Many new ventures fall into the same traps
During the more than 20 years I have been involved in high technology — first in academia, then as a manager and entrepreneur creating new growth businesses, and most recently as an advisor to such ventures — I have realized that there is a group of critical steps that commonly get inadequate attention during the process of building a new venture.
Value-creating steps get too little attention
These value-creating steps are often neglected:
- aligning the company’s technology with a real customer need;
- crafting a detailed product definition that will meet the customer need better than alternative approaches;
- creating a sustainable competitive advantage; and then
- executing in parallel product development and market development activities that result in growing revenues and profits.
Key business ingredients get left out
One of the following ingredients is often missing from the business concept.
- There must be a clearly defined, current or future customer need; it must be truly met by the company’s new product; and the need must become sufficiently common and sufficiently compelling that the product will sell in substantial volume at prices that generate profits.
- The product must be able to meet the need better, or more cost effectively, than other solutions.
- There must be a source of sustainable competitive advantage in product design, distribution channel, or some other aspect of the business model — or early success can turn to failure as large, well funded competitors enter the market.
- It must be feasible for the company to develop the product (with the correct specifications) with the money available and in a reasonable timeframe.
Time and money are often wasted
While lip service is generally paid to these aspects of forming a new business, there remain many startups, and advanced development groups in large organizations, that execute them poorly. As a result, all too often a growth initiative reaches the point where millions of dollars have been spent and a product or prototype has been developed, only to discover that the number of customers willing to buy the product, as created and priced, is insufficient for the initiative to reach its financial objectives. This is wasteful of capital and of an entrepreneur’s time and energy, and in many cases represents the end of the venture.
We saw a need
I have come to believe that many of these disappointing and wasteful outcomes could have been avoided, and that the techniques for avoiding them can be systematized, and applied in a variety of situations. I founded TangibleFuture, Inc. in part to take on these tasks, and to be a resource for entrepreneurs and intrapreneurs building new businesses.
Our goal is to increase the likelihood of success for the growth initiatives of the companies with which we work.
Richard G. Caro
Founder, TangibleFuture, Inc.