The 9 Best Innovation Books for Innovators, Entrepreneurs & Intrapreneurs

I wrote Lean B2B to help entrepreneurs apply the Lean Startup methodology in B2B. It’s something I had struggled with, and a reality I was aware of.

Among the happy discoveries that followed the publication of the book was the realization that the second largest group of buyers (after B2B founders) was innovation consultants and intrapreneurs. Not only did they buy the book, they also found a lot of value in the content.

Organizations like the Netherlands Aerospace Centre, ING and Altran have used Lean B2B to prioritize innovation projects and capture requirements from business customers.

Innovation and entrepreneurship often go hand-in-hand in these organizations: To build or to buy is a question innovation managers have to answer. Businesses need to decide which innovation projects to fund.

To help assess innovation projects, I have put together a list of the 9 best books on innovation:

The Top Business Innovation Books

	Diffusion of Innovations – Everett M. Rogers One of the most important early innovation books, and the only book about farming on this list. Diffusion of Innovations is a great example of how technological changes impact all sectors. The book introduced the different categories of adopters (innovators, early adopters, early majority, late majority, and laggards), on which Geoffrey Moore expanded in Crossing the Chasm. It also created some of the early theories around innovation adoption in large organizations.
	Blue Ocean Strategy – W. Chan Kim, Renée Mauborgne A global bestseller among business leaders. Blue Ocean Strategy introduced a useful framework to understand the relative positioning of offerings and businesses. Blue Ocean Strategy draws a comparison between the way businesses compete in red oceans, where companies compete in an existing market space and work to exploit existing demand, and blue oceans, where companies capture new demand by creating (and competing on) new parameters.
	Innovation and Entrepreneurship: Practice and Principles – Peter F. Drucker The first book to define entrepreneurship as a systematic discipline. Innovation and Entrepreneurship remains as relevant today as it was 30 years ago when it was published. The book advocates focus, building from a position of strength, and being market-driven. It’s a great read to understand the differences in the practices of innovation and entrepreneurship and create the processes to make innovation projects successful in organizations.
	The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses – Eric Ries The book that kickstarted the Lean Startup movement, and inspired Lean B2B. The Lean Startup looks at how organizations can create greater levels of agility through continuous experimentation. Minimum viable products (MVP), validated learning, innovation accounting, and the build-measure-loop are just some of the innovation tools that were popularized by The Lean Startup.
	The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail – Clayton M. Christensen One of my favorite innovation books. The Innovator’s Dilemma demonstrates how incumbents have historically been disrupted by more focused and nimble technology companies. The theory behind the book was widely adopted by the tech sector. Some of the largest technology companies today, like Facebook, now actively seek out products, platforms and companies with the potential to disrupt them (e.g. WhatsApp and Instagram acquisitions).
	Lean Enterprise: How High Performance Organizations Innovate at Scale – Jez Humble, Joanne Molesky, Barry O’Reilly To effect change in an organization, intrapreneurs need buy-in from management and processes to quickly respond to market changes. Lean Enterprise looks at how The Lean Startup can be used to change processes and influence upper-management. It offers a lot of valuable advice on how to move fast at scale and change the organization. It’s a must-read if you’re in charge of an innovation project within a large organization.
	Creativity, Inc: Overcoming the Unseen Forces That Stand in the Way of True Inspiration – Ed Catmull, Amy Wallace Creativity, Inc looks at the creative and innovation processes of Academy Award–winning animation studio Pixar. The book looks at the unique environment that Pixar built to maximize creative throughput and become one of the most profitable movie studios. There’s a lot to learn from this book in terms of leadership and creativity management, which are both key in innovation.
	Subject To Change: Creating Great Products & Services for an Uncertain World – Peter Merholz, Todd Wilkens, Brandon Schauer, David Verba Subject to Change was written by the partners of Adaptive Path, a now-defunct experience strategy and design agency. The book explains why companies need to develop qualitative customer research capacities to understand customer behaviors and inform innovation projects. It’s a great primer on making an organization more customer-centric and market-driven.
	Making Ideas Happen: Overcoming the Obstacles Between Vision and Reality – Scott Belsky Innovation won’t succeed without good execution. If your organization has great ideas, but doesn’t have the processes and people in place to realize them, it won’t be able to make a dent in the market. Making Ideas Happen will help you build the capacity to make ideas happen. The book offers a lot of actionable advices to improve productivity and create better products.

Do you agree with my list? What are your must-read innovation books? Tweet at @LeanB2B.

