Too often we witness companies who are equipped with a wonderful product and an elaborate business model fail without ever realizing their potential. The truth is, building a successful company is much more than simply writing the execution plans we all did in business school, it involves understanding the “real-life” components of your business, namely your customers. As outlined by Udacity in their course How to Build a Startup
, instead of focusing on what the entrepreneur thinks will work, it is critical for companies to leave behind their own internal thought bubbles, get out of their offices, and go out on the road to validate their ideas by engaging with real-life customers. Only then can the entrepreneur find proper solutions to their difficult questions and establish a truly effective business model.
But, the hard work doesn’t end there. If we had a dollar for every time we heard a company tell us that their business model will allow them to provide the consumer with the lowest cost, highest quality product all while offering the best customer service company in the market, then we'd be rich. Not surprisingly, we discover that the companies that make this claim are mediocre at best. Why?
In The Discipline of Market Leaders
the authors outline the reason: market leaders pick one of the three core business strategies (cost, quality or service) and obsess about doing that one thing better than their competition, while happily settling to simply keep up with their competition in the other two areas. Once the one area is chosen, all of their strategic planning, investments, budgeting activities, incentives, etc., focus on making that one area better and better, every week, month and year. Everyone in the company knows that this one area of focus is paramount.
Think of Apple, Walmart or Nordstrom as examples of market leaders that have chosen a particular area and continue to obsess over it. At RENEW, we enjoy challenging ourselves, our pipeline and our portfolio companies to define this one thing, which in turn helps us and them to focus our work and tap into new ideas to compete, win, and become market leaders.
So how can businesses figure out what’s needed for their go-to-market strategy? It’s a crucial moment that can so easily go off the rails without the right strategy. Leslie’s Compass
is a simple test for entrepreneurs to smartly deploy their limited sales and marketing dollars when they are launching their first product and have one chance to make a strong, first impression.