A Startup is not a smaller version of a large company
Innovators are “easy” customers for a technology company since they focus on the technology itself. The real focus for a startup are the Early Adopters.
Only at this point the entrepreneur will look at how to make his business work. It’s the time of Business Modeling. Again a time of trial-and-error to validate hundreds of assumptions about how the business works, to make it work for the Early Adopters!
But what happens after the Early Adopters? The Moore Chasm is there! The next group of customers are the Early Majority. Mainstream is coming in! They focus on reliability. They cannot afford to just try the innovation. They need to be sure that that particular innovation will not turn them down. It’s not just about the product any more, they consider what comes attached with it. Ancillary services, customer service, maintenance and so on. Their risk profile is very low. They have to be efficient and avoid risk taking.
With Mainstream customers, startups have to put in practice systems, processes and procedures to make sure customers get what they need. They need to start thinking like a larger company! For this particular product they are not in research mode any more. They must make sure they deliver consistently and efficiently. They have to behave like a large company if they want to be able to serve mainstream customers, both because of these customers’ needs, and because they are many. If startups want to maintain their ability to innovate, they must wear both hats and it’s not an easy task.
- Startups Focus on Trial-and-Error search for Optimal Solutions
- Large Companies Focus on Efficiency and Risk Reduction
Companies have to learn from startups how to innovate, that is, search for the Product/Market Fit of their innovations. A linear, planned approach like the ones companies are used to, becomes useless. A planned approach is like when startups pretend to plan their business before they’ve reached at least a Product/Market Fit. Statups, instead, are good at searching this fit and large companies can learn from them.
A number of approaches are coming out to help companies in the task of innovating like startups, the most important being Pretotyping and Effectuation.
- Pretotyping for companies says “Invent like a Startup, Invest like a Grownup” and focuses on an extremely efficent way of testing innovations against the market.
- Effectuation focuses on the overall entrepreneurial process identifying and implementing the most important entrepreneurial habits, all related to the ability of entrepreneurs to make things happen (effectuation).