool. Let’s start one. How hard could it be? We’ll differentiate with a funny safety video and by not being a**holes.
• Mint – give us all of your bank, brokerage, and credit card information. We’ll give it back to you with nice fonts. To make you feel richer, we’ll make them green.
• Palantir – we’ll build arcane analytics software, put the company in California, hire a bunch of new college grad engineers, many of them immigrants, hire no sales reps, and close giant deals with D.C.-based defense and intelligence agencies!
• Craigslist – it will be ugly. It will be free. Except for the hookers.
• iOS – a brand new operating system that doesn’t run a single one of the millions of applications that have been developed for Mac OS, Windows, or Linux. Only Apple can build apps for it. It won’t have cut and paste.
• Google – we are building the world’s 20th search engine at a time when most of the others have been abandoned as being commoditized money losers. We’ll strip out all of the ad-supported news and portal features so you won’t be distracted from using the free search stuff.
• Github – software engineers will pay monthly fees for the rest of their lives in order to create free software out of other free software!
• PayPal – people will use their insecure AOL and Yahoo email addresses to pay each other real money, backed by a non-bank with a cute name run by 20-somethings.
• Paperless Post – we are like Evite, except you pay us. All of your friends will know that you are an idiot.
• Instagram – filters! That’s right, we got filters!
• LinkedIn – how about a professional social network, aimed at busy 30- and 40-somethings. They will use it once every 5 years when they go job searching.
• Tesla – instead of just building batteries and selling them to Detroit, we are going to build our own cars from scratch plus own the distribution network. During a recession and a cleantech backlash.
• SpaceX – if NASA can do it, so can we! It ain’t rocket science.
• Firefox – we are going to build a better web browser, even though 90% of the world’s computers already have a free one built in. One guy will do most of the work.
• Twitter – it is like email, SMS, or RSS. Except it does a lot less. It will be used mostly by geeks at first, followed by Britney Spears and Charlie Sheen.

Michael Wolfe,

Source: http://www.quora.com/What-are-some-of-the-most-ridiculous-startup-ideas-that-eventually-became-successful?

Boyan Slat – how to clean oceans

Millions of tons of plastic debris are polluting world’s oceans eternally.

www.boyanslat.com

Plastic reaches the oceans mostly from land through rivers and waterways, and then accumulates in 5 areas of high concentration, called gyres.

Not only does it directly kill hundred-thousands or even millions of aquatic animals annually, its fouling may spread harmful algae and other invasive species, and furthermore serves as a transport medium for pollutants (including PCB and DDT), accumulating in the food chain.

Plastic pollution costs governments, companies and individuals millions of dollars in damages per year, due to loss in tourism, vessel damages and (inefficient) beach clean-ups.

The ultimate solution to plastic pollution is clear; we need to close the tap, by ending our reliance on disposable plastic items/packaging, we need proper waste management globally, and we need to become aware of the problems our garbage is creating.

It will require drastic changes on legislative, industrial and individual levels of society.

However, even if we close the tap, we need to get out what’s already in the oceans.

We’ll need a combination of both worlds, and we’ll need them soon.

The 7 Dimensions of Innovation

Written on May 27, 2007 by Dr. Lauchlan A. K. Mackinnon

A while back, I developed a model of “the 7 dimensions of innovation” as a tool to help clients orient themselves to the innovation topography – to identify where they are in relation to the innovation landscape, as a starting point to developing their innovation strategy. I am putting the approach forward under Creative Commons licensing (see end of article) which means under defined conditions you can use the model commercially with clients and, under the terms of the licensing, adapt, extend and distribute variations of the model. If you’d like to suggest some improvements to the model, I’m very happy to consider those as well.

The model is as follows: an organization can orient itself to its innovation context and do preliminary planning for developing the Innovation Plan by considering the following 7 Dimensions of Innovation:

1. Where Innovation Takes Place

Innovation may take place in relation to almost any aspect of your organization, its capabilities, and its outputs. While innovation is often thought of as taking place primarily as investment in Research and Development (R&D) activity leading to product innovations that may subsequently be commercialised, recent research has emphasised and underscored the fact that innovation often occurs through means other than R&D investment. It is by now widely recognized that innovation may occur across a number of dimensions within the organization, including innovation in:

• Products
• Services
• Business processes
• Logistical and other improvements in the supply chain – the links between the company and its suppliers, and the company and its customers
• The business model

It is therefore worth considering what innovation your organization does across each of these dimensions.

