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Last week I had the opportunity to hear Saras Sarasvathy of UVA talk about her research on Effecutations. Generally, the idea is that people traditionally think of entrepreneurship as writing a business plan, building a financial model, raising money against that plan, and then executing the plan. Now, we know that’s not the case and books like the The Four Steps to the Epiphany and The Lean Startup advocate for a customer discovery process where feedback from potential customers drives the process from day one, and everything is an iterative process, not a big structured plan.

In a similar manner, Professor Sarasvathy lays out a process as follows:

• Who we are
  What we know
  Whom we know
  (Bird in hand – what can we use right now that we already have)
• What can we do?
  (Affordable loss – set an amount we’re willing to risk)
• Interact with other people
  (Talk to anyone that will listen about the idea)
• Effectual stakeholder commitments
  (Get a commitment from someone before doing anything e.g. get someone who will pay X if you provide a solution for Y)
• Repeat the process

The next time an entrepreneur says they’ve built a big business plan and need money to execute against it, share the effecutations process and explain that the most successful entrepreneurs start with a general direction and iterate based on feedback from potential stakeholders.

What else? What are some more thoughts on entrepreneurship as using your available resources and iterating on feedback?

Recently I had the chance to hear Verne Harnish give a talk and one of his messages was that businesses need to focus on making things easier. Too often, companies start doing something one way and just keep adding complexity to it. One exercise is to sit down with the executive team and ask the following questions:

• How can we make it easier to buy from us?
• How can we make it easier to use our product?
• How can we make it easier to give us feedback?
• How can we make it easier to get support from us?
• How can we make it easier for our team members to do their job?

A simple starting point with these questions is the “five whys” — ask the question “why” five times, just like a three-year old does and see what you uncover. There’s always room for improvement and asking the question “how can we make this easier” is a good start.

What else? What are some other areas that companies need to make easier?

As a technical, product-focused entrepreneur, I find more comfort looking at quantitive metrics and data as part of growing a business. Of course, that’s not the full story. There’s a wealth of qualitative information that needs to be assessed such that decisions are made with both quantitative and qualitative information.

Here are a few thoughts on balancing quantitative and qualitative information:

• Startup stages, like idea and seed, have such small sample sizes that quantitative data is often minimal (still important to track)
• Besides tracking the operational metrics, look for ways to answer the “so what” questions (meaning, often times you have to dig deeper and figure out underlying trends)
• Strong internal meeting rhythms ensures there’s a time and place for continuous qualitative feedback
• Leadership tools like the weekly team update incorporate both quantitative and qualitative information

Building a successful business requires both quantitative and qualitative information. Ensure there’s a healthy balance with the two and build systems to track the data and the human feedback.

What else? What are some more thoughts on balancing quantitative and qualitative information?

One of the challenges I’ve seen is when an entrepreneur gets positive initial feedback from their target market on a new idea, builds the product with customer feedback, and then realizes the initial target is not actually the right market to go after. Thankfully, this realization almost always arises in the race to 10 unaffiliated customers as paying customers provide the best feedback.

Here are a few challenges that might indicate a poor initial target market:

• Sales cycles, even when it’s a perfect fit prospect, are substantially longer than expected
• Customer budget isn’t commensurate with the complexity of integration (e.g. the customer can only pay $250/month but it will cost $10,000 just to set things up)
• Product usage is sparse, even after paying for the product (likely indicates a nice-to-have for that market)
• Even with regular product usage, customer feedback and feature requests are limited, indicating lack of engagement and value

Once it’s clear that the initial target market isn’t right, it’s time to either change markets (typically go up-market, which has its own set of challenges) or to change product directions (sometimes a pivot and sometimes a heavy iteration). They key is to move fast and work to find product/market fit followed by a scalable customer acquisition process as quickly as possible.

What else? What are some more challenges from a poor initial target market?

One of the most important early elements of a startup is the imprint of the founder DNA on the business. As the company grows, and more team members join, the original DNA continues to permeate all aspects of the business.

Here are some areas of the founder DNA in a company:

• Mission, vision, and purpose
• Core values
• Corporate culture
• Organizational style e.g. meeting rhythm, weekly metrics, etc.
• Product or sales focused organization

Of course, these aspects evolve over time but elements of the initial founder DNA stay on forever. Founders would do well to be intentional about the type of organization they want to create and nurture it over time.

What else? What are some more areas of founder DNA in a company?