David Bland, author of Testing Business Ideas, and Kevin Dahl, Director of ElevateIP Alberta at Innovate Calgary, explore how to better balance your business strategy with IP considerations. Consider gathering real evidence from customers before spending a fortune building the wrong product. Learn how to identify your riskiest business assumptions using practical frameworks and strategically structure your testing process to avoid accidentally disclosing or compromising your valuable IP.
David Bland, author of Testing Business Ideas, and Kevin Dahl, Director of ElevateIP Alberta at Innovate Calgary, explore how to better balance your business strategy with IP considerations. Consider gathering real evidence from customers before spending a fortune building the wrong product. Learn how to identify your riskiest business assumptions using practical frameworks and strategically structure your testing process to avoid accidentally disclosing or compromising your valuable IP.
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Lisa Desjardins (Lisa): You're listening to Canadian IP Voices, a podcast where we talk intellectual property with a range of professionals and stakeholders across Canada and abroad. Whether you are an entrepreneur, artist, inventor or just curious, you will learn about some of the real problems and get real solutions for how trademarks, patents, copyrights, industrial designs and trade secrets work in real life. I'm Lisa Desjardins, and I'm your host.
The views and opinions expressed in this podcast are those of the individual podcasters and do not necessarily reflect the official policy or position of the Canadian Intellectual Property Office.
If you're an entrepreneur, creator or advisor working on a great idea for a brand invention or a business concept, you'll likely understand the importance of protecting these assets within intellectual property rights such as patents, industrial designs and trademarks. You'll also need to validate your business concept as a way to understand its value and ensure that your investment in I.P. protection and business pays off. So, should you prioritize business development or I.P. protection first? Or should they go hand in hand? In this episode, we'll explore these questions with David Bland, author of Testing Business Ideas. David knows all about validating business concepts before committing to I.P. protection. We're also joined by Kevin Dahl, Director of Elevate I.P. Alberta at Innovate Calgary, who brings in first-hand insights into how entrepreneurs have successfully navigated the process of testing. David and Kevin, welcome to the podcast.
David Bland (David): Thanks for having me.
Kevin Dahl (Kevin): Thanks for having me.
Lisa: So, David, I think I'll start with you. Tell us a little bit about yourself and why you decided to write this book.
David: Yeah, my background is mostly in design and in startups. You know, I spent the first 10 or 11 years of my career coming out of college and joining different startups. And you know, one startup that I would deem pretty successful; we had the wrong initial customer. You know, we thought we were selling to consumers and we ended up selling to banks and financial advisors and that's when we took off and that's when we were successful. The other couple startups I joined, we just kept building and building and protecting everything and making it look better and feel better. But the customers were never quite receptive to what we were building and would never pay enough and those didn't do so well. So I think that really sort of influenced my entire career. And when I made the switch to coaching and advising around a little after 2010, I found I was giving the same advice over and over and over to entrepreneurs, even in Silicon Valley and other places around the world and you know my co-author Alex Osterwalder, who's based out of Switzerland, and he wrote the business model generation book and a value proposition design book, approached me and he said look, we should write a book about all this advice we keep giving over and over and over again. And he didn't really have to convince me, you know, of course, I said yes right away, but the whole premise of the book was to get it out there in a different format to help people in actionable day-to-day, you know, discovery and validation of the ideas. So it was very like a passion project of mine, of really trying to help people make progress and not feel like oh yeah, I can do interviews and surveys, but there's nothing else out there. So I just want to make sure their horizons were broadened and they had other options.
Lisa: That's great. So let's talk a little bit about what you've written about in the book. Can you explain the core principles behind that approach that you take of testing ideas and in what way they're different to traditional methods?
