A successful start-up is more than just a great business idea
A couple of years ago I had a conversation with a young business investor. His company invested in start-ups that had the potential to offer new, industry-changing products or services. What kind of industry was not important, the key was finding products or services that would revolutionize a market.
People set up businesses for all sorts of reasons. Some dream of making a living doing what they love. Others want to be their own boss or aspire to get rich. Whatever the reason, most entrepreneurs have one thing in common – they are focused on their core business.
Core business refers to the main activity or function of a company that generates the majority of its revenue and profits. Therefore, companies with a growth mindset tend to focus on two things:
1) improving existing products or services,
2) inventing new products or services.
Organizational structures
Everyone knows that how we run a business will impact its profit. But because a company’s organizational structure isn’t part of its main business, we tend not to give it our fullest attention. Rather than investing time and money in exploring new ways of working, we follow a very traditional approach – we focus on perfecting internal processes and workflows.
Another common approach is to re-organize a business, but in practice, this usually means moving around people and departments, not revolutionizing the way we work together.
There's more than one way to run a business, but most companies are structured in the same hierarchical way. Why? Partly because we know it works and so it’s a safe bet. It’s also easy to implement because everyone’s familiar with it. Yet, is it the best way to run a business?
Over the past decade, a growing number of companies have tried new ways of organizing themselves. Some have succeeded (like Buurtzorg and Valve Corporation), while others haven't. What successful companies seem to have in common is that they encourage natural leadership and teamwork in some form (although they may not call it that).
I’m not saying that the core business is irrelevant. Far from it, but a company's success does not hinge on a product or service alone. Business is built by people, for people. It’s all about relations and interactions between individuals and groups. By changing the way we run our businesses, we can impact the way people interact.
When I talked to the young investor, I realized that this was not something he had contemplated. A successful start-up is more than just a great business idea. I argue that the key to success lies in how well the people collaborate. A strong, collaborative team can take on almost any challenge. Therefore, investment companies should consider whether or not a business has the potential to build natural leadership and followership.
