Six traps innovation start-ups fall into

In 1685 Johann Zahn envisaged the camera, 150 years before technology caught up with his idea to produce the semblance of the first photograph. How our perception of history might have changed if he had been able to convert his idea into reality.  I sometimes wonder how our descendants will look at our ideas in a 150 years and laugh at what we missed or how long it took us to adopt some whiz bang idea.

 

I’ve seen and been involved in many technology start-ups, in numerous sectors.  Nearly all have brilliant ideas but too many just don’t make it to market successfully.  Why?  Here are some generic characteristics of these firms, and the inventors and pseudo-entrepreneurs behind them that I have observed:

1.        

It always takes longer than you think: I’ve yet to see new technology being launched to market on schedule let alone ahead of it.  Something unexpected always comes up and all too often they just run out of funds.

2.        

It always costs more than you think: Partly a consequence of the first point of course but also all too often too much of their limited resources are spent on the wrong things. 

3.        

Too much time and effort is spent trying to improve or perfect the technology:  Innovators fall in the trap of taking comfort from what they are good at doing rather than doing what they should be doing.

4.        

The business model is flawed:  All too often I have seen start-ups make the cardinal mistake of focusing on a business model that makes sense to them, but no one else, least of all their potential customers. 

5.        

The route to market is suboptimal: Using a railwayman’s metaphor, firms take the wrong train to the wrong station in trying the reach their market.  They are so enthused by their invention that emotionally they lose sight of reality, and are surprised when the market responds mutely.

6.        

Approach to protecting IP is naïve:  Getting a patent is rarely enough and sometimes not even the most appropriate course of action.  It’s crucial to understand the depth and breadth of cover patents can provide in a given application and to what extent confidentiality agreements and even trade secrets form part of a holistic IP strategy.

Of course these are only some of the challenges innovation start-ups face. Like many SMEs, innovation start-ups struggle to access smart funds and when they do, have little appreciation of the consequences of introducing investors into their business.  They struggle with ideas related to valuation, control and exits.  Other common issues relate to managing rapid growth and dealing with founders’ bias views about their products superiority against competitive or substitute products.

And the solution: well, it’s never easy but it starts by introducing a proper governance process operating through a board, ensuring the business remains focused on the right strategy.  And the key cultural change that is required is shifting the mind-set from an R&D orientation to a C&A (Commercialisation and Adoption) market attentive business.

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Andrew Paszkowski
14.06.2017