David: Yeah, it's a lot of mindsets. You know, having an open mind, having a vision, but testing it against reality. You know, this idea of “We could be wrong. Let's go check. Let's go see if people will behave in a way that they say they would behave.” And so a lot of the core principles I have around the concepts in the book are about sort of identifying your assumptions and what would have to be true for your idea to work. You know, not just about the customer, but also about pricing and cost and also about your ability to execute. And then let's prioritize those assumptions and then let's go test them. And so a lot of that 3-step process is helping people understand, “what kind of risks do I have?” You know, I often use design thinking as inspiration, so I often frame it as desirability, viability and feasibility. Sort of like the “do they?”, “should we?”, “can we?” framing. What would have to be true for all of that to have a successful company and product. And so once we have all that sort of laid out, it's “OK what do we focus on” with the riskiest assumptions or the things that have to be like, not everything is the most important, right? Some are make-or-break and some are just kind of, you know, yeah, we can do with that later. And then how much evidence do we have? You know, do we have any evidence to support this or not? And then let's go anchor all of our experimentation on that. So it's just a really simple process and this idea of the principles of let's have an open mind, let's go and test, let's go and use that to inform our strategy and our approach and I guess at a high level, you could say it's kind of like a scientific method applied to business. But I would say it's much more like social sciences than anything else.
Lisa: That's great. I just love it as somebody who's working at… actually, anyone working between the intersection of business concepts and understanding the value and how you protect the value of that, I think this is really necessary. You said you've been giving advice for quite some time now. So what are the common pitfalls that entrepreneurs face typically when they test their business ideas and how can they avoid them?
David: Yeah, there's something endearing about entrepreneurs where it's almost like they have this reality distortion field or something around them where it's “No one can tell me that this is a bad idea and I'm going to prove you wrong”, and you know, that it has been the case throughout history to an extent, right? Some of the really successful businesses we've seen over the last 10, 20 years, people initially said they were crazy and you know that's the bad idea and then, you know, eventually they would end up being successful. So there is something about that perseverance, but I think there's a balance between that and, you know, is there really traction here, is there something that people will pay enough for and it's always a need they have or a pain or, you know, creates a gain for them. So I do think there's something balancing of the…, you know, the “I'm going to persevere no matter what” mentality of entrepreneurship, which, you know, entrepreneurship is quite hard, so I understand that, but also getting the feedback and having it shape what you do, because quite often these companies went through many iterations before they found something that was successful and repeatable and from a business model point of view, from an I.P. point of view. So you know, one of the traps I see is just “I want to persevere at all costs. You know, I'm just going to ignore everybody, even my customers, and just keep going cause I know what the right approach should be”. So that's one of the pitfalls. And I would say the other one is the jump we make from what people say to what they do, you know, quite often we're saying, “Oh, well, you said this in a customer survey. Or wrote this in a customer survey. You're going to behave this way, or you said this in an interview and therefore you're going to pay for this later.” Quite often that's not the case, you know what people say and what they do, there's a big gap there. And so I do see a lot of traps where we say, “Oh, well, I talked to a customer and validated that” or “I ran a survey and I validated that. So I'm going to build the whole thing now”. And there's so many different things you could do in between that feedback and the building to feel more confident about what you're working on and get more evidence so I think that leap, more than anything, I see as a pitfall where we just get too excited about the positive feedback we've heard and we jump to build and therefore we spend a lot of money finding out if we're right or wrong.
Lisa: Absolutely. It's not a public endorsement of the book. I think the book has principles that are really, really important and obviously at the government we can't do public endorsements of a book, but I think you've worked with a lot of entrepreneurs who actually need to do this testing. So what would be the practical tricks for entrepreneurs to do an effective experimentation and validation of their business concepts while also operating, obviously on a shoestring budget?
