Six S.I.M.P.L.E. Frameworks Every Startup Founder Should Know

Six S.I.M.P.L.E. Frameworks Every Startup Founder Should Know

(Originally published on the author’s LinkedIn page. Bhat Dittakavi is a Serial Entrepreneur, Startup Mentor, Founder and CEO of Variance.AI.)

During my experience in interacting with startup founders at TIE, T-HUB, CIE@IIITH, Symbiosis, KLU and elsewhere in India, I could see brimming passion as a common denominator across the founders. Founders are curious, risk-taking and aspirational in their pursuit of entrepreneurship.

Startup India is Promising

I sat through investor pitches by founders with prior experience from the corporate world. I judged the pitches of engineers, engineering students and MBA students having revenue Startups. I reviewed some exciting idea pitches by high school students. For a country that has more than 66% of its population aged below 32, this is a shot in the arm. India has become a breeding ground of tomorrow’s job providers. There are only a few Unicorns in India. It is a matter of time before some of the current Startups turn to a blessing of Unicorns.

The Proof is in the Revenues

It is also a trend that a set of founders find funding as the magic pill that solves all of their problems. They think a term sheet is a validation of their business idea. The true validation happens when these engineer-turned-founders understand what job customer wants done and make a product that customer hires to get that job done. Clayton Christensen all the way. Revenues are the true validation of any idea.

Indian Startup Hype Cycle

Millions invested in eCommerce Startups during the past few years blinded some founders that investments are the panacea. This is the reason why Startup wave in India is going through its own hype cycle. It is nearing the trough of disillusionment now. The good news is that it means an upward slope of enlightenment will shortly follow.

Passionately Inquisitive

Founders are known to ask questions and seek inputs. Somewhere down their journey as seekers, startup founders tell themselves “enough of seeking, we made good progress and let us not waste our time”. That could be a dangerous precedence as they get busy tackling low-hanging challenges, worse if there are irrelevant ones, while putting off chasing the challenges that matter. Good things happen in life when you become a constant seeker. There are mentors out there willing to help you. Are you seeking?

Six S.I.M.P.L.E. Frameworks

I have put together a S.I.M.P.L.E. framework that helps startup founders succeed. These instruments help founders ask the right questions that really matter.

  1. Speed
  2. Innovation
  3. Management
  4. Pivot
  5. Leadership
  6. Economics

1) Speed

Speed = Being ahead in the race within and in the race without 

Whether your startup succeeds or not depends on its speed of execution. How fast does it get off the ground? How fast and frequently does it roll out the product for customer reviews? How fast does it implement the feedback from customers? How fast does it learn from its mistakes? A design or utility has to be patented fast before others do. Speed gives a startup the luxury of failing fast yet outrun its competition. Speed helps a Startup win the race.

Stealth mode slows a startup as it hardly gets any feedback from the people that matter most for its success. One may steal your idea, but not your passion and belief. Key stakeholders of a startup are all outside the building. Get out. Spread the word. Listen. Get your idea ripped apart. Get the product ripped apart. Come back to the building. Revise the product faster and get out again. Repeat. Speed lies between a good idea and finding scalable business model. Speed lies between scalable model and scaling.

Enemies of speed: Perfection, Stealth mode, Procrastination

2) Innovation

Innovation = Desirability + Feasibility + Viability

Innovation is a by-product of an urge to solve a compelling problem for a customer. The quality of innovation is directly proportional to the degree of pain induced by the problem. Even a small incremental change in existing solution, product or service can be labeled innovation. As long as the increment adds new value and customer pays for it, it can be called innovation. If a customer pays for it but doesn’t use it, such innovation can’t sustain.

Just thinking about something new leads to just an idea. Doing something about it leads to innovation. Failure is an integral part of innovation. One shall embrace the failure.

Innovation is at the intersection of desirability, feasibility and viability sets. It must be desirable by the customer, feasible by technology and viable by the market.

Image Source: lochbridge.com

Desirability

Customers are very creative. Ideas of their own excite them. They desire to see their ideas implemented. They continuously push the envelope of what is desirable. They are not bothered about the feasibility. Not everything customer wants is technically feasible. Not everything a customer wants is market viable.

