Premature scaling, lack of customer discovery, and applying outdated methods led to some of the worst innovations.
MIT Technology Review published a list of the worst innovations from the past two decades. Some were too early for market; some were a product without a customer; others were helpful, but caused more problems than they solved. The list includes:
What do many of these innovations have in common? They were built in the 21st century using 20th-century entrepreneurial rules. They failed to put customers ahead of investors. They built solutions and products in secret, and only when the products were „perfect“ went looking for a customer. They failed to find a repeatable, sustainable, scalable business model.
Entrepreneurs in the 20th century were driven by engineering innovations, and generally the emphasis was on secrecy. Companies would spend years developing „the next big thing“ and only show prototypes to focus groups that signed NDAs. Working during the original dot-com boom in New York, I saw this daily. Many 20th-century founders raised money first and then turned their mind to users. Profit often came last. This approach often led to premature scaling (where founders invest resources before proving the need for them and knowing how to efficiently deploy them). Remember, the internet had not yet developed infrastructure, so startups had to do everything manually and by themselves. There were no Google Adwords, PayPal APIs, Amazon SDKs, or Facebook Pixels. So launching a startup took millions.
But today, hundreds of dollars are all that is needed to test your startup opportunity. The tenets of 21st-century entrepreneurship can be found squarely in the Lean Startup methodology developed by the likes of Stanford’s Steve Blank, Harvard’s Eric Reis, and MIT’s Bill Aulet. Here’s how to ensure your business model is steeped in 21st-century methodology:
- Get out of the building. No answers are found in a company boardroom or a founder’s garage. Answers as to what business model will disrupt an industry lie in the collaborative space between stakeholders. „Get out of the building“ means meeting face-to-face with lots of other people in order to hear their ideas.
- Share everywhere. Once, founders were told to keep their ideas to themselves. But this paranoia over intellectual property has been replaced by collaborative communication. Instead of keeping your venture a secret until it is perfect, you should show it to early adopters and other stakeholders in an effort to have them collaborate on the development. Working with users early in the process increases your chances for building a successful solution that sells.
- Get a minimum viable product. At the heart of the Lean Startup method is the idea that „done today beats perfect tomorrow.“ The old notion that companies only have one chance to make a first impression is replaced with the idea that users benefit through early collaboration, and it is better to release an ugly prototype today than to wait for months until it is perfect.
- Build, measure, learn. The process of building a startup is a series of experiments that require you to build a prototype, test it with real early adopters, and use that data to drive strategic decisions on how to iterate the business model.
- Pivot. A pivot is a change to one of the nine key elements of a startup’s business model (customer segment, UVP, KPIs, channels, etc.). In the modern day, entrepreneurs apply a systematic and scientific approach to testing assumptions and pivoting based on the results.
- Continuous deployment. Just as you need to get your MVP into the hands of early adopters, that process is continuous. Ventures are always building the next version; testing the impact changes have on adoption, revenue, and profit; and pivoting as needed.
- Split testing. The best way to decide what color your product should be, for example, is an A/B test, where 50 percent of users see Color A and the other 50 percent see Color B. Then, track which had a greater impact (e.g., which led to more sales).
- No more business plans. Business models have evolved from business plans to Lean Canvases. Business plans were too static, took too long to research, and really only reflected the management’s internal assumptions. A Lean Canvas is a one-page business model representation that acts as a living document, allowing founders to evolve the business model through experimentation and iteration.
Innovations like Google Glass, Segway, and cryptocurrency were built after 2000, but using 20th-century approaches. These products were built in secret and touted as game changers, but really didn’t engage in the customer discovery and iterative evolutionary process that has led to startup successes like Tinder, Uber, and Dropbox.
So if you don’t want your new product, service, or solution to end up on next year’s MIT list of the worst technology innovations, make sure you’re building a 21st-century business using 21st-century methods.