Since our founding in 1998, Algonquin Studios has acted as a trusted ally for several startups and has even launched a few businesses ourselves. By March, 2010, several Algonquin Studios team members had built a robust hardware prototype: a mesh network of sensors, controllers, and management software. It personalized the environment and access within commercial buildings and hotels. But the team had limited sales and installation experience.
Coincidentally, I had a trip to Beijing and Shanghai forming, as my team needed a capstone project in the University at Buffalo’s Executive MBA program. What a lucky match! Beijing and Shanghai were saddled with surplus real estate following the Olympics and investment booms and firms were hungry for smart competitive advantages. Why wouldn’t this solution work in China? My team set up in-person demonstrations and feedback sessions with hotel and property managers while we were in China, and brought back a trove of on-the-ground observations.
We were surprised at what we learned and the ways that were identified for doing things better the next time around. I’m sure you would be too:
Is that a prototype or a bomb? We brought several black plastic boxes as functional prototypes. Each was the size of a juice box and had LED lights and wires hanging out the side to batteries. Frankly, they looked like bombs to our American eyes. How would we get them through customs in China? It turns out they didn’t care.
Demos will break. How many ways can you give your demo? It had better be a bunch. At our first meeting we fried the Radio Shack step-down transformer we brought with us. But we had rehearsed in the hotel – how unfair! So what? We couldn’t find another transformer in any store. We would have been stuck giving vaporware demos, and our surveys would have just measured the dream in someone’s head. But, we found a way out – powering up with batteries or laptop USB ports. In fact, laptop wall power supplies adjusted to every location with just a reliable plug adapter and laptops could be recharged, unlike plain batteries.
Tricky Demos = No Demos. The developers warned us that the devices would jump to a different port every time we started a demo. My background is development, so I could resolve the problem without anyone noticing. But the rest of my team struggled when we split the team up to do two meetings at the same time. Remember, your goal on the ground is to get feedback and the talent you’ll have won’t necessarily be technical.
What does ‘done’ mean? Following that thought, we realized our demos could have been more polished. We built our demo around what the developers showed us. Why not build it around what evokes meaningful feedback? For that matter, make it look good so you’re not distracting prospects with a bomb, highlighting how far you are from done, and maybe getting them to feel like they should work with a cool outfit like yours.
How will you pay for that? Business credit was new in China in 2010; most paid by bank transfer or online services like AliPay and TenPay. Not one of our prospects chose credit cards as a possible payment method. One kind soul wrote, “There are no credit cards in China.” We could have figured that out from a few web searches, but we didn’t do the due diligence. So, did we miss a chance to get better feedback?
Integration and Management Services. Don’t forget that a hardware solution lives in an existing context. Every one of our prospects asked how we would work with their existing systems and offer administrative tools. If you can’t do this yourself, it’s smart to partner with a firm such as Algonquin Studios.
Sales Channels. Who will your prospects buy from? Our prospects suggested that we partner with a US firm already established in China, increasing trust, avoiding intellectual property theft, and offering integration options. Even a two-person local sales team with an engineer would be better than selling from outside China. You might need local help to get products out of customs delays in port.
Each building is an island. Treat each prospect as a unique case. We met with hotels and property managers, very concrete examples. We were surprised to find that each hotel provided its own utilities and services, including massive electric, water purifying, and emergency outfits. Less literally, don’t make assumptions about the rules. Listen first.
Even if you’ll open your business in your home market, or your foreign market is in the west, there’s more to ground research than just product demos. In fact, we wouldn’t have gotten any feedback without adapting on the fly. How thrilling!
Stayed tuned for Part 2 of this post, which will cover our take-aways on the more “personal” aspects of cross-cultural market research.
Related links that rang true to me:
Tips for On-the-Ground Market Research
Global Health at MIT
Ground Truth and the Importance of Market Research