Can you build your startup like a product?

Startups are a fantastic experience for everyone involved. Intriguing ideas, smart and engaged people, a high potential for making an impact on the future, and last but not least a prospect of lucrative returns.

There are many ways that startups are being helped: universities shape the smart minds needed for innovation, venture capitalists provide money and support, accelerators help with logistics.

But wait… are we missing something?

Despite the support and helpful environments, startups have a rather poor chance of succeeding. In fact, 9 out of 10 fail. This is… a lot.

Is that just fate? Or is there something that could maybe be done to help improve these odds?

The blind spot

When discussing startups, the technical innovation or the product are always in focus. How innovative is it? How big might be the business potential?

Of course, these are important questions.

What is less obvious is that apart from its primary offering, every startup also has a second product. Just like the first one made for revenues, this product needs to be created, shaped and evolved over time.

You are wondering what this is?

The second product is the company itself – made of a team of people that need to find a way to collaborate productively and grow with the business.

At stake are competences that are key to the success of a company. These include the abilities to:

  • continuously innovate, evolve and deliver the product
  • take profound and good decisions
  • tackle new functions like customer service or marketing
  • grow a culture that inspires people
  • shape an organization that can efficiently scale
  • … and many more

While always some solution comes into being, consciously finding a truly effective, consistent and sustainable approach is anything but easy.

To make matters worse: Shaping these aspects comes down to leadership, and leadership is essentially a social science. For many STEM alumni found in startups this is naturally rather alien terrain.

How do you develop your firm?

For one, expertise in building a productive organization obviously doesn’t hurt. There are many pitfalls to avoid, many dots to connect and lots of different domains to know about.

In addition to that, there are also tricks that can be borrowed from other development processes.

Everybody knows Lean Startup and Scrum. When developing a product, it has become common sense to take an iterative approach with regular feedback loops. You take a shot, get feedback, and adapt for next step.

Now… why not do the same with your company as the product?

Proceeding iteratively is in fact the only way to solve a complex problem, e.g. developing an organization.

The challenge here is to collect the right feedback. While your customer can tell you whether he likes your product, who can judge what is the right way to go for an evolving company?

Important sources of feedback include the founders / executives, the team, investors and clients. They can give their perspective and opinion on what’s going well, and what needs improvement. This is a good start to get things fixed that are already hurting in one way or the other.

What is required to make this effective is a form of governance, which institutionalizes these feedback cycles and makes sure that solutions are agreed and followed-up.

But that’s not enough

There are two more aspects:

  1. Fixing things when they break is good enough – except when it isn’t.
    • When demand is picking up, things get busy. If you learn only then that your organization or product is actually not ready, you’re in trouble.
    • Or if you experience a sudden team exodus and didn’t see it coming, this can break your neck.  
  2. While every venture is unique and requires distinct solutions, it is not efficient for a startup to go through the learning curve of organizational development from scratch. Getting expertise to help build, rehearse and refine important elements of your firm will both save you brainpower and prevent crisis when you need things to be working.

Simple conclusion – simple action?

To increase your startup’s odds for success, you need to put building the second product – the company itself – on the agenda.

You need deliberate and quality feedback, and an agreed governance to put improvements into action. However, things need to be shaped actively – just reacting will not be enough.

Did you find this useful?

StartupPilot is on a mission to help startups and their investors to beat the odds and build great companies. If this sparked your interest about what’s up our sleeves, get in touch!

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