In this article, we take a look at startups. What makes one startup succeed and another fail?
As entrepreneurs, you connect to your customers more than before. We live in a fast-paced world that is constantly changing. As a result, businesses need to be nimble. They need to adapt to innovations to remain relevant.
The Right Order
Companies that focus on building a customer base over a product do great. On the other hand, those businesses that come up with a product and then try to get customers most often fail. Following this, there is a method and strategy to ensure success. It is more about profitability from an established following rather than success with a specific product. Creating a loyal following should be the number one goal for any business. There are lessons you can learn from failed startups that you can apply for greater success in your startup.
Key Principles behind successful startups
There are five key principles behind successful startups.
- CONTINUOUS INNOVATION: Too many leaders are looking to unlock innovation. However, long-term growth requires something different. You need continuous innovation to adapt and stay relevant in your industry. Continuous innovation is a constant flow of ideas, both large and small. These ideas keep the company experimenting and adjusting to meet customer needs. It is the modern way that successful companies remain relevant. The old way of producing products used to work when they were barriers to entry and feel competitors. Today with the internet is it cheaper to introduce new products and there’s more competition than before.
2. ATOMIC UNIT OF WORK: To create cycles of innovation and unlock new levels of growth, you need to have teams that can experiment to find ideas. These are units within the team that require structure and support.
3. THE MISSING FUNCTION: One key factor that distinguishes startups from traditional organizations is entrepreneurship discipline. Steve Blank defines a startup as a temporary organization that seeks a business model that is repeatable and scalable. Going by this definition, startups look for a viable business model, while companies have discovered such a model and are executing it. You must be deliberate to ensure that team members understand and align with the vision.
4. THE SECOND FOUNDING: Eric Reis has this theory of the second founding startup. After a startup has been around for a while, there’s a natural tendency for it to start to use traditional organizational structures management tools, and other systems. This is exactly what the startup is set out to disrupt. The inevitable consequence of using these traditional methods is the same behavior and the same problems that the older companies have. These are bureaucracy, rigid policies, and so on. As a startup, you need to manage this transition. What you need to do is to evaluate your structure and revamp it. Making this kind of profound change to an organization’s structure is like founding the company all over again, whether it’s five or a hundred years old.
5. CONTINUOUS TRANSFORMATION: All of this requires the development of a new organizational capability: the ability to rewrite the organization’s DNA in response to new and diverse challenges. It would be a shame to transform only once. When a company has figured out how to transform, it can—and should—be prepared to do it many more times in the future.