5 Key Questions for Startup Success

startup successBuilding a successful Startup is hard work. You always start with a big vision and lots of energy. But after some first iterations of your idea you get to this crucial stage. Will our Startup takeoff or will it go nowhere? The following questions help to find our in a (more or less) structured way.

1. Are we tackling a real Customer Pain or Need?
Is your Startup on to solving a real problem or fulfilling a real need of customers? That is the first an most important question. Customers prefer to work with established companies from a risk management perspective. So, you need to be sure that you find a unique pain or need to fulfill. Go out and meet the potential customers and validate the pain or need as soon as possible (see Customer Development). Some things to keep in mind:

  • Focus on a broad need, rather than focusing on a smaller pain. This will give you more room to adapt and pivot (make a change in the direction of your Startup). We see many Startups that in fact are not much more than a Mobile App. You need to build something more compelling to have a sustainable business.
  • Really validate: don’t base your value proposition on the assumptions of you and your peers only. Really validate and have at least 30-50 potential customers that confirm the pain or need. Be sure to ask the right questions and get some early adopters on board.
  • Buying is pain as well: asking potential customers if they would buy your product or service is a good thing. But, this won’t immediately turn them into actual buyers. The pain or needs must be substantial enough for customers wanting to go through the actual pain of buying your product or service. Their pain or need needs to be frequent, substantial and have no substitute solutions.

2. Do we have Product-Market Fit?
With your the pain or need validated the next step is to find product-market fit. This is bringing the gap between your value proposition and the target customer. Ideally there is no gap and you have a clear understanding of who your customers are and why they buy your product and/or service. The ‘Why’ question can be answered in terms of functional, social and emotional benefits you offer your customers. The ‘Who’ question can be answered with a customer archetype. What are the characteristics of the customers that seek these benefits? This archetype or persona can be as concrete as a picture on the wall of your Startup office with name, age and preferences. Be sure to find the Product-Market fit as soon as possible.

3. What is our scaling strategy?
It is nice if you are able to gather some proof for your idea on small scale. Working with Early Adopters and Pilot Customers will provide useful insights. But you will have to think about scaling as well. How do you go beyond the level where you know your Customers and Scale your Startup for success? This scaling is not only about acquiring new Customers, but also about keeping them. You will need loyal customers that are promotors for your Startup. For scaling it is also important to have a business model that scales well. This about your revenue model, the key partners you require and the relationship and channel you need to become successful.

4. Do we have the superpowers to execute?
Execution is key to Startup success. It is all about team, traction and focus in this one. First you need to have a team that is really into tackling the Customer Pain or Need. The team members should be passionate about this and have the necessary skills and experience. Second you need to find your way to early traction. Traction is the proof that your Startup is on the track to success (e.g. growing user base, converting visitors, word-of-mouth, press coverage). This traction can be used to access the additional resources you might require to raise your execution power. Finally you need focus. All iterations during your Startup process must be focused. Not that you can’t change your path. You should make so called pivots when needed (see Lean Startup principles). But, focus on your big idea and focus on making the most out of all iterations is key for execution power.

More information about how to build a viable Startup? Check the StarterSquad Business Viability Scan or pre-order the StarterSquad “Get Ready for the Launch” book.

Lean Innovation: speeding up corporate innovation

The Innovation Pitfall
Organizations need to be superior in innovation to survive in today’s challenging business environment. New technologies, processes and business models emerge in ever shorting cycles. When we imagine innovation, in most cases breakthrough technological innovations come to mind. Hunting for these innovations is a risky adventure that rapidly soaks up Research & Development funding. In most technology companies up to 80% of the R&D budget goes into the search for breakthrough technological innovations. Surprisingly most business value is generated from other types of innovations. Business model & social innovation tend to account for up to 80% of the innovation value for companies. A classic 80-20 or Pareto principle pitfall? Of course investment in both technological and social innovation are needed, but the focus needs to change.

