startups in vuca world - entroids
TRANSCRIPT
#Startups In VUCA WorldHandling Setbacks Effectively
By Vijay Kambhammettu
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#Startups In VUCA WorldExecution in VUCA world is the 90% battle for success
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eBook Content• VUCA Startup World • VUCA Drivers, Effects, & Demands • Setbacks Are A Norm Today – How To Recover Quickly
– Business Model Failure – Forget The Plan, Embrace Continuous Planning
– Time Is Money - Avoid Missing Deadlines – Money Is Time – Avoid Running Over Budget– Key Resources Are Your TIME & MONEY – Plan them diligently– Continuous Risk Management Integral To Succeed– No Customer Traction – You Have Not Dated Your Customers Enough
• Success = Planning + Execution
VUCA Definition & Startup CorrelationIntroductionStartup Execution In Today’s digital age is filled with Volatility, Uncertainty, Complexity and Ambiguity (VUCA). Technological innovations and ease in Information access will continue to create exponential customer needs that never existed before which are the prime drivers for startups. Entrepreneurs are distinguished with the FORESIGHT to create new INSIGHTS in solving new problems with their ACTIONS.In a linear world, a startup would succeed by directing, predicting, knowing the answers, controlling, managing, and doing more of the same. The future is an extension of the past. But, in a VUCA world - one filled with Volatility, Uncertainty, Complexity and Ambiguity - startups must change how they operate.
Volatility;The nature and dynamics of change, the dramatically escalating rate and speed of change and the associated risks of instability and flux. Volatility demands a willingness to take action, to explore and probe in changing conditions. BUT Volatility can cause fear, risk-aversion and “back- to- basics” reactions
Uncertainty;The lack of predictability, and the sense of not knowing what the outcomes of even known changes might be. To operate successfully in Uncertainty, we must develop a wider sense of the events and conditions surrounding us. On contrary the inordinate amount of data collected could lead to execution paralysis. There needs to be balance and some level of risk taking
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Complexity;The intricate relationship of systems and their parts, the opposite of simplicity and the multifaceted effects of multiple factors, drivers, and influencers. Dealing with Complexity requires us to stay focused on what we are trying to achieve and to be flexible and creative in how we carry out our intentions. But Complexity can drive the unproductive behaviors of scapegoating and black and white dualities
Ambiguity;The fuzziness of reality and the state of an event or situation that is capable of being understood, made sense of – or misinterpreted - in many different ways. Ambiguous conditions demand agility and require that we create conditions that foster decision- making and innovation at the front- lines. BUT Ambiguity often induces doubt, distrust and hesitancy in decision making. And it can stifle innovation
Understanding VUCA Impact Deeper…Impact & Mitigations
Volatil
ity • Nature Of “Change” • Dynamics Of “Change”• Rate & Speed Of “Change”
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Uncerta
inty
Comple
xity
Ambiguity
• Risks • Instability• Flux
VISION • Take Actions• Probe Challenges
• Unpredictability• Potential Surprises• Unknown Outcomes
• Direction Paralysis Due To Information / Data Overload
UNDERSTANDING • Wilder Understanding• Different Perspectives
• Tasks Correlation • Multifaceted Effects• Influencers
• Unproductive • Dualities
CLARITY • Key Focus• Flexible & Creative
• Ideal vs. Actual • Misinterpretations
• Induce Doubt & Distrust • Lapses In Decision Making• Hurts Innovation
AGILITY• Decision Making• Innovation
Drivers Effects Calls For
Setbacks Are A Norm In Today’s VUCA WorldTop 6 Setbacks That Today’s Startup Face
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Business Model Failure
Missing Deadlines / Lack Of Time
Financials – Over Budget / Funding
Lack/Loss Of Key Resources
Hit With Unexpected Risks
No Customer Traction
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Always celebrate small wins (Milestones) on your startup journey in reaching the long term goals
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Business Model FailureLeverage Business Model Canvas in creating, delivering and capturing value
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Business Model;Strategy determines WHAT to do. The business model determines HOW to do it. Strategy is the ‘plan’ and business model is the ‘tactics’. Your model details how to generate profits. There are two sides to a business model – the revenue aspect and the cost aspect.Business Model Canvas;Created by Alex Osterwalder is the first visualization of a combination of the business model and plan. the ability to succinctly capture the business model on one page was powerful and widely accepted.