2. Industry Context

It is important to understand the competitive context for innovation. What are your competitors doing? What are they not doing? The ‘status quo’ just for keeping up with the pace of existing industry innovation activity may dictate a base level of requirements for innovation in your industry and market, and reveal opportunities for innovating to distinguish your organization from the competition.

It is also important to note that the nature of innovation varies by industry, and the requirements for innovation are different in different market contexts. For example, companies in the manufacturing industry tend to invest relatively heavily in product innovation and operational innovation, while companies in service industries will tend to prioritise service innovation. While there are common requirements, it is useful to determine if there is anything specific about the nature of the industry in question that impacts on development of the Innovation Strategy. Innovation requirements may vary greatly from industry to industry and in different market and competitive environments.

3. Which Innovation Domains to Focus On

The third dimension of innovation is to recognise that concern for innovation issues may be addressed on a number of levels. For example, the focus might be on one or more of

• individual creativity
• team creativity
• organizational innovation
• inter-organizational networks
• government innovation policy

It is important to identify which levels are important for the innovation issues you are seeking to address. For example, an advertising agency might be concerned with individual and team creativity leading to the generation of many innovative and useful ideas, an organization might be focused on organizational processes for processing, filtering and acting on ideas generated by employees, a university might be concerned with building networks to share and commercialise ideas with outside companies and organizations, and state or national government might be concerned with construction of a policy environment and appropriate infrastructure to further innovation on the state or national level.

In general, the innovation domains are linked. An organization, for example, would typically be concerned with individual, team and organizational innovation, but this takes place in an environment enabled or constrained by government innovation policy.

Recognising that innovation occurs in a number of linked domains allows for a detailed analysis of how your organization performs on its innovation activities in each of these related domains that it is involved in.

4.The Sources of Ideas

Eric von Hippel noted in his classic 1988 book The Sources of Innovation that innovations may arise from a number of sources. New ideas and innovation may be driven by

• customers
• employees
• suppliers
• management
• the activities of competitors
• ideas in the public domain or academia

Innovations may be introduced from each of these – and other – sources. It is, therefore, worthwhile to consider what your organization does to foster and support innovations from each of these groups. Does your organization recognise and enable or ignore and obstruct each of these sources of new ideas?

5. Stage of Organizational Growth?

The fifth dimension of innovation is to ask at what stage of growth your organization is at. For example, is your organization:

• a start-up
• a mid-size and growing organization
• a mature organization looking for opportunities for further growth

The requirements for innovation may be quite different for organizations at different stages.

Start-up organizations funded by Venture Capital, for example, may typically start with an innovative product, service, and/or business model. The business processes, structures and strategies may well change and adapt innovatively to market conditions as the company tests and then establishes its business case and viability. Similarly, organizations starting up in a bootstrapping fashion without the benefit of Venture Capital finance may have to be extremely innovative and adaptable in terms of their marketing and business strategies, undergoing cycles of rapid feedback from customer prospects and rapidly evolving business models and processes. A bootstrap organization will tend to be heavily customer focused, as it is dependent on customers for initial revenue, and product and service innovations may be very much driven by the customer.

Whether a start-up is funded with Venture Capital or the start-up proceeds in a bootstrapping fashion, the start-up tends to be characterised by a high level of innovation in product, service, business processes, and business models. At this stage, communication between individuals is rapid and fluid, business processes are malleable and adaptable, and business models can be readily tested and changed.

After starting up, however, an organization may well have entered a stage of market consolidation and growth. The challenge here is not to prove the initial products, services, and business case, but to acquire market share and to continue to grow. Innovation in products and services, business processes, and business models may be vital to lifting performance and acquiring market share. Innovations here may serve to improve marketing and lift sales, to identify and deliver new features and benefits to customers, to improve efficiency and lower costs, or to identify potential improvements in the product or service delivery cycle or to deliver increased customer service and value.

When an organization reaches maturity in a competitive market, it may be difficult to grow by improving processes, reducing costs, and displacing competition. Cost reduction and process reengineering can only lead to so much growth: growth must instead be fuelled by innovation in developing new products and services for existing customers or finding or creating new markets for existing products. For example, mature organizations such as Procter & Gamble and General Electric have turned to innovation to fuel the required growth and deliver shareholder value.

