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Six Lean Lessons For Corporate Startups

Egg Incubator

Big corporations want to build the next Facebook, Twitter, or Groupon as much as you, I, and the entrepreneur in a garage somewhere.

While corporations might have an advantage in resources and capital to do so better than anyone else, they do at the same time meet with challenges that independent startups don't.

Over the past years I've been fortunate enough to learn from corporate finance analysis, product launches, and early-stage M&A assessment on the one hand, and from founding and funding new startups on the other. And there is a pattern; the methods used by big corporations often turn counterproductive when launching new ventures.

Besides from knowing your customer development and lean startups basics, I share here some musings that you should consider if you want your corporation to innovate like a startup.

Rehabilitate from analysis paralysis

While a challenge in corporate business planning is that it often is comprised with mountains of information—in an early stage startup there usually is a minimal quantifiable track record.

Doing what they do best, corporations cram old information about existing products and markets to that of the startup. Executives and managers have founding teams develop detailed financial estimates and market analysis way too early.

Secondary data may be good for known and proven conditions, but not for unknown conditions, which most often is the case of new startups. The answer lies not with your thousand dollar Gartner report. Rather, it is time to un-MBA and get out of the building.

Learn like your kids would

With time grown-ups gradually stop learning. Kids, however, learn all the time. Kids experience their environment and make assumptions which are tested against reality, again and over again. For companies adopting new technologies in a fast pacing and quickly changing market the learning process is not much different.

Emerging entrepreneurial methods such as Lean Startup and Customer Development assume that startups are children, not smaller versions of mature companies. So, startups need their own methods and tools, which means it is time for even high-paid managers to get their hands dirty.

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How To Communicate Your Bootstrapped Startup

startup bootstrapping

Bootstrapping your startup brings along a trade-off in communications and marketing. You have two messages to communicate: one about your service offering, the other about the product that you are building. How do you prioritize what to communicate? Are you a service or product company?

This was and still is a question that we deal with at Lingo Social every day. Recently, I had coffee with friend and founder of Mobilskole.no discussing what seemed to be a bootstrapper's marketing "dilemma". We arrived at the following.

As you make money from providing services and use profits to fund product development, you need to balance your communications efforts between the two. The more aligned your services and product messaging are, the better are chances for healthy synergies. That means ensuring that your consulting gigs leads to product sales and vice versa. Pretty obvious, but easier said than done.

At Lingo Social we went from communicating the whole digital agency package; Internet and search marketing, mobile apps, web design, analysis and strategic planning, to focus on social media marketing and management. Even better, all those former service offerings can be communicated in context of social media. For an example, inter-linking all your social media channels would have an effect on search engine optimization, and web design and apps development would integrate social networks. Following we would certainly propose to clients social SaaS rather then just building apps on an hourly basis.

Nevertheless, as founders' skill-set in a startup varies, so does their value propositions. When you are only a few founders in communicating your services, potential customers often tune in on your personal qualifications rather than the company's. Each member of the founding team is best at what they do, and consequently this is usually what they are best at communicating. That in fact is your startups's DNA.

Aligning service and product offerings along with leveraging founders' strengths have not only allowed the company to put marketing efforts in one bucket, but also increased learning about customers' needs which in turn enables us to build a better product. As a result consulting gradually starts to work as (paid) marketing and sales.

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9 Minimum Viable Product WordPress Themes

Minimum Viable Product is an essential part of of the Lean Startup and Customer Development methodologies. According to Eric Ries "the Minimum Viable Product is that product which has just those features (and no more) that allows you to ship a product that resonates with early adopters; some of whom will pay you money or give you feedback."

With the raise of cloud computing and SaaS, the website often makes the product itself. Nevertheless, commoditization of Amazon-ish hosing services, search marketing, free and open source software such as the LAMP stack and publishing systems like WordPress - allows startups to build and market their products at a lower cost. This is a simple overview of - cut to the chase - minimum viable WordPress themes.

1. Optimize by WooThemes is a product and feature-centric theme that emphasizes a clear value statement and sense of call to action.

2.iPhone App theme by Templatic. The name speaks for itself. The theme is designed for, but not limited to marketing of iPhone apps. The call to action button is nicely positioned in the mid of the screen. Although the blue area/the header is static, I'm sure that this can be changed with ease.

iPhoneapp WordPress theme

3. Feature Pitch by WooThemes is an out of the box theme suitable for marketing that one compelling product of yours. Also take a notice of that lighting orange tab at the upper right. Good thinking.