6 Reasons For Failure;• Problem – Solution / &
Product – Market fit. Mismatch between Value proposition and customer interest / segment
• Financial Viability. When costs (Including Customer acquisition) exceed revenues generated
• External Factors – Poor risk management, competitive analysis, market & economic trend analysis, and other external factors
• Execution. 90% of startups fail due to poor execution
• Continuous Adaptation. Past success hinders future planning by not allowing to think in current circumstances
• Right Resources. It’s people who make startups succeed. Wrong resource choice can hinder momentum very badly
Business Model Canvas* 9 Segment ;
Key Omission – Replaced ‘Metrics” with “Key Partners”. Entroids.com has automated ways to capture KPIs
1. Problem : How intense is the problem and how urgent is the need to fix it
2. Customer Segments: Who is/are the customers and collaborators (other users). Identify the early adopters
3. Unique Value Proposition : Why your solution is different and worth buying
4. Solution : Features that address each problem stated
5. Channels : Distribution and paths to reach customers
6. Cost Structure : Identify costs, capital requirement, and your burn rate. Know breakeven point
7. Revenue Streams : Pricing. Start with validating your premium pricing first. Estimate customer life time value
8. Partners : Capture key partners, collaborators, influencers
9. Unfair Advantage : Why is it difficult for somebody else to copy*Originally developed by Alex Osterwalder
Missing Deadlines / Lack Of TimeWhat Seems Urgent Might Not Necessarily Be Important
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All Startup Projects are executed through “tasks” and every task has a level of urgency and importance.
Urgent: Any task that needs to be done right away. These are the ones that are right at your face, screaming “now”. Problem of the day, squeaky wheels, the naggers are examples of what leads to urgent tasks. Important: These are tasks that contribute to the vision and strategic needs. These help to achieve the goals and objectives. Planning, Risk mitigation, Validating assumptions, meeting deliverables etc are examples of important tasks.
Definitions;
Not I
mpo
rtant
Impo
rtant
Urgent Not Urgent
Q1
Q2
Q3
Q4
Necessity Leadership
Deception Waste
Crisis management• Various Deadlines:
Customer Service, Regulatory Requirements, Quality Control
• Fire fighting
Pressing Tasks• Distractions: Email,
Social Media• Urgent requests• Small quick hitter
jobs• Popular “Feel Good”
tasks
Planning• Risk mitigation• Design validations• MVP testing• Verify business
model• Budget control• Validate
assumptions
Trivia Busy Work• Escape Activities :
Internet, News, TV• Unimportant Emails• Unproductive
Actions In Social Media
Quadrant 1: Urgent & ImportantThese are crisis, problems and critical deadlines. Quadrant 1 tasks get the first priority. This can be meeting customer deadlines, investor presentations or contract negotiations.
Quadrant 2: Not Urgent & ImportantThese tasks help achieve your goals and strategic needs. They are important but don’t have a deadline. Typical tasks include planning, risk mitigation, validating value proposition, verifying the business model assumptions.
Quadrant 3: Urgent & Not ImportantThese tasks are distractions and day to day fire-fighting activities, these usually include helping other people out. It is not necessarily bad but it keeps you from doing other important things.
