Start-ups are not your tried and tested concepts; they’re game changers and pioneers, bringing new products and services to the market that were previously not available. The concept is based on four key principles critical to start-up success.
1. Less art, more method
The goal is to build a sustainable enterprise, and so there needs to be less art and more predictable methodology for doing so — especially with the exploding digital revolution we find ourselves in.
2. Validated learning
If an organisation can learn as quickly as possible what the marketplace values enough to pay for, they will be able to adapt their business and grow. Start-ups exist to learn first, become sustainable second — money and customers come after.
3. Building right
Validated learning is approached through building, measuring and learning, getting back to ‘build’ as quickly as possible after learning from the marketplace.
The quicker you can get through this cycle, the faster you’ll learn what the market values, and the better chance you have of surviving and building a sustainable business.
4. Innovation accounting
This is the boring but essential stuff that will actually make a company successful. It’s the measurements you take, the milestones you set, and how you prioritise your work.
Added up, these four principles form a new way of thinking about start-ups and managing them.
Three points to take off
Build a quality product or service for the marketplace based on your customer archetype. Make sure you know exactly who you’re making your product or service for. An archetype will guide your decisions about development and resource allocation.
Be prepared to make a leap of faith, but know which part of your plan is where the risks lie. No matter how much research you’ve done, you’re going to have to make some assumptions on some very important things. A simple tool for this would be the analogue/antilog.
A company in practice: The business strategy and development of the Apple iPod was based on other companies and the industry. Apple knew people would listen to music in public wearing headphones based on the success of Sony Walkman.
They didn’t know whether people would pay for music – the antilog was that file sharing proved people would download music (albeit illegally) if it was free. They took a leap of faith and built iTunes anyway because they knew exactly where the risk lay.
Time for rapid prototype building. It’s likely you need a lot less than you think to launch your new product. Start with a ‘mimimum viable product’ MVP – the smallest product or service you can create to start learning from — and target the early adopters. They’re almost always aware it will come with bugs so your concept doesn’t need to be perfect. In fact, perfect is a waste because it wasn’t driven by responses from the marketplace.
A company in practice: Zappos is a billion dollar a year online shopping portal developed through rapid prototyping by Nick Swinmurn. The idea was to build a brand new retail experience so he ran an experiment to see if people would buy shoes online.
He took pictures of shoes for sale at local stores and put them up on a basic website. If people bought the shoes he’d buy them full price from the store. It took very little time, energy and resources to prove the concept worked.
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