The Quest for Social Innovation
Recent Dutch research RSM and Panta Rei conducted at 1.500  companies has shown that innovation success is determined for up to 77% by what they call ‘social innovation’. The technological innovations contribute 23% to this innovation success according to the researchers. ‘Soft innovation, has hard impact’, according to innovation professor Henk Volberda: ‘but most companies don’t have strategies for social innovation in place’. The researchers indicate that there are four types of social innovation: new ways of management, innovative organization structures, smarter working, and external cooperation. Supporting entrepreneurship within companies is one of the strategies for supporting social innovation (and for customer focused technological innovation it might help as well). Dutch electronics giant Philips aims to foster entrepreneurship via its Accelerate! program. In the Finance sector ABN AMRO organizes Startup Friday to mix employees with the outside challengers and Startups in order to create and pitch new ideas. Just some examples of first steps fostering Intrapreneurship. This Intrapreneurship is not just about a program or initiative. It is a change in corporate culture, employee behavior and innovation tooling that needs to make large corporations more successful in innovating their technologies, social structures and business models.

Lean Startup meets Corporate Innovation
It is not surprising that the Lean Startup Methodology attracts quite some attention in the Corporate world. The approach first described by Eric Reis is all about short cycles of building, testing and measuring. It combines the best of entrepreneurship, co-creation with customers and the Deming Wheel of quality management. A Golden Formula for innovation as more and more Corporate Organizations are finding out. But it is not easy to get the Entrepreneurial spirit and Startup approach embedded into the innovation processes of corporate organizations. It requires a different mindset managers and employees apply to innovation. The need to take ownership of the innovation process and apply a Lean approach to managing innovation projects that is not intuitive for most of them. Following Lean and Agile ways of working within the boundaries of their organization is still a struggle. In most cases Lean Innovation is limited to specific programs, contests or initiatives. Embedding it into wider innovation practices and the organization as a whole is challenging. A good starting point for adopting Lean Startup or Lean Innovation are all Internet related innovations. This is where the approach comes from and build-measure-learn cycles for validation can be easily monitored and supported by good data. Besides the approach this should be the area where corporate organizations need to release or foster the Entrepreneurial spirit.

Bringing the entrepreneurial spirit in
So, besides the Lean Startup Methodology it is required to bring the Entrepreneurial spirit into your organization. To have employees and managers experience what it takes to work from pitching ideas via restrained budgets to innovations that have the traction to be successful. Have them work together on the Challenges and Must-win-Battles of your organization in a Pressure Cooker style. To learn and fail fast and use innovation accounting to capture this learning. At StarterSquad we help organization towards application the Lean Startup Methodology for building successful innovations. This includes working on the skills and mindset required to put this methodology to work. We support innovation programs that go from Idea Pitching, via intensive Bootcamps with teams, all the way through to the actual launch of Startups. On the execution level our Distributed Development Teams help build the actual web-based solutions that can be taken to the market. We have experienced that bringing the entrepreneurial spirit into organizations is extremely rewarding for employees and business results, and besides the hard results it is a lot of fun!

Becoming Registered Marketeer

Today I became official and proud member of the Registered Marketeer (RM) or Expert Marketing Professional network. This network is part of the Dutch Marketing Association NIMA and is governed by the European Marketing Certification Foundation (EMCF). The network holds just over 100 experienced marketing people from the Netherlands as it’s members.

Register Marketeer

Why is this network important to me? It helps me to exchange knowledge and experiences in strategic marketing and business development. The network has quite some variation in backgrounds, age, industries and types of business (corporates to startups), which makes it very interesting. The network also actively contributes to the body of marketing knowledge and aims at exploring new developments in marketing linking research & practice. Distribution of marketing knowledge is important to the network and its members and up until now I have experienced this in interesting sessions about Neuromarketing, B2B- and Content Marketing. And the final good news: the study trip this year will go to Cape Town!