Quadrant 4: Not Urgent & Not ImportantThese tasks are interruptions and completely non value added. Internet browsing, engaging in trivia, water cooler talks are some examples
The Scenarios;
The Secret to success;If most of the time is spent in Q1 it leads to burn out and which leads to moving to Q4 to get a break. Many people spend time in Q3 without realization; they perceive that it is a Q1 task. The urge to think that everything urgent is important takes over. To be effective, teams need to spend time in Q2. This is where foundation to greatness is achieved
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Financials – Over Budget / Under Funding2 Ways to minimize budget overrun & avoid immediate funding
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Startup spend money for two main purpose : Product Development & Product Marketing. Allocating appropriate budgets for both is very critical as they need both spends to be successful.
Product Development Costs: These are the costs incurred to design, build and test a product. Examples: A Saas application, A Internet of Things Device, .. Product Marketing Costs: These are costs incurred to reach your customers, convince them with your value proposition. Examples: Social media management, Customer visits, Promotional content, …
Budget Components;80% of your spending comes from 20% required resources for each of Product Development & Marketing. Identify what is the 20% resource in each of the categories and shop around for the lowest price without compromising on quality.
Typically, these are software or design engineering resources required for product development and content creation for product marketing. Example: In our startup, we have offered equity to our software developer which brought our costs down dramatically.
Analogy: We can SAVE LOT MORE when we spend our 80% time and effort in bargaining a house which is far less then 20% of the activities we do in our life time versus collecting & redeeming coupons all along the life
The Golden 80/20 Rule ;Follow MVP Approach;Build product in a iterative process to continuously adjust your product or service to fit the customer needs (Problem Solution Fit) and to be able to do so economically with ability to scale (Product Market Fit).
A Minimum Viable Product (MVP) is a means to test and validate the startup hypothesis early in the process. The inputs to a MVP are the assumptions around your market and product strategy. The minimum viable product is the embodiment of the assumption that can be created quickly, and is something the potential customer can interact with. A MVP is not representation of the final product.
An MVP is not a one-time event. You should do it at all stages of development; however, as you reach final stages, it will merge into your beta and then final product. The result of the MVP feedback should be to tweak and adjust your value proposition and business model.
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Your strategy determines ‘what’ to do, and the business model determines ‘how’ to do. When you have a fairly good idea of the strategy and model, it is time to move on to ‘Who’.
Startups should not do it all. Trying to do everything has the detrimental effect of spreading yourself or your team too thin and also, it is expensive to develop all the necessary skills internally. This will affect the time to market, quality of the product and drive up the costs.
Rather than trying to do it all, experienced founders know what they are good at. They nurture their strengths and grow it, while partnering and outsourcing everything else. This is faster, cheaper and better.
Identifying Resources ;
Lack / Loss Of Key Resource2- Step Resource Gap Analysis To Have Right Resources Onboard
Reso
urce
Gap
Ana
lysis
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Step 1; Step 2;Identify the key skills of importance for your startup. Through the value stream, identify the tasks to be done and list them. A generic starter list is as below;• Technology – this includes R&D, innovation. View
this as the ingredients to make the secret sauce.• Product Development – This is commercialization
of the technology. This involves creating the product that can be repeatedly reproduced in an economical manner. Design could be a subset of this and again combine if it appropriate in your case. View this as the recipe for sauce.
• Design – This gives the idea a form be it a website or a product. This creates tangible personification of the idea. View this as the presentation / plating of the dish.
• Manufacturing – This is the process of converting the inputs into a saleable product. This is the cooking of the sauce.
• Distribution – This is getting your product into the hands to the users.
• Network – This is the rolodex required to make your startup fly.
• Customer Acquisition and Retention – This is about marketing, sales conversions and customer support. You should break them out if the skills or resources required to do this are different in your startup.
• Management and Leadership – This is probably the hardest, because a founder thinks he is always the best person to lead his company.
