We’ve been fortunate enough to work with several startups over the last decade, across several different industries. Some of our clients have experienced a wide range of successes, while others have not met with the same outcome. Quite often new clients come to us and ask, “What makes a successful startup?”, so, we’d thought we’d summarize some of the characteristics and trends we observed for you.
Understand Your Market and Strategy
Most startups have a singular, narrow focus on their own product, technology, or service and don’t make enough effort to evaluate their position relative to the market or competition. We’ve found that teams that approach their market as a whole, using strategic assessment tools (like Michael Porter’s Five Forces and “SWOT” analysis), often have a better understanding of their situation and can successfully seize on opportunities that may not have been readily apparent otherwise.
Identify the Right Customer for Your Business
Having a team clarify their market and strategy often leads to a better focus on which customers the business should target. Not only do firms need to understand who are these customers, but they also should know what they are willing to do for them. Identifying the right customer for the firm is a powerful exercise in helping define a firm’s brand. A customer who demands a level of service or a type of product you aren’t willing or capable of delivering isn’t the right customer for you.
Know Your Customer’s Definition of Value
Understanding your customer, identifying what’s important to them, and defining what features and benefits matter to them is often critical to a firm’s success. The only way to not be surprised by what’s important to your customer is to talk to them (early, often and lots of them). Too often, clients miss opportunities to enhance their business by only having a myopic focus on their own product, service, or technology.
Design a Great Customer Experience
Create a customer experience that builds value for you and the customer. A great customer journey takes effort by a firm to translate their understanding of customers’ beliefs in value into an experience they feel good about when they use your product/service. Teams that are able to align their customer acquisition strategy to product/service delivery help build the right kind of customer relationships that are necessary to drive growth and demonstrate the potential for growth to investors.
Excellence is Ongoing
Market dynamics are changing faster than ever, which means firms have to combine experimentation with educated guesses and constant iteration. Teams need to constantly anticipate, create, innovate, and iterate on their initiatives in order to succeed. While innovation can happen anywhere, and everything can be tried, tested, and changed, many firms are recognizing they need to prioritize their efforts where co-creation innovation techniques with customers are used for strategic areas of differentiation, and research in the lab is used for fine tuning.
Startups work in a world moving at an ever-increasing speed and nothing should be more important to the team than delivering on the company’s main idea. In most instances, a firm may not have the time, resources, or expertise to accomplish the activities we’ve described. If you decide to use outside help, work with principals of the firm. Hiring a big-name firm means that most likely you’ll end up working with junior staff that you’ll need to mentor or train. Small, expert firms where you work with the principals can be much more effective in helping you achieve your goals.
Getting an initial product-market fit is just not enough anymore. Firms have to continuously monitor the market, engage with their clients, and keep tweaking their formula.