If you’ve ever been involved with a company, you know this can be a messy process. Usually, between a dozen and a hundred projects, activities, and focus areas would all be “completely critical” and all in some degree of incompleteness.
Having a compass which clearly indicates priorities would be useful in this storm. Steve Blank ‘s book, The Four Steps to the Epiphany, is the compass. Through them, in the beginning, you’ll know how to prioritize and what methods really can’t work. This will help you avoid the mistakes other companies have made, which have left them bankrupt.
Many business people work under a basic flaw in thinking: they assume that companies are just tiny versions of big business and that, to be successful, they just need to use the same methods as big business. Not that.
Second, unlike big firms, entrepreneurs typically can not bring a new product to the mass market. Known businesses have a pre-existing customer base and know their rivals well so they use a product creation strategy to come up with new products: first design a product and then find appropriate customers.
In the other hand , companies don’t grasp their business climate, and need to get to know their potential customers first before launching a new product. They use a method of customer development: first construct a customer base, and then create an acceptable product.
For example, Webvan, an ambitious startup founding the first online grocery company in 1996, shows that this approach to customer growth is essential. The organization focused on the product creation process rather than understanding its customers and their needs, and failed miserably.
Second, unlike big companies that know their market and know how to sell to it profitably, the founders of startups have no idea whether or not their business idea will actually fly. It’s up to them to prove that their vision is viable.
In this sense, entrepreneurs are like classic heroes, who are called upon to pursue a journey, and must ride through challenging paths into the unknown, overcoming challenges and difficulties. Yet they succeed and become heroes when they meet their target, because of their strong initial calling.
In the same way, entrepreneurs still need to find a direction to make their vision a reality. They learn as they go, figuring out who their best future clients are, and how they should be doing business.
When a startup sets out to fulfill its visions, it may not yet know what path it will follow. This is why it needs to make some decisions right from the get go to help keep it on the right path.
The first thing a startup must define is a set of fundamental and long-lasting core values to guide it on its journey.
For instance, a pharmaceutical company can decide one of its core values is “First and foremost, we produce medicines that benefit people.” This principle means that it will know what to do if it has to decide about profits versus helping people.
Whatever core principles a firm chooses, they must be genuine and the business stands behind them. And a startup must also have a formal mission statement in addition to the core principles.
Why? You’ve probably also noticed in your personal life that if you want to achieve something, it’s easier if you write down a plan first. The same is true of a startup. To achieve its aims and objectives, it needs to write them down in a mission statement.
Almost every startup goes through a period of turmoil in its early stages, and it is during this time that the mission statement will be especially vital in showing the way forward.
Note that unlike the core values, the mission statement can change over time as the company’s business situation develops through, for example, launching new products and entering new markets.
So how do you identify these main components of your business? The statement of mission should address questions such as: why should the employees of our organization come to work? Which are our growth and benefit targets? How do we know when we do a good job?
A startup has a much better chance of remaining on the road to success with real core values and a strong mission statement. — startup is different and so it follows that each startup is also the right strategy. The right strategy often depends on the environment, or form of business.
The key question is whether the company is faced with an current or new market. An developed market is one in which it is obvious who are the clients and rivals. The upside is that you’re not going to have to waste time collecting information about potential buyers, but the downside is that you’re going to be competing with proven competitors, who you’re going to have to outperform to reach the market successfully.
One company facing an established market was the Transmeta microprocessor startup, which wanted to challenge Intel’s superiority with a modern, Intel-compatible chip with far superior energy performance. Transmeta saved time and resources because it knew Intel already about its future clients – anybody with an Intel-processor – and against whom they worked. But the existing giant ultimately developed its own low-power chip which put Transmeta out of business.
The second kind of market is the new one, generated by the company by seeking users. Although this isn’t easy, the upside is there’s no competitors yet.
One startup that failed to create a new market was PhotosToYou, the first company to print high-quality photos from digital cameras in the late 1990s. It focused most of its resources on branding instead of researching who its potential customers were, and consequently struggled to reach prospective customers.
Finally, startups now have a third option: to resegment an established market by selling a cheaper version of an established or niche product. Resetting will open up a whole new consumer base of people who haven’t been able to afford the product before, or who haven’t found a product that fit their needs.
For example, the fast food company In-N-Out Burger managed to capture some of the fast food market despite fierce competition from McDonald’s and other established players because it focused simply on offering higher quality hamburgers for the same price.
Any startup will make a mistake, sooner or later. Although preventing any and all errors is difficult, it is easier to catch them early on. Startups will minimize errors and their effects by gathering loads of input from their customers as soon as possible – even before an actual product is available for sale!
The goal is to figure out if the product has a market: people who would actually purchase it. If not, you’ll only be saving yourself a costly error, and you’ll be able to change the product to better meet consumer needs by analyzing the feedback. After that, you restart the process: collect feedback and use it to refine your product. At this stage, the goal is not to sell anything, but rather to collect as much information as possible.
Let’s say your new product is a sheet of plastic that protects cell phone screens from cracks and scratches. You would probably want to ask how inconvenient people find broken screens and how much money they spend on replacing them, as well as what they feel the ideal solution would be.
Just as startups can hardly afford mistakes, they also can’t afford to be slow and unresponsive, since they operate in an environment that is ever-changing.
Stiff hierarchies and organizational structures that hinder fluidity are out of the question: if feedback indicates that a product should be changed or a new opportunity pursued, the startup can’t wait for someone up the chain of command to make a decision – competitors won’t.
— member of a team must have the authority to take urgent decisions. Now you know some of the keys to a good startup. But even though you stick to all of these, a startup can still fail. What is the biggest secret to success at startup?
Startups who are trying this method claim that they can simply create and deliver a fantastic product, after which customers appear. It does rarely work.
In reality, product creation is just an internal process of product, and in order to produce goods that people purchase, it needs to be aligned with results from the process of consumer growth, which relies on external factors for the performance of the product – clients.
Consider the online-furniture retailer Furniture.com. It focused primarily on building an expensive website, a recognized brand and a large-scale shipping system before researching market demand. Unfortunately, it turned out customers weren’t ready for online furniture shopping yet, so all the effort had been for nothing.
Instead of making this mistake your company should concentrate on the process of customer development: building your customer base and ensuring that your products fulfill their needs. How exactly your startup conducts the process of customer growth depends on your core principles and mission statement, but above all on the type of market you operate in and the input your customers have on your product.
On this concept, the designer product retailer Design Within Scope honed in adjusting every catalog it published according to consumer feedback obtained from the previous catalog. The focus of the retailer towards customer reviews resulted in a rising number of customers and a greater average order size.
Check out my related post: Is a startup all about implementation and execution?