For such organizations, it is often the case that internal research and development cannot deliver sufficient innovation to fuel the required growth. In such cases, organizations often turn to “open innovation” to access innovations by individuals and organizations external to the organization.

6. Size and Complexity of Organization

The sixth dimension of innovation is the size and complexity of your organization. Clearly, smaller organizations with a flatter organizational structure allow for greater, more rapid and more intimate communication between employees. In larger organizations, more care must be taken to design and cultivate appropriate networks, communication channels, and innovation processes to cultivate communication, creative thought, and intelligent progression of creative ideas into commercially productive innovations.

It is pertinent, therefore, to consider how your organization’s size and structure impacts on collaboration between individuals, and how organizational processes and culture facilitate or retard the recognition and commercialisation of innovation within the organization. In general, the larger and more complex the organization, the more structured and disciplined your approach to innovation will need to be, and human factors including organizational culture and change management will play an increasingly important role in the solution.

7. Organizational Innovation Maturity

The final dimension of innovation presented here is the level of organizational maturity. Does your organization have a well defined and managed organizational culture? Do you have good processes capabilities for executing change? Can you put structure and discipline around your innovation initiatives?

An organization may be seen as progressing through the following four stages of innovation maturity:

• ad-hoc
• managing innovation effectively in particular innovation areas (e.g. product innovation)
• learning how to introduce organizational processes and structures to manage innovation consistently and effectively across all business processes, products and functionality
• learning to continually assess and improve both innovation performance and the organization’s processes for managing and monitoring innovation

It may be useful, therefore, to consider where your company is along the innovation maturity curve.

Concluding thoughts

Organizational innovation has been likened by one commentator to “the mating of pandas: infrequent, clumsy, and often inefficient.” Just as the mating of Panda Bears is essential for the survival of that species, however, the survival of modern businesses will depend on their capacity to innovate. The above article is intended as a tool to generate discussion and thinking about the nature of innovation, and where your organization can or should begin to look to its innovation performance and areas for improvement.

Copyright and Licensing

 

This model of the 7 Dimensions of Innovation is provided as an ‘open souurce’ piece of intellectual property specifically under “Creative Commons Attribution Share-Alike 2.5 Australia” licensing.



This means you can use it commercially with your clients and even extend it, but in any and every use of it (in whole or part) you must refer to this original version as being from Lauchlan Mackinnon of Cognitive Transitions (e.g. provide a link reference back to this page).

Any distribution of the work must be under the same Creative Commons Licensing (e.g. link back to this text or copy this text).

Any extension of it must cite that your work is based on the original (but not in any way suggest that I endorse you or your use of the work), must cite the original version (e.g. link to here), and must state its relationship to this original version (e.g. the path of variations on which it is based), and if distributed must be provided under the same Creative Commons licensing.

Innovation Maturity Models

Written on June 2, 2007 by Dr. Lauchlan A. K. Mackinnon

 

In my recent article on the 7 Dimensions of Innovation, I proposed a 4 stage model of innovation maturity describing an organisation’s path to innovation maturity in terms of 4 stages:

1. Ad-hoc – innovation is not managed systematically and results are not predictable
2. Localised innovation – innovation is managed effectively in particular innovation areas (e.g. product innovation)
3. Generalised innovation – organisations introduce organizational processes and structures to manage innovation consistently and effectively across all business processes, products and functionality
4. Continuous managed innovation – learning to continually assess and improve both innovation performance and the organization’s processes for managing and monitoring innovation

In proposing this approach, I had in mind something like the SEI Capability Maturity Model for software engineering, which consists of five stages:

1. Initial – software development processes are ad-hoc and tend to rely on individual people as ‘heroes’ to step forward and save the project from disaster.
2. Repeatable – project management and software development processes are put in place on a per project basis to manage projects systematically, leading to repeatable satisfactory results. However, at this point such processes are typically driven into particular projects, and different project managers or software development teams may have their own standards and approaches. There is no consistent approach across the organisation.
3. Defined – a set of common, shared, defined processes are defined and applied for all projects and all people across the organisation
4. Quantitatively Managed – clear metrics are put in place around processes, project management activity, and software development activity and outcomes, allowing techniques such as statistical process control to be applied to identify where anomalies are occurring in the processes and to apply techniques such as causal analysis resolution to identify the underlying causes and to fix problems in or underlying the processes
5. Continuous Improvement – the processes and their management are continuously improved. Typically an idea management system is introduced and a quality focused continuous improvement culture is embedded within the organisation