Feature Pitch Minimum Viable Product wordpress theme

4. eBook theme by Templatic. Although the name implies a focus on eBooks, its message can easily be changed to work for any product.  It comes with widgets for testimonials and newsletter sign-up right out of the box.

ebook WordPress theme

5. Coffee Break by WooThemes has unlike the others put the call to action buttons at the leftmost side. It is clean and clearly built with usability in mind. The slider can easily be disabled.

Coffeebreak Minimum Viable Product WordPress theme

6. iProduct Theme by Templatic. Yes it is a product-centric theme. Its layout differs from the others as its download buttons are centered underneath the product image. iProduct comes with a pricing plan module, as well as a testimonials and customer service widget by default.

iProduct Minimum Viable Product wordpress theme

7. Eminent is a simple company-product hybrid. It provides call to action along with Twitter aggregation and client list features.

Eminent minimum viable product wordpress theme

8. Ignite is one dead simple theme. It is primarily a landing page, but it might make a good basis for starting the design of a minimum viable product site.

ignite minimum viable product wordpress theme

9. GetBusiness is a Web2.0-style theme more focused on company profiling. However, with slight modifications it would work as well as a minimum viable product theme. The call to action button and value proposition is at the heart of the front page.

GetBusiness minimum viable product wordpress theme

The themes have in common the emphasis on minimum viable product techniques. Their design is built around the product rather than the other way around. There is a clear slogan and value proposition, as well as product feature listings. Call to action buttons, along with testimonials and customer service widgets are at the center of the templates. Perhaps the most important, the minimum viable theme should organize for customer feedback and simple testing of ideas.

You may have noticed that WooThemes and Templatic themes dominate the list. I believe that this is not by accident. If you have a look at their respective sites, you'll see that they make good examples of how to design a compelling reason to buy.

If you like this post you may also enjoy Business Model Press, a WordPress Plugin for Lean Startups.

Business Model Canvas Tool for WordPress

What is Open Source Entrepreneurship?

Recently, I commented to Dogpatch's blog which coined the idea of Open Source Entrepreneurship for their philosophy; "the community benefits from a very high level of interactivity and sharing between the members". With the growing role of open source as an enabler of entrepreneurship, I believe that coining the idea carries responsibility and deserves further elaboration.

With EasyPeasy, a community providing an open source operating system for netbooks, I observe that some competitors makes use of open source software alike. They don't, however, share their source code or new builds back with the community  - which in the first place provided them with the opportunity. Open source software may be an impetus to entrepreneurship, but is it mutual? Should open source enabled entrepreneurs contribute back, or does the argument “we give back when we grow big” holds?

With the dissemination of open source software, technology becomes commodity and allows entrepreneurs to shorten development and time-to-market cycles. Since open source software is available to almost anybody, it's not the technology itself, but the application and capacity to meet with customers’ needs that makes it a competitive edge. Consequently, the basis of value creation migrates from "back-end" product development towards "front-end" customer development. For an example, the threshold for putting up a LAMP architecture and yet another Digg-clone script is minimal.

I believe that entrepreneurs that are using open source should share their modifications and extensions from the start. Even in spite of competitive risk. And it is more to it than ethics. The nature of open source methods allows startups to leverage the true value of building user and customer relationships, learn from and test their hypothesis with early adopters. This is essential to user-lead product development which turns out to be a promise of value creation. As with social media, community management becomes a necessity and startups will be able to get a head start when it comes to tapping into their users' needs. When done right the startup will be able to recruit from the open source community, and create market evangelists as they get increased ownership to the product.

There is probably more to it, but I hope that open source entrepreneurship adapts open source software thinking but exploiting it. See also Matt Mullenweg, WordPress founder: Why it pays to stay faithful to open source. In the long run "giving back" will help the open source paradigm to evolve, and in turn spur entrepreneurship.

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The network economy calls for new models – entrepreneurship or management?

Technology changes, yet methodology remain. When managers develop strategies for their companies many still use the tools of the traditional organization. As mentioned in the previous post on the Lean Startup Business Model Pattern, there's a growing toolbox of methodologies. However, the traditional business strategy formulation frameworks still fail to adapt technology change and the network economy, as well as the understanding of entrepreneurship as a process but a whim. I reckon that there are some trajectories especially fruitful for adaption.

