Four elements are key for start-up success
A magmatic start-up consists of four elements:
- Innovation: The start-up develops valuable unique selling points (USP).
- Market: A large market allows a scalable business model.
- Time: Short development cycles for optimization speed and time-to-market.
- Team: Entrepreneurial, innovative, flexible and brave. Never thrown off course in the event of setbacks.
The start-up compass and the lean start-up modell
Seed period
In the seed phase, the start-up team is looking for a sustainable business model based on innovation. Time plays a decisive role in this. The young company must develop an innovative and at the same time easiest possible prototype (minimum viable product) as quickly as possible, collect feedback from (at least potential) customers, integrate this feedback into product development and contact the customer again with the new result until it is ready for marketing. The market must be ready for rapid scaling of the product.
Short development cycles
This lean approach for start-ups is not based on a rigid business plan that has to be implemented unchanged for years, but on a flexible, i.e. agile model. Everything should always be questionable and adapted accordingly. All planning basics - from product characteristics and target groups to the sales model - are hypotheses. It is the task of the founders to validate or falsify these hypotheses. Only after sustainable sales are achieved does the startup leave its "garage". The big advantage of the Lean Startup method: Errors are detected as early as possible. Founders can quickly integrate this knowledge into product and process optimization. Financing will be much cheaper, as only as much resources as necessary need to be invested in the development of the business model. This significantly increases the startup's competitiveness.
Traditional business plan
According to the traditional way of thinking, however, start-ups must first create an all-encompassing business plan. A comprehensive and static document that typically forecasts sales, costs and profit for the next five years in a financial plan in addition to a market analysis and implementation plan. Such a business plan - as Prof. Steve Blank analyses in the "Handbook for Start-ups" - remains an academic exercise. Unfortunately, it is designed in isolation from the customer's wishes and far from the market, even before a product or service has even started to be created. Such a business plan usually focuses on only a few hypotheses and is therefore usually not very courageous. Behind an academic business plan there is often a misconception of conventional venture capital investors that this could limit the risk and uncertainty of founding a new company in advance before it is implemented. Even a relatively inexperienced team can develop a more viable business model through rapid development cycles that an experienced team without market access would not have dared to do.
Lean start-up model
In the digital economy, the Lean Start-up approach works particularly well, since software can be adapted quickly and inexpensively, it can be made available to the customer directly online for testing and a great deal of data about the customer's behavior can be collected digitally. It is important to start by meeting minimum requirements so that precious resources are not spent on anything other than developing the sustainable business model. More at: www.businessmodelgeneration.com/canvas
Steering success according to the compass
If the four elements of a start-up - innovation, team, time and market - are very well coordinated, the foundations for a successful, magmatic start-up are in place.
In the seed phase, the start-up team is looking for a sustainable business model based on innovation. Time plays a decisive role in this. The young company must develop an innovative and at the same time easiest possible prototype (minimum viable product) as quickly as possible, collect feedback from (at least potential) customers, integrate this feedback into product development and contact the customer again with the new result until it is ready for marketing. The market must be ready for rapid scaling of the product.
Short development cycles
This lean approach for start-ups is not based on a rigid business plan that has to be implemented unchanged for years, but on a flexible, i.e. agile model. Everything should always be questionable and adapted accordingly. All planning basics - from product characteristics and target groups to the sales model - are hypotheses. It is the task of the founders to validate or falsify these hypotheses. Only after sustainable sales are achieved does the startup leave its "garage". The big advantage of the Lean Startup method: Errors are detected as early as possible. Founders can quickly integrate this knowledge into product and process optimization. Financing will be much cheaper, as only as much resources as necessary need to be invested in the development of the business model. This significantly increases the startup's competitiveness.
Traditional business plan
According to the traditional way of thinking, however, start-ups must first create an all-encompassing business plan. A comprehensive and static document that typically forecasts sales, costs and profit for the next five years in a financial plan in addition to a market analysis and implementation plan. Such a business plan - as Prof. Steve Blank analyses in the "Handbook for Start-ups" - remains an academic exercise. Unfortunately, it is designed in isolation from the customer's wishes and far from the market, even before a product or service has even started to be created. Such a business plan usually focuses on only a few hypotheses and is therefore usually not very courageous. Behind an academic business plan there is often a misconception of conventional venture capital investors that this could limit the risk and uncertainty of founding a new company in advance before it is implemented. Even a relatively inexperienced team can develop a more viable business model through rapid development cycles that an experienced team without market access would not have dared to do.
Lean start-up model
In the digital economy, the Lean Start-up approach works particularly well, since software can be adapted quickly and inexpensively, it can be made available to the customer directly online for testing and a great deal of data about the customer's behavior can be collected digitally. It is important to start by meeting minimum requirements so that precious resources are not spent on anything other than developing the sustainable business model. More at: www.businessmodelgeneration.com/canvas
Steering success according to the compass
If the four elements of a start-up - innovation, team, time and market - are very well coordinated, the foundations for a successful, magmatic start-up are in place.
No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns.
- Steve Blank, Professor, Stanford University