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October - 2008 - issue > Entrepreneur
Stratergies for startup Success
Gunjan Sinha
Wednesday, October 1, 2008
Entrepreneurs and corporate leaders have to identify the best strategies to drive success of their businesses. How does one think about startups or innovation strategies that might work? These strategic techniques are often different from what might be the topic of discussion in MBA classrooms - startups are often resource starved, do not have ample credibility in the marketplace yet, are often trying to push half-baked ('beta') products and services, and in many cases their markets are also not ready for the prime time yet. Yet, strategy plays a critical role in the success or failure of the startup experiment.

The author is the Chairman of SiliconIndia.com and MetricStream. An internet pioneer, he was the co-founder and President of WhoWhere? Inc., a Internet directory services company acquired by Lycos in 1998 as well as eGain, an online customer service company. Sinha can be reached at gunjan@metricstream.com
Strategy #1: How are You Different?
This is an important question for all entrepreneurs to answer for themselves. How are they going to be different from other players in the marketplace? For example, Apple focused on 'UI'as the big differentiator while it thought about its iPhone product line. Similarly, promising startups like Facebook saw an emerging need in social networking, which was not best served by established players like Google or Microsoft. Likewise, startups like salesforce.com recognized early on that salesforce software is best delivered through the Web as a service.

SiliconIndia.com community itself recognized the need for building a professional Indian community, when nothing like that existed. Existing players like the big media companies in India are focused on the wider consumer segments, while the global networking sites like facebook, myspace, and linkedin are serving everyone around the world, hence cannot dedicate 100 percent of their focus on India. The key question for the entrepreneur is to identify a niche or a market need where you can indeed be different from the established players.

Strategy #2: What Capabilities areYou Building to Enhance Your Differentiation?
Once you have found a niche or a market opportunity, where you can indeed be different, the next big challenge is to put some capability behind your differentiation. The big question is about what you do differently to stay differentiated, and what capabilities are you building within your firm or organization that others are not able to build as effectively? For example, in Apple's case, their experiences with 'Smart UI' with iPods, iMacs, and a brand image of building user-centric products, gave them a real advantage in building iPhones. They hired more UI experts, and out-innovated competition on the product UI axis. Similarly, Salesforce.com, early on focused on aspects like multi-tenancy, self-service, ease of signups, and a fast delivery mechanism of software as a service. They hired employees with Web background, and directed their product engineering in that direction. Established software companies like Oracle and SAP could not easily rival these capabilities, given their products had to be built for enterprise implementations and installations. Similarly, here at SiliconIndia, the focus has been to differentiate on building a team of news, blog, video, event management, and editorial experts who can truly catalog and produce differentiated content for the professional Indian community. The key is that not only is it important to have a unique focus from your competition, you also have to learn to do them differently.

Strategy #3: How do You Prevent Your Competition from Copying Your strategy? Good strategies are built to be sustainable. The trick here is to design strategies for your product or startup in such a way that established players have to 'kill' their current revenue base or product or market success to uniquely copy your business strategy. For example, Oracle and SAP had to kill their 'enterprise software' model to become purely 'software-as-a-service' companies. Given that large chunks of revenue were dependent on their existing software model, it became impossible for them to fully copy salesforce.com's market approach. Similarly, in case of siliconindia.com community, communities like facebook are focused on global audiences, and it is not in their interest to drop their current focus and get entirely focused on the Indian communities. Smart entrepreneurs play the competitive 'chess game' to determine how competitors might react to their product or market moves, and will have them to kill or abandon their current market successes to copy the strategies.

Strategy #4: How do You Map Your Strategy to an Organization? Good strategies are always the ones that can be easily executed. Strategies that require inordinate amounts of effort or resources, or are very difficult to execute, are inherently flawed. Entrepreneurs and business managers should review their strategies if their organization is not able to effectively align to their strategies. As a leader, it is your job to come up with an organizational framework, where you determine who is going to play what role, and how can the strategies be executed effectively; what kind of skill sets do you need in your organization, and what is missing in your current organization. Answering these questions early-on might prevent lots of iterative learning. I urge folks to share your thinking and organizational strategies with your team members, but also get advise or feedback from others in the industry. You will be surprised how often people are willing to help for no cost or fees. All you need is an open mind. Many entrepreneurs start believing in their own world and often have a hard time taking feedback or listening to others. To be a good strategist, you have to be a good listener first!

Strategy #5: How do You Create a Culture of Good Strategic Thinking? Successful startups are able to create a culture of strategic thinking and creativity. The strategy is not just a task of the CEO or the entrepreneur or the VP's. It is ingrained in the very fabric of the organization. Everyone is at least spending 10 percent of their time thinking, refining, and acting upon the new creative strategies to out perform competition. It is a culture where every employee feels empowered and is required to think outside the proverbial box. If you find that your current organization is not encouraging you to think strategically, there may be a challenge at hand! Clearly 90 percent of your focus has to be on execution and delivering on the day-to-day tasks, be it delivering the code, or selling your product, or keeping the customers happy. Yet, all employees must be involved in the strategy process and devote 10 percent of their time to driving the organizational strategy.
Winning startups and innovators often have strong focus on these five strategic questions. If you think that your current organization can indeed improve in these regards, you should consider stepping up to proactively addressing it. That might end up being the best strategic move for your own career!

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