Earlier this year, James Todhunter from the Innovating to Win blog also posted an innovation maturity model, consisting of four stages of:

1. Accidental Innovation
2. Situational Innovation
3. Repeatable Innovation
4. High-Performance Innovation

At the level of accidental innovation In James’ model, innovation is poorly understood. However, by the stage of situational innovation, the organisation has had some exposure to ideas in innovation, and has begun to apply them in certain situations. By the stage of repeatable innovation they have tested and developed confidence in innovation techniques that apply well to their organisational context, and the question now becomes about optimising the performance of innovation in terms of the business value derived from innovation activity.

There are, of course, other attempts to describe models of innovation maturity. For example, in his book 24/7 Innovation: A Blueprint for Surviving and Thriving in an Age of Change, innovation author Stephen Shapiro introduces (see Figure 9-2 on p. 220) a model of “six distinct stages [organizations will travel through] on the road to innovation maturity.” The 6 stages are:

1. Functionally bound
2. Process sensitive
3. Process driven
4. Process dominated
5. Capability based
6. Alliance based

Shapiro’s innovation maturity model is tied to the characteristics of the organisational structure rather than the specifics of their capabilities and experience with innovation.

Similarly, on the web, one can readily find a number of attempts to describe the path of innovations through the maturity curve from humble beginnings to innovation mastery. For example, the Product masters website has a pdf outlining an innovation maturity modelrelated to product development, while the Think For a Change website provides an innovation maturity model modelled along the lines of the SEI Capability Maturity Model.

I very much like James’ model of innovation maturity, as a descriptive model. I think it has many advantages over the model I proposed for describing where an organisation is on the curve. However, as a prescriptive model (i.e. outlining for an organisation what they need to do to move to the next level), I feel that an innovation maturity model following the SEI Capability Maturity Model (such as the innovation maturity model at Think For a Change) as the guiding metaphor may be able to leverage the insights from the Capability Maturity model such as institutionalising processes and a work culture in a manner which can be tremendously useful for guiding an organisation down the path of innovation maturity.

15 Metrics Every Marketing Manager Should Be Tracking

A marketer who is skilled at using data — whether you’re entry-level or a CMO — is a powerful force. Having data at your side will help you make smart decisions, suggest fast changes when necessary, and find opportunities for different marketing channels and teams to work together. Who doesn’t want that?

Quite often, however, even good marketers are in the business of only monitoring the basics: traffic and leads. But there’s a substantial world beyond those important yet simple measurements. In fact, you can go much deeper into your data to see how certain marketing components are working together, learn what improvements can be made to better your marketing, and avoid some serious pitfalls before they happen. All you need is to have your marketing metrics list ready, and the tools to get started.

So to help you get started, here are some of the key marketing metrics and reports you should be analyzing if you’re looking to advance your marketing game. It’ll help you strengthen your analytical tool belt, and run marketing programs that work smarter — not harder — for your business. You ready? Let’s go.

Goal Setting and Progress Tracking 

The first few sets of metrics and measuring methods are to help you (you fearless marketer, you), stay ahead of your lead generation goals so you can have a solid month.

1) Leads Waterfall

Wouldn’t it be great if you knew at the start of every day if you were on track to meet your leads goals for the month? Well that’s exactly what a leads waterfall graph is for! This chart helps you guide your progress by visualizing what you need to achieve on a day by day basis. As your month progresses, plot what you actually achieve each day to compare your results to your goal. Now you can catch yourself when you’re falling behind the first day it happens, so you can react quickly to pick up the pace. If you’re a HubSpot customer (in fact, with closed-loop marketing software all of the metrics recommended in this post will be much simpler to get), you can simply input your numbers into the software to get a graph like this that automatically updates:

 

 

If you’re not using HubSpot software, you can still keep track of this number using Excel. We’ve written a blog post that tells you how, which you can read here.