David: Well, the good news is a lot of the early stage discovery you do is pretty cheap and you can do it really quickly, now granted you want to generate stronger evidence over time, so you can't just keep doing interviews and surveys over and over again and pay down your risk. You know, you have to do something where you're kind of closing that say-do gap, but the good news is you can do especially now, you know if I was doing this maybe 10 or 20 years ago, we just didn't have the tools available that we have today. All the templates, all the different software and everything that could help us sort of rapidly prototype things, even in hardware, you know, my hardware startups [inaudible]… They are 3D printing stuff really quickly that was just not possible before, so the good news is there are so many different options available to you that you can go fast and relatively cheap. Now, you still need to tie it back to your risk, though. So I use this technique called “assumptions mapping”. It's kind of, you know, used by Google and a bunch of companies in the world now, but this idea of like, can we just prioritize what our risk is at this point in time and let's make sure we're testing that stuff and not just the fun stuff, you know? So I think if you're very technical in nature, it's fun to build, right, it's fun to create things. And maybe that's not helping you pay down your risk. Maybe that's the riskiest part right now. Maybe it's well, “do people pay enough?” or to even have a job to be done behind that thing that you want to build. So, I think anchoring it back to your risk is really important. But the good news is, you know, much early, like, early on, you're going to see a lot of your risk be, you know, approached by things that are very cheap and fast and you can do it really quickly and so I think it's just making progress getting that stuff and getting that momentum going and that will help you sort of inform what you're going to build later.
Lisa: Yeah, that's excellent. We're getting actually turn to Kevin now and Kevin, I'm so excited to have you here because you're in Canada, you're working with startups! You've seen this model tried and tested with the clients that you work with, and you've obviously seen first-hand have they gone through the process of testing their business idea? We're going to hear all about that. But first tell me a little bit about Innovate Calgary and the kind of work that you do there.
Kevin: Absolutely, yeah. So Innovate Calgary is the tech transfer office, industry liaison office and business incubator for the University of Calgary. So we are part of the UCalgary, you know, broad team here in Alberta and we offer a wide range of services and funding opportunities to help innovators build and grow their businesses. So the services that we offer are clustered kind of into 3 main pillars. First, we have a number of innovation hubs that operate in and around Calgary. So we have a variety of industry-specific hubs that are located both on and off campus to support entrepreneurs. We're also closely linked with the Hunter Hub for Entrepreneurship, which is focused on student entrepreneurs and the hubs really provide a number of programs and services to address the needs of those startups and those researchers looking to commercialize their technology. The second pillar is around investments. So we run a number of early stage funds that fall under the UCeed brand. So UCeed is very interesting because it's backed by philanthropic support and focused on accelerating early stage startup companies. We oftentimes refer to it as venture philanthropy where we leverage an evergreen model that doesn't just create monetary returns in the short term, but also has a sustainable impact, hopefully for years to come here in Alberta. And the last pillar is I.P., so Innovate Calgary is the tech transfer office formally for UCalgary. We have a diverse team of experts with deep experience in I.P. commercialization, company creation and as well a lot of startup perspectives, and with Elevate I.P. Alberta, we fall into this pillar around intellectual property as well, given that we extend the reach of our services for startups beyond campus, beyond Calgary to really work with entrepreneurs across the entire province here, so we also work very closely with our tech transfer office teammates. They play a vital role in supporting me in my core Elevate I.P. Alberta team. We leverage their expertise to help us achieve some of the goals we're trying to with the program.
Lisa: That's fantastic. It's such an interesting and exciting time to be working with I.P. because we have so many new players in the system that are helping entrepreneurs understand I.P. and so I am really thrilled that you're here. Now, you've worked with David so what would you say were the initial challenges that you faced where you were validating business ideas and how did you feel that this methodology addressed the challenges that entrepreneurs are seeing?
