Milestones not Millstones
It’s all about technology, markets and people
Since my post Choosing Wisely – Business Models to Profit By, I’ve had a number of questions on how to choose milestones and goals for your business. As I mentioned previously, it’s important to come to a point of view on what you want your business to be and how you intend to get there. Your point of view may change, but if you start with a well thought out point of view at least you will have the perspective and data to make considered changes.
Milestones are simply interim way points or goals. They should be constructed so that the completion of a milestone provides a powerful indicator that you are on the right course. Missing a milestone requires that you consider the reasons for failure, rethink the ultimate goals of the company, or both.
When I help companies construct milestones I usually like to bucket them into three categories: Technology, Market and People. I also like to consider what stage the company is in, again I usually like to bucket stages into three categories – Proof of Concept, Going to Market and Scaling to Profitability. Different milestones are appropriate for each stage but in general you want to pick things that are pivot points for both risk and opportunity.
In the proof of concept stage technology milestones should focus on proving the feasibility of the core technology. For example, in a software or Internet company, there are often key algorithms that need to be developed. What milestones need to be achieved so that these algorithms provide compelling results to justify the essence of your company’s value proposition?
Market milestones should be chosen so that completion provides substantial proof that a large enough market exists to continue to the next stage. For example, you might complete a compellation of published market research on existing and related markets, gather market sizing information for your target market and conduct primary research and interviews with a representative set of your target customer base.
In the proof of concept phase, it’s important to measure the effectiveness of different people in their jobs, including yourself. When done early, honest appraisals of whether the right people are doing the right job can avoid costly and painful conversations later. Often this can be determined simply by evaluating who is achieving their goals and who is not. It should be obvious who is in the right role, and if it isn’t, well that is an answer too!
When your company is about to transition from the proof of concept stage (we are pretty sure we can build the technology, we are confident a market exists, and we have the right people and they are doing the right job), it’s time to think about milestones that will bring your product or service to market. In this stage, choose technology milestones that lead to a general release of the first product and a development process that allows for quick iteration to the next release or generation of the product based on initial customer feedback.
The most important marketing milestones will provide further validation of the market and identify missing elements of the product through feedback from a broad cross sections of target customers. It’s equally important to have milestones around developing a product specification based on that feedback as well as a marketing plan that includes initial sales or customer acquisition targets. Choose milestones and market metrics that prove to you and your Board the company is establishing market traction.
In the go-to market stage the company will hopefully be scaling quickly, requiring people to do a variety of jobs and exercise additional skills. Implement the milestone process deeper into the company will allow you to develop a broader evaluation process for more people than you put in place in the proof of concept phase.
Once you have firmly established yourself in the market (good initial customer base, broadly used by consumers etc.), the next stage is scaling to profitability. For technology milestones you will want to consider milestones around product cycle times, cost to deliver and other goals that will allow you to deliver a cost and feature competitive product.
Marketing milestones will largely revolve around scaling the sales or customer acquisition process economically. If you are an Internet company you should carefully monitor customer acquisition costs against lifetime value of the customer and drive towards making the customer profitable. In a more traditional software or hardware company, focus on milestones that guide you to a set of customers and sales processes that are repeatable.
At this point in the company’s evolution you should be scaling rapidly and it’s likely you will need to augment the team. Sales and Marketing are likely places to focus, but you should also evaluate needs across the company and establish timelines and milestones that insure you have critical human resources in place at the right time.
I’ve suggested a few ways to create a framework and establish goals/milestones for your company. Each company is unique and you should adapt or create milestones and goals that work for you and your particular situation. The important thing is to “Just Do It!”. Creating Milestones will help you avoid building a Millstone around your neck and contribute to building a successful company.