Internal vs External Consultants
Considering that I spend a lot of time at incubators and accelerators, I thought it would be worthwhile to talk about the different approaches I see when people decide that they want to start a company. There are basically two ways to approach starting a company: A) Idea first, or B) Audience first.
Audience First Approach (B)
The most successful companies I see are those that focus on the audience or problem first (B). They find customers that are willing to pay for their product as early as possible. Sometimes, they are selling a product before they actually have anything to sell. This isn’t done unethically; rather, they’re trying to justify the time that will be required to create something magical. Importantly, they use the sales process to identify that there is a meaningful problem that people are willing to pay to have solved.
Idea First Approach (A)
This isn’t the approach most companies I speak to at accelerators use. They generally start with a preconceived notion of what they think the market will want (A). This is even more difficult when creating a product for consumers because your paradigm likely reflects your background and preferences, a poor sample at best. You can create experiments to test whether your assumptions are grounded in reality, but it could be preferable to start the way you intend to continue. The testing process for consumer products and platforms is long and winding, hardly something that can be solved in a month or two of iteration.
Business-to-Business (B2B) Concepts
Business-to-business (B2B) concepts can be incubated through simpler methods. The two ways I’ve seen B2B businesses successfully created are through:
- External consultants – taking a solution and building it into a product.
- Internal consultants – seeing an issue in a specific situation they directly experience and realizing that a solution would be applicable to a broader market.
To solve a problem, you need to get close enough to it. Unless you’re perceived as a trusted “consultant,” it will likely be difficult to grasp the problem sufficiently.
External Consultants
Companies that take the “external consultant” route typically have some broad vision of what they want to build and then find companies that have that specific problem to sell the solution to. They may or may not have built a Minimum Viable Product (MVP) when they start to pitch.
The first iteration of the solution will be tailor-made for a specific client (this is when you’re doing things that don’t scale). As the start-up works through the process, solves the problem, and builds the product, they ensure that there’s a direct product-market fit.
Once they have a working MVP in place with one client, the solution can then be replicated for other clients. As the client roster grows, the customizations increase, and additional products are added. Eventually, you end up with a product suite that appeals to an even broader range of clients.
Internal Consultants
Companies that go the “internal consultant” route have typically worked in a specific company or industry for an extended period of time. They are likely domain experts who are well-regarded by their peers. They may possess an open secret – something knowable to all but perceived by only a few.
Internal consultants have first-hand experience with the issue and may have even pitched the solution internally to their prior employer. This allows them to understand all the features and quirks customers would like to see in the finished product. They are able to start building a product before having contracts in place because they know the right people to sell to when the time comes.
Conclusion
Neither external nor internal consultants are taking a leap of faith or blindly believing in their mental constructs. Both architects are translating real-world experiences into saleable solutions.
If you’re looking to build a successful B2B business, you should focus on finding the audience and customers before building the product. If you’re going down this path, chances are that you’re either a domain expert (internal consultant) with intimate knowledge of the problem, or you’re transforming yourself into a trusted expert (external consultant) to solve the problem. Don’t focus on an intangible idea, solve a problem that people care about.
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