What makes a good start-up strategy?

Or 5 things to keep in mind while devising a start-up strategy

Let’s face it, start-ups are all over the shop. Some of them just work, and are hailed as the next big thing since the invention of Pizza (Cheese-Burst or otherwise) but a large majority fail and disappear without as much as a whimper. While it is difficult to pinpoint what makes a new business tick and endears it to millions, listed below are a few best practices that can increase your chances of getting it right the first time. The examples that are mentioned are structured in a sense that relates to instances from popular culture, followed by examples from real world businesses. It is imperative to note here that these tips if you will, are fairly generic and this makes it easy enough to extend and apply them to most situations or activities that are start-up like in nature. For instance, some of these could apply to how to do your group project in B-School a little better, how to stand out say in a presentation to senior management at work, or simply in your day to day to interactions with people. For all future discussions, the subject is ‘you’, the individual, simply referred to as the ‘founder’/ ‘creator’ henceforth.

  • People value innovation and ingenuity

We begin with something so glaringly obvious that people sometimes assume it to be a given. While your idea of a business need not be as revolutionary as well, Pizza, it does need to have the element of surprise, sometimes to the extent of shock even. There are times when a business idea stems from the need to alleviate a specific problem (simple things like say a can opener), there are others when you have to guess what people want even when they themselves do not know it.

Consider the hit TV show ‘Game of Thrones’, which is one of several fantasy fiction franchises available for consumption. The reason it works is that it has managed to differentiate itself from the others by virtue of being darker, much darker. The shock value is almost a little too literal, Thrones kills of its major characters one by one leaving the viewer second-guessing themselves as to the safety of their beloved character. Contrast this to say The Lord of The Rings, which is an epic in itself, but responsible for a large majority of the fantasy tropes that abound, something Throneshas successfully dissociated itself from. Dark comedies like Seinfeld have a similar claim to fame. Different, and dark.

Apple is probably the best example of giving consumers what they want. Apple sold an incredible 2 million iPads, devices which are well within the definition of luxury goods, in a period of recession and historically high unemployment rates in the US [1].

Notice however that this is not saying that there is no business without innovation, just that your product has a much better chance of selling once you’ve bagged and tagged the consumer’s ‘aha!’ moment.

  • Any publicity is good publicity. Or is it?

Branding is important, very important. Not only does it define your positioning it could make or break your very existence. Consider the case of the app that lets you rate people called ‘Peeple’, in the news recently for the expectedly heavy backlash against it, primarily due to how it would exacerbate the problem of cyber-bullying in the cesspool that is the internet. The founders described it as ‘Yelp! for people’, and then recanted saying that it wasn’t exactly as open as that made it sound. The damage, as is often the case, had already been done, and the founders find themselves with a mountain to climb[2].Incidentally, the Twitter account @Peeple got a lot of hate messages, what is interesting though is that the account is not linked to the app but a home security device called ‘Peeple’[3]. The creators of the device face a unique situation where for them, even zero publicity turned out to be bad publicity.

The auto industry has a few stellar examples here. The Tata Nano leaps to mind, a car that was killed by its positioning of being the ‘cheapest car ever’. The Nano could have and should have done well in a market like India, Indians like me are cheap, just that we don’t like being branded so [4].

Volkswagen, in the news recently for an emissions fraud of gigantic proportions, is also reeling from the blow that the media has dealt it. The company will recover as is their wont (remember this was the company that supplied cars to the SS in World War II), but their brand has been tarnished forever.

  • Industry experience is invaluable
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The 1990 FIFA World Cup featured an unlikely hero in Cameroon’s 38 year old Roger Milla, who had retired before the World Cup and had been coaxed out of retirement by Cameroon’s President Paul Biya. He scored four goals and led Cameroon to a preposterous last 8 finish, they were beaten narrowly in the quarter-finals by England. Milla wasn’t quick or particularly creative, what he was, was shrewd and possessed a composure bred of many years of toil on the pitch [5].

