Currently, we are experiencing a global start-up and venture boom that is similar to what we saw right after the financial crisis in 2008. More and more people are deciding to take their chances to positively contribute to the future by building a new start-up and solving global problems. On top of that, many established organizations realized that to keep up with the changes in our environment and to leverage the new opportunities of today's times, venture building and creating new businesses from the ground up is an essential part of a modern and successful business strategy.
The harsh reality is, however, that 90% of start-ups and new ventures fail, with the lion's share of start-up closures occurring during the first three years during operation. In terms of corporate innovation, we are also experiencing the phenomenon of what I like to call “idea vanity.” Companies are investing in design thinking workshops, ideation challenges, and other tools and methodologies to generate ideas but fail to execute them. The outcome: No results are created for the company.
Have a look at some of the major reasons why start-ups fail and why execution is not working below:
- No execution process in place
- Making products nobody wants
- Extreme product focus and disregarding business model, customer, or financials
- Rigid, slow, and inflexible development of the business
- Focusing on the wrong things at the wrong time
- Lacking the right people and team
Most of us, if we are honest with ourselves, will be able to relate to a few of the above-mentioned problems with our venture. Are we really operating in a lean way or are we just using the buzzword? Have we really understood the problem, or did we enter immediately with our solution? Are we all over the place with 1000 things to do or do we have clarity on what to focus on each week? Etc, Etc, Etc.
Me personally, I know I made many of these mistakes with my first start-up. I have read all the books – the start-up manual, lean startup, exponential organization – and thought I knew what to do. But I did not. I was too much focused on the solution and not the problem. I spent too much time chasing grants and funding instead of trying to evaluate my business. I build a product before I had any customers. I was in love with my idea, with my solution, instead of validating it first. I spend several months writing a business plan instead of having weekly learning cycles and moving fast. Suffice to say after not even a year I had to accept that my venture is not working.
But here is the good news. You do not need to make the same mistakes as I did. Let me showcase to you how you can make your new venture a success, regardless of whether you are a team of entrepreneurs/intrapreneurs or a solo entrepreneur.
Purpose Launchpad Methodology
Purpose Launchpad is an open meta-methodology and a mindset to generate and evolve early-stage initiatives into purpose-driven organizations to make a massive impact. A central element of the framework is the Purpose Launchpad Radar with its 8 areas that every venture needs to consider for becoming successful.
Purpose: The purpose is the reason why the initiative exists. It guides the evolution of the initiative to eventually make a positive impact in the world while being sustainable for the environment in a responsible way. There are also other important elements related to the Purpose such as the Moonshot, the Vision, the Mission, and the values that need to be considered.
People: This axis represents those external communities that relate to and are aligned with our purpose, as well as the internal team that will be able to develop the purpose-driven initiative.
Customer: Those people and/or organizations that use and/or pay for our solutions. We will need to fully understand their problems, which will be challenges related to our purpose, how customers in different stages in the market (early adopters and mass market) behave, and how they relate to our initiative.
Abundance: Identifying the sources of abundance that our initiative can leverage will be key to define a proper approach for our whole initiative (e.g. abundance of physical, digital, and human resources. Think Airbnb, Flixbus, Uber, etc.).
Viability: Whether we are for-profit or not, we will need to be sustainable from a financial point of view, so we will need to have a business model (including revenue source/s) and/or financial resources (economic support from other entities) to run our initiative.
Processes: The way we organize our initiative to both explore possibilities and build the right thing (using agile approaches) and also run the daily operations in an efficient way (using process management and optimization traditional approaches).
Product: Defining and building the right solution for the different customer segments. It will include different approaches (low-fidelity prototype, Minimum Viable, optimized products.
Metrics: Switching from mere financial accounting to Innovation Accounting and Impact Accounting
How it works - Execution for Success
The Purpose Radar you see above is an iterative infinity loop, meaning you are starting with purpose going over to people, etc, and starting the radar again – just with a different perspective. What I mean by that is the following:
Exploration: Discover different possible paths with all EIGHT elements of the radar. Do rapid experiments (customer interviews, product mockups, etc). Make first evaluations of your assumptions
Evaluation: Evaluate all EIGHT elements, not just the Product and Customer! Evaluate with actual sales to early adopters. Iterating based on validated learnings. Preparation for scale
Impact: Reaching the mass market. Optimize and automatizing your operations. Scaling the business
Note: This is just a rough overview for understanding
Now here it comes. We are not doing that in month-long cycles. Instead, we run through weekly sprints to achieve 52 learning circles per year. This means we are creating a backlog at the beginning of the week, focusing on execution during the week, and bring back the learning and insights – make adoptions – and creating a new backlog for next week. On top of that, we are going back and forth between exploration – evaluation – impact depending on the insights and learnings from the market. This allows us to maximize our speed, learning, and progress while being 100% focused on the market.
The entire Purpose Launchpad Methodology leverages existing methodologies like lean start-up thinking, design thinking, exponential organization framework, etc. A huge advantage is that it brings the right tools and methods in the right sequence and helps you to apply the right thinking and actions when needed. Ultimately the most difficult thing is not coming up with an idea, it is how to execute it.
If you are eager to fully embrace learning, to ensure you are focusing on the right steps, and to increase your chances of success by focusing 100% on the market I can only recommend to further explore this approach. Now at the end, let us have a look again at the main reasons why new ventures fail and how adopting this approach helps you to overcome them:
- No execution process in place - > Having a process in place aimed at executing your ideas
- Making products nobody wants -> Ensuring 100% market focus and customer orientation from the very beginning
- Extreme product focus and disregarding business model, customer, or financials -> Having a balanced and comprehensive perspective on your venture and what needs to be done
- Rigid, slow, and inflexible development of the business –> extremely fast (weekly sprints), agile, and flexible
- Focusing on the wrong things at the wrong time -> Allowing you to focus on the 5 things that matter this week instead of doing 100 things at the same time
- Lacking the right people and team –> focuses on building the right team with the right entrepreneurial mindset and skills
What are your recommendations to increase your chances of success with venture building? What did I miss?
Article was first featured on LinkedIn on February 21, 2022.
ExO Insight Newsletter
Join the newsletter to receive the latest updates in your inbox.