Evaluate each of the tasks or required skills identified to determine what to do yourself and what is best to seek partners. Keep skills that are central to creating customer value or enhance differentiation. Below is the criteria you can use to evaluate each skill or resource area;• Valuable – Is this skill valuable in
increasing revenue or reducing cost• Rare – Is this skill hard to find. • Inimitable – This skill is not easily copied.• Non-substitutable – Not many
alternatives exist for this skillIdentify the areas that are valuable and rare or that cannot he imitated or substituted. These areas are critical to your success. Typically, you will have two or three areas that are important. Assess if you have these skills or can develop it. You should not keep more than two critical areas to be able to do them well. Find partners for all other skill areas. Of the skill areas you keep internal, one can be your core competency
Hit With RisksContinuous Risk Management Is Key To Success
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“Entrepreneurs are, by definition are risk takers. Strong risk management is an important source of competitive advantage. You can beat the odds and build a thriving and rewarding venture by learning to recognize and mitigate risks.”Akira Hirai
The pitfalls for not managing risks in a formal planned process are huge in terms of schedule delays, resource consumption, and opportunity cost of not able to work on the right things.
Risk management is the process of identifying possible risks upfront that could potentially come up while adventuring into the business world.
Each risk has three critical components associated with it: probability of occurrence of the risk, impact of the risk if it does occur, and planned mitigation to avoid / minimize it.
Every startup tries to solve a new customer problem or an existing problem in newer way. The ambiguity and never been done nature of startups, make it difficult for a founder to react to startup risks mentally fast enough even to avoid the smallest unplanned risk.
What & Why Of Risk Mgt;
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Failure Path; Risk Impact & Probability increases with improper / no risk management from the time capital is committed
Success Path;Upfront Identification, ownership, analysis & mitigations reduce the Risks impact & probability
Best Practices;• Identify Risks Early• Analyze &
reprioritize• Develop mitigations• Allocate owners• Update & re-identify
continuously
Startup Path To Sucess
No Customer TractionThe pursuit of traction is what defines a startup success
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• Lack Of Customer Value Proposition. Validate early on if the problem exists and your solution is unique in solving it that customers would embrace
• Improper communication of value proposition. Get away from describing features and describe more on what can the customer benefit
• Too many features to confuse customer with and loose sight of the key value proposition. Solve 1 problem at a time
• Looking for customers in the wrong places
• Not leveraging the existing customers and focusing only further reach. Wow your customers to be your brand promotion agents
Reasons For No Traction1. Targeting Blogs2. Publicity stunts3. Unconventional PR4. Search Engine marketing5. Social & Display Ads6. Offline Ads7. Search Engine Optimization8. Content marketing9. Email marketing10.Engineering as marketing11.Viral marketing12.Business development 13.Direct Sales14.Affiliate programs15.Existing platforms16.Trade shows17.Offline events18.Speaking engagements19.Community building
19 Ways To Gain Traction
Source: “How any startup can achieve explosive growth traction By Gabriel Weinberg & Justin Mares
Best practices• Identify what customer traction technique
works best for reaching your target customers and be really good with that. Don’t spread yourself across all the techniques. When you have really mastered one, you can then try another to build upon the previous techniques
• Hangout & interact more where your customers are likely to hang out – online & offline
• Don’t forget to request existing customers in spreading the word. No better way to promote than your customers promoting you
• Quality vs. Quantity of customers: Know your customers well. In the initial stage focus on identifying your target customers (Quality) with your direct contact sales efforts. Once you gain momentum, you can then leverage digital marketing to reach the quantity of customers.
