Follow the money, and remember that focus groups don’t have money
I don’t always agree with Seth Godin … but here I think he’s got something important to say about focus groups.
Author, speaker and business strategist Seth Godin tells BusinessWeek how to go about evaluating a new business idea: “You make a list of all the things that have to work in order for the idea to be successful. That means focusing on the process rather than the product. For instance, distribution: Where is the product sold to the consumer, and are there middlemen? Who’s selling it for you? What’s the pricing model? Where do you get the raw materials? What’s your marketing strategy, and how will it scale? Then you give yourself an honest appraisal of whether it’s going to work, recognizing that not one of the people whose help your success depends on cares about your idea unless it helps them make money. I can’t tell you how many people I talk to think they have a brilliant idea and can’t figure out why other people don’t agree.” Well, what about business models? Don’t you need to invent a business model?
Godin says: “Most successful entrepreneurs don’t invent a business model. They trade on the success of a proven one. Not only can you be certain that it can be done but also you can learn from others’ mistakes. And not all business models work in all industries.” His example: “Say you have an idea and you want to license it to a larger company with sales and marketing capabilities. Have people licensed their ideas in that industry before? If the answer is no, then you need a new idea. My chances of licensing a successful board game to a big toy company are very slim. However, the book industry licenses 50,000 new ideas a year.” What about focus groups? Godin says, “Focus groups are foolish and dangerous. It’s almost impossible to run one properly, and the data that you get isn’t accurate.”
BusinessWeek 17 Apr 2006