Bringing a concept to profit as a start-up is very similar to driving a speed boat through a storm. Things happen fast in an inherently chaotic environment, and the only rudder that the enterprise has is its dynamism. Be flexible and welcome change… cautiously.
Characterising start-ups in one line is difficult, but essentially they are organisation designed to search for repeatable and scalable business models. The business plan, by its very nature requires flexibility. The initial business plan targets a particular customer segment based on market research and gut feeling. The next step should always be consumer validation.
On our list of commandments, hanging in the office is “Customer validation is not customer acquisition”. We advise start-ups to get validation of their minimum product before starting a process of customer acquisition in earnest. However entrepreneurs often get spooked with itchy feet and begin the process of customer acquisition too early, resulting in an early and damaging plateau. The golden rule is that the business must be based in customer need. Customer and market validation is important proof to the organisation that the idea has strong potential, and it enables the enterprise to identify and tweak the product accordingly.
What happens if these small changes amount to altering the product or business plan in a new direction?
Don’t be defeated by dogma. Your initial perception of what you believed to be your market/product/company will change throughout the process. Your business plan is only an educated guess as to what path your enterprise will take. If the market environment points you to a different path, change. Follow market demand. Paypal began as an encryption platform and adapted to become the world’s leading online payment service.
This is commonly referred to as the Pivot, and regularly evokes shivers down the spines of investors. In their eyes, they have invested in the vision that that the entrepreneur sold them. When that changes, the deal changes and it can cause seriously distressing tensions between the relevant parties. Be bullish and persistently flexible. If I can borrow the boat analogy again; the investors are the fuel, it’s the entrepreneurs who are the captains and it’s up to them to steer the company through to profitability.
However, this advice comes with one important caveat; keep focus of the core vision or mission of the enterprise. All the examples of the most successful pivots –flickr and paypal- illustrate that no matter what change in direction the enterprise takes, there remains a clear link with its foundation. That’s why we advise to have a Plan b, but with a small b. be open to flexibility, but not at the expense of changing the character of the organisation’s vision.
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