Hiccups often threaten the best innovative ventures, but if you're forewarned, you can take preventive measures to ensure your start-up doesn't suffer from too many glitches.
Entrepreneurs constantly innovate to bring a growing range of tech products and services to us. However, the road to innovation is usually riddled with challenges. We take a look at ways to minimise the trials and tribulations of innovators.
1.If you dream right, your innovation will be spot-onâ€¦
.....And your clients, we could add, will make room for your product in their homes! Evidently, innovation and entrepreneurship are a direct outcome of vision. As of today, a plethora of foreign companies see India's huge untapped markets as a veritable gold mine. It's no surprise, therefore, that a wave of MNCs have set up bases in India, aiming to sell dreams that only their product or service can fulfill. Speaking of the innovation space in India, Vijay Anand, founder, Proto.in (the start-up ecosystem forum in India) points out that".......some of the very well-known lifestyle services in the developed world [still] haven't come anywhere close to being implemented here in India. Be it the next revolution in radio stations, ways and means to enable better interaction between communities, 'broadband' Internet, or smart homes - all are opportunities.
Interestingly, in dreaming big in India, the intention of overseas companies may well be to stabilise their own parent economy. According to Anand, "Despite seemingly valid claims, the stability of an economy depends on diversifying your target markets; India being this potentially huge market, it is being eyed by foreign companies as a last hope for their company stability - while we are still looking elsewhere for our hope to shine from. "Yes, these are the sad facts. Despite the huge market at home, Indian innovators still have their sights set far away - in Anand's words, they ".......look to 'more economically viable' markets abroad as their target customers." Apparently, they still haven't realised that today, it is not only appropriate to talk about innovation in the Indian context, but that they stand to grow explosively when they focus on one of the fastest-growing markets in the world - "India!
2. Don't just talk big. Put your thinking cap on.
Of course, there are always would-be entrepreneurs who seem to have a starting problem! They talk about what they'd like to do, but that's about it. They have no clue about the share of the available market their proposed solution could capture, the price people may be willing to pay for it, the competition, etc. In fact, ideation has far more to it than merely getting an idea. â€œIdeas are worth nothing," says Anand, as he observes that most people seem to demand millions in valuation without even proving a demand for an idea they came up with during the night. In contrast, ideation revolves around the formulation of a solution, which quite simply, is hard work.
And when it comes to hard work, there are no short cuts. Aadil Bandukwala, chief evangelist, Leading Minds, warns against 'shortcutting', which he describes as leaping to solutions in an instinctive or intuitive way. As he explains, "This seldom leads to an elegant solution, simply because deeper, hidden causes do not get addressed. Spontaneity works most of the time; however, it never is a permanent, reliable and scalable solution." Ideation also requires clear thinking that is free from assumptions, biases, and opaque mindsets.
Navneet Bhushan, VP & head, Hexaware Innovation Labs, describes the founders of tech start-ups as ".........those who are passionate about their technology, ready to invest deep effort and long hours in developing this technology, and who believe that what they are doing is actually relevant for the world at large." In the same vein, he points out that a person who converts an invention into an innovation, and thus gives the idea value in the client scenario, needs to be a social engineer as well. The bottom line is that if you desire to innovate, you must be willing to go the whole way, and invest time and effort - not just express random ideas.
3.You can't go it alone. Put together a core team.
Along with passion, belief and vision, Bhushan lists team spirit as essential for the long-term viability of innovation. When you're in for the long haul, you can't go it alone. You may have successfully ideated your solution, even validated it by meeting potential partners, clients, and industry veterans for their suggestions. After that, however, you need a core team made up of persons of diverse skills.
While your best friends from tech school may certainly share your dream, is this enough? As the going will most probably get tough, you may well reach a stage where your partners leave the team due to the need to make a living, as opposed to working on speculation. External opportunities may also lure key team members away. Bhushan believes it is pragmatic to agree, in writing, how long the team commits to working with you - say two years, or perhaps till the sale of your first product.
4. Talent is scarce. Get around that hurdle.
So you have your core team! But you still need more hands to get the work done, or the prototype built. In this context, Anand points out that start-ups face a major challenge, in that nowadays, most work on either Ruby or Python development platforms - and for both, there is a serious shortage of talent.
With the perceived risk of failure of a start-up, most first-time job applicants seek work in a large, established company, where they have 'job security'. Bandukwala opines that ".......people in India are still not ready to be a part of start-ups, where they will have to go that extra mile and do something innovative, exciting, incredibly crazy, something that can change the world. They feel that they might fail. However, what they fail to realise is that if you do not fail every now and again, it's a sign that you're not doing anything very innovative."
Anand proposes that a few start-ups get together, formulate an equitable agreement, and conduct week-long workshops to train 'blank slates', as he calls them, and determine which would make a good hire. "Training people,"he explains, "lowers the risk of making a bad hire and then having to go through that awkward 'letting go' phase.
Bandukwala also believes that often, the leaders expect a payoff sooner than is realistic. But expecting quick solutions from your team only puts huge pressure on your employees, who in turn, find it hard to focus on the products they're building.
It's not only babies that hiccup!
It's not only start-ups that face innovation hiccups. Innovative initiatives launched by existing enterprises also face their share of challenges, the most predominant of which stem from a mindset that thwarts innovation. Navneet Bhushan, VP and head, Hexaware Innovation Labs explains these difficulties:
- If the new initiative is considered something above and beyond employees' regular work, they fail to understand how it will connect to their regular work. As a result, they donâ€™t contribute, and the initiative fails. Instead, companies should realise that innovation is actually a social phenomenon (whereas an invention could be the fruit of a single individual's work). Creating structures and processes that offer opportunities for innovation via social interactions is a better way of fostering innovation in existing enterprises.
