Posted on

A call for more entrepreneurial style of thinking in startup development and why it is absent

 

It might sound surprising, but in my experience as a business model innovation adviser, startups could use a lot more entrepreneurial way of thinking when it comes to building their development plans.

Typically, startup businesses are developed with very optimistic, disruption-driven and life-changing objectives in mind. And that’s good. The opportunity to change the world is big, the chances of acquiring one tiny percent of the Chinese markets are even more appetizing.

More often than not, however, projects come along with very light strategic thinking being involved, and that usually proves difficult for the founders.

While many startups are able to present very impressive technology prototypes and app-based proofs of concepts, the founding team’s ability to provide potential partners with a plan is often questionable. How the one per cent threshold is to be attained is a mystery, the exit-strategy is rather obscure, so forth and so on.

In this op-ed, I explore the topic of entrepreneurial thinking (or the absence of it, should I probably say). I bust a myth or two, and I elaborate a little bit on what many startup entrepreneurs might want to think about prior to meeting partners and investors. Need a hint? Think Impact.

Myth #1: “we are disruptors”

For many startup-ers, a very common belief is that having a disruption in your DNA (and vocabulary) is worth gold. But is disruption the real deal?

Not really.

Yes, Uber disrupted the transportation market, and yes, Airbnb disrupted the hospitality market too. But this doesn’t mean that breaking the codes is the recipe to a million-dollars cheque.

There is a major flaw here because seeking disruption doesn’t create value on its own. Value doesn’t appear out of thin air, and just because you say that your model is disrupting doesn’t mean that the model actually makes sense.

Disruption doesn’t guarantee desirability, it doesn’t guarantee feasibility and it does not guarantee viability either (more on the Desirability, Feasibility and Viability model here). And if those criteria aren’t met, chances are that your business model will sooner than later crash into a wall.

Beyond disruption, what a startup entrepreneur should seek is a form of innovation that improves an existing model, and that provides a desirable, actionable and viable form of value.

As Joseph Schumpeter wrote about eighty years ago, innovation is not a matter of (re)inventing the wheel but a matter of getting something different into the process. And what that means is simple: startups don’t need to disrupt a market to create value. They need to find a model to improve, and they need to work hard on making that model better for someone.

That model can be a production model. For instance, Henry Ford didn’t just develop machinery, he found a way to improve the traditional operations through automation and scaling.

Innovative models can also be a matter of improving user experience. Uber didn’t just disrupt, it created a new type of value by improving the taxi onboarding experience, from a booking & payment point of view.

The bottom line? Being a disruptor won’t get you a cheque. But an entrepreneurial mindset focused on improving an existing process might…

Myth #2: “we have an MVP, it’ll be fine”

Another idea that startup founders like to put forward is that having a proof of concept – also known as a Minimum Value Proposition or MVP – is enough to secure funding. But guess what? MVPs used to open golden doors before the world wide web bubble burst, but they don’t do that anymore.

The blockchain created illusion over the past years, but many projects were shallow, and founders were totally incapable of explaining how they would produce value for people.

No business model, no knowledge of the regulatory constraints, and a lot of promises. But where did the desirable, feasible, viable model go? When the crypto folly prices dropped, the reality check fell very hard on people. Investments based on mere MVPs without actual clients failed to find investors, and the ecosystem took a U-turn.

In an analysis of the ICO peak trend published about a year ago (Nov. 2018), my friend Jack Chia wrote that “Blockchain investments in ICOs [were] reaching a peak. Investors are more careful with the way they use their capital, and choosing projects stronger than ‘Minimal Value Products’ (MVPs) has become important”. Jack concluded on the idea that he “would, accordingly, brace and prepare for a much-needed washout […] The surviving minority of tokens after the washout will be those that deliver genuine value, genuine liquidity, and genuine utility”.

Also Read: Is your entrepreneurial journey just another rat race? Here are 20 things that say it might just be so

Jack’s point made sense: expecting that a mere Minimum Value Proposition will get your startup a million-dollar paycheck is ludicrous. An MVP in itself doesn’t create value and doesn’t guarantee that an investor will obtain value for his money.

Yet I keep seeing a lot of startups investing a lot on MVP without doing any type of strategic planning.

The bottom line? Have an MVP is a good starting point, but it is nothing more than that. A starting point.

Myth #3: “We are entrepreneurs”

Last but not least, many startup founders like to call themselves “entrepreneurs” because, well, the term is trendy and sexy. Yet, many of them don’t have a vision of what their business is about to become. No real plans to present, no exit strategy, and no real ‘entrepreneur’s shirt’ either.

Again, like it or not, but there are entrepreneur and entrepreneur, and not every business-maker falls into the right category. The field reality, really, is that in many cases startups make the mistake of focusing on just ‘doing’ whilst leaving the big picture and the long-term vision aside.

The idea was formulated by Gerber two decades ago, every want-to-be entrepreneur is built around three personalities which fight each other continuously.

At first, an entrepreneur is a technician – because ‘getting shit done’ is crucial. When work overload occurs, the technician shifts into a manager responsible for operating.

But, ultimately, what really makes an entrepreneur is the ability to shift from management to vision and strategic planification. And with that often comes the question of Impact.

The question of “Impact”

Envisioning the future of a structure is key, and whether you are trying to develop a startup, an established business, a personal project or an NGO your key challenge as an entrepreneur is to figure out what Impact you plan on making.

I call this way of approaching business ‘Impact thinking’, and in my experience, the point usually talks to every entrepreneurial person out there.

Impact Thinking can change business because making money shouldn’t be and is rarely the sole purpose of an entrepreneur. Sooner or later, a business needs to find allies, staff, investors, and their own agenda will one way or another lead to making a difference.

A call for more entrepreneurial thinking in startup development – pragmatically speaking?

Pragmatically speaking, the bottom line here is that is not an entrepreneur who wants, and in practice, many startup founders have no idea that their daily routine keeps them stuck in the realm of doing without undertaking and envisioning.

Also Read: Why trust is the biggest barrier to entrepreneurship and innovation

The reality of life is rather simple. Startups won’t normally obtain the money they need just because they disrupt, just because they have an MVP, and just because they are founded by tomorrow’s entrepreneurs.

No.

An entrepreneur knows the importance of having a strong value proposition. An entrepreneur knows the importance of going far beyond just a proof of concept.

And an entrepreneur knows that being an entrepreneur is a matter of envisioning and preparing in order to make an impact down the road. And more startups should follow this way of thinking.

Editor’s note: e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

Join our e27 Telegram group here, or our e27 contributor Facebook page here.

Image Credit:  Kelly Sikkema

 

The post A call for more entrepreneurial style of thinking in startup development and why it is absent appeared first on e27.