Kevin: Yeah, unfortunately I can't take the credit for, you know, architecting our program to really focus on that connection or that intersection between business strategy and intellectual property strategy, but when they joined the team last year, we had already made the decision to use the business model canvas as a tool to help us and help our applicants for our program really understand how I.P. and business fit together. So I had the opportunity several years ago to help develop and deliver some educational programming here in Calgary focused on the business model canvas. So I already knew of David, although we had never met but when I joined the team, one of the immediate things that we recognized was that there was education needed, both for entrepreneurs and for the advisors, coaches, mentors that we have in the province because a lot of times and I think this is you know, part of what we're trying to change with our program, entrepreneurs feel like intellectual property is its own disconnected thing that is not necessarily related to business strategy and that is one of the biggest challenges that I think we've seen and that we were trying to address when we first connected with David and brought him in to help run some workshops for advisors, coaches and mentors to really help them use the business model canvas, this global industry standard tool that has been around for many years. How can, you know, advisors, coaches and mentors use the business model canvas to get entrepreneurs thinking about how intellectual property relates to their business? And, as David highlighted, so many entrepreneurs have this mentality of, you know, if we build it, they will come and I think here you know, if we're looking at it through an I.P. lens, it's kind of if I protect it, they will come. And so we really you know we're happy to have David come in and work with our network of advisors, coaches and mentors in Alberta to help them ask the right questions and to help them be able to work with the entrepreneurs to see that connection between business and intellectual property and then be able to actually go out and test it in a way that doesn't, you know, prevent them from moving their business forward.
Lisa: Perfect. Let's talk about this because we if we build it, they will come. If we protect it, they will come. We know it doesn't work like that. So let's talk about these light bulb moments. Can you share a specific moment where somebody has been testing a business idea and they just had this insight, you know, this pivotal insight in the company's direction where they realized that “ohhh”! Do you have anything like that to share?
Kevin: We have a couple of examples that I can share and I mean I've got some personal examples as well, but I think just seeing some of the light bulbs, you know, proverbial light bulbs go off above the heads of participants in the workshops with David has been very telling and I think very indicative of the fact that a lot of even advisors, coaches and mentors who have been serial entrepreneurs, who have a lot of experience working in startups don't always think about that connection to the evidence that is needed, right and it's not one-size-fits-all, stop here. It's like, well, some companies can go further with testing than others, but in the end, everyone can test and evidence is key, testing is the way you can test strong I.P.-backed companies. And that's the message that we are repeating over and over again in our workshops and as we kind of point entrepreneurs to the business model canvas and testing, that's really the mantra that we've developed and it's so true. And I think David really does a great job in his workshops of helping to get people thinking differently about their day-to-day and help change the way they approach things. And one example you know from our pilots, now this is, I won't name any entrepreneur names or startup names because obviously we don't want to publicize that, however, there have been more than one company that have come through our pilots who are very much, they've identified that filing patents was a critical top priority for their business and by the time my team had processed their application and were ready to really evaluate the work that was being requested, the company had made the decision either to shut down, or they had pivoted and were no longer actually building a product or service in that vein that they had initially claimed, it was critical to file patents around. And so I think that you know that making that decision to either, you know, pivot your company or to wind down your company is very difficult and I fully respect any entrepreneur that goes through that and makes that tough decision. But what I don't understand is how disconnected the initial critical need to file a patent was from where their actual business reality was, and so I think that, you know, we've seen this now through our pilot that we ran last year, and now as we move forward with the full program, really getting entrepreneurs to provide that evidence that they have tested that this is really something that is going to be a critical differentiator for their business model, this I.P. that they want to pursue is that critical differentiator for their business model is so important and I mean we all know the stats out there that you know 95-plus per cent of patents go unlicensed and are generating no royalties. It's a huge problem and I think that this is at the heart of that problem.
Lisa: Yeah, yeah, absolutely. Do you have any other variable, valuable lessons for entrepreneurs or key takeaways from using David's approach that you would share with other entrepreneurs or I.P. professionals?
Kevin: Well, you know, we've kind of talked about this earlier, but I think that testing your business assumptions is not something that is groundbreaking, earth shattering, that's never been done before, and David's book really highlights those recipes or those templates, those processes that you can follow to test and gather evidence to support your business model and the fact that intellectual property is the right thing to be investing your time, your money and a lot of that attention that you know as a startup you are constantly, you know, fighting fires on all fronts. So is intellectual property one that you need to fight now? And I think that's where we've seen a lot of entrepreneurs not really come into our program and come into our workshops thinking about, you know, intellectual property, business strategy, something I can test, you know, and that's where I think we've really seen through working with David that connection is being made and I think we're going to see some hopefully, very successful companies come out of the program and continue to grow here in Alberta.
