What can you do to learn from other’s mistakes or success? Stuart Leo, MD and Founder of Blirt.co looks at the valuable lessons from the Startup Genome Report – A new framework for understanding why startups succeed.
Why do organisations succeed? To answer that question, it’s worth asking, ‘Why do they fail?’
The goal of any organisation is to benefit society; through jobs, value creation, innovation, education etc. We, at Blirt, want our customer’s customers to have great experiences so organisations do ultimately succeed and bring wonderful benefits to society.
Statistics tell us that only 1 in 12 entrepreneurs and their organisations make it through the startup process and find a sustainable path.
That’s less than 9% making it. It’s not a good rate.
What Builds Market Success?
A great resource, which I often refer to in my daily work, is the Startup Genome Report – A new framework for understanding why startups succeed, which analysed data from over 3,200 companies across multiple nations over many years and determined some criteria for success.
Here are two insights gleaned from that criteria:
1. Those who succeed must have a good product and a large market opportunity. In other words, they must be able to set up a scalable business scenario.
2. They must align the following 5 fundamental growth dimensions identified by Startup Genome and scale these together.
4 Business Model
The Start Up Genome found that the predominant reasons for failure was the premature scaling of one or more of these five areas.
For example, too much funding can lead to lazy product development; too many team members can kill creative and resourceful thinking (and cashflow!), too many products too quickly can confuse a market segment and broaden reach too quickly. This list could go on and on….
Scaling a consistent customer experience with all areas of the business in alignment is the key. And, yes, it is extremely hard to do. It is like balancing spinning plates on pencils. (I know because as our little business has grown we have certainly failed and succeeded at this at different points in time).
As any leader will tell you, leading teams is a lot like riding a roller coaster; sometimes you’re on top of the world and sometimes you’re just trying to find a path in the chaos. And, then you get to do it all again the next day!
Well, here’s the thing – running a business is literally like riding the ups and downs of cycles. Knowing this before you start at least helps bring context to the situations we find ourselves in on a daily basis.
The Start Up Genome identified six stages of growth every organisation goes through – it’s the classic ’s’ curve – or what I think is more appropriate, a roller coaster!
At Blirt, as we work with organisations on building customer experience strategy, we will firstly determine where the organisation is on this curve and then apply the most appropriate customer centric strategies.
For example, as marketers, there is no point unleashing millions of dollars in executing an advertising program if the lead flow, customer care, CRM and ROI tracking are not in place. Conversely, you may have spent money on building a technology platform but if you’re not putting customers through it, well, it’s just like building a boat and never putting it in the water.
What Should Leaders Focus On?
Here is a brief breakdown on where to place some priorities – based on our own experience with our clients and products according to the six stages of growth.
Focus on developing an idea through the context of Vision and Market (Customer). What’s the opportunity and how might it sit within the market? What might this organisation look like, act like, feel like – what problem are we solving for society?
Really, you are asking the questions of why do we exist and what value do we bring to our customer. As the answers to these questions become clearer, you will begin to rally people around your problem and you will begin to frame up your brand positioning and perceptions.
You should be spending time and money on knowing, understanding and testing ideas with your customer. Learn quickly and discover the nuances of your customers’ needs and desires.
Focus on validating the idea with potential customers. The objective is to understand if a customer will pay for the service or product developed. The emphasis is on executing (selling!) – to simply get a result so that you can be in a position to make decisions about refining the service or product.
I love Seth Godin’s approach in this stage; ‘Build the Sales Deck and go and see if you can sell it! (See Seth Godin’s Start Up School Podcast)
Spend time and money trying to get sales – as quickly as possible. This doesn’t need to be expensive either. In today’s digital world it can be very easy and quick to determine if there is market demand.
Focus on achieving a profitable business. If a dollar is made in Validation, then a profitable dollar must be made in Efficiency. The emphasis is on Business Model, Systems, People and Culture.
It is during this phase that external investment often comes in to the business. In fact, the Start Up Genome identified that investments entering at the end of this stage of the business cycle almost quadrupled.
It makes sense. Who wants to invest in a business that’s still working out how to make money? Rather, an investor wants to invest in a business that’s worked out how to make money but hasn’t yet triggered a scale and needs their capital, connections and support.
You should be sustaining your customer focused activities and begin to spend money on people, systems, technology, process, structure, training and culture. Work out how to repeatedly make a return.
This is the engine in the organisation that allows you to then pour more oil in and go faster.
Focus on lifting all areas of the leadership and management functions in alignment. The emphasis is a weighted effort on all parts of the Leadership function with a particular drive on building brand awareness within your market, reinforcing core perceptions and driving a clear strategy in executing customer growth programs.
For marketers, getting things like brand clarity, operating rhythm, marketing cycles, conversation ratios, standardised experiences etc. are all part of bringing alignment across the business in preparation, or during the early stages of scale.
You should be spending money on media (paid, earned and owned), employing new people and taking market share from your competitors.
Focus on keeping an even keel and then begin to plan your investment in the next renewal phase. The emphasis here is on people & culture with an R&D exercise on customers and business model innovations.
The success of the organisation’s ability to renew itself into the next cycle of growth will be its ability to build new innovations on its current platforms. The people that know your current customers the best should be on your team – therefore, the best ideas ought to be coming from the current team.
You should be spending money on your people. Hold them, give them time to think and nurture creative thinking across your team.
The focus is planting or reinventing for the future. The emphasis is on communicating the vision of the new ideas, setting strategy on these new ideas and building the early business model around them.
Really, it’s like starting up again but this time with a little more capital, effort and experience. Every organisation – Profit or Not for Profit – goes through this cycle and really, your future growth is about your ability to sustain customer experiences time after time after time.
The mistake big organisations often (very publicly make) make during this phase is to invest heavily in these new ideas without getting the market positioning and customer experience right. There are countless examples of large sums of capital being thrown at average businesses simply because that organisation has been successful in the past.
Here in Australia, we just need to look at the Masters business by Woolworths and Lowe’s to see an over capitalised weak market positioning that grew not by market demand but by executives’ passion for beating a competitor.
Strangely, you should be spending very little on these new ideas and executing on agile principles until you know it can work.
Stuart Leo, Founder and MD, Blirt.co.
Stuart founded Blirt in 2012 when he saw a growing need in the marketplace for marketing tech expertise. Four years on and the company is now an emerging leader in the high growth, data driven marketing technology sector. As one of Australia’s leading MarTech strategy groups, Blirt specialises in customer experience, marketing automation, digital communications & full funnel customer engagement to help organisations lead in The Experience Economy.
Stuart has more than fifteen years’ experience in corporate marketing and strategy roles. He has a passion for strategic thinking, creative strategy, seeing new products come to life and helping organisations grow.
Stuart is regularly asked to speak on marketing, strategy and the changing nature of branding in data driven world.
Written by Stuart Leo
Founder and Managing Director at Blirt
Visit blirt: https://www.blirt.com.au/