Systematic Business Innovation for Startups


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This presentation has evolved from a talk I gave at Silicon Beach 2012, via Tallinn University of Technology February 2013 to this version for the Executive Business Centre at Bournemouth University on 230413.
It is an introduction to the background and tools I use to help startups and early stage digital, creative and content companies build a robust business 'vehicle' to drive (sorry!) growth.

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Systematic Business Innovation for Startups

  1. 1. SystematicBusinessInnovation
  2. 2. Start-up Grow-upStay-up10/12 30/35
  3. 3. Start-up Stay-up10/12 30/35
  4. 4. Start-up Stay-up•You’re drowning in paperwork -especially financial•Quality of work is starting to slip•Cash flow is bumpy•Gaps appear in communications•Team morale is not so great•You feel overworked & stressed10/12
  5. 5. Is Money the Answer?
  6. 6. “The unfortunate truth is only one percent of (techstart-up) business proposals receive funding fromangel investors or venture capitalists or privateequity” – Startup Addict Blog
  7. 7. So think what the percentage is for entrepreneurialcompanies that are NOT start-ups: agencies, contentproducers, service companies etc.Businesses that don’t scale.
  8. 8. If money isn’t the answer –what is?
  9. 9. In 35 years I’ve not seen asingle early-stage companythat couldn’t be more efficientas a business
  10. 10. Founders FocusObsessivelyon The NewThing They Do
  11. 11. While the business vehicle they’rebuilding to make & marketThe New Thing They Dojust isn’t up to the job
  12. 12. It’s flimsy, home-grown, unstable, andan inefficient way to get from A to B
  13. 13. Product/ServiceProcess/WorkflowLeadership/ManagementBusinessModelPeople/SkillsMarketingTurnover/SalesNetProfitsStructureBy ‘Business’ I don’t mean finance. Imean all the things that – together -enable you to generate revenue &profits from your product or service.I assume that you can deliver yourproduct or service .‘Business’ is everything else you needto do to create a profitable enterprise.
  14. 14. Home-grownbusiness‘vehicle’Businessinefficiencies‘Leak’ profitsfrom producing& selling productNot enoughprofit to reinvestin growthBusiness staysstuck in Start-Upa home-grownbusiness vehiclestops you motoring
  15. 15. Poor projectmanagement sojobs overrunNo ongoing jobprofitabilityanalysisThey’re ‘busy’, haverevenues, sothink it’s OKNo money toinvest in s@#t-hot PMEnd of yearaccounts show5% Net Profitsagency thatbuilds websitesfor retail clients
  16. 16. Flat structure: 2founders + veryyoung teamFounders getjobs in & lookafter clientsNo-one managingteam so poorquality controlLowers jobprofits, reduces theirbiz dev effort, slowsgrowthFounders haveto step in to sortjobs outsocial mediamarketing/PRagency
  17. 17. All early-stage businesses have –under the hood - these‘invisible inefficiencies’.If you can identify these and reducethem, you can ‘find’ the profit to fuelgrowth organically.(what ‘funding’ often does is allow theseinefficiencies to remain invisible)
  18. 18. JosephSchumpeter
  19. 19. “Creative Destruction”Creative Destruction
  20. 20. “Creative Destruction…incessantly revolutionizes theeconomic structure fromwithin, incessantly destroyingthe old one, incessantlycreating a new one.”
  22. 22. They haven’t taken on board his distinctionbetween Invention and InnovationINVENTION INNOVATION
  23. 23. They haven’t taken on board his distinctionbetween Invention and InnovationINVENTION + INNOVATION= ENTREPRENEUR
  24. 24. “This should be as demanding and excitingas inventing the thing you do”Every aspectof itAn entrepreneur also innovatesthe entire business that creates &delivers the new thing they do
  25. 25. When youInvent and Innovateit can produceextraordinary success
  26. 26. But that’s not what most early-stageentrepreneurs do
  27. 27. SystematicBusinessInnovation
  28. 28. A Business is a System
  29. 29. “A set of interactingor interdependentcomponentsforming anintegrated whole”
  30. 30. “A set of interactingor interdependentcomponentsforming anintegrated whole”