17 Fundamental SaaS Frameworks B2B Entrepreneurs Should Use

Startup founders are notoriously self-reflective. They, along with their investors, spend a lot of time thinking through and creating Software-as-a-Service/SaaS frameworks to help improve their processes.

As a self-reflective founder myself, I spend a lot of time comparing and studying frameworks to find the best ways to understand and grow my business.

In SaaS, frameworks are shortcuts to understanding, learning and self-growth. To help B2B entrepreneurs focus on the best SaaS frameworks, I compiled the 17 sales, customer development, growth and product management frameworks they should be using in 2018:

1) The Build-Measure-Learn Loop

The Build-Measure-Learn Loop in B2B

Why it matters: Eric Ries’s Build-Measure-Learn loop is a key concept from The Lean Startup. This framework helps remind startup founders of the importance of iterating, staying lean and marking progress through validated learning. For startups, the speed of learning creates speed of growth. Iteration is key.

2) 8 Ways to Build a $100M Business

SaaS Frameworks – 8 Ways to Build a $100M Business

SaaS Investor Christopher Janz originally wrote about five ways to build a $100 million business. He later added three more to the list.

Why it matters: This framework helps founders compare and visualize alternative business models. A business hunting mice (1,000,000 customers x $100/year) will be completely different from a business hunting elephants (1,000 customers x $100,000/year). The roles, channels, metrics and sales processes will greatly vary in relation to the average revenue per account (ARPA). Misunderstanding the type of business you’re in is a very dangerous mistake.

3) Uniqueness Vs. Value

SaaS Frameworks – Uniqueness vs. Value by Guy Kawasaki

A few years back, venture capitalist Lisa Suennen shared a great chart from former Apple Chief Evangelist Guy Kawasaki.

Why it matters: This chart helps communicate the importance of uniqueness when it comes to bringing technology to market. In a previous post, I expanded on this topic, explaining why startups need differentiated features in order to convince businesses to adopt their solutions. Without differentiation, your business will have to compete on price or features.

4) Features vs. Benefits

SaaS Frameworks – Features vs. Benefits for Customers

Why it matters: Too many technology startups communicate in terms of features, not benefits. This chart by Samuel Hulick helps communicate the importance of understanding your product from the customer’s perspective, not yours. Understanding the desired outcomes (e.g. do rad things!) of your buyers keeps you focused on creating real value.

5) The 4 Steps of the Customer Development Process

Double diamond process Lean B2B

This chart, based on the Double Diamond design process by the UK Design Council, came together during the writing of Lean B2B.

Why it matters: There’s more to customer development than getting out of the building. This framework helps entrepreneurs understand the 4 steps of the customer interview process and their associated outcomes. Problem and solution interviews have both divergent and convergent phases. This chart helps remind founders of the importance of exploring broadly when interviewing customers.

6) The Three SaaS Sales Models

SaaS Frameworks – The Three SaaS Sales Models

The Three SaaS Sales Models framework was created by Joel York to help entrepreneurs (especially B2B founders) understand how pricing and complexity impact their go-to-market strategies.

Why it matters: Ultimately, your product’s price and customer acquisition cost (CAC) dictate the sales channels you can use to grow your business. A Self Service product can’t be commercialized by a sales team. An enterprise product won’t be sold exclusively through your website. This framework helps founders understand these dynamics.

7) Sales Interactions per Transaction Amounts

SaaS Frameworks – Sales Interactions per Revenue Amounts

A few years back, I stumbled on sales expert Scott Sambucci‘s chart from his presentation on the Sales Model Canvas.

Why it matters: Although the actual numbers of interactions will vary from one industry to the next, this framework helps entrepreneurs set benchmarks for their sales and follow-up interactions. This SaaS framework, like the previous, helps explain the relationship between the amount you charge and the complexity in closing the deal.

8) The 9x Effect

SaaS Frameworks – The 9x Effect And Product Value

The 9x effect was originally introduced by John T. Gourville in Eager Sellers and Stony Buyers.

Why it matters: Entrepreneurs often overvalue their products. Business customers often overvalue their current solution. To get companies to buy and make a change, prospects need to perceive 10x more value. Because of this framework, a lot of investors and entrepreneurs talk about creating products that are 10x better than the alternative.

9) Purchase Drivers per Customer Types

SaaS Frameworks – Emotional & Economic Purchase Drivers per Customer Types

This framework was created by entrepreneur Steven Forth. It builds on the technology adoption curve from Crossing the Chasm.

Why it matters: This chart helps communicate the differences in mindsets and motivations across the six stages of buyers. Business buyers are not exempt from emotional decision making. By understanding their realities, you can learn to mold your marketing messaging to their needs and aspirations.

