MIT Sloan Senior Lecturer Elaine Chen
What does the word “startup” mean to you?
Many words can come to mind: new, exciting, experimental, small, lean, agile, fast. To me, “startup” mostly makes me think of “agile” and “fast.”
In an early stage startup, everybody is focused on the same thing. People are passionate, enthusiastic, hungry for an opportunity to change the world, and they will do whatever it takes to get things done. At a headcount of 5-10 people, coordination comes naturally. There are no legacy processes to slow things down. Without existing customers, the team is free to modify their products and services as they learn more. There is also a shared sense of urgency. So they run fast: because it’s fun, because they can, and because they have to.
MIT Sloan Asst. Prof. Matt Marx
When it comes to startup strategies, many entrepreneurs assume there is one optimal path. They may need to experiment or “pivot” initially among alternatives, but once they fix on an ideal strategy they simply need to execute. For example, a startup attempting to commercialize a new technology faces the strategic choice of whether to “go it alone” or cooperate with existing companies. Entrepreneurs are often taught to settle on a single strategy rather than trying to do too many things at once, but for some new ventures it may be advantageous to adopt multiple strategies—sequentially.
A new way to look at strategy involves the concept of a “switchback.” Think of a hill that is too steep to directly climb. An alternative is to proceed diagonally up the grade, eventually reversing direction, similar to mountain trains like the Darjeeling Express. It may seem like a slower path—and may even involve some backtracking—but in the end the climber reaches the top rather than getting stuck when trying to go directly.
This approach can work for entrepreneurs too. If the climb to their ideal commercialization strategy is too steep, they may build a “strategic switchback” in that they initially pursue a different strategy—which would be suboptimal in the long run—but which enables later switching back to their ideal strategy.
This is different from the popular notion of “pivoting,” where the entrepreneur iterates through a series of experiments to find potential approaches to the market. While pivoting involves trying multiple approaches in a trial-and-error fashion, switchbacks depend on the success of the initial strategy—not failure. It’s only when that initial strategy works that the startup is able to switch to its originally preferred strategy.
Read the full post at Xconomy.
Matthew Marx is the Mitsui Career Development Professorand an Associate Professor of Technological Innovation, Entrepreneurship, and Strategic Management at the MIT Sloan School of Management.
Daena Giardella, MIT Sloan Sr. Lecturer
From Forbes México
Companies helmed by or fronted by celebrities can have meteoric rises, but can also face dramatic and public setbacks. Recent news stories, for example, have highlighted both the stratospheric success of some celebrity companies and also a set of well-documented problems with some celebrity companies.
Celebrity companies are unique in many ways, but studying them can yield important insights into where everyday entrepreneurs should put their energy and emphasis. Read More
MIT Sloan Senior Lecturer Bill Aulet
From The Strathclyde Business School Blog
In 2013, I wrote a light piece for Forbes about the “Six Whopping Lies Told About Entrepreneurs” but in hindsight I left out the biggest myth of all about entrepreneurship itself. The single most overrated, and yet common, belief about entrepreneurship is that the idea is paramount.
Yes, an idea is necessary, but it is so much less important than the discipline and process with which the idea is pursued. And, interestingly, all of these are even less important than the quality of the founding team.
The belief that the idea is important becomes invalidated when you work with successful entrepreneurs and begin to see a common pattern emerge: how an original idea morphs and evolves over time as the team does primary market research and starts to focus on customer needs, rather than their initial eureka moment. This observation is borne out in recent research by Professor Matt Marx of MIT, summarized in “Shooting for Startup Success? Take a Detour,” showing that for successful entrepreneurs, the idea they originally started out with is rarely the same as what they ended up succeeding with.
The idea of a better search engine wasn’t novel before Google got started; its value creation was all in the high-quality execution. Similarly, the concept of an electric car was not new when Elon Musk started Tesla, yet it has experienced unprecedented success while others before and since have failed. Likewise for the smartphone and Apple.
Image by Marius Ursache
Hal Gregersen, Executive Director of the MIT Leadership Center
Organizations are dealing with higher levels of uncertainty and deeper complexity than we’ve ever seen before. Not surprisingly, this changeable landscape is causing employees to act cautiously in order to keep their jobs. (After all, who wants to “rock the boat” or be blamed for a failed project?) While this reactive behavior makes logical sense, it’s also creating a major roadblock on the journey to innovation.
Innovation begins with either a passion or a problem. Passion means you’re motivated to innovate because you care deeply about something. For example, thanks to watching Neil Armstrong land on the moon as a child, Richard Branson became very interested in space and realized that he wanted to go there like Armstrong did. For decades, he asked questions, kept notebooks of ideas, talked to different people and worked hard to figure out a way for his passion to become a reality. With a long-term commitment borne by the head and heart, it’s no wonder that the stars lined up for Branson to start Virgin Galactic, transforming his passionate idea into a tangible business.