Like any type of business the tactics for managing and executing a startup are evolving. Here is a new presentation by Steve Blank from SXSW 2011 on the topic. Focusing on 3 topics near and dear to me: Customer Development, Business Models, and Lean Startups. While the primary slant of this presentation is on software (and also a primary focus of the Lean Startup) these concepts can be applied in any startup environment. Its more about having the right mindset.
I recently finished a great book by Randy Komisar and John Mullins called Getting to Plan B: Breaking through to a better business model. I originally got turned onto this book from the Startup Lessons Learned Conference in spring of 2010. While the book has become a must read for startups, and in fact does focus a lot on starting new business's the core aspects of the book can be used across any business that:
... so pretty much any modern business that wants to stay competitive will get some benefit from the book. The title is a good summation of the book: Always be looking for and testing plan B, C, D etc. To do this the authors focus on 3 main principals:
These leaps of faith must be tested, and measured via a dashboard. This can essentially create the framework for a simple yet effective management framework. The book has many great examples but I will use one of my own for this post.
I support and have been involved since the early days with a startup non profit called Create Common Good. Create Common Good provides training and employment to refugees and others in need through experiential programs that transform lives and enrich communities One of our programs is a farm program where we train refugees in farming techniques but also use the proceeds from the farm to support our efforts. One of the ideas that we have had is to create a mobile lunch truck that serves up international cuisine made by refugees based on food from their native homeland using in-season local produce produced at the farm. In addition to some Anilogs and Antilogs found for mobile food trucks, here is a sample Leap of Faith Dashboard to describe how it can be used. (results listed below are fictitious:)
Many companies try and create complicated sets of metrics and dashboards, but often they are just patting themselves on the back with metrics that already prove what they know to be true. Next time try innovating and exploring some leaps of faith in your business using this simple tool to test and measure.
The best definition of a startup I have heard is this:
A startup is a human institution designed to deliver new products and services under conditions of extreme uncertainty.
With the above definition, many groups other than what you might think of with the word startup could qualify. Its not just Google or Skype. It could be a new business unit within an existing company or even a department deliverying new products. It has a lot more to do with how the team operates and thinks about how to solve the problem - remember its a human institution - nothing to do with company size, sector or industry.
With that - take a look at this slide deck which merges ideas from two of my most favorite books - Business Model Generation
I really enjoy seeing how business models have evolved from static industry focused models to pretty much anything goes. For example take this list of business models this blogger came up with just for Web Applications. Plus, when you combine these creative variations with the level of industry cross over occurring in new businesses, it makes for exciting and frantic times for modern business owners. One thing I am always watching for is business models that seem to stick and then proceed to get copied across different market spaces. A great example of this is what I refer to as the threadless model based on the popular t-shirt company with the same name. (overview here) Yes, if falls under a broader category often referred to customer co-creation strategies, but Threadless created a model within that space that worked exceptionally well at not only building a community but also a profitable business founded on a basic need of people’s desire to be unique and different. Threadless did it with T-shirt designs, but since then this model has been copied across a plethora of markets especially in clothing. I have seen companies doing this with shoes, dresses, pants, and now in larger ticket items like cars.
A more recent trend I have noticed just starting is what I am calling the zipcar model. Zipcar is car sharing/rental business that has really tuned into the needs of its market. Of course nothing is truly unique. Before Zipcar there were tangential models based on fractional ownership. Netjets created fractionally owned jets for executive air travel, and of course the grand daddy of fractional ownership: real estate timeshares and all the variations in this space. However, Zipcar has made the jump and eliminated the ownership burdon as as well as all the downsides to traditional rental car models. This newer model is now actually being applied back into real estate (eg – see Airbnb for instance). Most recently I tweeted about this model now being applied to bikes in the US. (The Social Bike System) This model while maybe new here in the US, has actually been around in various forms in other more bike oriented parts of the world for a few years. However, there is a separate trend spurring the zipcar model now: a technology trend of smart phones being used as keys.
One thing to remember when looking at all of this: It’s actually not that important to know exactly who had the idea first, but more about who created the tipping point and more importantly why the tipping point is occurring. For instance, the trend to the zipcar model seems to be a growing cultural trend away from ownership towards experiences. When the practicality of renting something exactly when and where you need it is available, the why own? A broader trend happing as part of a massive economic and culture reset happing now.
Another example is a new trend in business models supporting consumer oriented group buying. Group buying provides a cheaper price for all buyers based on volume purchases. Of course group buying has been around in the b2b world forever, but due to logistics it has not been feasible for consumers. The closest we have got is one step removed via big box stores. However now with the aid of technology consumer group buying is starting to grow and evolve with companies like, Yelp, Open Table and Zagat’s getting into the mix in the food space. Also – I just recently saw a presentation from a Lean Startup competition in New York where the winner was a company called moneymob taking the concept of group buying even further.
Watching these trends is important to starting and managed a modern business. No longer can a modern business just focus on their industry because most likely their steepest competition will come from an adjacent space. Watching business model trends can help you be prepared to shift and/or innovate your own business to fill market needs that your customers have.
This blog focus's on what I feel are the 3 keys to managing and leading a modern business: creativity through intrinsic motivation, customer development and organizational agility.
