The 3 Ecosystem Essentials Start-ups Are Missing (No, it's Not Funding)
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50,000 and counting—that’s the Indian start-up scene right now. Many are bootstrapped, and these optimistic numbers are exciting hunting grounds for some of the planet’s top venture capitalists as well.
This also means that ideas and suggestions for growth hacks abound. Those new on the scene look at successes such as Zoho and Oyo—not as case studies—but as prescriptions. What should be obvious is that what works for one almost always does not work for another. For lack of dependable ‘formulae’ for success, the start-up scene continues to be riddled with the spectre of failure; in 2018, a study by the IBM Institute for Business Value and Oxford Economics found that 90 per cent Indian startups fail within the first five years, lack of innovation being the main reason.
With this background, there is need to look not at tactics such as value chain ownership and tech innovations, but at the top three key factors currently missing in the start-up ecosystem today:
There is more focus on the tech than true innovation that stems from an organic design process. A formulaic approach towards building and running a business often forgets to keep the market needs at the centre of what they do, focusing on the product rather than the gap it fills or the value it provides. The focus, instead, for entrepreneurs needs to be in creating a sustainable solution for a problem they are solving. Take one of the first such design-led innovations, the Apple iPod. The ‘1000 songs in my pocket’ still sticks—even after all these years—because it solved a real user problem. Similarly, the need is to ask if it is a solution that the target market needs or is it just another product/service option that is nice to have?
In this context, what’s useful to keep in mind are these four Cs:
- Curiosity: Ask the right questions. Ask why, but also remember to ask, why not?
- Creativity: Given how fluid both the economy and society can be, there is no ‘one right answer’. Explore newer approaches and ideas with the focus of creating most value for the end user.
- Critical thinking: Analyse the data and information available, join the dots and look at the whole picture to understand the web of interconnected patterns.
Communication: Get accustomed to a non-liner, multi-layered, multi-lateral exchange of ideas, advancing towards the most meaningful solution.
Sustainability & Innovation Management
The focus, therefore, should be on creating and growing a sustainable business model that can adapt to today’s continuously changing environment. AirBnB, valued at $31 billion, has moved with the market need from hotel rooms to couches. Today, it is has top-of-the-mind recall value and has crossed Hilton Hotels in nights booked, a growth fuelled by a simple yet ingenious integration with Craiglist—massively increasing the customer reach.
Designer and Founder Joe Gebbia followed the simple principle of user-led design: “People told us what they wanted, so we set off to create it for them.”
Innovation and thereafter innovation management are both equally important parts in this jigsaw of creating, strengthening and developing sustainable businesses.
At the speed at which the business landscape is evolving, organizations need to evolve at a breakneck speed with as little risk and cost. Traditional partnership structures such as mergers and acquisitions or joint ventures prove to be too slow, costly, and cumbersome to keep up with today’s ever-shortening innovation cycle. More fluid alliances where like-minded organizations with expertise in varying fields are working together to create a “win-win” partnership.
It is for this reason many companies, traditionally thought to be competitors are working together to beat the disruptive pace of change (common goal) with combined resources. Many financial companies are working in collaboration to come up with innovative fintech solutions, Cisco and Ericsson are sharing their respective expertise to come up with solutions to stay ahead of the curve in such a fast-changing telecom environment.
According to Jeff Liu, global coordinating partner, GE Digital-EY Industrial Internet, “You’re able to use your car as a transportation service, or use your apartment as a hospitality service, because another organization has built an easy-to-use, automated transactional environment on the Internet with new kinds of usage terms that depart from standard lease contracts” (Source: Is Collaboration the New Innovation).
If your startup ecosystem can bridge the gap across industries, geographies and cultures to bring in different perspectives and moving ahead with those that are inclusive and user-centric, it is highly like to remain relevant, regardless of changing market conditions.