Stress test your business concept

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The authors of this article (link below), Karl Stark and Bill Stewart suggest you ask yourself 8 questions to really stress test your business concept. Actually, The Genesis Genie believes these are also worthwhile questions for organizations that have been running for a while and may be struggling in this economic climate. The questions are:

  1. Who are the ideal customers?
  2. Does it already exist?
  3. What is the customer doing currently?
  4. What is the all-in cost of the current solution?
  5. What asset or capability are you bringing that is unique?
  6. How will competitors react to a successful launch?
  7. What is the business model?
  8. How can you test and learn before building the entire structure?

At Genesis, we would suggest two further questions:

  1. Is this cash viable on a stand-alone basis
    That is: will you need to borrow / invest before you are in a positive cash-flow situation; or can you “boot-strap” it. That is can you survive without an injection of cash (and what is your contingency plan)?
  2. How are you going to persuade your customers?
    Either to switch from their current solution or buy into a brand new concept.

The article is short and worth reading as the authors elaborate on each point together with some rationale.

Test your new business concept: 8 questions

Lastly, if you are serious about getting your business underway, you should have an objective audience listen to your responses to your questions and offer some challenge. Most entrepreneurs are passionate visionaries which is a wonderful characteristic – but can sometimes blindside us to issues that are contrary to our vision. This is a role that The Genesis Genie can play – mail or call us now for a no-obligation discussion of how we can help.

Mail at genie@genesismc.co.uk
Skype simongifford

 

 

 

Peter Drucker on strategy for entrepreneurs

There are some brilliant authors who write about strategy: Porter, Prahalad and Hamel to name a few. But I am constantly amazed at how timeless is the advice of Peter Drucker. I was re-reading his work on strategy and entrepreneurs the other day in a book called The Essential Drucker (click on book to see contents) which is a collection of his best essays. The essay I am discussing today is called Entrepreneurial Strategies, which came from a book he wrote in 1985 – when only a handful of people had even heard of the internet.

Although one must consider the concepts in the light of today’s environment where technology and other conditions have changed the playing fields for entrepreneurs, the four strategies that he suggests are as applicable today in Silicon Valley as they were in the manufacturing era in which they were written. Below is a summary of his set of entrepreneurial strategies:

  1. “Being fustest with the mostest”
    That is being the unchallenged leader in your field – and staying there. Would this be Facebook in its early days? Or Pinterest? They certainly started that way and have attempted to maintain dominance even if the field is cluttered with would-be successors. Blackberry was another example here with its mobile email system. Peter Drucker recognises it as a potentially highly rewarding strategy but also warns it is the most risky – and it is often a challenge to maintain the position.
  2. Creative imitation
    1. Creative imitation: “Hit them where they ain’t”
      Instead of designing something brand new, try to exploit potential opportunities of someone else’s innovation – but who have failed to exploit the opportunity to date. The teenage son of a friend of mine takes apps designed for Apple and converts them into apps for the Android – and makes a fortune. I am not debating the morality (or even legality) of this, but it is an example of this type of strategy.
    2. Creative imitation: entrepreneurial judo
      Here the entrepreneur tries to succeed in a market which someone has created but for some reason is not concerned about. The two examples used are where an organisation develops a product but does not capitalise on it through arrogance; or where an organisations simply picks out the high profit sector of the market and leaves the rest. Many companies operating at the “bottom of the pyramid” (such as mobile phones in Nigeria) are operating here and finding ways to make money and provide a valuable service.
  3. Finding and occupying a specialised “ecological niche”
    This is where a company obtains a practical monopoly in a small area that, in itself, does not offer much incentives for others to compete in, as it is too small and/or requires highly specialist skills. An example is an Israeli company (Givun Imaging) that makes ingestible video cameras (fits into a pill) and allows Doctors to see the inside of the intestine of their patients.
  4. Changing the economic characteristics of a product
    Here the entrepreneur takes an existing, well-known product  and positions it differently in the market through better adapting it to the customers requirements such as changing the pricing model and so it is generally based on the premise of creating new customers for an existing product (Drucker mentions 4 ways of doing this in the article).
    Netjet may be an example of this whereby it puts the use of a private jet within the price range of executives who could not afford their own jet.

