Every startup evolves – often unexpectedly. How do you manage this effectively?
How to transition from Free to Pay? How to take that thriving community and monetize it? How can you keep doors open to embrace all the potential but lock in what you need to move forward? And sometimes we just have an awesome business idea, something radically new. We don’t know how yet, but we feel it will work. In all these contexts, how to skillfully navigate this all the twists and turns so you can get to the best business? This article looks at one tool from design which can help improve your agility when you need to reconfigure your business.
It’s challenging to get to the ‘best business’
Transitioning your business or launching something radically new requires looking at different configurations of the business model and offering, and aligning them with emerging insights from validation rounds. This is fundamental stuff for startups – check out this lean startup process here, where Eric Ries captures a build/measure/learn approach to testing a Minimum Viable Product (MVP) and reconfiguring the idea until it is ready for launch. The point is to identify and test underlying hypotheses. Key to success is gracefully navigating these reconfigurations (pivots in startup jargon). If we are too slow, funding may run out or the competition will close in. If you ignore a key component then an idea may fail to reach its full potential or you will miss an underlying hypothesis. Simply put, you need a certain amount of agility and creativity to successfully go from one pivot to the next – and to get to that best business fast.
Agility and creativity are central to a graceful pivot.
Agility ensures you can leap quickly and flexibly from one configuration to the next. For e.g., if today’s testing shows that the B2B market is not big enough to make the business viable, you can quickly align your business to incorporate part of the consumer market tomorrow. Creativity helps you interpret and generate new solutions based on your insight – what the business will look like to appeal to this new consumer market. The more creative prowess, the stronger your resulting pivot can be.
Here’s the fun part. You can learn creativity and agility in your business domain.
By actively exploring alternative solutions you build your agility to respond to new insight. Simultaneously you learn to become creative with your business.
Your intuition will guide you to what creative solutions are best. At the beginning it’s only natural that this feels like a daunting task, even for seasoned designers. In radical innovation we have a hard time quickly jumping to the best configuration because we can’t rely on already proven business models or consumer insights. We have to feel our way to the best solution. Our intuition says we are onto something, and we will ‘know it when we see it’. That’s why we need to purposely create alternatives of the business model and offering, to make your intuition tangible. We explore extremes, because once we make it tangible we can shoot it down easily, and figure out how best to test it.
The trick – purposely create tangible alternatives.
The same goes for envisioning future versions of our business. For e.g., if we anticipate that we first have to build a thriving ‘free’ community, and then transition to a pay model – it helps to understand what this pay model could look like so as to be able to build into the free community key aspects like membership accounts and confidentiality terms. Sounds obvious but surprisingly few people I speak to actually go the distance and give shape to the 2nd, 3rd or 4th version of their business when caught up in the hustle of launching version 1. In a Working Lunch with a well funded big startup, they failed to consider the entirety of what it would mean to appeal to an end-consumer target group as a pivot from their B2B target group. Their brand was unappealing and functional, and in the haste to get to market they thought that the consumer brand piece of the puzzle would sort itself out as they launched. Having not considered this dimension in any version of their business, I imagine they will be slow to pivot.
In summary, transitioning to future versions of our business is less daunting when we have explored how different configurations would look and how we can test for them. creating tangible alternatives makes you flex your creative muscles specifically focused on the subject matter. This increases your agility to respond to results of validation testing. This makes your testing smarter and more focused. This makes your offering better.
- Align on the key criteria of your offering, do this with your team. What are the critical/unique aspects which have not yet been tested. For e.g., Pricing model, market share etc.
- Generate creative alternatives. Conceptually, and tangibly where possible, make versions of your business model and offering that are distinctly addressing your key criteria in a different way. Also consider future versions of your business. One tool for conceptually generating multiple business model canvases could be the Canvanizer. Start with ‘What if’ questions and purposely seek extremes. For e.g., switch your target group to see how a new pricing model/market share could be improved.
- Test the alternatives against each other. The goal is learning and generating new insights, not necessarily to reach the final form of your offering. Again, follow the ‘learn, build, measure’ technique. For e.g., comparing two sets of pricing models in informal interviews with different target groups.
- Capture your insight. Clearly stating what you have learned is something few people do, but essential to making an effective pivot. Once you’ve stated it clearly, project this onto the versions you have created.
- Gracefully pivot as needed. This may mean quickly terminating options that don’t work (which is easier now because you have envisioned other configurations!) and reprioritize easily to another configuration that aligns with emerging insight.
P.s. In design we are taught to never fall in love with our first idea. We have to push until we reach an essence. In radical innovation it is the same. Only by winning the lottery will you get the idea right the first time. Think of Edison and the commercial light bulb – 3000 versions. Dyson and the bagless vacuum – 1000 prototypes. Similarly we must create versions of our business – what is it for your launching customer, for early adopters tomorrow, for the early majority in a year from now?
The real power of this tool is how it scales. Big companies like Alphabet can build roadmaps from these envisioned future for how their businesses have synergy with each other and help each other grow. Imagine, you can plot out complimentary services, or key transitions in technology and consumer beliefs so that you build agility and creativity in a given domain. For e.g., radical innovations like self-driving cars and the Uber platform have an inherent synergy when you happen to have deep domain knowledge in both (or happen to own both as does Alphabet). I think a great job would be envisioning futures based on the portfolio of a company like Google Ventures / GV, and helping them make decisions on which new companies to bring into the fold to maximize business potential.