My six “value habits” for successful start-ups & innovation programs

My six “value habits” for successful start-ups & innovation programs

This article is extracted from our Linkedin group “Value Management Leaders”. Join our group here!

Over the years I have been pleasantly surprised with the number of people who have built some great practical as well as theoretical content to successfully run a start-up or complicated innovation program. However, in my opinion, still too few people have read the books from Christensen, Chesbrough, Osterwalder and others. So even with a lot of practical experience and having done my fair share of reading, I often feel that other people’s personal experience can add a lot of value. Increasingly I got the same request to share my own experience, so I decided to put my main “value habits” in this article and I am curious what you think?

Asking “Why” & “What” questions

In many situations I found that people don’t take enough time to think through, and work on the vision of a business or program, whilst we all know that good a plan increases your likelihood of succeeding with about 60%. Arguments like “how can we be sure?”, “It is going to be different anyway in a few years time!”, but above all the nature of people to “do” rather then think is something that prevents a well thought through vision from being realised. The “Why” and “What” questions help to describe the future vision, quantify it and also define it into simple logic. And logic is the basis for validating each venture. I see the “Why” and “What” questions therefore not as questions of “not believing” or unreasonable challenge, which it has become in many companies, but more as a question of “wanting to understand, building logic and aligning the objective”. Maybe this focus is essential in all phases of any type of business, but it shows most value with more risky ventures like start-ups and innovation programs.

Being precise & simplify

There is a saying in English: “I can’t see the woods for the trees”, which says exactly what I mean. Just go back to the essence of each business and try to identify what is essentially the “Value proposition” and what is required to deliver that proposition? I prefer not just to think about it, I put it into a model as well, so I can simulate it and see whether the logic of the value proposition works. Over the years I have developed skills and tools to actually do all this in a short timeframe. When a project or business progresses, the models naturally get more accurate. The big challenge is to balance complexity and detail, with simplicity and value delivered from the effort made.

Thinking cause & effect

If something doesn’t seem logical, some basic cause and effect thinking can help you figure out where things are going wrong in assumptions made. Many people make assumptions, because that is what we do based on our experience in the past. The more experience we have, the more assumptions we make, and the higher the likelihood of something going wrong in start-ups and innovation. And even if the assumptions are right, the people working with you might not get it and therefore do the wrong thing or do things wrong. Besides the understanding and insights cause and effect thinking bring, I also like to use them in my models and quantify them so I can see financial impact on cost, revenue and cash flow.

Doing the rights things first, then doing things right

Don’t just do things because people tell you to, or because that is how it has “always been done”. People love doing things and focus on the easy aspects. For example a lot attention always goes into the cost of a project, not in the potential revenues. This is because it’s easier to do costing, then prediction of revenues. Also people like to be seen busy, “look how hard we’re working”, because people feel good when they’re busy on a daily basis. People have the tendency to focus on managing efficiency too much, but the impact of efficiency only really matters when effectiveness is in place. To give you an example; the goal is to have a relaxing, warm 2 week beach holiday within a certain budget. With focus on efficiency one could end up in north of Finland in the countryside and snow, but still be within budget and timeliness. As you can guess most people will not be very pleased with this holiday. The same goes for projects very often, as PWC showed in a research amongst top 500 CEO’s, 70% of the CEO’s don’t see measurable value coming from their large projects. Obviously it’s not the only reason that projects fail. The trick here really is to use the cause and effect thinking and give enough detail to the logic. Then it will become clear what the timely sequence of deliverables needs to be, and what the order of project activity needs to be, and how much effort should be invested in this.

Fact based learning and adjusting

As said before, create a clear and quantified goal from the start. Although this will not have the detail it will have in the future, it serves a clear purpose namely getting direction of energy and activities. However, as reality teaches, no plan goes according to plan so its extremely important to collect facts, information and data, use this in evaluating how things are going, and use it to adjust your goals and path towards your goal. I see too many people in Innovation and start-up situations who feel like they “will see where it get’s them” or “hold on to an original plan or path” even though facts are proving them wrong. This can be very costly in a financial sense, but also in a timely sense. Money is scarce, and wasting time might bring you from a leading position into a following position, so you would like to avoid both situations as much as possible.

Aligning short-term wins with sustainable value

Large companies always invest too little in innovative products and expect high returns too early; small companies often overinvest in products and underinvest in Marketing and sales. The first situation makes it tempting to take revenues, which indicates success. However if the product is not in the state it is supposed to be, an early client can create a big distraction and deviation from the set plan. Later on this might lead to additional cost and time spent on getting back on track or even worse, this never happens and makes the innovation or start-up a mediocre success. Too little focus on sales and marketing ignores the wishes of customers. This creates a lot of waste and also puts you behind in the market compared to potential competitors. So carefully balance these, and make sure you plan, know where you’re going, analyze, learn and adjust, hence make the right decision at the right time!

I hope you find this useful, and that it gives you some new things to consider when running a start-up, setting-up an innovation program. If you like to share your views, please add to this?

Join the conversation in our LinkedIn group!

 

Image credits: viZZZual.com