10) The 4 Forces Influencing a Customer to Switch

SaaS Frameworks – The 4 Forces Influencing a Customer to Switch

There are different versions of this framework available online. I like Intercom’s version because it communicates the challenge visually.

Why it matters: There’s always competition. Whether you’re replacing a manual process, an Excel spreadsheet or a piece of software, your product always needs to overcome the status quo coefficient to get customers to switch to a new solution. It’s never easy but, if you’re able to understand their concerns, you’re in a better position to address them.

11) Revenue Breakdown: Initial Transaction vs. Retention Phase

SaaS Frameworks – Revenue Breakdown Between Initial Transaction and Retention Phase

This model was originally created by Totango CEO Guy Nirpaz. It was later popularized by investor David Skok.

Why it matters: This chart helps communicate the impact of retention and customer success on revenue generation. Sales teams often try to maximize the initial transaction, but it’s important to realize that up to 70 to 95% of the revenue generated from a customer will come from recurring or expansion revenue.

12) Feature Requests for Free and Paying Users

SaaS Frameworks – Features Requests per User Types

This chart was created by Intercom co-founder Des Traynor for this post.

Why it matters: Feature requests are extremely common for founders. As a rule of thumb, feedback from non-paying users tends to focus on additions to the product while feedback from paying customers focuses on improvements to the product. It’s important to properly assess and categorize user feedback to avoid building bloat, or building for the wrong users.

13) The Whole Product Definition

The Whole Product

The Whole Product is a concept introduced by Bill Davidow in Marketing High Technology.

Why it matters: In B2B, there are a lot of things that must be put in place before you can be considered a valid vendor by your prospects. The Whole Product is the concept of that minimum set of requirements (features, certifications, partnerships, etc.), and is intrinsically tied with sales and Product-Market fit.

14) The Retention Curve

SaaS Frameworks – Retention Curve

The retention curve was originally introduced by Brian Balfour during his talk Growth Is Good, But Retention Is Forever.

Why it matters: As Brian Balfour says, retention in SaaS is the silent killer. If you look at any retention curve, it will start at the top along the Y-axis and then slowly (or abruptly) tend to zero. For a SaaS product to succeed, the retention curve must eventually flatten as users continue to use the software.

Andy Carvell, co-founder at Phiture Mobile Growth, added the following model to help highlight the retention gains possible through constant interactions with customers:

SaaS Frameworks – Potential Retention Gains

15) The Product Death Cycle

SaaS Frameworks – The Product Death Cycle

Designer David J. Bland spontaneously shared this chart for The Product Death Cycle on social media.

Why it matters: This chart illustrates the reaction of many entrepreneurs when their product does not get the level of usage they were hoping for. As the model states, this mindset leads to bloat and eventual death when businesses should really commit to a niche, solve problems and increase value.

16) Startup Risk Types by Financing Rounds

SaaS Frameworks – Startup Risk Types by Financing Rounds

This chart was originally created by investor David Skok for his blog.

Why it matters: Raising capital in B2B requires a great understanding of the investment landscape and the stage your business is at. With this simple model, entrepreneurs can visualize the risks and metrics investors look for at each investment round. For example, at the Seed stage, investors look for signs of product-market fit.

17) The Valley of Death in Technology

SaaS Frameworks – The Valley of Death in Technology

This chart has been widely distributed on the Internet. The origin is unknown.

Why it matters: This chart is all about perseverance. Although the stages, duration and intensity of the highs and lows will greatly vary, this framework helps communicate the importance of making it through the Valley of Death.

How to Use SaaS Frameworks

There’s no one-size-fits all model to growing a software business. Although I personally use these frameworks in my work and to help other entrepreneurs, it’s important to keep in mind that they may not apply to your business.

Frameworks are shortcuts to thinking patterns; they help simplify complex concepts. Use judgement to find the best SaaS Frameworks for your business. They can be very useful in your work, but if the shoe doesn’t fit, it doesn’t fit…

Ideal Customer Profile: What Makes a Great Customer in B2B?

Think of your ideal customers… What do they look like?

They found you organically. They cost next to nothing to acquire.
They have the problem you’re solving… When they land on your site, they go: “Oh, that’s for me.”.
They experience the value of your product right away; it gets them the business outcome they seek.
They barely use your support. Everything just makes sense for them.
They don’t churn. In fact, they want more of your product. More seats, more features, more usage. More, more, more.
They can’t help but talk about your product… with other companies, at conferences, on their blog. They’re happy to give insights into new opportunities.
Their business is growing. They don’t ever think your product is too expensive because it delivers on value.
They provide a never-ending stream of feedback. it motivates your team; your product can’t help but get better.

