Startups Lessons Not Learned or Lame Startup Thinking (via 24 Ways to Start)

What is it about?
Mike Butcher, TechCrunch Europe Editor, writes about lame startup thinking (in Europe). In my experience there is so much truth in this article, it’s a must read.

What can I learn?

Learn about money: Firstly, do you really need outside money? If you don’t want to put most of your money into the idea don’t bother asking other people. If you will need money you should know how much. Furthermore, if you look for angels, look for angels who can help you build your network. Before pitching these investors ideally you should have build some mock-ups or better a product or ideally a product with customers and revenue.

Your company is your product: Don’t outsource your core competency. Do not do it. If you aren’t a product person look for a person how is and make them CEO or learn the stuff for yourself. You should iterate your product and test it often. What do your customer think? How is the user experience?

Startups Lessons Not Learned or Lame Startup Thinking | 24 Ways To Start

#48/111: Seizing the White Space

What is it about?

What have Amazon, Hilti and Hindustan Unilever in common? Each company revolutionized its business model. Mark W. Johnson studied these and more companies and found a process for business model innovation.

What can I learn?

What’s the job-to-be-done? Don’t ask your customer what he wants your product/service to be. Find out what tasks he have to do. This allows you to use your expertise to build a better solution. This will be your starting point.

How can you satisfy it? Now it’s time to build a company around your product. What are your key resources, your key processes and how can you make money out of it?

Let’s take the first business model of Amazon for example. The job-to-be-done was offering a wide range of books. You can only make profit, if enough books will be sold. Also the warehouse costs have to be reduced. Furthermore, people want to read their books as soon as possible.

To ensure that you are going to sell enough books, you have to build a platform. So the key resources and processes are the technology for warehousing, IT infrastructure for the website (channel) and a partner for shipping.

Change is hard: Often there’s a discrepancy between your company and your new business model. If possible, take the easy way and build a new company. It will save your lots of time, discussions and compromises.

Conclusion

I really like Seizing the White Space. It is more practical than Business Model Generation which focuses more on building a meta solution. There are lots of interesting case studies with uncommon companies. Furthermore, I like Johnson’s approach of Customer Development, i.e. searching a solution for the job-to-be-done and then building the rest of the company around it. Great recommendation for everyone who wants to start a company and solve a job-to-be-done.

#26/111: Only the Paranoid Survive

What is it about?

How do you change a company? And how do you avoid being overrun by new forces? Andrew S. Grove explains how Intel changed from a semiconductor company to a microcomputing company.

Key points?

Strategic inflection point: Grove defines a strategic inflection point as a point or period in which a force (see Porter five forces analysis) gets 10X stronger. For example, in the 80s, the Japanese memory industry grew very fast and got very cheap. This was a gruesome experience for Intel because they were known as the memory company in the USA.

Always observe your environment: To avoid being overrun by such changes, you should always observe your environment, i.e. your customers, competition, new technology, your suppliers, etc. Only if you can see emerging 10Xs you can act fast enough.

Is it a 10X or isn’t it? There are a lot of changes but which are important? Ask your employees, customers or vendors. Often the CEO is the last one to see a change. If you think that one of these 10X forces isn’t really one, don’t discard it. Observe if it changes and then valuate it again.

Change from top and bottom: You can’t force a change from the top, but also can’t form a cooperate strategy from the bottom. It is important that you use both forces to carry out the essential modifications.

Conclusion

This is a excellent book on changing a company. Andrew Grove recounts his own experiences and don’t try to please everybody. Half of the managers quit the company because they don’t wanted to change. The other 50% had to reeducate themselves. Changing a company isn’t easy and there will be casualties but it’s better than completely vanishing. Clear recommendation!

#16/111: Leading The Revolution

What is it about?

Gary Hamel writes about the future of leading a company and explains that innovation will rather come from your normal employees than from the top management. He focuses on some outstanding companies like Cemex, Schwab or UPS.

Key points?

Encourage activism: A lot of front line employees see problems that the (top) management can’t see. You have to enable every employee to share their ideas.

Build internal markets for talents, capital and ideas: A great way to allocate resources are markets. Hamel recommends to build internal markets for these components to allow people to execute their ideas.

Measure your innovation progress: If a idea seems fertile let people test it. If it succeeds let them build ventures and if this venture is successful try to spin-off or reintegrate this venture in your company. You probably have to generate lots of ideas for one successful venture, so start filling the funnel!

Conclusion

Leading the Revolution is a great book for its time. There are some really neat ideas like internal markets which are now successfully adapted (e.g. at Google). Furthermore, Gary Hamel understood the idea of crowdsourcing long before it became familiar.