The point here is that while it is not essential to surround oneself with experience, shunning people by considering them too old to work with isn’t progressive but regressive. Most companies with visionary founders weren’t a first venture. They were built on sweat and blood which is a safe foundation generally to build an enterprise on. Going back to our Apple example, after Steve Jobs was shown the door at Apple in 1985, he founded a company called NeXt. He returned in 1997, and they rest as they say is history [6].

  • Be mindful of competition, but realise that the competition is not your enemy

This is probably one of the most important ideas on this list, and the one that is the most difficult to wrap one’s head around. The idea that your competition isn’t always bad for you comes from crystal clear self-awareness, and the ideology that your goals are paramount. Think of the iconic quote from The Godfather, ‘It isn’t personal, only business’. This is an idea that needs to be internalised and should manifest itself in the strategic decisions that you take.
For instance, the iconic South Indian movie star Kamal Haasan was once quizzed as to why he and Rajinikanth didn’t work together in movies.  He recounts to the interviewer an incident when a producer hired them both for the same film and lowered both of their fees saying that the other had agreed as well, essentially hiring both of them for just about the going rate of one. After the two of them realised what had happened, they pledged never to work together again if a third party was producer. They felt that being a part of the same film diluted their value [7].
The similarities to the case of Pepsi and Coke implicitly colluding to encourage a new artificial sweetener supplier, Holland Sweetener, just to drive the prices of their existing supplier Monsanto down, are striking [8].
Note here that sometimes it is best to work with your competition, something that game theory studies in great detail. That it is illegal to do so explicitly is a matter that isn’t as insurmountable as it appears, if you play clever.

  • Change the rules of the game

Sometimes, the rules of business can be tweaked to an extent so audacious that it actually works. Roger Federer, the tennis legend, continues to innovate even when arguably in the twilight of his career. He invented a shot called, ‘SABR’ or ‘Sneak Attack by Roger’, a move that has been described as ‘disrespectful’, ‘audacious’ and ‘lethal’. Federer shows the mentality of winners here, he does what he has to, to win, and possesses the flair to execute his intentions with aplomb [9].

This is akin to what a relatively new name in the video game industry, CD Projekt Red has been doing. The video game industry has been plagued by Digital Rights Management (DRM) software that are installed as add-ons with video games to fight piracy. These software often result in genuine copies of the game being rendered unplayable due to technical issues. CD Projekt Red decided to do away with DRM for good based on customer surveys and polls [10]. The latest entry in the franchise, The Witcher 3 sold an astounding 4 million copies within 2 weeks of release [11].

The gist of these five points is simple enough. As a founder of a start-up, the onus is upon you to innovate not just within the confines of your domain. Challenging the status quo can reap unexpected benefits, benefits that might define the very being of your organisation. Such an organisation ceases to be just another company, it becomes a legacy, worthy of much praise and song.

REFERENCES

[1] http://www.csmonitor.com/Business/The-Reformed-Broker/2010/0614/iPad-sales-soar-along-with-unemployment-numbers.-What-kind-of-a-recession-is-this

[2] http://www.cnbc.com/2015/10/02/peeple-the-human-rating-app-gets-little-love.html

[3] http://www.wired.com/2015/10/peeple-the-thing-versus-peeple-the-app/

[4] http://www.thehindu.com/business/Industry/marketing-nano-as-the-cheapest-car-was-a-mistake-ratan-tata/article5405894.ece

[5] http://edition.cnn.com/2015/06/23/football/roger-milla-cameroon-african-football-world-cup-1990/

[6] http://lowendmac.com/2013/next-years-steve-jobs-before-triumphant-return-apple/

[7] https://www.youtube.com/watch?v=JRjee5kaLLc

[8] http://www.nytimes.com/1992/04/22/business/company-news-pepsi-and-coke-set-nutrasweet.html

[9] http://indianexpress.com/article/sports/tennis/us-open-2015-how-the-federer-sabr-became-a-lethal-weapon/

[10] http://www.giantbomb.com/articles/cd-projekt-red-waves-goodbye-to-drm/1100-4783/

[11] http://www.forbes.com/sites/davidthier/2015/06/09/the-witcher-3-sold-4-million-copies-in-two-weeks/

The article has been written by Sagnik Choudhury. He is currently pursuing his MBA from IIM Bangalore.

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What makes a good start-up strategy?

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