2) Traffic Waterfall

The same concept as above can be used for traffic, which is important if you hope to achieve a particular leads goal. Use a waterfall to monitor your traffic growth closely. Again, if you fall behind, you can act quickly, perhaps by creating content that will draw more readers in at a faster rate.

3) Average Lead Close Rate

Do you know the average rate at which your leads close? You should track this often, I recommend on a monthly basis. Why is this number helpful? It will help you monitor the quality of your leads at any given time. If it’s high, you’re attracting high-quality potential business. If that close rate drops, you might not be attracting the right people.

4) Average Leads Per Business Day Month Over Month Growth

Lots of marketers track month over month growth, but fewer track lead per business day month over month growth. So how is that different, and why might that be important? Well, not every month is the same length! In other words, this metric helps you measure growth more fairly by drilling down to how much you can produce in a single business day.

For example, if you generated 300 leads in January, and your boss tells you to maintain that same about of lead generation in February, could you relax that month? Unfortunately no — that actually requires 15% growth in average leads per business day in order to maintain 300 leads. In other words, you need to achieve the same results in 19 days as you did with 22.

Channel Effectiveness 

This next section is to help us ensure we’re closely monitoring how well each specific channel is performing. A channel in this case (no, not ESPN) is a lead source. So “social media,” for example, is a channel just like “SEO” is a channel. By separating these channels individually, you can get some really interesting insights into which are working best for your business, so you know if you’re investing in the right sources.

5) Month-to-Date (MTD) Goal Per Channel

How closely are you measuring the growth and progress of each of channel? For example, are you on a mission to scale social media as a lead generation channel? Or maybe email marketing? Let’s say you set a goal to generate 100 leads via social media in March. By using your handy dandy leads per business day metric, you can set daily goals to help you there. This is a numerical-only version of the waterfall chart above, but it could also easily be graphed to help you have a visual representation.

This metric is also a great tool to incentivize, say, your blog team to hit a lead goal for their own channel. Now it’s easier for them to do it, because they can actively track their daily progress.

6) Close Rate Per Channel

Every marketer should understand what channels work best for their business from a customer acquisition standpoint. Maybe SEO is your best volume-producing lead generation channel for your business, and social media is one of your smallest. Well, regardless of lead volume, it’s possible that social is driving more customers for your business! How, you might wonder? Perhaps the close rate of leads generated via social media is significantly higher than leads generated via SEO … so much so that SEO’s volume isn’t enough to make up the difference. That high close rate is also a very strong indicator of the quality of those leads coming from that channel. In other words, do more on that channel! It’s your sweet spot.

7) Paid vs. Organic Lead Percentage

Lots of marketers group their channel analysis into larger buckets — for example, “paid” and “organic” might be separated for analysis. The paid bucket is any marketing that you spend money on (aside from employee time), like social advertising, sponsored newsletters, etc. Organic is the opposite; it’s all leads that you generate without cost other than your team’s time. Blogging, SEO, social media, and email marketing fall into that bucket.

So if you’re a marketing director using both of these “types” of lead generation, you probably want to keep a close watch on how much of your leads are coming from one bucket over the other. You might also set a goal to decrease paid channels as a lead source over time. Measure what percentage of your leads come from each bucket to get a sense for how your organic efforts are working for you, and if you are scaling to reduce your dependency on advertising.

Content Effectiveness 

How do you measure the impact of a blog post? Or an ebook? How do you know if the effort and time you put into that piece of content … well … paid off? Measuring the impact of content is a tricky, tricky skill, but it can absolutely be done. Below are a handful of wonderful metrics to let you know if the stuff you’re making is paying off.

8) Leads Generated Per Offer

One great use of content, particularly premium or long-form content, is to gate it behind a landing page to encourage your visitors to fill out a form. That content is often called an offer, because it’s what you are offering on that landing page. But how do you know if that offer was worth creating? Simple! By tracking how many people filled out that particular form on the offer’s landing page. Now that you have that number, how does that lead volume compare to other offers of yours? Knowing that will help you determine how effective different types of offer content are to your marketing efforts.

9) Landing Page New Contacts Rate

So we’re all comfortable with landing page submission rate, or the rate at which landing page visitors fill out your landing page form. But how can you differentiate your repeat form-fillers from your newcomers? Well, new contacts rate is a great place to start! This metric is a wonderful tool to let you know the percentage of new people you’re attracting to your business. In other words, what is the rate at which new contacts only are filling out your form? This is a much better gauge of whether your content is helping you attract a new audience that you can do business with.

