Startups are amazing businesses. They find a problem that isn’t properly solved in the marketplace and try to resolve that problem in a better, faster and/or easier way. They are one of the biggest innovation engines in the world economy today. They attack problems with a fervent energy that makes incumbent businesses nervous about disruption in the marketplace. But what if we could take some of the principles that startups follow and use them in our existing business? What if we could get the innovation mindset and combine it with the benefit of already having an established business? We need to remember that having an established customer base is a huge advantage that can be leveraged to an established company’s benefit.
As part of Rhythm Systems’ method for consulting clients on their Winning Moves, ideas that have the potential to double your revenue in 3 to 5 years, we advise our clients to test and validate their assumptions. We often quote Jim Collins’ “Fire Bullets, Then Canonballs” strategy, as outlined in his book Great by Choice. He uses a military analogy of finding yourself at sea with a limited amount of gunpowder. If you fire a cannonball and use all of your powder and miss, you deplete your stockpile and die as you can no longer defend yourself. If you only fire bullets until you make the necessary adjustments to hit your target, then fire the cannonball, you greatly improve your chances of success.
The same idea holds true in business; rather than using all of your resources on one new idea, test in small increments to learn and make adjustments until you have the right strategy for success. Startups are constantly testing and improving on the successful tests while dropping or adjusting ideas that yield negative results. This is part of their culture and DNA, but that doesn’t mean that it can’t be done in larger businesses. Testing small and constantly improving dramatically reduces the risk of launching a new initiative, as continual improvement works in your favor.
At Rhythm Systems, we consult with our clients to use low cost and low risk “bullets” to test their assumptions, before they fire the larger and more expensive and resource-intensive “cannonballs.” Our patented Rhythm Systems software allows companies to list out all of the assumptions being made about a potential project in our Idea Bench, to see which ones can qualify as a Winning Move. The more assumptions you test early in the process, the faster you will succeed - or fail (remember failing fast is a good thing!) Make sure that you list all of the assumptions you are making about a project. Be on the lookout to recognize assumptions that are reported as facts - but are actually assumptions - such as 15% of our existing clients will buy the new service. These are assumptions that need to be made, but you must test them by actually calling a set of customers and gauging their reaction or using A/B testing on your website. Even if you prove your assumption to be wrong, you will gain a lot of great feedback into your customers’ needs.
Startups are forced to think this way as they have limited capital that needs to be put to the best use. If they fire one poorly aimed cannonball they might not be able to survive. They use this “lean methodology” out of necessity because they don’t have access to large amounts of resources. However, larger companies can use this framework to their advantage as well. Larger companies can devote resources to more than one assumption at a time, can test multiple potential winning moves in unison and can generally devote more resources to firing “bullets.” After firing multiple bullets they can then aim their cannon at the most promising ideas and pour their vast amount of resources into them, greatly increasing chances for success.
What can you do with your startup thinking hat today?
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