Article Technical Rating: 1 out of 10
You need to see the forest for the trees, don’t get lost in the weeds, don’t drown in the details, take a bird’s-eye view, focus on the big picture.
These idioms all convey the same meaning, and there’s a good reason why there are so many expressions for this idea. The concept of focusing on the larger picture is so very important. I’m going to tell you why focusing on the big picture is especially critical for entrepreneurs bringing a hardware product to market.
Many entrepreneurs developing a new hardware product make the error of focusing too much, and too early, on all the little details. When you focus on the details you naturally lose the ability to see the big picture.
For example, developing a full schematic circuit diagram requires a focus on numerous tiny details.
An example of a small detail is a resistor value. The value of a resistor (or even its existence since the cost of most resistors is insignificantly small) has no bearing on the big picture for your product. While it’s important to eventually get this resistor value correct for functionality, it should not be an early priority at all.
Let’s look at another example of the type of little details you want to initially set aside. The pinout of an integrated circuit (microchip) is important, but not at all critical to focus on upfront.
Whether the power supply connects to pin 1 or pin 100 has absolutely no impact on the big picture. However, it is an absolutely critical detail when designing the full schematic diagram.
Connect power to the wrong pin and the product simply won’t work. But do you think the pin number has any effect on how much the product will cost to make, how much profit you can make, or whether the product will sell well?
Of course not! It’s an important detail but not one that you should give any attention to initially.
On the other hand, the actual microchip does impact the big picture because it effects the manufacturing cost for the product, and the complexity of development. For most circuits the microchips completely dominate the cost. This illustrates why your first step should be selecting the core components for your product.
I often talk with excited entrepreneurs who immediately want to focus their effort (and money) on getting a production quality prototype. They incorrectly believe that a working prototype is the best first step to developing a new product.
So many entrepreneurs put their heads to the grindstone and focus entirely on getting a working prototype. But, they often neglect the big picture.
Entrepreneurs that are engineers or makers may be the worst in this regard because full product development is where they feel most comfortable.
It can take six months to a year (sometimes even longer) to get a fully working prototype. Once an entrepreneur has a working prototype, then they will finally look up hoping to see the forest!
But by then it is too late.
Many entrepreneurs look up to realize they’ve developed a product that can’t be manufactured and sold at a profit. Or they realize they didn’t have a realistic financial plan so they are now out of money and unable to proceed any further. Or they realize they’ve developed a product no one actually wants.
Some make the mistake of developing a product that can’t be easily manufactured. Others realize development took much longer than anticipated and the market for their product has changed or even disappeared.
Others may have focused so much on the fine details of development that they forgot about the importance of marketing and sales.
The list goes on and on…
But you can avoid making all of these mistakes! What you want to do is start your development process with something called a preliminary design (or pre-design for short).
A pre-design focuses solely on the decisions that impact the big picture for your product. This includes your product’s cost, profit margin, performance, features, development feasibility and manufacturability. A pre-design ignores any details that don’t impact the big picture for your product. You can worry about those later.
After you complete the pre-design you next need to accurately estimate all of the costs required to launch your product. This includes the cost to develop, prototype, certify, scale, and most importantly the cost to manufacture your product. Knowing these costs ahead of time will allow you to plan the best strategy forward.
When big companies like Apple or Samsung are introducing new products do you think they just dive right into creating a working prototype? Of course, not. They first have a plan. They first look at the big picture.
Seriously, what’s the point of developing a product if it can never make any profit?
As a business founder, remain absolutely focused on the big picture for your product and company. You’re the one with the vision!
Figure 1 – A focus on the big picture is essential to success for hardware startups.
Remember, you need to work on your business, not for your business. This is an important distinction. Working on a business is all about the vision and the big picture. Working for a business is all about the little details.
As an entrepreneur your ultimate business goal is to maximize sales (revenue) while also maximizing profit.
When starting out, not only do you not know what price and set of product features will generate the most sales, but you also have no idea how much profit you can actually make.
Thorough market research (and eventually sales or pre-sales) will help answer the question of what price and product features will sell the best. Knowing the manufacturing cost for your product, broken down by each potential product feature, will answer your questions about profit.
As an entrepreneur with a limited budget your thoughts are probably on the most immediate costs. You naturally worry about costs as they occur, partially because you only learn about new costs when they become necessary (to learn about all the costs now see this article).
But experienced companies start at the end goal and work backwards (and so should you). Your first priority should be to estimate how much profit can be made. That’s ultimately the big picture for any business, right?
To accurately estimate your product’s potential profit you need to know how much you can sell the product for and how much each one will cost to produce. Once you know that you can make a healthy profit, then it’s time to focus on the cost to develop and scale it.
The most common reason why hardware startups ultimately fail is because they underestimate the complexity, time and cost to develop and launch a new, market-ready, hardware product.
To succeed it’s critical that you have realistic expectations from the beginning.
If you underestimate the development cost or the scaling cost you’ll run out of money before your product makes it to market. If you underestimate the production cost then you won’t be able to afford to purchase any inventory and your profit will be less than you expect (or worse, non-existent)!
The production cost, or more precisely the landed production cost (meaning landed at your warehouse – also known as the Cost of Goods Sold – COGS) not only determines your profit and your sales price, but it also tells you how much capital you’ll need to purchase inventory. It’s your most important cost to know.
You’ll eventually proceed past the development and scaling stages, but you’ll live with the production cost indefinitely.
Production cost is also the most difficult to estimate. In order to accurately calculate the production cost, considerable engineering analysis is required to determine all the components needed.
In addition to knowing your costs you also really need to have a realistic timeline. By starting with a preliminary design you will have the information needed to more accurately forecast the timeline.
Many entrepreneurs drastically underestimate how long things will take to accomplish. But with realistic expectations you can succeed, and be taken seriously by investors and customers.
By starting with a preliminary design and a focus on the big picture you will be:
– Confident about what you need to do to succeed
– More likely to get investors (investors cringe at unrealistic estimates)
– Able to plan better financially
– Better able to forecast when your product will reach market
– Able to develop a better product
– In a position to get your product to market faster
– Able to save money
– Able to reduce your overall risk
– Knowledgeable on how to make more profit
– An entrepreneur with a realistic business plan
Being both an entrepreneur and a product designer, I decided to create a way to help entrepreneurs focus first on the big picture. It’s a preliminary design service called a Predictable Hardware Report.
The report includes the selection of all critical components, a detailed engineering analysis, accurate cost estimates, recommendations for suppliers and manufacturers, an estimated timeline, suggestions for improvement, and private consulting with me.
If you need engineering technical support, coaching, training, connections, referrals, and resources to help bring your new electronic hardware product to market then be sure to check out the Hardware Academy.
The key to success is knowledge of the obstacles that lie in your path and a realistic plan on how to overcome those obstacles. Helping you accomplish this is the goal of the Predictable Hardware Report.