You’ve thought of a new concept that will revolutionize the market and is completely unique, setting you apart from everybody else. You feel the drive to turn this idea into reality, but it has to work. It is so good that you are going to invest everything you’ve got into it. One moment though, take a step back, slow down, and think!
The best part of my job is meeting so many interesting people and being able to keep close to the market. The UAE is a hive of activity for entrepreneurship at the moment, with so many talented minds driving innovation, and with reports saying that MENA digital startups received $650m in funding last year; 76% of these businesses are based in the UAE.
Generally people talk about startups failing. This seems such a shame, when so much creativity and passion has gone into producing something new and cutting edge. From what I have learnt recently, the reason for such ventures not working out, is mainly down to a lack of the right sort of planning. ‘Fail to plan and plan to fail is the cliche statement that comes to mind.
Why do people not plan properly?
As a general rule, those people who are dominant in the right side of their brain are creative people, and are more likely to think of a new business ideas due to holistic, intuitional and insightful thought patterns. However, the essential skills for running a successful business, which are analytical thinking, reasoning and numerical skills, all sit on the left side of the brain. Few people are totally devoid of thinking on one side of their brain, but there is a biological conflict here. Interestingly though, the key difference between creativity and innovation is the fact that innovation is quantifiable and tangible albeit born originally from the right side of the brain.
What should entrepreneurs be thinking during the transition from creativity to innovation?
The first thing that should be created is a robust business model that addresses a market need and solves a problem. Too many startups focus on rushing ahead towards creating great technologies and hitting the market, without thinking about scalability or really what problem they are solving with their product. This means that there is little room for maneuver in terms of changing market demands and a unique selling point can easily be lost.
Thorough market analysis with a focus on risk management should be an integral part of the business planning process, as being outcompeted is another challenge. New ideas don’t stay new for long. More new entrants appear very quickly into a space, many of which are off springs from established companies who have the cash to invest in new business lines. Suddenly then your product’s unique identity fades, and therefore not planning ahead for the evolution of your offering can have catastrophic consequences.
The right mix of skillsets and mindsets within a start-up team is crucial to success. Not only do business critical areas need to be managed by experts, but these people need to be a dream team, who when put together are a formidable force and will produce high impact activity which delivers significant results.
Tightly managing the financials is imperative as cash flow all too easily becomes an issue, in many cases because of pricing and then subsequent revenue vs costs. Once this has happened, it is really difficult to attract further investment, as confidence in financial management is dramatically reduced.
In general, decisions around new ventures are based upon the four principles of people, cash, strategy & execution. Joshua Gans, Erin L. Scott and Scott Stern, in their Harvard paper, “Do Entrepreneurs Need a Strategy”, suggest the principles of decision making for startups to be based around Customers, Technology, Identity Culture & Capabilities and Competitors. They have created an “Entrepreneurial Strategy Compass”, which is a Strategy Matrix that categorizes the approach towards competition and innovation over the four quadrants of Intellectual Property, Architectural, Value Chain and Disruption.
To strategize for a start up in such a way will provide clarity and direction, and this series of articles is well worth reading. https://hbr.org/2018/05/do-entrepreneurs-need-a-strategy
Success stories are inspirational and although unfortunately not every startup will succeed, it would be far better that when startups are spoken about, the word success should be used more than failure.
So, that great idea you have? Go for it and make it happen! Just don’t get ahead of yourself too quickly, and make sure that transitioning your creation into innovation is as successful as it deserves to be.
“Don’t be afraid to let go of the good to go for the great” – John D. Rockefeller