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Continuous innovation is required to survive in all businesses, beginning with a startup, and increasing in importance as your business matures. Technologists often insist that new things can’t be invented on a schedule, but successful companies seem to be able to do it on a regular basis.
Many people have tried to define a process for innovation, but most are too abstract for me. I like the easy to remember approach found in “Robert’s Rules of Innovation: A 10-Step Program for Corporate Survival,” by Robert F. Brands. It seems to be more concrete, and chronicles several decades of practical experience to solidify the principles which together spell INNOVATION:
Inspire. The first and most important step is to identify a leader who can inspire and drive the process. In a startup, that needs to be the founder or CEO, and that person has to be regularly and personally involved. This is an imperative.
No risk, no innovation. Not every idea can, or will, be a winner. Without risk, there can be no innovation. Innovation teams perform best when they trust that failure or a pivot will not result in punitive measures. Fear of failure can kill innovation.
New product development process. A formalized process with timelines and milestones is a must. This should include at least the key elements of idea generation, prioritization, prototyping, commercialization, and measurement.
Ownership. Innovation needs ownership, a champion and team leader within the organization. The champion must have the credibility to convince others to take calculated risks and work outside of one’s comfort zone.
Accountability. This is a critical component of the trust equation, even when the process is akin to “herding cats.” Team members need to feel responsibility for on-time delivery. Slippage is the sure way to jeopardize the entire process.
Training and coaching. Proper hiring of people with a natural curiosity, open-mindedness, and ability to see the big picture is the way to create and enhance the right mind-set. Ongoing coaching from the top is essential to maintain the attitude and spirit.
Idea management. Build and manage a pipeline of ideas. From time to time, include customers and sales members in ideation sessions. Make sure all team members have some connection with the product – has either used it, or sold it, or assembled it.
Observe and measure. Tracking results are essential to optimal ROI. Product life cycles keep getting shorter and shorter, which mandates accelerated innovation cycles. Once a new product is launched, a key metric is the ratio of new product sales to overall sales.
Net result and reward. Based on ROI, incentives should be developed for all participants. Reward your people. Frequently, the key motivator is less financial than it is recognition for a job well done. People are your best innovation resource.
Sustainable innovation is really the only sustainable competitive advantage. But innovation is hard, because people by nature resist change, and company cultures are most comfortable with status quo. Yet survival in today’s world of rapid business change requires that you keep one step ahead of your competition. Innovation is what gives life to your business initially, and keeps it alive in the long term. Make sure your business can spell it.
You can’t succeed in business without an operational model that delivers value to customers at a reasonable price, with an underlying cost that allows you to make a profit. There are no “overrides” – for example, businesses don’t thrive just because they offer the latest technology, or because everyone wants to be “green, or because their goal is to reduce world hunger.
I expect that should seem intuitive to all entrepreneurs, but every investor I know has many stories about startup funding requests with major business model elements missing. The most common failures are solutions looking for a problem, lack of a defined market, and giving away the product.
There are dozens of sources to help you construct your business model, and a good example is a recent book by venture capital investor Elizabeth Edwards, simply named “Startup,” which is really designed as a handbook for launching a company for less. I support her assertion that a business model consists of at least the first seven of the following ten basic elements:
Value proposition. What is the need you fill or problem you solve? The value proposition must clearly define the target customer, the customer’s problem and pain, your unique solution, and the net benefit of this solution from the customer's perspective.
Target market. Who are you selling to? A target market is the group of customers that the startup plans to attract through marketing and sales their product or service. This segment should have specific demographics, and the means to buy your product.
Sales/Marketing. How will you reach your customers? Word-of-mouth and viral marketing are popular terms these days, but are rarely adequate to initiate a new business. Be specific on sales channels and marketing initiatives.
Production. How do you produce your product or service? Common choices include manufacturing in-house, outsourcing, off-the-shelf parts. The key issues here are time to market and cost.
Distribution. How do you distribute your product or service? Some products and services can be sold and distributed online, others require multi-level distributors, partners, or value-added resellers. Decide whether the product is local or international.