Lisa: That's awesome, I can't wait. So I know Kevin, you also had a question for David, I think.
Kevin: Yeah, you know, this is one of the questions that I think has come up a couple of times and I think it's a very important question because when you think about strong intellectual property-backed companies, one of the biggest problems or challenges you can have is how do you talk about your business, your idea without disclosing your intellectual property? And so David, my question for you is what advice can you give entrepreneurs who are building companies around strong intellectual property when it comes to testing and not inadvertently or accidentally disclosing your I.P.?
David: Yeah, I think there are a couple different points of view on this. One would be coming back to the business model canvas, right? So when you're talking about your I.P., we tend to put it in the key resource box. You know, think of it as a resource and quite often you're going to need to figure out what's the value proposition of this I.P., what can you create value, you know, and then also who's your customer segment for that? So, when you think about all those 9 boxes, you can think about your I.P. in that conversation being just a resource, a key one, that you would use to leverage to either go into a new market or expand in some way, but you're creating a value proposition with it for a customer. Another thing is when you think about your experimentation, try to plan ahead a little bit. I mean your plan will change, I fully understand that, but think through, you know, let's say you’re doing hardware. Right, so a flow that we talk about in the book with hardware is, you know, you might do some customer interviews, then you might start paper prototyping things. Then you might use that to help inform like a 3D print. Then you might make it to a data sheet where you're laying out the specs of everything and the performance of it. Then you might create some kind of minimum viable product where you mesh existing tech together and then you might end up asking for a letter of intent. So having people sign a non-legally binding one pager to, you know, have a little more skin in the game, so to speak. Well, if you think of that process interviews to prototypes, to printing, 3D printing, to data sheets, to match up to a letter of intent; you know, you're disclosing more and more as you go, so maybe, you know, when you get to the 3D printing for example, you know and you're just putting that in front of somebody, maybe you should think about protecting your I.P. when you're at that stage, right? Software, it's the same thing, right? You might do interviews, you might go on discussion forum to do search trend analysis to figure out you know how big this problem is, you know like competitive user test existing solutions. You might create some kind of clickable prototype and then try to presale that and then really quickly build it in V.P., because usually in software you can put those together a little bit faster than you can in hardware. But even along that journey right, from interviews to discussion forums to competitive user testing to like a clickable prototype, when you get to a clickable prototype, even though it's not wired together, behind the scenes you are putting something in front of somebody and having them interact with it and click through and there is, you know, U.I. that you're, you know, showing and all that, so maybe at that point you know you need to think about I.P., but even in all those flows, I think what we see as a pattern is it's not necessarily big design up front with I.P. and then protect it all and then go see if there's a need. It's where does it fit in, in your flow and where do you, you know, and this is something I've learned from you, Kevin, along the way in our collaboration is at what point do you protect it and how in that process? Because it's not all up front, but at the same time you don’t want to accidentally give stuff away as you go through this discovering validation process.
Lisa: Absolutely, I.P. strategy all around. I love it! David, Kevin, this has been great. Thank you so much for sharing your insights with us today. It has been really a true pleasure to have you with us here today.
David: Thanks for having me.
Kevin: Thank you.
Lisa: You've listened to Canadian IP Voices where we talk I.P. In this episode we met with David Bland, who is the author of the practical guide named Testing Business Ideas. David went over the principles explained in the book as well as shared some practical tips on how inventors can get started on validating their business ideas on a tight budget.
We also met with Kevin Dahl, Director of Elevate I.P. at Innovate Calgary. Kevin shared his experiences from working with David and Canadian inventors to validate business ideas and has seen first hand the importance of establishing the connection between a validated business idea and intellectual property. To learn more, open the description to this episode where we have shared links to David’s web page, Innovate Calgary and the business canvas model.