The most serious errors of startups
Why do startups fail? The answer is difficult because the factors influencing success or failure of any kind: leadership, personnel, money ... I will try to respond by focusing attention on those cases that deal exclusively with strategic marketing and specifically in the case of innovative startups (whose offering introduces some kind of discontinuity in the market). That is, we do not discuss such business models that replicate the success of others or whose products are inadequate from a purely technical point of view (not market)
In my view the most serious errors are:
Believe there is a large market for the product when in reality does not exist or is not as great as previously thought. Put another way, the product fails to meet any need of potential users as urgent and important enough to be bought. This error is very common in companies led by innovative technologists who, dazzled by the technical qualities of the new product, believe that "we are going to remove the hands (or on other lands as they say," build it and they will come " ). This enthusiasm leads to unrealistic business plans to build the first line saying something like "Our customers are all mid-sized companies, large, with a projected total business volume of XXX million, of which even get the 2 % leads to an income of ... "with the known consequences. To avoid this problem is essential to make a minimum market research to ensure the viability of the business.
Insist on a meet unrealistic business plan and implement initial strategies wrong. Of course, if there is a greater mistake to write a business plan is unfounded follow to the letter even though the reality is another way. The relevance of the original idea in the development of a startup is a matter for debate. In the case of truly innovative products, all that is known about the projections, plans, strategies, approaches, and so on. Initial is going to be wrong. For this scenario, many successful authors and entrepreneurs to discover and recommend knowing the market through direct contact with him through successive releases, and refocusing of the business (a concept that has been called "expeditionary marketing"). With this philosophy, the important thing is to quickly make mistakes (and a low cost) and then straighten the course by applying another approach. This philosophy is also indicated in those sectors where operating costs are low and launch the product is cheaper to conduct commercial research (e.g., new Web-based services).
Not understand or manage the cycle of adoption of innovation. The discontinuity which causes the brakes to introduce new product acceptance in the form of resistance to change and a different propensity of users to adopt the innovation. So which companies do not take into account these factors and properly manage innovative products will fail. In many cases this requires users to initially focus on more visionary (who value the new product as a platform for competitive advantage and take it despite the risks) and then make the jump to the mainstream market. Unfortunately, given the pace of innovation in some sectors (e.g. what happens in the so-called Web 2.0) these users are being bombarded by visionaries such new proposals that could hardly pay attention to none.
Lack of focus. On many occasions, especially when new technology could be applied in a wide range of scenarios, trying to market the product as a kind of balm for spitfire "good for everything" in an attempt to maximize business opportunities. The problem with this approach, especially in companies with limited resources, is causing a dispersal of effort that makes the end product is not good for anyone. The solution is to focus on a few customer segments that are close to ideal user's profile, important and urgent needs that the product can satisfy. But beware: to bring this strategy to its logical conclusion (for example, to prevent a competitor) may cause the company to focus on a niche market unprofitable.
Bid indistinct or incomplete. In general, the new product must compete with a number of alternative products, both competitors and substitutes, in many cases are already in place on customers and represent the status quo. In the case of an innovative product, the battle is being fought on two principal coordinates: the differential and completeness of the bid. The second key aspect is discontinuous innovations: only if the company is able to articulate a comprehensive solution to customer problems built around its product using products and services, partnerships, etc.. -instead of providing the product was isolated abolished the risks and costs associated with new technology and promote adoption, particularly among the less innovative users. In relation to the previous point, a distinct and comprehensive solution is both easier to build the more specific the target customer segment.
In short, many argue that enterprise failed because "the product was too advanced for the market" or because "the money is finished." In many cases, these are merely the consequences of a wrong marketing strategy, which failed to understand the market and generate demand at a sufficiently high speed.
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