Revenue model. How do you make money? The key here is to explain to yourself and to investors how your pricing and revenue stream will cover all costs, including overhead and support, and still leave a good return.
Cost structure. What are your costs? New entrepreneurs tend to focus only on product direct costs, and underestimate marketing and sales costs, overhead costs, and support costs. Test your projections against actual published reports from similar companies.
Competition. How many competitors do you have? No competitors probably means there is no market. More than ten competitors indicates a saturated market. Think broadly here, like planes versus trains. Customers always have alternatives.
Unique selling proposition. How will you differentiate your product or service? Investors look for a sustainable competitive advantage. Short-term discounts or promotions are not a unique selling proposition.
Market size, growth, and share. How big is your market in dollars, is it growing or shrinking, and what percent can you capture? Venture capitalists look for a market with double-digit growth, greater than a billion dollars, and a double-digit penetration plan.
Investors will want to understand your business model very well and very early. They don’t want to hear your customer sales pitch, which naturally avoids any discussion of how much money you intend to make, and how many customers you expect to convince. Giving that pitch to investors will only frustrate both you and them.
A viable and investable business model is one of the first things you need to highlight in your business plan. In fact, without a business model, your startup is just a dream.
Some investors seem to focus wholly on the strengths of your management team, or your sustainable competitive advantage, and in reality these are the core attributes for every funding equation. While these may be necessary for funding, they may not be sufficient to make your startup the great success embodied in your vision.
I have always struggled to communicate the multiple other relevant priorities, and the other intangibles required for a great execution. I found many of these in a new book, “Great From the Start,” by John B. Montgomery, which does a great job of laying out specifics, but also starts with a good summary of the intangibles, summarized as the five rules of relevancy, by Mark Zawacki:
A startup needs to be relevant and stay relevant.Relevancy for an early-stage company is the discovery and understanding of the real addressable market for a product or service. This is not the total opportunity out there, and not the total target market, but the subset of customers who have and will spend the money you need to cure their pain.
A startup needs to find a voice relevant to its ecosystem. These days, you have to foster a community of support for your business. That means educating targeted supporters is key, even before you start to sell. Selling too early triggers customer defenses and drives them away. Everyone hates being sold to; we all prefer to buy.
A startup must gain traction. This is not just sales traction, but a proper balance between resources, product, and customers. It means building a viable and desirable product before selling, assembling the right team with funding, and recruiting and educating enthusiastic customers who will be your best advocates.
A startup must form partnerships and alliances within its ecosystem. Today’s ultracompetitive global environment demands that you make alliances early. Startups often pay lip service to strategic partnerships, but they schedule these efforts far down the road. The right partnership strategy can make a company relevant.
A startup must maintain a laser focus. Too many early-stage companies are so desperate for customers that they operate in a frantic and random sales mode. They sell into multiple verticals, or pursue multiple revenue streams, such that they can’t develop a repeatable, scalable sales process, and don’t do anything well.
Of course, relevancy doesn’t work if you don’t have a winning business model. In the traditional business environment, this means the priority is an adequate return for your stakeholders, but today it also means your company should provide a material positive impact on society and the environment.
Great companies recognize that there are now multiple interdependent stakeholders, including customers, business partners, and social groups, who need to be part of your equation since they can drive or limit your success, in addition to management and stockholders.
In other words, your startup needs to be a “conscious” entity, constantly aware of the complex eco-system around it, and the factors driving change and evolution. This requires conscious leaders who are passionately committed to personal and professional growth, as well as the greater good of society. These leaders then cultivate the consciousness of their team members.
In reality, your people are the consciousness and relevance of your startup, and your customers judge your startup as they would judge a person. No relevant company can afford to focus on short-term wins over the long-term effects of its behavior on other stakeholders. How much time and how many measures has your startup applied regularly to the relevance issues above?
Some of my friends who started their small businesses had little or no experience, as was the case with me, and just jumped in. Luckily for us, it turned out just fine.
However, over the past couple of years, I have held countless business discussions with Emirati entrepreneurs about their experiences, and even though they are doing well now, many have made the same kinds of mistakes along the way.
One of the most frequent errors of a retail entrepreneur is trying to keep the rent as low as possible, such as opting to open a store in a non-commercial area of Abu Dhabi.