Sounds amazing, no?

Well, those customers exist. It’s your job to find them, and then, find more and more of them.

An Ideal Customer Profile Framework

Entrepreneur and consultant Lincoln Murphy talks about the 7 criteria that define an ‘ideal customer’ on his blog. He says of ideal customers:

They’re ready
They know they have the problem you’re solving. There’s a sense of urgency you can use to sell your product.
They’re willing
They’re ready to solve that problem. There’s a champion and a strong catalyst for change: a merger & acquisition, an investment, a request for proposal, etc.
They’re able
They have the money and authority to solve the problem. You want as few decision-makers as possible because the longer your sales cycle is, the more money you’ll need to raise.
They can be made successful
Your solution is not held back by technical limitations; it can solve the problem. Your Jury – the key decision-makers – personally stand to win. Someone might get promoted as a result of implementing your solution. There’s a clear ROI. Success can mean a lot of different things to organizations, but delivering value and making businesses successful is critical.
It’s cost-effective to acquire them
User acquisition is never an after-thought. You always need to know how you’re going to acquire customers. If you need to speak to the CEOs of Fortune 500 companies to get a deal done, you won’t be able to ramp up as fast as if you sell a more transactional solution to the CEOs of SMBs. You want to make sure you’re able to reach the right decision-makers quickly.
There’s ascension potential
There’s an opportunity to Land-and-Expand to sell more seats, licenses, features, etc; upsell and cross-sell are possibilities. You don’t want to be locked-in with your initial deal.
There’s potential for advocacy
If made successful, customers can spread the word with their friends or colleagues, refer your business, write testimonies, or more. However, some industries are opaque, and word of mouth won’t work. It’s always better to know that ahead of time.

Ultimately, it’s your role to define your organization’s criteria for what makes a great customer.

To go fast, ask yourself: how can you have maximum impact with what your business currently has or could offer within the next 3 months?

Don’t look too far ahead. You’re looking for the lowest hanging fruit; the ideal customer for your current product.

Why Ideal Customer Profiles Matter

Signing 10 customers that fit your ideal customer profile will be more impactful than signing a large number of random customers.

Customers will always ask for product enhancements. These requests need to align with your vision of the future.

Customers provide references. It’s important that those references attract the right kinds of customers.

Define your ideal customer profile, use outbound to contact them, and focus. The more value your product provides, the faster you’ll grow within your target segment.

The Best Technology Business to Start in 2018 is B2B

This content on the best technology business to start is part of the Lean B2B course 🔓.

All of my jobs have been in B2C. I worked in retail, I worked in loyalty, and I’ve sold to musicians. Yet, every single technology business I started has been in B2B.

I started a consulting company selling user experience and usability services to businesses.
I built Flagback adding a layer on top of the web for quality assurance teams and agencies.
The employer brand monitoring platform I was building at HireVoice was B2B.
My current (new) startup is also B2B.

Why the best technology business to start is B2B

I ❤️ B2B, and there’s a lot of reasons why it matters. Here are the top eight reasons why the best business to start in 2018 is B2B:

1. You get to leverage what you know

The company you’re working for might be Business-to-Consumer (B2C), but you’re working in a business. You get to see the problems, you build domain expertise, and you learn the industry. If you work in retail, you understand retail. If you work in finances, you start to understand finances, but you also build solution expertise; you learn how to build a product for that market or for someone with your job title in another company.

2. The opportunities are almost infinite

If you truly understand the Job to be Done, you can find opportunities. People in companies are constantly looking for an edge over competitors – internal or external. There’s always a desire to improve retention, have better employee engagement or increase the performance of the marketing funnels; there’s always going to be a need to make things better. If you truly own-in on a niche and understand the need, you can build something really exciting for businesses.

3. B2B markets can support multiple winners

Think about it, how many email marketing platforms do you know? I can probably name ten off the top of my head. In B2B, you can have multiple companies serving the same need for different types of businesses. You can target a niche, go upmarket, low market, mid-market, etc. Whereas, in B2C, markets tend to be winner-takes-all. Facebook has no real competition. They’re WhatsApp, Instagram and Facebook. What else is there after them?

4. Software spending is growing

We’re in the golden age of tech. Businesses are still transitioning to the Internet, and software spending is growing. Businesses use more and more tools. I was recently speaking with a company that uses 80 tools to manage their business. They’re still thinking about getting new products, and why shouldn’t they? If they can automate a task or improve a business process, and the return on investment is there, it just makes sense, no? A lot of job functions are still underserved. Marketing or development may be well covered, but there’s still a lot of other functions in companies that can be helped. Think archiving, purchasing, operations, etc.