 

 

10) Call-to-Action Clickthrough Rate

Let’s step back for a moment …  how do potential leads get to your landing pages again? Ah yes! Calls-to-action (CTAs)! You know, those little mini “ads” for your best content on your website that guide people to the content on your landing pages. By monitoring your call-to-action clickthrough rate, or the rate at which people visit a page and then click on the page’s CTA, you’ll be able to understand how valuable that offer is to incoming traffic.

It’s also important to note that sometimes, a CTA’s performance can be optimized simply by updating the CTA itself. So it’s wise to test CTA variations like color, text, and position before you decide to change your entire content strategy.

11) Traffic-Driving Keywords

Here’s a hat-tip to the marketers who love SEO. Another way to evaluate if your content creation is impacting your business is by tracking how well relevant keywords related to your business are performing in search.

But wait — we don’t necessarily care about rank. This metric evaluates keyword performance based on the traffic that’s coming to your content via those keywords. Now what should you do with this information? If you have many traffic-producing keywords, you’ve done a great job creating a piece of content that has received significant links and shares, helping it perform better in search engines. Create similar and even stronger content to help your goals.

Marketing Qualified Leads 

Say what now? For those of you who are not measuring qualified leads (MQLs), or have not defined what a marketing qualified lead is for your business, here’s the short answer: a marketing qualified lead is a lead that is ready to be rotated to Sales. There could be many ways to determine which leads are MQLs. Your company might decide a lead is marketing qualified after it takes a certain combination of actions — like filling out a form, visiting your website five times, and visiting your product page. Or you might decide that a lead is an MQL once it requests a demo. It’s up to you. The purpose is to know what leads are the most sales-ready so you are passing on the hottest ones to your sales team. Now let’s measure them.

12) Total MQLs Per Month

Now that we understand what MQLs are, this is easy! How many of these MQLs are you generating month over month? Is it increasing? (That’d be nice.) This is a good metric to know if you’re helping your leads get to the “marketing qualified” stage via nurturing and more sales-driven content. You could also look at this metric more closely by evaluating average MQLs per business day.

13) MQLs Per Channel

It would also be great to know if a particular channel is a strong source of MQLs for your business. How many MQLs do you get from your blog versus email marketing? Maybe you’ll learn that one channel is a better source for generating newer leads who are still getting to know your business, but another is great for nurturing to the MQL stage. This metric would help you determine that.

14) Percent Leads That Are MQLs

Are more leads being nurtured into MQLs over time? Or is your business struggling to nurture your leads into MQLS? By monitoring what percentage of your leads are MQLs over any given time, you’ll be able to understand how well MQL generation is working compared to lead generation. This is another great metric to track month over month. Ideally, the MQL percentage would grow over time while overall lead volume is increasing. That’s the dream, baby!

15) MQL Conversion Rate Per Offer

This metric is your tool to measure both MQL conversion and content effectiveness. Say what? Let’s back up. Ideally, after someone converts on an offer’s landing page, you’d then guide that person through the steps that would (hopefully) turn them into an MQL. So in the event that anyone who requests, say, a free demo is an MQL for your business, you’d want to guide your new lead to a form that lets them request a free demo.

Now that we understand that, let’s dig into this “MQL conversion rate per offer” metric. This metric tells you at what rate a person becomes an MQL, per offer. So if 20% of leads became an MQL after attending your webinar, but 10% of leads became an MQL after downloading your ebook, you would say the webinar has a higher MQL conversion rate. How is this helpful? Over time, you can learn what content is the best tee-up for a strong MQL opportunity.

Metrics make the marketing world go round, and there are more excellent ones to look at outside of the ones presented on this list. So share what metrics you measure in the comments, and keep sharpening your analytical chops so you can make the smartest decisions possible for your business.

Love marketing analytics yourself? What are your favorite marketing metrics to follow?

Image credit: Blue Diamond Photography

Read more: http://blog.hubspot.com/blog/tabid/6307/bid/34179/15-Metrics-Every-Marketing-Manager-Should-Be-Tracking.aspx#ixzz2L086kn1K

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