I’d like to propose a definition:
An innovation startup is a business that is testing assumptions that haven’t been tested before (i.e. sufficiently new teachnologies, product & services and/or markets).
At Geovation, we like to deconstruct innovation in the following way:
Innovation = Problem x Solution x Execution
For the purposes of this post I’ll be referring to this as the Innovation Equation. That’s very neat, but what does it really mean?
We believe that there are 3 essential aspects to innovation which are separate but intimately related. The resultant amount of innovation is a product of the size of the problem being solved (both in terms of the amount of pain being relieved and the number of people affected), the amount of benefit provided by the solution to the problem and the effectiveness of the execution of that solution.
This is not a scientific definition (the terms amount, size, benefit and effectiveness are in italics because they are somewhat nebulous in their meaning) but is a useful heuristic for defining an approach to achieving successful innovation with a startup:
- First, define the problem to be addressed:
- What exactly is the problem you’re trying to solve?
- Who does it affect?
- Why does it matter?
- Once you have fully defined the problem you can consider what solution you intend to provide:
- What benefits does it bring to the customer?
- How are you testing its potential?
- Why is it better than the alternatives?
- Defining a solution is one thing, making it work is quite another. Execution is arguably the single most important factor in creating a start up, providing that the method of execution supports the problem and the solution:
- How will your idea make money?
- How scalable is your solution in the long term (never worry about scaling in the short term - you need customers before this becomes an issue!)?
- What is your unfair advantage for success?
Questions, questions, questions
If you accept my definition of an innovation startup as stated at the beginning of this post then I hope that what I’m about to say comes as no surprise.
As an innovation startup your very existance is a question
In my work with innovation startups it is usually the case that people understand the principle defined in the equation above: define your problem, create a solution that solves it (or part of it) and build that solution. What is harder to communicate not only that this is not a linear process but also that it is a learning process designed to answer the question that your startup is asking.
The world of any startup is one of uncertainty. This is especially so for innovation startups, which is probably why 9 out of 10 of them fail. The more uncertainty you can mitigate by asking appropriate questions, the better chance you have of coming up with the right answer.
You may have heard of the Lean Startup principle of Build, Measure, Learn which is designed to support this learning approach. I personally believe that this principle could be better stated as:
Hypothesise > Experiment > Learn
The reason I re-state the ‘lean cycle’ like this is that, in it’s original form, I believe it puts undue emphasis on the Build element of the cycle. To my mind, the emphasis should be on the question you want to know the answer to and the learning that comes from the answer, not the building itself.
This implies that you need to define the question each incremental experiment in the execution of your startup is going to answer before you build anything.
How do I know what to questions to ask?
One of the hardest things about innovating is working out what questions to ask. Unfortunately, this is not so amenable to a simple heuristic such as the innovation equation stated at the start of this post. There are some common hypotheses that most startups will want to test, measure and learn from but most of your questions will be individual to your problem/solution.
To help solve this issue it is useful to look at Problem > Solution > Execution in another way. When considering what questions you startup needs to answer I suggest thinking in terms of:
Desirability > Feasibility > Viability
This relates to the innovation equation in the following way:
- Desirability refers to the problem. In essence, you will be asking “Do my customers want/need to have this problem solved?”. Some of the risks that need to be mitigated here are:
- Is the market big enough?
- Will customers pay for it and if so, how much is the solution worth to them?
- Can we reach, acquire and retain target customers?
- Feasibility refers to the solution. The focus here is “Can we do this?”:
- The risk is that the business can’t manage, scale or get access to key resources (technology, IP, brand etc.), key activities or key partners.
- Viability can simply be expresses as follows:
- Can we generate more revenue than costs?
If you can change your thinking to recognise the question that your very existance implies and can be honest and rigorous in your responses you have a much better chance of being the 1 company out of 10 that survives and thrives.
Over the next few months I’ll be posting more detail on what sort of questions to ask (and, just as importantly, what questions not to bother asking) and how to ask them depending on the stage you are at and the nature of your startup.
Watch this space!