Askbox: startup weekend as a learning experience

Currently I am in Pakhuis De Zwijger, Amsterdam at the Startup Weekend. This is an intense 54 hour event which focuses on building a web, software or mobile application which could form the basis of a credible business over the course of a weekend. Entrepreneurship is a trade you learn in practice and this is where Startup Weekend provides an inspiring learning experience. Within the first 24 hours our team made great progress and developed our startup: Askbox. Askbox is an App for peer-to-peer knowledge sharing. Our aim is to connect questions from Askbox users around the world to a crowd of leading experts. They give users instant advice using rich media content (text, images, audio, video). So far it has been interesting to see how a team of back-end & front-end developers, designers and marketeers can work together to create something great. More updates to come of how the entrepreneurial Askbox team will progress. Follow us on twitter via @getaskbox.

Three questions about the Learning Organization

Ever since the introduction of the term Learning Organization back in the 1990s the concept has been the ‘holy grail’ for many organizations. In some business plans I reviewed recently, the organizations producing them had an explicit aim of becoming a learning organization. As it has turned out that the concept of the learning organization is rather abstract and difficult to implement, I was struck by this ambition and directly responded with some questions to articulate this ambition:

1.     Why do these organizations want to become a learning organization?

2.     How can these organizations become learning organizations?

3.     What kind of learning do these organizations aim at?

Why?

Many management concepts are hyped by consultants and/or scientists, which in return, earn good money by implementing them. But, the learning organization is beyond that point. The importance of knowledge and learning is a given for almost all organizations. Therefore all organizations need to find opportunities to produce, distribute and commercialize knowledge. Learning is a critical process in contemporary organizations. As research has shown this process is multilevel when considered from the learning organization perspective (e.g. 4I model by Crossan et al.). Most critical learning takes place at individual and team level. Some of this learning is institutionalized at organizational level and is embedded into systems, procedures and practices. On individual and team level learning is also important for competency development, as it helps individuals and teams to grow and improve their performance. When looking at organizations, the answer to the why question depends largely on their strategy or the business drivers that are appealing to them. Strategy and business drivers are for instance aimed at security (compliance), improvement (exploitation), innovation (exploration) or HR policies (talent management).

How?

How does a learning organization learn? Of course 80% or more occurs in the informal or non-formal space. But, interventions are needed to secure that the learning is effectively captured and embedded in the organization. As many scholars suggest the right mix of formal and non-formal learning should be found in order to reach effectiveness of learning in organizations. Also the connections between individual, group and organizational level learning should be optimized. This ensures the proper institutionalization of learning in the organization. Developing the right mix of learning interventions, either formal or non-formal, is the aim for true learning organizations. This is quite a job and requires a learning climate that balances organizational characteristics in leadership, culture, structure and systems. Also it requires maturity in learning & development offerings that are aligned with the broader HR and talent management practices in an organization.

What?

What the learning organization wants to learn is a question that is overlooked in literature on the learning organization. In the why question some directions where given, but when you look at organization strategies some assumptions about the required learning for successful execution can be made. Typical strategic options are presented in the work on Value Disciplines of Treacy and Wiersema. They distinguish operational excellence, product leadership and customer intimacy as strategic options.

-      When you want to play in the ‘operational excellence’ league, you probably want to have smaller learning cycles based upon process improvement. Learning will be focused on operations with a combination of plan-do-check-act learning cycles and a sharp eye for radical operational innovations. Learning will take place at production and supply chain level to a large extent.

-      When you want to play the ‘product leadership’ card, learning should be aimed at technological and design innovations that can be embedded in products. This learning is focused on finding new combinations of technologies and design. Probably learning will take place with knowledge and business partners in this case.

-      When your aim is ‘customer intimacy’ your learning should be aimed at the market and your clients. Market intelligence, questionnaires and direct learning from customer complaints and needs is a key differentiator.

With these questions in mind, the implementation of the learning organization concept is quite challenging. In my opinion it is a worthwhile ambition for organizations to become learning organizations. Not only for them to stay competitive, but also to provide their members with an inspiring work environment that allows growth and talent development.