How to do business with startup style

How to do business with startup style

How to do business with startup style. The way to win the business competition is that we have to learn faster than others.

Now, I will discuss the book The Lean Startup by Eric Ries. This book explores how effective startup organizations can deliver extraordinary results.

Many startups fail, but many of these failures can actually be anticipated in advance. In his book, Eric defines a startup not just as a new company, but as an organization that has the responsibility to create something new in very uncertain conditions. This organization can be a start-up company or the Board of Directors of a Fortune 500 company.

The common thread of both is having a mission to be able to break through uncertain conditions to find a path to success. Instead of spending time creating complex business strategies, companies are forced to adapt to consumers before it's too late.

How to do business with startup style, You Can Try

I've summarized them into three highlights from the book The Lean Startup by Eric Ries:

First, don't focus on the business plan

The conventional way of working is usually that every founder has to make a very complex business plan up to a five-year plan. All plans are usually only in the form of presentations and have not been tested directly to consumers.

When the founder just made money, he started building a team and building a product. When you start selling your first product, that's when the product comes into direct contact with consumers. That is the reason why many startups fail.

Eric explained, in making a product, a company must involve consumers and ask for input when developing its product, so that the product will continue to be improved until the launch time begins.

Successful startups are able to adapt from failure to failure and grow with consumers.

An interesting example is that of Nick Swinmurn, founder of Zappos, the world's largest online shoe store. Before online shopping became a lifestyle, Nick experimented whether consumers wanted to shop for shoes online or not.

He went to a shoe store and asked permission to take a photo of his product. After that, Nick posted a photo of his shoes and saw if consumers were interested or not. If someone wants to buy, Nick then goes to the store to buy it and then sends the shoes to the customer.

With this method, Nick doesn't have to invest in shoe stock, inventory and just start selling. On the other hand, you can sell directly with minimal capital and limited resources.

There are three main principles in the lean startup method:

First, use a hypothesis. Instead of trying to come up with the perfect business plan, entrepreneurs should focus on some untested hypotheses. From there we can know what added value we can provide to consumers.

How to do business with startup style

Second, input from consumers. In developing products, we must involve consumers from the start. The focus is on adaptability and speed. Use consumer feedback to improve the products we sell.

Third, agile development. This is a system commonly used by the software industry. The process begins with the manufacture of MVP or Minimum Viable Products, which means the manufacture of a product that meets the basic needs of customers who are not yet perfect but still have a high use value.

So what are the benefits? The benefit is that the company does not take long to find out whether our products are liked by customers or not.

Second, Pivot or continue

This is a common dilemma in business. Do you continue with an old idea or change it with a new one?

This is one of the advantages of the lean startup method, we don't need to produce a perfect product, but we already know whether consumers like it or not. So, we don't need to invest a lot in the beginning without knowing whether our idea can work or not.

When we finally decide to change an idea, it doesn't mean we have to start all over again. We can use what we have learned so far as a basis for us to create new strategies. Deciding when to pivot is very important in business.

It takes courage to admit that the idea didn't work and courage to move in a new direction to produce long-term success.

The main focus of startups that use the lean startup method is to learn, learn as quickly as possible what consumers like, and what things can make the business survive in the long term.

Eric explains there are several reasons why business founders delay pivots:

First, the metrics used are not precise. Business performance has many ways to measure its level of success. However, businesses should focus on the metrics that matter most.

Second, the hypothesis is not clear. When the hypothesis we make is not clear, it will be very difficult to make a sustainable business.

Third, afraid to pivot. Admitting mistakes can be a dilemma for team members within the company. Moreover, with the pivot there is also no guarantee of a better future. However, if you don't pivot, the business will not survive in the long run.

Third, Adaptation and Innovation

Adaptation does not mean compromise on quality. Usually, many founders take shortcuts. They sacrifice quality, which is important fast. This is the wrong approach.

When we sacrifice quality, we don't get proper feedback. Founders must have the right adaptation mindset, small mistakes in the beginning for early stage customers are still tolerable.

But in the end the products we sell will reach the end consumers and will not tolerate any mistakes.

In adapting, we can use the 5 Why method to find out the root of the problem. In every why question we ask, we will explore what the problem is behind it. Companies' ability to adapt will allow them to innovate.

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There is an assumption that if the company is big, it will be difficult to innovate. This is a myth. It is true, if the company reaches a certain point, innovation feels more difficult, because the business risk is getting bigger.

Eric suggested the sandbox innovation method, which means only innovating in one area so that the impact does not spread to other parts, but all team members are given the freedom to innovate.

How to do business with startup style

It works like this. Each team is given the freedom to experiment but can only be in a predetermined section. The team will work on the project from start to finish within the allotted time.

This experiment will engage a limited number of consumers and use clear, measurable metrics. Then, each team must monitor its progress and finish the project immediately if something goes wrong. In this way, large companies can minimize risk while gaining new innovations.

Closing

That's my writing about How to do business with startup style, Being the fastest doesn't mean being the best. However, with the continuous improvement method, it will produce a sustainable business.

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