Why great products fail: Lessons for startups
11 out of every 12 start-ups will fail under 3 years of incorporation
Rule of Thumb
Few days ago, I sent a mail to a random business guy. In that mail, I shared with him two critical insights on his venture. As an unrepentant believer in everything starting up, I have chosen to make it my bone of contention to bother about this nucleus. By the time you are through with this, I am sure you will gain some level of insights that will help you shape your next big idea. I present the insights here and now.
Insight No1
Let me start by stating my understanding of the philosophy of many start-ups around the world which I would summarize as this: “Startups solve real problems using ingenious business models. Most start-ups today are not necessarily riding on the platform of superior technology or offering. For the most part, they operate a business model infrastructure driven by very unique value propositions. These guys in most cases seek to reset an industry sometimes disrupting the existing value chains".
What does this mean for Start-ups?
I'd like to refer to the last statement in my quotation "These guys in most cases seek to reset an industry sometimes disrupting the existing value chains". I think for start-ups, a very ambitious pursuit beyond creating a marketplace will prove to be a very strategic route. Thinking of disrupting an entire ecosystem? look no further than to what Google did in the online search business segment. It raised the bar. According to Professor Clayton Christensen, he has predicted "wholesale bankruptcies for traditional universities who refuse to buy into the new budding model for education as demonstrated by the likes of Udacity, Coursera e.t.c The gem here is not to summarily adjust to the norm but rise above by re-thinking the way an industry works. This doesn't come easy I must say. In the future I will share further insights into the Business Model Canvas, a tool that creates an unfair advantage for anyone who dares to adopt the new thinking behind evolving a new business. The tool was co-created by Alex Osterwalder.
Let me start by stating my understanding of the philosophy of many start-ups around the world which I would summarize as this: “Startups solve real problems using ingenious business models. Most start-ups today are not necessarily riding on the platform of superior technology or offering. For the most part, they operate a business model infrastructure driven by very unique value propositions. These guys in most cases seek to reset an industry sometimes disrupting the existing value chains".
What does this mean for Start-ups?
I'd like to refer to the last statement in my quotation "These guys in most cases seek to reset an industry sometimes disrupting the existing value chains". I think for start-ups, a very ambitious pursuit beyond creating a marketplace will prove to be a very strategic route. Thinking of disrupting an entire ecosystem? look no further than to what Google did in the online search business segment. It raised the bar. According to Professor Clayton Christensen, he has predicted "wholesale bankruptcies for traditional universities who refuse to buy into the new budding model for education as demonstrated by the likes of Udacity, Coursera e.t.c The gem here is not to summarily adjust to the norm but rise above by re-thinking the way an industry works. This doesn't come easy I must say. In the future I will share further insights into the Business Model Canvas, a tool that creates an unfair advantage for anyone who dares to adopt the new thinking behind evolving a new business. The tool was co-created by Alex Osterwalder.
Insight No2
This is a rider to the first insight. I have come to summarize the challenges in business into two categories. The first category consists of the challenges that relate to the business model and the second is brand related. Results have proven that there is more to assembling a suite of great products and services. According to Simon Sinek (Author, Start with Why) he said "People don't buy what we do. They buy why we do it.”
What does this mean for Start-ups?
The question of why is expressed in terms of the brand philosophy. The brand philosophy being the statement of purpose. Why do we exist? Why do we do what we do? This is not the same as vision and mission statements. Start-ups and indeed nascent brands must put first before offerings (products and/OR services) their unique Point of View (POV). To be able to successfully differentiate, start-ups must clearly articulate a spirited POV which is capable of waking its people up from bed. Times are changing and a huge generation shift is happening. According to Malcom Gladwell, the current generation (The Millennial) are not driven by the same set of rules that most companies operate by. They see the world differently. They despise the rat race and want to be a part of an organisation that's bigger than the venture capitalists and the founders.
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