Feasibility

Research oriented technology institutions are good at pushing the technical feasibility higher. They take problems that are research-worthy and not necessarily customer-worthy mostly due to the timing. They are indifferent to customer desirability. Not everything technically feasible is desirable by the customers.

Viability

Market size, competitors, price points, customer segments, geographies and product characteristics determine the viability of an innovation. A solution desirable by customer and feasible by technology is not enough. Market viability is the key.

Enemies of innovation: Solving the problem that doesn’t matter to customer.

3) Management

Management = Getting extraordinary things done by ordinary people 

Wealthiest American of all times, John Rockefeller, once said “Good management consists in showing average people how to do the work of superior people”. First, hire the best team you can. Attitude takes precedence over aptitude while hiring. Then it all boils down to how you get work done by having them wanting to do it.

There are many definitions for management. This is the one I like the most. Management is the art of getting things done by people. Let us break this further down.

Art:

Art is defined as the application of human creative skills and imagination. Art expresses important ideas and or feelings. Art makes human to human connect. Good management is about making that human connect with people. Like art, management is about having others see what you see, your vision.

Things:

Things include all things that are tangible and intangible. Tangibles include both innovation and marketing that lead to business revenues and profits. Intangibles include values and culture that lead to trust and brand. Getting these tangibles and intangibles done by people require us to understand people first.

People:

People are invaluable assets. They are true competitive advantage of any business. People are emotional. Appreciation and recognition are two important enablers that bring the best out of people. Management is about setting the objectives and getting them achieved by people. Encourage, stimulate and make them feel part of your vision and mission.

Enemies of management: Touching the task of others, My way or highway.

4) Pivot

Pivot = Change in strategy without change in Vision (Eric Ries)

Pivot = Change to a new direction based on feedback from marketplace.

Let me define a startup before getting to pivot. Steve Blank defines Startup as “an organization formed to search for a repeatable and scalable business model under uncertainty.” I concur. Profitable, repeatable and scalable business model is the key.

Pivot means change in business model based on new learnings. It is a structured course correction designed to test a new assumption about the product, strategy, and engine of growth. Pivoting helps Startup search a scalable model. Pivoting has to be the second nature of startup entrepreneurs.

 

Image Source: SteveBlank.com

 

There are many kinds of pivots. As per Eric Ries, a pivot can be of type zoom in (small set of features), zoom out (a large set of features), customer segment, customer need, platform, business architecture, value capture, engine of growth, channel and technology.

Enemies of pivot: Big bang development, Betting on sunk cost.

5) Leadership

Leadership = Team gets wins + Leader gets failures

Leadership is about doing the right things, leaders show the path and walk the talk. As a leader, you lead by example. As a leader, if you can’t stand critical feedback, your team member can’t stand it either. When you lead by example, you make it easy for others to follow you. This is how you turn today’s followers to tomorrow’s leaders. Leadership empowers others to do things at their full potential. A good leader listens more and observes more.

As a leader, you get the cues from what’s happening around you. Leaders become the change they wish to see in the world.

Enemies of leadership: Indecision, Taking credit for wins and attributing others for failures.

6) Economics

Value Captured > Total Costs

Customer LTV > CAC (LTV: Life Time Value, CAC: Customer Acquisition Cost)

Having just an idea doesn’t entitle one to be an entrepreneur. Ideas are dime a dozen. Take the top 1000 funded ideas of 2016 and you can pick an idea to emulate and customize for your market. Being technologist isn’t enough to be called an entrepreneur. Applying a technology to an idea without gauging the market is like shooting in the dark. Being a marketer isn’t enough to be called entrepreneur, though it is a critical piece. An entrepreneur is the one who understands unit economics and ecosystem economics.

There are idea providers, technology providers, capital providers and even customer providers. None can provide the entrepreneur with economics. An entrepreneur must get his economics right to deserve the title. A business model describes how a startup creates, delivers and captures value. Value capture is as important as value creation. Value capture is not complete unless cash hits your bank. If you are in the business of serve first and collect later, pivot now. Revenues are no good if you can’t collect the money.

There is a reason why 8 out of top 10 billionaires from India are banias, the trading caste that understands the unit economics the best.

Enemies of economics: Free Offerings, Not having economies of scale