Some investors seem to focus wholly on the strengths of the management team or a sustainable competitive advantage. 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.
In the last couple of years, perhaps in reaction to some business atrocities leading to the recent recession, I am seeing a renewed focus on other less tangible attributes which can set your startup apart. Examples include: the Conscious Capitalism® movement, led by John Mackey of Whole Foods; The B Team, led by serial entrepreneur Sir Richard Branson; and the Benefit Corporation (B Corp) form of business now available in 14 states.
I have always struggled to communicate the multiple other relevant priorities and the other intangibles required for great execution. I found many of these in “Great From The Start: How Conscious Corporations Attract Success” by John B. Montgomery, which does a great job of laying out specifics.
It 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 balanced 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 relevant 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.
In addition to management and stockholders, 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 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?