The main target for businesses is to keep their expenses low, right? Not necessarily. Sometimes it is worth paying a higher rent if it increases the number of customers, enhances the business's reputation, or makes dealing with suppliers easier. In the world of start-up businesses, a small mistake regarding location can be fatal.
When it comes to small businesses, competence should be the watchword. While hiring friends and family has its benefits in terms of trust, it limits the pool from which you can choose qualified managers or employees.
Friends and relatives can also carry baggage and may take you for granted, or slack off on the job. They can also be hard to manage and even harder to fire.
Another common mistake is with pricing. Keeping the price on products "reasonable" might sound nice, but it is not nice for your profit margins. Why not pick a price that will allow your business to flourish?
A friend of mine established a clothing line and decided to underprice her designs to attract business. Doing so, she did sell but only barely covered her costs. Now she wants to hire an employee to help her out, but she realises that she will not end up with much of a profit after the employee is paid. In her case, it may even mean a loss.
Buying second-hand equipment to minimise expenses is not always smart. It works in some cases, but in many others it is short-sighted.
For example, buying a delivery vehicle with more than 200,000 kilometres on the clock may cause you to waste time and money fixing the vehicle instead of catering to your customers. You want to generate business. Can you really afford equipment downtime?
Moreover, an overdose of love for your product could kill it. I am all about being passionate about your small business. That is what made mine successful, but it does have its downside.
Make sure that your passion does not lead you to make a bad decisionand that it does not blind you to the fact that even though you love your product, it may not necessarily have customer appeal.
Something else to watch - saving money on professional advice and instead listening to your friends is not always wise. Unless your friends are business consultants or experienced entrepreneurs, do not even go there. You may save money in the short run, but it could end up costing you more, perhaps even your business, down the road.
Moreover, do not just count on consultants' views, but join a business group, talk to successful entrepreneurs, buy some books about real-life stories of business success. Check out Tamakkan and ThinkUp, websites that are a platform for successful entrepreneurs and talent in the UAE and the region to share their success stories.
It may be difficult to decide which advice to take, but no one said entrepreneurship is a piece of cake.
Finally, avoiding borrowing does not always mean you are being prudent. Yes, in some cases, borrowing can be unwise. But if borrowing money is likely to guarantee your business's success, go for it. Borrowing is not always irresponsible or foolish.
Graduating from rookie status can take more than a year, so be patient. To make progress faster, try learning from others.
The above article was featured in The National Newspaper, submitted by Manar Al Hinai, who is an Emirati fashion designer and writer, and who can be followed on Twitter: @manar_alhinai
Watch this video showing Guy Kawasaki on stage at #Swagapalooza giving his "Top 10 Tips for Start-up Entrepreneurs". March 24th 2010.
30 Second Elevator Pitch is very important tool for Small Businesses and Entrepreneurs. Your Elevator Pitch is a brief and effective story about your business that you need to deliver to a prospect or investor in 30 seconds or less (the time of an elevator ride). You need to explain the most important information to your prospect about your business, your products, services, solutions and explain the way you do business and how you are helping your customers.
Yes, you need to explain everything in 30 seconds. Your elevator pitch is not a traditional sales presentation but it is a story of your business so make your story interesting and exciting so your prospects will be interested to learn more about you and your business when you finish your elevator pitch. The desired outcome of your elevator pitch is to have your prospects ask questions and you can use this opportunity to talk in more details about your business.
Every business is unique in a way – your business should be also unique in order to be successful. Your elevator pitch should communicate the uniqueness of your business and your value proposition. What is the single unique thing that delivers outstanding value for your customers that none of your competitors can deliver?
Use quick facts, analogies and comparisons when explaining your business – you are supposed to deliver your message in 30 seconds or less so use simple examples that support your elevator pitch. Your 30 second elevator pitch should be simple and easy for anyone to get the main idea of how you create value for your customers.
Make your elevator pitch open for questions and further discussions. Examples and facts that trigger interest and provoke people to ask questions and get interested in your business is what you really need. When pitching a potential customer use examples of similar customers that you already have so your target prospect can easily relate your business to her needs, issues and preferences.
