It’s never been easier or cheaper to build new products and services, but being a successful innovator, entrepreneur or intrapreneur is still incredibly tough. In this post, I share a list of mistakes you should avoid when turning an idea into a new business. I encourage you to share more examples in the comments below. Let’s take a look.
1. You search for the perfect idea
Don’t waste time waiting or searching for the perfect idea. There’s a myth around the value of ideas. People believe a great idea will undoubtedly lead to a successful business. In reality, your original concept has less impact on a venture’s success than you might think. What matters is your ability to take an idea and mould it into a value proposition that customers want and a business model that works based on insights gained in the field with customers and partners.
2. You mistake your hallucination for a vision
Remember that when ten entrepreneurs/intrapreneurs think they have a great vision, one of them is onto something promising while the nine others are merely hallucinating. It’s easy to convince yourself that customers will be falling over themselves for your product or service when they most likely won’t. Don’t waste time refining your vision into a business plan. Rather, empirically verify with customers and partners if your vision has legs. Better Place is a good example of a company that started with a bold vision, great business plan, and raised over 800 million USD only to fail later on.
3. You fall in love with your first idea
Don’t fall in love with your first idea; it’s rarely the best. Prototype radically different value proposition and business model alternatives before you narrow down on superior options. Here’s an important tip for prototyping: keep your ideas rough and high level as they’ll most likely evolve throughout the testing phase (see mistake #1).
4. You focus on product & technologies at the expense of a business model
We have a name for entrepreneurs/intrapreneurs that are so focused on their products that they neglect their business model: the ‘Oblivious’. A great product is indispensable, but isn’t enough for your venture to survive and thrive. A venture that is propped up by investor injected money will only last so long. Entrepreneurs must accept the harsh truth: a bad business model will make a great product fail. You must embed your product within a repeatable, scalable, and profitable business model
5. You lack a clear business model story
You’re building multiple value propositions, creating several revenue streams, and are on so many different fronts that it becomes difficult to figure out what exactly it is that you do. You lack a clear business model story. A clear business model story is one where the building blocks of your business model work together to execute one well thought out strategy that will create, deliver and capture value. An organization with a great business model story has built-in moats to protect its business from competitors.
Nespresso’s original business model had a compelling story: it offered a value proposition that locked customers in (Nespresso coffee machines) and a consumable that generated recurring revenues from those customers (via the direct sales of coffee pods). The entire business model worked towards the execution of this strategy which made the company successful.
6. You obsess over competitors, not customers
You can try engineering attacks or copying competitors. It might even give your company a temporary advantage. But the only way to truly outcompete other players is by creating value propositions that brilliantly address your customers’ needs within a superior business models. Focus your efforts on understanding what customers crave for and build it for them.
7. You first focus on 'can it be built' instead of 'should it be built'
Ring the emergency alarm when your team gets excited about technical challenges and beautifully-designed products without questioning if and how they create substantial customer value. You’ll risk wasting time, energy and money on cutting-edge products that the market doesn’t care about. Figure out if the market wants it before figuring out if you can build it. This sounds like common sense, but it’s definitely not common practice.
8. You build what customers say they want
I can hear you thinking, “What do you mean don’t build what customers say they want? I thought they were the ultimate judge of my idea!” It’s important to remember that customers don’t always act like they say they will. Their feedback provides rich insights, but you can’t take their opinion at face value. Be customer-centered, but start building only when you have strong evidence that customers will put their money where their mouth is. (with call-to-action tests).
9. Your early experiments are expensive
Experiments help you verify the hypotheses around your idea. But because uncertainty is at its highest when you start out, your hypotheses are likely to be wrong. You’ll need to keep testing until you learn what customers want. You need to be smart about resource allocation -- money and people will be limited, and you don’t know how many experiments will be required to validate your idea. Tackle the critical hypotheses that could kill your business first with quick and cheap tests. Increase spending only as you gain insights or evidence that prove your idea will work.
10. You outsource the testing of your ideas
A good entrepreneur and intrapreneur will think of their venture as their ‘baby’. Now imagine you delegated parenting and asked someone else to do the critical job of helping your kid grow into a successful adult? When you outsource the testing of your ideas, you are basically doing the same thing. You're asking someone else to learn about your customers in the field and search for a value proposition and business model that work for your venture. The learning you get from testing your ideas in the field is fundamental to your venture’s long-term success. You can’t outsource it, it is a job for founders and the product team.
11. Bad timing
Businesses are not built in a vacuum, but in a context. Your business model and value proposition can be great, but they won’t succeed if the environment is not ready for it. One common example is a business that comes too early in a market that isn’t large enough yet, and hence doesn’t get enough traction. The opposite case would be getting on a market too late, when there are too many established competitors with powerful business models. Availability of resources, regulatory trends and the economic infrastructure are other external forces that can favor or hinder your venture’s success.
12. Poor Execution
You are pursuing bad quality leads, your product doesn’t work well, you hired the wrong team. You are doing many things, but still fail to execute on your plan. Poor execution will kill your business if you don’t quickly react. Use the Galbraith Star Model to assess the current situation, and compare it with the business model and value proposition you have validated. What are the critical issues that are blocking you from executing your plans? Fix those before your it’s too late to save your business.
What other mistakes can make you fail? Share your experience with us!
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