Are business development methods the seed of a business success? - Part 1

Yesterday, I stopped for a while and reflected on the work we have been doing these past seven months. In short, we have been gathering and analyzing the acceptance of business modelling methods by seasoned entrepreneurs, under the premise that this could be one of the success factors of any new business out there. We are studying how you build businesses.

But why may this be important for you (as it is for me)? The answer is not simple. Initially, we want to tell every entrepreneur that, although the conventional way of creating a business is still on top, many entrepreneurs (nearly half of the 234 that answered our survey) are trusting Lean Startup as their secret to build new business models. Is that a hint for success? Certainly not, but it should be refreshing to know that if you are an entrepreneur you have an alternative to the conventional way of developing a new business. This Lean Startup alternative apparently can help reducing the more than 95% failure rate of new businesses in the first six to eight years (to see how read Steve Blank writings on it). Secondly, making you aware that what you believe to be a great method to develop your business may not be the ‘only’ way to success is powerful. And harsher, it is possible that you need to work on several ways at the same time. The implications are deep, as ‘your way’ should ideally be coupled with ‘other’s ways’. Put simply, if you want to learn something in your business (say, knowing if your potential clients would buy from you) you better approach that learning from multiple methods, and here comes the trick, at the SAME time (too strong implications for many, I’m afraid). Humbleness and extreme hard work coupled with tons of imagination (your own or some other’s) are needed here.

Third, knowing how you accept to use one method or another might be relevant for you. Picture this, what if the way you build your business may be the strongest indicator of its success or failure? What if your selection of one method (including selecting none) makes your business doomed from even before its actual start? The answers to these questions are what we are after. And currently we have covered a first step of what we believe might be the DNA sequence of building a business: first, an entrepreneur chooses a method to develop her business. Then, she follows that method to actually start building it (whether from scratch or changing an old one). More times than not, the method changes over time (we’ll speak about these changes, wide and deep, and the affects on the entrepreneur him/herself). And one day in the future, she and others will declare final victory and that business will be a success.

Based on our empirical study of Spanish experienced entrepreneurs, we now know part of these answers. And the first part of the story (‘the entrepreneur chooses a method’) is behavioral. Whaaat!!? (I hear you). Yes, you the entrepreneur choose a path to build your business following certain influences, impulses, knowledge, recommendations, and some other conscious and unconscious motivations that model your decision. In plain words, you choose the first step (and the following) to build your business based on your personal ‘inspiration’, and act on that first and following steps, based on that ‘inspiration’. If what we said above (i.e., ‘the way you build your business may be the strongest indicator of its success or failure’) holds true, then your ‘inspiration’ might be behind your business success. And that is why we have concentrated on learning what builds your ‘inspiration’.

Lessons learned

1. We are researching how entrepreneurs and innovators build their businesses
2. We study the effect of the actual way (method) of building a business in its future success
3. The method to build a business could be the strongest actionable indicator of its success
4. The entrepreneur’s ‘inspiration’ motivates her to choose from a variety of business development methods

In the next post, I will summarize what drives that ‘inspiration’. Please, let me know what you think.