• Have a customer acquisition plan and keep measuring against it at periodic intervals. Adjust your efforts / techniques based on the target vs actuals
Handling Setbacks - RecapHow to recover quickly – Prevention & Cure
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Prevention; Cure;Business Model Failure
Focus on the most important “Feature” valuable to your customer and start charging early on . The sooner you experiment your startup hypothesis, validate assumptions, and mitigate risks the better chances you have in avoiding Business model failure
Re-Analyze Problem-Solution Fit & Product-Market Fit. Re-define and execute on your MVP. Take help from mentors & peers. Discuss your business model with mentors and peers to bring further insights in Pivoting if required
Missing Deadlines / Lack Of Time
Use of some project management tracking productivity tool is always better than conventional “Excel”. Always understand your teams important vs. urgent tasks and monitor continuously – Focus On right tasks
Step 1. Identify the critical tasks to validate your MVP Step2. Identify Risks & Mitigations Step 3. Update your project management plan based on current status
Financials – Over Budget / Funding
Follow 80/20 rule in planning your budget controls. 80% of the costs typically come from 20% of the resources (Example: software development) Spend enough time in evaluating the cheapest route on minimizing this 80% expense upfront
More money is not the answer. Accept sunk costs, leverage implemented development efforts and re-examine the prevention approach mentioned
Lack/Loss Of Key Resources
Identify critical resources (Skills) required upfront and evaluate outsourcing options for all the non critical resources required. Don’t start capital spending unless you have key skills required within your team. Focus on finding the resource first. Development can always be expedited if right resources are onboard
Let go of bad resources (people / tools, other) as soon as you realize they are not working, instead draining your energy. Find better resources by joining meetups were like minded skilled people are hanging out.
Hit With Unexpected Risks
1. Identify risks upfront 2. Analyze and prioritize them 3. Develop mitigation plans 4. Assign risk resolution owners 5. Update & identify risks continuously
Understand the Impact of Risk. Every problem has a solution. How soon can you solve it is the key to getting back on track. Talk to mentors & peers for advice. Spend additional funds to address risk faster.
No Customer Traction
Talk to real customers in person starting early on. Social media is wild, have a well thought customer engagement plan. Engage with customers continuously through out the development
Assuming Product-Market & Problem-Solution fit are validated, evaluate newer marketing techniques (Social media, Guerilla Mkt, Customer hacking). Refer to the 19 ways mentioned in this eBook & try the next channel.
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Success = Planning + ExecutionExecution is the art of getting things done
Key Concepts For Success• perfect execution• strategic execution• the science of
startups
Perfect ExecutionThe best selling book by Larry Bossidy and Ram Charan has the title “Execution – The discipline of getting things done”. Perfect execution is an extension to this definition. Startup life is chaotic and its easy to get caught in the whirlwind of daily firefighting and lose focus on more important things. Keeping focus of the team and the habit of getting important things done is the core of Perfect Execution.
Strategic ExecutionKey to success is simplifying strategy to tactical activities that result in achieving the goals; and keeping the team focused and getting these tasks done. The activities of the team will be in flux depending on circumstances. Keeping team tasks nimble and aligned to strategic needs is the ultimate challenge. It is the key differentiator for winning at execution.
The Science Of StartupsI wish we could say there is a formula for success. Next best thing is to use productivity tools that keep your team tasks aligned to the strategic needs. One simple and effective tool to use is the “A3 Management Process” popularized by Toyota. At Entroids.com, we understand the need for speed and consistency in getting results. It is one way to automate productivity and promote team accountability.
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”Sun Tzu
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Thank YouPlease help improve and develop this E-book to be the voice of Startups
About the eBookI hope you enjoyed reading this mini eBook as much I enjoyed writing it. This is a small step in the journey of studying the secrets of success in execution. Please let me know what you think of this eBook and of the www.entroids.com. I hope to improve this book with your comments and experiences.
About Entroids.com@entroids is striving to understand the hidden art of startup execution. Our first step is to automate startup activities for faster results and enhanced team performance.
About the AuthorPassionate and fiery cross functional business leader, who earned his living in product management and development.Having worked over 15 years in the HVACR and Electronics industry , one problem I have faced always was lack of productivity tool which would align the strategic needs with execution continuously.With the diverse experience in new product development, product management , marketing & business development that I have I have partnered with my team in solving this burning problem for product managers and startup founders like myself. I am the co-founder of Entroids a “strategic project management” platform that helps startups and corporations get better results faster in New product development.
