Startup Strategy: The Old, The New, and The Ugly
For more than 30 years, startup founders fiercely believed that building a 5-year plan composed of complexed financial models and long term operating plans were the way to go when thinking about stating a new business.
More than that, it was believed that product management and waterfall engineering, together, were the tools to go from concept to product development, to testing and launching of products and therefore launching of startups.
Nevertheless, with the recent boom of incubators and technology, it became clear to startup developers, founders and investors, that the old strategy was simply wrong. Why? Because no plan survives first contact with customers.
The old model simply assumed that startups knew customer problems without ever implementing processes to control for customer risk. And startups failed, not due to failure to launch a product, but due to the lack of customers.
Nowadays we know better, as it has been widely accepted by the entrepreneurial community that instead of financial models and operating plans, customer development and agile development, together, are the foundation of startup strategy.
But what does the new process of customer development and agile development mean, in practice? It means that the founders must get out of the building and search for the business model. They need planning, not a plan, before acting.
Agile development comes later on, in the execution part of the customer development process. Agile development means that instead of adopting cumbersome engineering processes that develop and test products thoroughly before launching, engineers take a simpler and faster iterative approach to product development. They launch beta versions of products that haven't been tested through all possibilities and then acquire data from customers. They ask themselves and their customers: What needs are my product satisfying? What has worked well? What can be better? And iteratively, the launch new products shaped by customer needs.
In this manner, startups are more prone to successfully satisfy customer needs and then find the ultimate business model to be pursued. But don't be fouled, this takes a lot of work and may take a long time. The key is that this process of customer and agile development is the right strategy. Follow it when creating your new business and you won't be wasting your time. Ultimately, you are bound to find the right business model that works for you and your customers!
