In his talk at the March 2013 entrepreneur meetup, Paul Daniel (@paulrdaniel) spoke of the flexibility start-ups require until they find a sure footing.
The issue is not just finding customers. It is also about getting the right product to those customers, Daniel explained. And, while entrepreneurs may start out with a product idea in mind, the successful ones will often end up selling something different.
One classic example is the William Wrigley Jr. Company of Chicago, Ill. It was founded in April 1891 by Wrigley to sell soap and baking powder. In 1892, he came up with a promotion: A free pack of chewing gum with each can of baking powder.
“The chewing gum eventually became more popular than the baking powder itself and Wrigley’s reoriented the company to produce the popular chewing gum,” Wikipedia says. Before Wrigley was bought by Mars for $23 billion in 2007, its annual revenue was $5.4 billion. That’s a lot of sticky pavements.
That reorientation is now known as a pivot in start-up jargon. Wrigley the entrepreneur was prepared to experiment and adapt, and recognized that cleaving to his original idea was not the way to stay in business.
That company has gone from selling engines to “selling thrust,” Peppard said. A company that traditionally manufactured engines and cars has spun its business model and is now monitoring performances of those engines in real time and selling that service too, he said.
To bolster the case for flexibility, Daniel cited some of the definitions of start-up developed by experts in the field today.
Steve Blank on why startups exist: a startup is an organization formed to search for a repeatable and scalable business model.
Eric Ries defines a start-up as: A human institution designed to deliver a new product or service under conditions of extreme uncertainty.
Older definitions exist, of course. Legendary management guru, Peter Drucker said: An entrepreneur searches for change, responds to it and exploits opportunities.
Those definitions are all far removed from popular conceptions of entrepreneurs who have that eureka moment before selling widgets like hot cakes.
Instead, the definitions deal with uncertainty and searching. This is where the famed nimbleness of the small organization comes in to play. But the entrepreneur has to be nimble of mind, too. They have to be willing to ditch ideas that they see fail and they have to constantly examine their ideas’ effectiveness.
Ries recommends holding regular pivot meetings to avoid surprises and to avoid being forced in to last-minute changes before resources run out.
But Daniel cautioned against pivoting too soon because that, too, is a drain on resources. “Don’t be shy to feel the pain, too,” he said.
Image of “Last Meeting” courtesy Hiking Artist on Flickr.