Focus on the Product before the Business Model
It’s not unusual for entrepreneurs to get ahead of themselves. Entrepreneurs are aggressive and opportunistic, their pace accelerated by their hopes and dreams. Doing things in the wrong order, however, is one of the surest ways of sabotaging your start-up; and doing them in the right J Curve order (Create > Release > Morph > Model > Scale > Harvest) is one of the best ways of ensuring its success.
Consider two of the most common chronology mistakes:
- Focusing on the business model before figuring out the product
- Scaling before nailing the product or business model
You’re likely to make the first mistake because when you explain your new idea to people, you’ll be peppered with questions such as, “How are you going to make money at that?” While you don’t want to ignore that question completely, the real questions to ask yourself are “Can I make something people will really want?” and “Can I get customers to actually use my product or service?” Because if you can’t get people to use your product or service, then you are not going to make any money at it anyway. What history generally has proven is that if you can get customer traction, you can find a way to make money. By focusing too much on the revenue model, you may be creating a myopic view of what your idea should be and blocking yourself from considering some important paths for evolving your initial idea. However, it might be one of those alternate paths or a later iteration that brings you the most customer traction. In addition, you waste valuable time being overly focused on the business model early on because you don’t yet know what the actual product will be. You may go through two, three, or more iterations of the product, and by the nth iteration, the model you created for the first iteration will be hopelessly inappropriate. Paradoxically, emphasizing a business model prematurely, you may block yourself from the best money-making opportunities. You’ve structured the company in a certain way and hired people with certain types of experience
to capitalize on the first product. Most organizations aren’t sufficiently agile to shift as their product shifts, so they may have the right product but the wrong business model.
It’s only when you gain significant customer traction with a product iteration and you are through the Morph phase that you should spend significant time on the business model.
Avoiding this mistake requires patience, a virtue that some entrepreneurs find is in short supply. Following the proper order will allow you to focus all your resources and attention on the phase you are in, so you can nail it and move your startup to the next phase.