Welcome to the twenty-second of our Entrepreneurial Wednesdays series. In this series, I share my thoughts on lean entrepreneurship as I take my first steps in my journey. I will be sharing my lessons learned with you.
With this part of the Entrepreneurial Wednesdays series, we are diving into the final chapter of The Lean Startup methodology. We went through so much and while all of the elements we mentioned are crucial, the next chapter defines startups.
Do you lack innovation? Game-over!
It’s as it is. If you think you can be successful and keep up the sprint with your competitors without innovating, it’s all over for you even before you even started. How can you see if your team has got what it takes to be innovative enough? Usually, the time and the results will tell. But Eric Ries dug deep enough to uncover three attributes according to which you can analyze the potential of the team. The team should have:
- Unique, secure sources.
- Independent authority.
- Personal involvement in the outcome.
Don’t forget! This is just a structure, if you have all of these it’s great. But it shouldn’t reassure you of any success to come. While it’s good to have a good structure, it’s not everything. Let’s get through all of them briefly and see how important they are.
Unique and secure sources
Startups can grow only as fast. Without money, they just cease to exist at some point. The golden rule is: A big budget is both a blessing and a curse, just as small budget.
I know, this doesn’t tell you much. But it points out something worth noting. Startups are super sensitive to changes in the budget. Actually, in financials in general. It’s not normal for a startup to lose 10% of its money. And the fact remains that big budgets orchestrated more startup funerals in the dot-com era (especially in San Francisco) than anything else. Keep an eye on that one.
The ultimate unfair advantage of each and every startup is that they can move fast. Develop fast, change fast, adapt fast.
You have to make sure that the environment you are working with is ”pyramid management” free. That means that whenever you need to make a change, you don’t need to run to the department manager. Who will then run to his boss, who will make his way to the CEO? What a waste of time!
If your team leader/founder/manager can’t create an environment where you can respond to problems super fast, he’s doing a bad job, really. Especially, if he’s a manager in a startup.
Personal Involvement in the Outcome
I think this one might be the most important. There is a tradition in the startup industry to tie the efforts of the employees with the performance of the company. It’s called equity. While this is super efficient almost always, I feel it should be natural that the employees of a startup dedicate to it as much as possible.
Another used technique is bonuses. In established companies, this is something which is used all the time. In startups, if you do this, it’s necessary to connect the bonuses to the outcome of the innovation. Could be long-term or short-term. However, you feel comfortable with under concrete circumstances.
Let me finish this article with a very nice thought that was included in the book : ”Let’s leave financials aside. It was my name that was always on the table, I could lose more, or achieve more than anyone else.”
All of the three elements I mentioned are just the tip of an iceberg. Make sure to check out the next article on innovation. So much to cover! Take care until next time.