After you develop your 30 second elevator pitch go back and forth and improve it – think of the questions that can be raised by your prospects and come up with the best answers that will help them understand your business. Don’t make your elevator pitch sound like an organized sales presentation but try to deliver your elevator pitch spontaneously and in a simple conversational way.
Pay attention to questions, responses and body language of your prospects when you deliver your sales pitch and adjust your tone and approach if necessary.
Use actionable statements and verbs such as saves, improves, delivers, reduces, cuts, helps, simplifies… and use real experiences, examples and real-life facts in your examples like 20% savings, 3 months program, develop project in less than a week…
When you think you are done with your elevator pitch go over your pitch again and review every word and statement you made. If you find words and statements that don’t add value to your pitch delete them – you don’t need them. You need fast and efficient story not a typical long presentation. If you think your elevator pitch is too long and it will take you more than 30 seconds to tell your story try to reorganize and simplify your story. For each important point in your elevator pitch you need to ask yourself “Is there a better and faster way to explain this point?”.
If you have more info about a specific prospect you can customize your elevator pitch based on his or her needs and experience. For example in business to business sales your elevator pitch should be more focused and customized to your prospect based on the information you already have such as your prospect’s needs, current supplier, issues and problems, core business… Make your sales pitch open so you can easily customize it based on your audience – for example what can be a great example for one prospect can be a very bad approach for another if your point is unrelated to your prospect’s needs.
The process of developing and creating your 30 second elevator pitch is also a great exercise for you – it helps you get focused and it helps you identify the most important issues for your customers and prospects. As you start using your new 30 second elevator pitch pay attention to how it works, what are the typical responses and results you get and continuously improve it.
Tips & Tricks: How to Pitch a Startup Idea in 30 to 60 Seconds at Startup Weekend (Abu Dhabi May 24-26, 2012)
- Focus on your core idea – don’t talk about features.- Speak clearly and not too fast.- Pick a name for your startup idea.- Don’t use slides or props. You’ll only have a microphone.- Introduce yourself and share your background. (5-10 Seconds)- Describe the problem the idea solves. (10-20 Seconds)- Explain the idea and how it solves the problem. (10-20 seconds)- Say who you need on your team (e.g., developer, marketing, designer, etc.) (5-10 seconds)- Remember to smile and make your enthusiasm contagious!
Startup Weekend Abu Dhabi is scheduled for May 24-26, 2012. The event will be sponsored by Khalifa Fund for Enterprise Development, which has offered 36,500 AED in prize money. Qualcomm is also sponsoring the event and are offering a free technical workshop on May 17 for software developers who are attending the event.
Last week’s Startup Weekend event in Dubai attracted more than 600 registrants. The number of actual attendees was around 300, with 62 startup idea pitches presented and 39 teams working throughout the weekend to build startup prototypes.
As with all Startup Weekend events, participants with a web or mobile app startup idea will have one minute to present their idea to the crowd at Startup Weekend Abu Dhabi (see “How to Pitch a Startup Idea in 60 Seconds“). After the pitches, the best ideas will be selected by voting, and participants will form teams, who will work through the weekend to develop the best ideas into viable startup business models and prototypes. During the event, mentors will be on hand to advise and encourage teams. A panel of judges, comprised of business and community leaders, will determine the winning ideas and teams.
Dr. Christiane Schloderer, founder of myidea-campus.com, which specializes in programs for entrepreneurs, believes, “Events like Startup Weekend are very relevant for the entrepreneurial ecosystem in the UAE, bringing together ideas, talent, IT competencies and money. They also create a lot of momentum for entrepreneurship in general and single ideas in particular.”
Participants and attendees, including anyone with a startup idea, application development or design expertise, or investors and startup enthusiasts, should complete a free registration for the event at http://swabudhabi.org/
Startup Weekend is an intense 54-hour event, which focuses on building a web or mobile application, which could form the basis of a credible business over the course of a weekend. The weekend brings together people with different skill sets — primarily software developers, graphics designers and business people — to build applications and develop a commercial case around them.