  • Take Michal Porter's frameworks for an example. How do you apply the value chain framework to networked businesses, two-sided markets (e.g. social networks, online dating, auction sites, search marketing, credit cards, banks, etc.) where manufacturing is not the locus of value creation [1]. Management and consultants of all colors tend to stand by the former, but are the models still valid?
  • Also consider whether entrepreneurs have the time and resources to sit down and carefully lay out their long-time strategy. Or whether strategy formulation should come as consequence of processes where resources are scarce and uncertainty is extreme. This calls for new frameworks that embrace entrepreneurial learning and change methodologies. To cite Steven Blank, A Startup is Not a Smaller Version of a Large Company. Instead early stage ventures require their own tools and techniques.
  • Commodification of web services, API's and social media allows unstructured strategic models to become structured. That is, conceptual models would integrate data about your customers, such as user behavior and demographics to aid in decision support and increased responsiveness. Similarly, how does rapid collaboration and the free flow of information that are made possible with the social web affect the technology adoption life cycle?

The management challenges presented by entrepreneurship are different [2]. Nevertheless, the management challenges presented by the networked economy (read cloud computing, social web, you get it) are different. Network companies create value by facilitating connections between two or more customers. Not by efficiency in A-to-B manufacturing. Too often  managers try to use traditional strategy methodologies when dealing with new technology paradigms. Similar to what Clayton Christensen & co may think of as cramming. When dealing with the introduction of disruptive technologies of any kind, managers still have to align with entrepreneurial approaches. Indeed, there is a need for change methodologies.

[1] There are some excellent work on value networks and multi-sided markets by among others Ø. Fjeldstad and E. Andersen's Casting of the Chains , Tom Eisenmann, and the contributors at the Catalyst Code blog.

[2] This post was also inspired by Is Entrepreneurship a Management Science? by Eric Ries for Harvard Business Review

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What Do You Want To Read About Startup Methodologies?

While talking about user generated content and customer development in general, and in order to learn about my readers, I figured that I would walk the talk. Having some new ideas on the subject of startup methodologies, I would ask of your opinion on what should be my next post. For those of you who would consider the case studies, EasyPeasy is an open source operating system for netbooks. It has 1M downloads with users in over 142 countries, and currently attempts to pivot into the Social OS space.

Social Media Strategy Frameworks: what about the metrics?

The social web has created an ecosystem where off- and on-line businesses are rushing into blogs, social network pages, communities and other social media. When will organizations start taking a structured, holistic approach, rather than just pouring budgets into all cool ideas? While I have been on the outlook for such supportive frameworks during the previous weeks, the following three seems to be the most referred.

  • The POST MethodPerhaps the most popularized framework as of today, the POST method by Groundswell describes a systematic approach to social strategy. POST is a acronym for People, Objectives, Strategy and Technology.
  • The Three SpheresAlthough Jeremiah Owyang applies the Three Spheres to web strategy in general, social media strategy could be considered a sub-set herein. The three spheres are the Community Sphere, the Business Sphere and the Technology Sphere.
  • The Five S's. Windmill Networking suggests five basic “S” concepts of social media marketing: Share, Support, Social, Strategy, and Sales.

The figure's colors show correlations among the components in the frameworks. Conceptually there is a technology component at the bottom, and a business/strategy one at the top. In the "middle", there is a social-community component (often user-generated media) - the business logic that technology and strategy align with. Yet, there is room for more descriptive frameworks for managing social media strategy.

With this middle layer I believe that time has come to revisit the true meaning of bubble-ish network effects and the "openness" as a part of every business model. This is the gist of  user-generated content. Also, I'd prefer to add an additional layer, it be "M" for Metrics into "POSTM". In the months and years to come, measurement will become a key activity and impetus to competitive advantage . While control migrates back to the demand-side (i.e. buyers of social media strategy), knowledge of metrics will become invaluable. As Thomas Davenports title suggests, is Competing on Analytics: The New Science of Winning?

Disciplined Creativity: how to balance between creativity and focus?

Innovation and entrepreneurship is subject to a fundamental paradox - the trade-off between creativity and focus. Many entrepreneurs are by nature creative individuals that must balance between glazing new ideas, products or features at the one hand, and execution and determinism at the other.

DisciplinedCreativity-methodologist

The Disciplined Creativity idea is derived from the Flow concept by Mihály Csíkszentmihályi to help innovators reconcile creativity and discipline in parallel.

Update: In light of Lean Startup and Customer development methods this brings about a discussion on how entrepreneurs can stay true to their vision while still maintaining the flexibility to pivot.