Something is wrong. Very wrong.
Either conventional business wisdom based on years of research and experience is wrong or start-up funding is wrong (and massively overvaluing the ever popular unicorn start-ups).
Let me explain…
Shasta Ventures looked back at the Series A funding of 25 start-ups that are now worth a billion dollars each. This includes digital darlings such as Uber, DropBox, Airbnb, and WhatsApp.
Strikingly, the attributes of these start-ups are in contrast to conventional business wisdom and behaviour.
They had easy-to-dismiss ideas. How often does a project or initiative get shot down in your business for being too easy to dismiss?
They went after competitive markets. Ever been told that something won’t succeed because a competitor is already doing it? Competition proves that there is a market.
They sought to reinvent consumer behaviour by creating a superior customer experience. I see too many businesses aping existing consumer behaviour with a poor customer experience.
They were built by untested founders not by an experienced board or management team. Sure some “grey hair” experience arrived later, but the critical point is that it started with entrepreneurs with little on their CV. Time to start rethinking top-down approaches to corporate strategy.
They didn’t have a monetization model (yet). Perhaps its a consequence of the credit crunch but there is a real risk aversion to making investment decisions without thorough number crunching of IRR, ROI and NPVs. More courage is needed in unprovable models.
Time will tell whether conventional wisdom or start-up funding is right.
For Executives seeking to copy the success of these billion dollar digital start-ups its time to really shake things up.
- Stop dismissing ideas that are easy to knock back. Embrace simplicity.
- Don’t avoid competition. Chase it down and beat it.
- Invest in creating superior experiences that transcend current best practice and market trends.
- Listen to your teams. Innovate from the bottom up.
- Don’t get hooked on short-term ROI. Play for the long-term.
These principles may actually be the real heart of Digital Transformation.