Startup Weekend’s motto: Build Community. Start Companies. No Talk. All Action. Together, we are our own community of passionate entrepreneurs on a mission to help other entrepreneurs and facilitate innovation.
Beginning with open mic pitches on Thursday, attendees are encouraged to bring their best ideas and inspire others to join their team.
Over Friday and Saturday teams design and develop business plans while constantly streamlining their startup vision. On Saturday evening teams demo their prototypes, listen to judges’ feedback and, in some cities, win prizes.
Startup Weekends are specifically designed for entrepreneurs interested in receiving feedback on an idea, looking for a co-founder, or who want to learn a new skill. We also welcome anyone looking to test the entrepreneurial waters. Startup Weekends are risk-free environments where everyone is expected to roll up their sleeves and dive into the exhilarating world of startups.
Are you planning on attending? Have any tips for attendees? Leave a comment and share your thoughts.
SWOT Analysis is a strategic planning method used to evaluate theStrengths, Weaknesses, Opportunities, and Threats involved in a business venture or business startup. It involves specifying the objective of the business venture or startup and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
A SWOT analysis starts with a definition of a desired end state or objective. In an initial marketing plan of a business startup that desired end state or objective will probably involve the attainment of the marketing objectives after a year of business.
Identification of SWOTs is essential because the steps in the process of planning for achievement of the selected objective may be derived from the SWOT analysis.
Examples of strength attributes which can be used to gain the business a competitive advantage could be factors such as:
Analysis of the external environment may reveal opportunities for profit and growth for the startup business. Some of these include:
Once a SWOT analysis has been done, the results should generate a list of ideas that can then be turned into Goal Statements.
I’m often surprised that the most innovative breakthroughs come from startups with almost no money, experience, or resources. In contrast, organizational giants with more cash than small countries get beaten to the punch with startling regularity.
While big companies are busy protecting the golden goose with fear-based, micro improvements, startups are busy with the hard work of changing the world. Craig’s List and eBay forever disrupted the newspaper classified industry. ZipCar changed the car rental game leaving Hertz and Avis to play catch-up. The energy-drink category was created by the startup RedBull, putting the sleeping giants on the ropes.
How can broke startups break the entrenched leaders? Why do visionary, 20-something college dropouts scare the color out of fancy-pants bureaucrats loaded with credentials, money, and “experience?”
Simple answer: They have the Startup Mindset. They look at the world in ways that allow them to unleash their true creative potential. And if you start thinking like a startup, you too can conquer giants, slay dragons, and change the world just like those Silicon Valley (and Detroit) wunderkinds.
Having built four startups over the last 20 years, and now running a venture capital firm, I have a pretty good view into that startup mindset. Here are five core philosophies that entrepreneurs use to break the mold and in the words of Steve Jobs, “think different”:
1) Curiosity – People at startups are inherently curious. They constantly challenge conventional wisdom, asking “why?”, “what if?”, and “why not?” They have a deep craving to understand the world, gain new insight, and discover a better way.
2) Focus on Possibilities – Entrepreneurs spend most of their time imagining what could be, rather than focusing on what is. They let their mind’s eye travel to a future state and explore fresh possibilities rather than clamming up and protecting the past.
3) Disregard for Status Quo – Since they have nothing to lose, startups are driven to stick-it-to-the-man. They yearn to put a thumb in the eye of the complacent incumbents.
4) Conquer Fear – We all face fear, but entrepreneurs figure out how to forge ahead in spite of their demons. They have the will to act instead of cower. They live by author Nido Qubein’s famous quote, “The price of discipline is always less than the pain of regret.”
5) Speed – The big no longer beats the small. Today, the fast beats the slow. Startups use speed to their advantage and are overflowing with urgency. They sprint toward their goals while big companies are busy writing policy manuals and planning next summer’s company picnic.
No matter who you are, thinking like a startup will help you win in today’s ultra-competitive environment. The entrepreneurial mindset can help everyone from bureaucrats to babysitters; from authors to accountants. Seize the startup mindset, and watch your creativity and imagination light up like a roman candle. You don’t have to be a pimply-faced 22-year old listening to house music in order to unleash your own creativity and change the world.