In the essay, Drucker considers the risks and downsides and opportunities of each strategy with examples. He explains how a strategy may actually be a mixture of several of those described individually. He also discusses how different strategies require different behaviours on the part of the entrepreneur and require a different type of innovation.

As part of the Genesis Strategy Genie process we discuss and challenge entrepreneurial strategies with this type of thinking, together with tools such as the Business Model Canvas. The work is useful to organisations doing well, but who would like to grow more rapidly as well as companies suffering low or negative profits who would like to see how a shift in strategy or focus can cause a quick turnaround.

If you would like to review and possibly strengthen or refine your strategy, please contact us for a no obligations discussion – either go to the “RUB THE LAMP” link in the menu or the “Genie for entrepreneurs ONLY” link and you will be given a route to contact us.

Below is a link to a brief summary of Drucker’s essay, but I strongly recommend getting hold of a copy of the book and going through it in detail – or speaking to someone at Genesis and finding out how to put the theory into valuable practice.

Summary of Drucker article.

 

 

 

Creating a Lean Start-Up

This is a useful article from Eric Ries who discusses how to try to reduce unnecessary costs when starting up a business. Although some of his earlier remarks may challenge your thinking as they do mine, when you get into the detail of the article itself, he puts across some useful lessons.

His two personal examples demonstrate how easy it is to over-engineer a product or a business before one has a clear understanding of exactly what is your service, who you are selling to and what is your basis of competitive advantage. Strategy 101? Perhaps, but an awful lot of organisations (large and small) lose sight of that.

Although he calls it “lean” start-up, to me it is more of a design approach to developing new products and strategies: idea > prototype > test > refine with an iterative loop in the last 2 elements before investing too heavily in the final product. But no matter what it is called – it is good advice. Click below to read article:

Eric Ries: Lean Start-Up

The reason we have decided to promote this article is because the thinking demonstrates some of the pitfalls of not thinking strategically or not having a clear strategy based on real customer needs and market dynamics. And these are the type of things we can help you with when developing or refining your strategy.

So have a look at our latest on-line tool: The Genesis Strategy Genie (click on genie below) and see whether the genie might help you put “strategy – at your command”.

Welcome to the Genesis Genie

Genesis Management Consulting is an organisation with a mission of

“improving lives through better decisions”

Our history is in classical strategy consulting and we long ago recognised that the essence of strategy is making a number of critical strategic decisions that shape the direction and future of the organisation and guide it in its striving to reach its objectives.

For this reason, we are developing a set of products that assist organisations in taking strategic decisions. They are designed to be run remotely (web, phone, screen-share, cloud) and are supported by a range of technologies. In this way we are able to deliver an exceptionally high value solution at a cost significantly below that which is generally associated with some of the more traditional offerings.

We have named this range of products “The Genesis Genie” for obvious reasons. The first in the series to be launched is The Genesis Strategy Genie aimed at mid-sized organisations. Below are a number of publications that tell you more about The Strategy Genie – starting from a short 2 page overview through to, for those that are considering investing in The Genie, a 13 minute video.

Note: If you are viewing from your iPad or other tablet, you may not be able to see the presentations and/or video embedded below: In that case, to view, simply click on any of the links immediately below:

For those of you on traditional computers, you should be able to view from here:

Note our limited special offer. Click on the star!

 

The 2 page overview

The video (slideshow plus narration)

If you would like to discuss this further, please contact Simon Gifford at genie@genesismc.co.uk for a no-obligation initial meeting to explore if the Genesis Strategy Genie may be appropriate for your organisation.

 

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