Perils In The Startup Space
Perils In The Startup Space
Business consulting provides
exposure to a diverse portfolio of companies and industries, from established
enterprises to mid-size setups and to early stage concept discussions. The entrepreneurial startup culture is an intriguing
and challenging space, responsible for taking ideas from zero to one. Through a collective exposure & deep experience
in the startup ecosystem it has become apparent why only 3% of entrepreneurial
enterprises succeed. Internal business
complexities overwhelm the market uncertainty, necessitating a study of business
anomalies.
Foremost it is imperative to
define business success. Recognition
from associations, funding from investors, few early customers, longevity of
the business are not defining parameters for success. The primary measure of success in the business
domain has always been delighted customers. While this creates a dilemma for early
startups, any alternate measure will be misleading. Product development and go-to-market are the
primary drivers with a feedback loop. Effective
product development and customer satisfaction is what differentiates the
winners from the masses.
97% of the startup ventures do
not survive beyond five years. Startups
are indeed a social and business experiment, where a group of people (founders,
investors, employees, early customers) come together with the belief of
providing a unique value proposition to the market. While the intent is noteworthy, the road to
success is paved with trials and tribulations.
These challenges are related to market, people, culture and process - very
different to the business technology envisioned by the founder.
The opportunity created through technology
discovery can be categorized across two dimensions, (i) automating our existing
manual systems, i.e. productivity impact and (ii) creating and fulfilling new customer
needs. Finding and offering new
mechanism of fulfilling a task is process innovation, which is the field where majority
of the startups are playing their game.
While the business opportunities are real, and technology is making it
possible, rate of failure of startups are surprisingly high – lending to this
study. Each person will have their own
reason and perspective on failure. Basis
the in depth study and analysis of startup failures few critical observations
and recommendations follow.

Key Learning: Get the Product Right.
No compromises with the Product to Market Alignment. Don’t focus on the sales/market outcome until
the Right Product is ready.
Quality Obsession: In
the startup space, product is fluid and fast evolving. Every part of the product, from the initial
concept to the creative design is open for change. The product manager, most likely the founder
himself, would architect and micro manage the product development. He will face the conflict of launching a stable
product vs being the first to market.
The hot-seat blinds the founder of the long-term, while he is surviving
day to day. In the need for speed, launching
imperfect products creates dissatisfaction in the market, resulting in internal
organization chaos across all internal functions and depleting market
confidence. This vicious cycle traps the
early stage startup in a regressive system, which eventually causes systemic
failure.
Key Learning: In the conflict between speed and quality always lean
towards quality. Customers are
demanding, looking for nothing less than perfection. The first impression can make or break the product
and the business.

Key Learning: Changing consumer behaviour is imperative in the product
innovation space, though it is a time-taking process. It should be integral to the business strategy. The product should enable and encourage a smooth
transition.

Key Learning: People are an integral block in the startup game. All other strategies and experiments
follow. Keep people delight integral to
the business philosophy thereby creating a motivated and self-driven team.
These are by no means exhaustive
observations, but rather few business imperatives. While these are common wisdom notes, in the
heat of the game the founders often take hasty decisions under the pretext of
innovation. Constant reference to this
article will empower startups to maintain rational decisions in their daily
functioning and decision making.

Startups are imperative for human
progress. Startups challenge the norm
and create the dream of a brighter future.
Startups push the envelope to a new height. It is these startups which are creating the
future. Higher success rate of these
startups will result in a better tomorrow.
Harish Chawla
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