Over the past few weeks we’ve examined the
foundations of social ventures, how to play to your strengths as an
entrepreneur, and also the process of social venture concept ideation. Of these
I'll focus on our most recent lesson in concept ideation. I find the process of
ideation to be one of the most vital aspects of entrepreneurship.
An ideation processes that I believe many might
be familiar with, is the lean entrepreneurship philosophy of company building,
most commonly applied to tech start-ups. In the lean entrepreneurship model you
engage in a circuitous cycle of product/market fit validation, through customer
discovery and customer validation. By doing this you allow customer feedback to
drive future iterations of your social venture product. I feel that this
technique is under utilized in many industries and does not have to just be
applied at a technique for tech companies.
At the foundation of this circuitous cycle is
the assumption that “the facts reside outside the building.” If the facts
reside outside the building then it becomes vital to engage with potential
customers. You can see this idea in action if we look back to the week one
optional reading article in the New York Times about the medical equipment
company, they were determining the next designs of their product based on
customer feedback, such as the device was to heavy to get into mountainous
regions. Too many start-ups don’t do this though and prefer to live in bubble
where they believe they've found the perfect solution
but haven't actually engaged any potential customers.
For an entrepreneur to succeed they
need to recognize that they probably have the answer wrong
on their first time around. A way to capitalize on the fact that you
might be wrong is to adopt a discovery-driven planning strategy. This is point
#3 from the lessons in the field section in the Making Social Ventures Work article.
Point #3 suggests for entrepreneurs to “start with a clearly hypothesized model
for the venture; launch it at the lowest possible cost, and use business data
that emerges to continually update your assumptions” this is basically the lean
entrepreneurship framework.
One way to put this framework into practice is
the development of an M.V.P or minimally viable product. The MVP is the first
iteration of your idea. It is supposed to allow you the greatest amount of
learning for the least amount of effort/cost. By creating an MVP you can begin the process of customer discovery
and validation while taking on very little risk and cost, two crucial elements
to consider as a start up. What’s more is that this process of customer
discovery and validation is a good way to prevent prematurely scaling.
Prematurely scaling is often cited as the #1
cause of startup failure. Data suggests that startups need 2-3 times as long to
validate their market as the founders originally though. Even more strengthening
for the case of premature scaling being a major issue is that startup genome
data found that 70% of startups scaled prematurely along some dimension. This led
them to believe that it is a large reason for 90% failure rate of startups.
Seeing the large amount of start-ups that might
have their failure rooted in premature scaling I find the lean entrepreneurship
methodology to be a great product development scaffolding on which to properly
define your consumers and your product prior to attempting to gain traction for
growth.
http://blog.startupcompass.co/pages/startup-genome-report-extra-on-premature-scal
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