In the second week, we learned about New venture development. Every person has a million ideas in his life. Many people want to make money and have their own business, whether it’s large or small. Both businessmen and entrepreneurs could make money. So what’s the difference between them?
For example, shipbuilding. Entrepreneurs focus on solving problems: make the best boat in the world and make some money by the way. However, businessmen just focus on making money, no matter to make shoes or ship. Making shoes well is to make more money. According to Drucker(2002), Entrepreneurship should not be measured in terms of size, newness and/or type of a company, but instead in terms of certain characteristics and values of their outputs – ‘They create something new, something different [not only better]; they change or transmute values.’
Then, most people will choose to start writing a business plan to reduce risk. and pitch it to investors, assemble a team, introduce a product, and start selling. However, According to new research by Harvard Business School’s Shikhar Ghosh shows, 75% of all start-ups fail.
As reported by CB insights, “no market need” is the top1 reasons startups fail. In other words, even if entrepreneurs have excellent technology, data, and consultants, they cannot solve market problems. Failure is an inevitable consequence. Followed of reason by “ran out of cash” and “not the right team” respectively. A diverse team with different skill sets was cited as being critical to the success of starting a company. The point is CTO(Chief Technology Officer) as important as a founder. CTO is a partner can balance founder out. and provide sanity checks for business and technology decisions made.
Nowadays, we have a new model called the “lean start-up”.Using lean methods across a portfolio of start-ups will result in fewer failures than using traditional methods. That means it better than “big design up front”. It more focuses on an elaborate planning and customer feedback. The lean method has three key principles:
- No intricate business plan. (have untested hypotheses—basically, good guesses)
- Agile development. (eliminates wasted time and resources by developing the product iteratively and incrementally.)
- Get feedback from the customer. (customer development to test their hypotheses) Prototypes are invaluable. It is a good opportunity to get feedback along the way from actual users when you building a process for your product.
Over the past 20 years, model of business always changing. Many company has focused on improving efficiency by reducing costs. But just focusing on improving existing business models is no longer enough. Almost every big company realized that companies need to create new business models to ensure their survival and growth. This means that new organizational structures and skills are needed. And how to innovate the process is the problem we still have to explore.
Drucker, Peter Ferdinand (2002) Innovation and Entrepreneurship: Practice and Principles. Harper Collins.