  31. 31. Product/ServiceProcess/WorkflowLeadership/ManagementBusinessModelPeople/SkillsMarketingTurnover/SalesNetProfitsStructure
  32. 32. Product/ServiceProcess/WorkflowStructureLeadership/ManagementBusinessModelPeople/SkillsMarketingTurnover/SalesNetProfits
  33. 33. How do yougrow abusiness in aSystematicway?
  34. 34. everydetail, everyelement mustbe buildingtowards yourultimate VisionIt’s like directing a film:
  35. 35. it’s a way of seeing andunderstanding yourbusiness.
  36. 36. it’s about how you use yourown creativity to innovateyour whole business
  37. 37. Let’s get closer to the realworld of running a business.Let’s start by talking aboutburgers.
  39. 39. BUSINESS ENGINEBUSINESS STRATEGYTHE NEW THING THAT YOU DODeciding where you want to go as a business andplanning how to get thereThe mechanics of the business; how it functionsefficiently day-to-day
  41. 41. OPERATIONALCOMPETENCE=the skills to execute onThe New Thing That You Do(The Invention)Business Strategyisn’t developedBusiness Engine isneglected
  42. 42. THE NEWTHING THATYOU DO(Product/Service)Process/WorkflowStructureLeadership/ManagementBusinessModelPeople/SkillsMarketingTurnover/SalesNetProfits
  43. 43. Product/ServiceProcess/WorkflowStructureLeadership/ManagementBusinessModelPeople/SkillsMarketingTurnover/SalesNetProfits
  44. 44. Start-up Stay-up10/12
  45. 45. Benchmarkwhere youare – withtotalhonesty.This ispoint A.
  46. 46. DrawyourVision.This ispoint B.
  47. 47. Build anintegratedRoad MapThis is howyou’re going toget from A to B.
  48. 48. Identify thetrue value inyour business.Build yourpricingaround it.
  49. 49. Bakeinnovationskills intothe teamleading thebusiness.
  50. 50. Innovateyourbusinessmodel.
  51. 51. Innovate& buildyourbusinessengine.
  52. 52. Getmanagementinformationflowing.Use it tomake betterdecisions.
  53. 53. Separateoperational fromstrategicdecision-making.With separatemanagement andboard meetings.
  54. 54. Develop theentrepreneur/sbusiness skills& perspective
  55. 55. Develop aseniormanagementteam.Empowerthem.
  56. 56. Let’s look at one in more detail.I’ve chosen this one because it’s atthe heart of the whole process.Build an integrated Road Map
  57. 57. Q1 Q1Q4 Q4Q2 Q3Q3Q2Example: an early-stage onlinejewellery business that is growing fast& sees opportunities for it’s own e-commerce operation, partnering withthe big online retailers and openingoperations in ChinaBuild an integrated Road Map
  58. 58. Q1 Q1Q4 Q4Q2 Q3Q3Q2People/ SkillsProduct/ServiceProcess/WorkflowStructureBusinessModelLeadership/ManagementMarketingTurnover/SalesNet ProfitsYEAR1YEAR2750KTeam: 63rd partysites(too?)flatE-commercerange94KBasicWebsite2 Founders(designers)UKoutworkers
  59. 59. Q1 Q1Q4 Q4Q2 Q3Q3Q2People/ SkillsProduct/ServiceProcess/WorkflowStructureBusinessModelLeadership/ManagementMarketingTurnover/Sales1.5mNet Profits 150KFull-timeMDFree upMD 50%ShanghaiWarehouseBespokeServiceMultiple revstreamsTeam = 15peopleOpen inChinaYEAR1YEAR2Team: 63rd partysites(too?)flatE-commercerange94K2 Founders(designers)UKoutworkers750KBasicWebsite750K
  60. 60. Q1 Q1Q4 Q4Q2 Q3Q3Q2People/ SkillsProduct/ServiceProcess/WorkflowStructureBusinessModelLeadership/ManagementOpen inChinaTurnover/Sales1.5mMgmt teamNet Profits 150KFull-timeMD750K 1m 1.35m1.25m1.1m800K 900KShanghaiWarehouseBespokeServiceMultiple revstreamsTeam: 6 Hire studioassistantHiredesignerHire sales/account mgrHire ShanghaiheadTeam = 15peoplePromoteBen to MDMgmttraining BenBen: buildmgmt teamBen: buildmgmt teamMarketing3rd partysites(too?)flatE-commercerange94KBasicWebsite2 Founders(designers)UKoutworkersLimit of flatstructure
  61. 61. 1. Benchmark where you are: A2. Draw your Vision: B3. Build a Road Map4. Identify real value & price accordingly5. Equip leaders with innovation skills6. Innovate your business model7. Innovate & build your business engine8. Get Management Information flowing9. Operational/Strategic decision-making10. Develop leaders’ business expertise11. Develop/empower management team
  62. 62. Don’t derail your business bythinking anyone can run one…Inventand Innovate!
  63. 63.