Every entrepreneur and business executive knows that continuous innovation is required to survive, but most struggle with this more than any other challenge they face. They know they need to act proactively but still are often blindsided by a new competitor coming out of the blue with a future they never imagined. Innovation driven by the next crisis is not leadership.
When entrepreneurs introduce new products to the market, their passion and conviction often leads them to assume that every potential customer will see the immediate need and value, and will quickly adopt the solution. They are devastated when their business growth never starts or stalls, and they have no idea how to get it moving again.
In 1979, Michael E. Porter proposed his Five Forces framework for analyzing the competitive environment which I think makes even more sense today. Every existing business, as well as every startup, needs to reassess their product or service in the context of these five forces.
Customers buy from people, not companies. Employees rally for a great leader, not a brand. As an entrepreneur, you need relationships to succeed. That means relationships with team members, investors, customers, and vendors.
Customers today expect highly personalized and exceptional experiences to stay loyal and become advocates, rather than just conventionally “satisfied.” Satisfied is far from memorable.
In business, and in your personal life, the ability to anticipate and overcome criticism is one of the biggest differentiators between leaders, who make things happen, and followers, who may have great ideas but never seem to get things to go their way. In fact, leaders are not remembered for their dreams, aspirations, or intentions – they are remembered because they achieved results.
Every startup success is a function of great people, products, and profits. But there is no magic formula on how to bring these together a second time, but there are some good insights on the parameters in a classic startup business parable, Endless Encores.
The seven capital assets that are the core required to create a thriving entrepreneurial ecosystem, and produce real economic value for your startup and the rest of us.
Cash flow is a basic survival metric for every startup. Investors check your burn rate to assess your efficiency and project your remaining runway before you run out of money and into a brick wall. Don’t wait until you are almost out of cash before managing every dollar spent, or looking for the next refueling from investors. Desperate entrepreneurs lose their leverage and die young.
Just because it was your idea doesn’t mean you “deserve” 90% of the equity. The value in a startup is all about tangible results, so I see no equity value in the idea alone. Thus the real discussion must start with who will be doing the work, providing the funding, and delivering results. Each cofounder should get equity for value, based on these key variables.
The critical success factors for a product business are well known, starting with selling every unit with a gross margin of 50 percent or more, building a patent and other intellectual property, and continuous product improvement.