- Too much forcible process orientation has turned IT engineers into 'process junkies'. Unnecessary process orientation kills innovation under the guise of quality, repeatability and regulation.
- Fear of the unknown is often very acute in 'old-timers', who believe in the old ways, methods, and technology and can grow insecure with new ideas. They perceive anything different as a threat, and will systematically snub or scuttle innovation initiatives.
- Companies used to double- and triple-digit growth are now adopting new ways to keep the growth going - like employing less expensive non-engineers to carry out low-end work that was earlier done by engineers. As these employees are continuously reminded of their 'non-engineer' status, they usually don't think beyond the confines of their job definition.
- IT services companies used to a USD-INR conversion business model have no inclination to invest in anything new. Unable to accept new horizons, they subdue 'product' ideas with the statement 'we are a services company'.
5.As a newbie, you don't know the ropes - so get your mentor on board.
Bandukwala's words suggest that you should definitely know what it takes - in terms of time, effort and process - to transit from being a non-entity to a start-up worthy of VC funding. You shouldn't slow the process of innovation simply because you don't know what comes next in your venture's lifecycle. So, as you put your team together, Anand advises that you also get your mentor on board - someone who can guide you through the process of converting your idea into a saleable product, advise you during the rough patches, and also guide you to protect any IP you create, or point you to a well-established IP firm for advice.
Incubating - out of a centre
The going for technopreneurs is pretty iffy, especially if they are young twenty-somethings straight out of tech school. However, this is not to say that being taken under the wing of an incubation centre will banish all the challenges that come in the way of innovation. In India today, there are few incubation centres that have a list of success stories to boast about.
According to Vijay Anand, "Most of them [incubation centres] are academic institutes, and they run to understand and gain experience - to gain an insight into the lifecycle of an entrepreneur - and in most cases, are helpless spectators when the start-up hits some obvious roadblocks along the way."
Then again, another expert opines that well-meaning and technically sound incubation centres in India often fail, simply because young entrepreneurs perceive being assisted by incubation centres as requiring them to 'part' with' their innovation - which is not true!
A key takeaway from these observations is that if you get a good mentor on board, you'll be no worse off by giving incubation centres a miss.
6. Do funds seem hard to come by? Focus on transitioning to the right stage.
Every start-up is the result of a dream, but beyond the dream of merely creating a best-selling product or a must-use service, is the drive to earn big bucks. Interestingly, this preoccupation with money is perhaps what leads many start-ups to list 'funding' as their foremost difficulty. To this end, many start-ups try to get themselves 'spotted' by potential funding agencies, believing this will give them a head-start to success.
How could they be so wrong? Instead of whining about the lack of funds in the ecosystem, they should actually question whether they are ready for investments. As Anand opines, ......."nowadays.........there is way too much bad light shone on the investors. Perhaps it's time to turn the tables around and ask if the entrepreneurs are in the right stage for a VC to look at, to begin with........If your other metrics are in place, funding might be a relatively easy milestone to cross."
What are these metrics you should aim for? Clients, traction, validation, and partners; do this home work, and Anand says that getting funding will be a piece of cake from most investors.
Every VC seeks to fund an idea born from a credible, mature team, with a clearly-positioned product and market valuation. Your team must, therefore, focus on your business model and building your prototype, and then on transitioning through PR/media activities, a review of funding possibilities with an angel investor, and scaling up your operations in the real world. If you're done all these, you're far more likely to have the substance VC firms look for.
Why do you exist?
Vague mission statements are hard for employees, potential clients and investors to cotton onto. Aadil Bandukwala, chief evangelist, Leading Minds, quotes the mission of Wendy's as being, "To deliver superior quality products and services for our customers and communities through leadership, innovation, and partnerships." He observes, "We all love Wendy's. Yet, how many times when eating a burger at Wendy's have you felt that you're partnering in 'leadership, innovation and partnership'? Wendy's could rather use a short crisp 'mantra' like 'Healthy fast food!' - that pretty much summarises their basis of existence." The moral of the story is to choose a sensible, realistic mission statement!
Barriers to innovation specific to India
- Decades of protectionism before the economy was liberalised, have made the average Indian averse to taking even calculated risks.
- Scarcity of entrepreneurial skills in investigating the pros and cons of proposed technology innovations.
- Lack of access to well-researched databases relating to market intelligence or technology.
- An unwillingness to share work with another start-up or established firm to leverage their skills, slows down innovation.
- The inability of start-up firms to attract and retain skilled and competent manpower.
- Suppliers of parts may not desire to work with start-ups that have erratic, meagre cash flows.
- Few mentors are inexpensively available to start-ups. Hence, most start-ups suffer from inadequate management skills.
- Non-availability of institutional finance on affordable and easy terms.
- Absence of a widespread credit rating scheme for technology start-ups.
- Lack of technology-centric business incubation centres.
- Lack of governmental finance directed at promoting technology adoption.
- Inability of start-ups to identify or financially and technically evaluate alternate technologies to determine which best suits their requirements.
7. Poor cash flows can rock your boat. Manage your meagre cash flows.
Although bootstrapping your way to dizzying success may sound romantic, it isn't. For most start-ups, an irregular, insufficient cash flow is a perennial problem; often, they lack cash flow management skills and overlook formulating a cash management strategy and putting in place an execution team. However, the effective management of cash is a sound way to instil confidence in, and retain, your team and investors.
Forewarned is fore armed; now you know quite a bit more about what it takes to innovate without hiccups. Put these tips into practice, and watch your start-up run full steam ahead.