A process for growing a new venture

The process for growing a new venture is not something I could have written off the top of my head prior to now. It has emerged from writing about pitfalls in planning a new venture over the past two weeks. I had to trust my process for exploring one pitfall a day to get inspired about creative strategies to avoid that pitfall. Once that series of blog posts was completed, I was capable of revisiting the issue from the opposite perspective of steps toward creating a success. I realized a better order to put these strategies in that follows a logical progression from a new idea to a venture operating one year out. I filled in more details where the strategies now seemed vague on the previous series of post. Here's the sequence of explorations to follow that has evolved by writing and refining:

What's our idea?

When we're planning a new venture, we need a new idea that will sell. A good place to begin includes:

• Starting with a user's pain, problematic situation or frustrated attempts to make progress. 
• Making a difference in the lives of other people who don't know they need an invention. 
• Serving users' abilities to get more out of what they are already buying. 
• Focusing on what good it does for those who do the buying.

When we get off to a bad start, we can fall for doing the wrong thing correctly.

What difference does it make?

Once we have an idea that will sell, we need to determine that's it's a good enough idea to get attention and to get favored over other ideas. When we consider the difference our idea makes, we can explore:

• Making a big enough difference to get noticed and to stand out from the crowd 
• Making a useful difference that will get valued and talked about by lots of varied users 
• Making an accessible difference that others can take advantage of without overcoming huge obstacles 
• Making an immediate difference that does not require lots of patience and trust to experience a payoff quickly 
• Making a long term difference that rewards deeper commitments and investments for buying into the difference 
• Making a range of differences to satisfy a variety of situations, expectations or limitations 
• Making predictable differences so the invention seems trustworthy, reliable and consistent to users

If we skip this step, we can inadvertently end up making the same difference as other ventures

What about copycat competitors?

With an idea that makes a big difference, we need to consider the possibility that our idea will get copied by other ventures. We can defy imitators by:

• Serving lots of different use cases that call for a variety of responses, functionalities and custom services. 
• Seeing that the idea works within an entire range of variations in traffic loads, weather, or other "environmental turbulence". 
• Accommodating lots of different, open-source combinations, mash-ups and pairings with our initial idea  
• Designing a "total solution" that appears we have "thought of everything" and "considered every angle".

If our venture's product/service mix remains too simplified, we may be assuming we have no imitators at our own peril.

How will it get better over time?

With so many issues to resolve for a successful venture, it can become an obsession that loses sight of the long range evolution of the enterprise. We can launch the venture with our sights on a continual stream of sustaining innovations by:

• Brainstorming a list of all possible improvements and prioritize the items to identify the next two upgrades to work on next. 
• Working enough iterations with the possible enhancements to identify difficult tradeoffs or forks in the development path where customers can provide valuable input. 
• Crowdsourcing suggestions for future upgrades and let the "most often submitted" and/or the "highest ranked submittals" establish which get implemented. 
• Creating part or full time positions to rapidly prototype new features, functionality and use cases to extend the life of the project.

If we get too caught up in refining everything for the launch of the start-up, we will fall for drop kicking our innovation.

Where will the customers come from?

When we're considering where the customers will come from, it's better to not steal them from incumbents who may retaliate. We can create new customers off the radar of sleeping giants by:

• Inventing new ideas to serve the non-consumers who can say the new offer is "better than nothing" which what they're getting so far. 
• Coming up with something simpler or easier to use for those consumers who feel over-served by too many features, too much sophistication and increasingly complex functionality in the incumbents' product/service mix. 
• Moving down market to offer new solutions to the customers current problems which are less expensive to purchase, less costly to maintain or cheaper to operate.  
• Remixing the strategy canvas so the new idea is playing by different rules and changing the quality standards which can be met as "good enough for starters".

If our new venture is so high profile that it steals customers away from rivals, we may suffer the consequences of provoking the incumbents to retaliate

How will adjustments get made in the original plan?
Once we've zeroed in on the idea, the difference it makes, the defeat of imitators and a safe source of customers, we commit to a trajectory. It may be a long shot, but we won't know until we "run it up the flag pole and see if anyone salutes it". Our chances of success are greatly improved if we continue to make midcourse corrections. We can learn what adjustments to make by:

• Listening to those who are close to the customers as if they are the fingertips that can feel what's going on outside the enterprise. 
• Asking oneself and others "what's missing?", "what's not working?" and "what's in need for more refinement?" 
• Learning from what happens to get better or different results by changing methods, processes and strategies. 
• Theorize the underlying reasons for surprising successes, approval ratings and growth.

If we stick to our guns in order to never veer off course, we are likely to end up too smart to succeed.

How will surges of growth get funded?
When a venture takes off, two different aspects get bigger in a hurry: revenue and expenses. If expenses get bigger faster, the venture will run short on cash to fund the next expansion of capacity. We can keep revenue and expenses growing together by:

• Limiting the funding of growth to retained earnings instead of debt. 
• Slowing the initial growth rate while building the infrastructure for exponential growth later. 
• Withholding a cash reserve for unforeseen expenditures in spite of it slowing expansion. 
• Maintaining exclusive or close knit ownership to control decisions about expansion and expenses.

 If we grow too fast or too soon, we will fall for underestimating the cost of growth.

How will prices get set?

When sales exceed our expectations, we begin to wonder how greedy we can get and what price the market will bear. We can find that optimum price for each paying client by:

• Developing a range of alternatives that offer different amounts of value at different prices so the customer can choose for themselves. 
• Helping the customer compare our prices to competitors with opposing considerations like "getting what you pay for" vs. "not getting more when you pay more". 
• Explaining the amount of work and expense that goes into the offering which deserves a fair price in return -- that customers can decide for themselves. 
• Factoring in the customers' ability to pay with a sliding scale of prices adjusted for different economic conditions.

If we try to get the price right by making stabs at it on our own, we apt to fall for undercharging the customer.

How will it survive the end of the honeymoon phase?
When the successful sales leads to press coverage and buzz in the marketplace, it's time to build a loyal following that will endure "after the thrill is gone" for what was the "next new thing". The long term commitment from customers can be cultivated by:

• Consciously dismissing the hype as seductive, misleading and distracting from appealing to the pragmatic early majority who want proof of specific features and benefits.
•  Cultivating relationships with early adopters as if they can provide feedback to develop the next upgrades and forewarn you of potential negative reactions to the current version.
•  Putting the ball back in the laps of the fans who are final arbiters of why they like it, want it and see uses for it - whenever we get asked to extoll the virtues of our "next new thing",
•  Giving a heads up to reporters about the long term development plan that could evolve into other stories for them to work with us on in the future.

If the bubble of enthusiasm seduces us into false confidence about the long term success of our venture, we're likely to fall for flaming out before catching fire.

How will the setbacks get handled?

Once sales begin to lag and instill fear of success slipping away, the enterprise needs to be better managed than ever. The team can endure the setbacks better when we:

• Regard employees as internal customers who will serve the real customers in turn -- as well as they are served, respected, listened to and supported. 
• Consider employees to be equally entrepreneurial, using the employment experience to advance their careers and refine their abilities to create value. 
• Show employees the respect of trusting their own judgement in defining their job description and appraising their performance with the help of their peers and internal customers. 
• Creating an internal marketplace for new ideas, process revisions, strategy refinements, and cost savings - where the best get rewarded and each gets acknowledged.

 If we allow our fears to dictate our reactions to the setbacks, we will turn up the heat and create jobs from hell for every member of our team.