5. Legacy vendors still control the market

Legacy software companies like Oracle, Microsoft and SAP control a market cap of 83%, and own 93% of all software revenue. This means that only 7% of all software revenue is in SaaS; the bulk of the revenue is still legacy software. A lot of products will probably transition to more Software as a Service models, and there’s a lot of things that will need to evolve in terms of tools to give better service and better results to businesses.

6. Profits are cool again

After the bubble burst in 2008, a lot of investors realized that they can’t keep investing in high-growth companies that don’t necessarily have business models. There’s less and less investment in companies that are just acquiring users, growing and then eventually thinking about monetizing. Monetization is a key part of it. It’s easier to bootstrap and build a sustainable business in B2B because you’re expected to sell, have sales and be sustainable. You can’t just acquire all the businesses and then someday try and convert these companies into customers. It doesn’t work like that in B2B.

7. The innovation industry is booming

If you look at the US, the Asian or the European markets, there’s more and more people working in innovation in businesses because companies have started feeling the heat. They realized that their business models need to change. One way for them to do that is to acquire startups that can help them leverage an advantage over competitors. This increases the odds of successful exits for B2B entrepreneurs. If you build a meaningful product, it might not become a sustainable business, but maybe a company will need it to build or expand its product offering.

8. B2C incumbents are going B2B

Last, but not least, B2B is becoming cool-er. Because of the consumerization of enterprise software, business users have come to expect the same kind of user experience that they get in B2C in B2B. More and more exciting B2B products like Slack, Box or Intercom are coming up each year, and they’re attracting more and more attention. Even companies like Dropbox and Facebook are slowly transitioning to more B2B services because they realize there’s a lot of money in B2B.

As an entrepreneur, if you’re willing to dig deep into the value chain and the needs of the market, you can find opportunities for breakout products. You just need the patience and the dedication to do the research. There’s countless opportunities in B2B, and that’s why it’s truly exciting. :-)

How to Identify Follow-on Markets (With a Great Bowling Analogy)

How to Identify Follow-on Markets (With a Good Bowling Analogy) — © Control Alt Deceit: A Game of Lies, Betrayal and Questionable Business Strategies

Let’s talk about bowling…

If you imagine the move from early adopters to the mainstream audience as a bowling alley where each pin represents a niche market…

As you knock over a pin – or capture a significant share of that niche – you can move on to adjacent markets… and then knock them over.

But, to be successful, the key is to make sure that the next pins you hit are related to the ones you’ve already knocked down so that awareness, word of mouth and case studies travel from one pin to the next. That way, you don’t have to start from scratch every time you enter a new market.

This approach is what Geoffrey Moore, author of Crossing the Chasm, calls the “bowling pin” strategy.

Facebook is a company that executed this strategy really well.

Facebook started at Harvard and then spread to other Ivy League colleges, before eventually reaching the general public.

If they had started out with 1,000 users spread randomly around the world, the service wouldn’t have been very useful.

But having the first 1,000 users at Harvard created value for students. Those students had friends at other colleges, which allowed Facebook to jump from one college to the next.

Much like in bowling where it’s much harder to hit a split – when the pins have clear separation – then to hit adjacent pins, you want to make sure your follow-on markets are related.

How to Find Follow-on Markets That are Related

To find the next “pin”, it’s important to understand what you’ve already created and be aware of new or emerging opportunities.

What have you built? What came up as you were winning over your initial market segment?

Did users from other segments sign up despite your marketing’s focus being on a completely different market? Were some of those user groups larger than others?
Did any of those users find real value in your product? Were there segments that showed equal – or maybe superior – performance than your target market customers (churn, engagement, NPS, return on investment)?
Did users from other market segments contact your team wanting a slightly different product or solution? Did they have the budget to pay for custom development?
Did your team build authority or visibility that can be leveraged to enter in a new market?
Did your team gain knowledge or insights that can be used to strategically expand in a new segment?
Have customers recommended your product to companies outside of your target market? Have those companies found value using your product?

You’re looking for the intersection between the easiest segment to capture and the greatest strategic benefit for your organization.

Which segment opens most doors? Which segment strengthens your position of leadership? Which segment helps your finances the most?

At this point, since you’re building from a position of strength – with revenues and an established company – you can prioritize longer-term opportunities.

Ask yourself: which follow-on markets will help you knock down pins #3, #4, #5 and beyond? Find the best customer segment and do it! :-)