Every great enterprise innovation executive knows how to evaluate a startup based on numbers, but sometimes, numbers and measures don’t tell the whole story.
Think in terms of basketball. Sure, you could look at a player’s worth based purely on their average points or rebounds per game, but that doesn’t always show whether they would be good for your team. A good manager or coach will definitely look at a player’s stats, but they’ll also look at intangibles like leadership, consistency, motivation and teamwork.
This concept also applies to the evaluation of startups. The quantitative measures matter, and will always matter, but an all-encompassing startup evaluation should include consideration for the qualitative KPIs as well.
Defining Qualitative Research
For enterprises testing software solutions, qualitative research can come at the very beginning of an exploratory research process or at the end, as part of evaluation. In other words, it can take place before testing the technology by running a proof-of-concept or after.
Either way, it complements quantitative measures by providing more information. But what exactly is qualitative research?Whether done before or after a proof-of-concept, qualitative research compliments quantitative measures by providing more information. Click To Tweet
At its most basic level, it is a way to examine more interpretive or opinion-based elements of a particular problem or product.
Say you are looking to acquire a piece of software, and you have the sales data in front of you, but you just want to know more about how customers perceive the product. The best way to do that would be to run a qualitative focus group or series of one-on-one interviews in order to gather more detailed information directly from users.
That is qualitative research, and it can be extremely useful when trying to wrap your head around the efficacy or experience of a product or service.
Types of Qualitative Research
Focus groups are lightly-guided group discussions wherein a small collection of diverse users talk about their opinions on specific subjects. It is commonly used for corporate product development, and it is incredibly helpful for giving enterprises a deeper understanding of the user experience offered by a startup’s product or service.
Similar to focus groups, individual interviews can help an enterprise understand the user experience of a product or service. Unlike focus groups, however, it eliminates the chances of group-think, which can happen any time several people are discussing a subject.
A startup can provide great user experience and the technology have a stellar reputation, but if the company fails on a basic level as a business, then the chances of you as an enterprise collaborating with them is dead in the water.
You should evaluate every startup in your sights through three distinct lenses: expertise, leadership, and need.
For expertise, you want to know that your startup understands their market and their product. Some companies have a great idea, but they don’t understand implementation or profitability. Assess their business plan and that will clue you into the breadth of their working knowledge.
Next, proper management and leadership is incredibly important. Gauge how the company works as a team and how their CEO manages that team. This will give you a window into the startup’s long-term potential.
Lastly, ask the hard questions about the startup and their market. Do customers have a need for the service or product that this startup provides? What is the competition like? Can this startup survive in a saturated market? The answers to these questions will let you know of the overall need for what the startup offers.
Proof-of-Concept Testing: Where Qualitative and Quantitative Measures Meet
When enterprises test startups by running proof-of-concepts (PoCs), they are able to test the technologies in specific business cases that are relevant to their company’s needs.
For example, an insurance company can test an artificial intelligence technology to see how quickly, accurately and efficiently the technology processes claims; or a healthcare company can test an IoT technology to see how accurately it processes data from the objects to which it is connected, and how quickly it transfers that information.When enterprises test startups by running proof-of-concepts (PoCs), they are able to test the technologies in specific business cases that are relevant to their company’s needs. Click To Tweet
In customizable PoCs, enterprises can measure strictly quantitative metrics such as memory usage, CPU usage and GPU usage that impact technical functions. But they can also measure qualitative metrics that impact business functions, like the quality with which the startup’s technology performs the required functions.
If an enterprise is testing chatbot technologies, for example, it needs to know how well those technologies identify, understand and process customers’ needs and requests.
How It All Works Together
At the end of the day, numbers should set the stage for decision-making when testing technologies. If a startup’s business metrics don’t add up, then no amount of good management or expertise will rescue a bad bet.
But when the numbers look promising, and you need some extra assurance that you are making the right decision, then you need to look at their potential from a qualitative perspective.
This will help you complete the picture and separate the okay prospects from the truly remarkable success stories.