Wednesday, 29 April 2009

The keys to entrepreneurial success: annoyance, dissatisfaction and misery

Have you ever wondered why, in most cases, indifference is the overwhelming reaction to innovation? Is it not amazing that potential customers, who would be so well served by your new service, are not even willing to listen to your pitch?

The world is a barren desert for dreamers and an endless source of opportunities for problem-solvers. “Where there is a will, there is a way,” preaches conventional wisdom. Yes, there might be always a way, but who wants to walk a path leading to waste and disappointment?

If you are about to start a new enterprise, please remind yourself daily of the cold-hearted basic fact of business: 81% of new ventures do not survive beyond their fifth year.

Dreary as this number is, let's not forget that some retail markets show even higher new-product mortality rates, as it is the case of packaged foods, soda drinks, and restaurant formulas.

What do statistics tell us? Is there a way to predict if a new service is destined to be buried in the grave of consumer indifference? How can we make sure that we only launch products that have a good chance of a warm reception by the market? What strategy maximizes our probabilities of success?

My answer is that you should avoid testing ideas at random. Never put all your resources just into making new stuff and throwing it into the market. In that case, hoping for the best is bound to reveal itself as nothing more than an expensive delusion.

Commercial history has repeatedly proven that new undertakings enjoy the best prospects of success when they are aligned with key negative factors such as annoyance, dissatisfaction, and misery.

In this sense, this is the ideal situation that you should strive for:
  1. Potential customers who are deeply annoyed by a problem.
  2. An entrepreneur who is dissatisfied with existing solutions and can propose something better.
  3. A distribution system or retail outlet that is miserably under-utilized.
Although hitting all three trouble spots won't guarantee commercial success to new products or services, it is as close as you can get.

1.- ANNOYANCE: The angrier the potential customers, the more receptive they will be to new solutions. Do you recall the massive irritation at check-in lines in airports before the times of electronic ticketing?

2.- DISSATISFACTION: The more inefficient the current solution, the higher the value that entrepreneurs can add. Do you remember that not so long ago it was impossible to deliver packages overnight?

3.- MISERY: The less profitable the current distribution system or retail outlet, the more avidly it will embrace new products of great potential. How many thousands of retail locations have seen their value doubled thanks to fast-food franchises?

Come up with a revolutionary invention and your product will be looked at with suspicion by potential customers or, even worse, completely ignored.

On the other hand, solve a burning problem and wild success might impose an insane growth rate on your business. Those who prove able to alleviate long-standing pain tend to become leaders of enthusiastic tribes of loyal customers.

Is this principle hard to implement? Yes, accepting reality can be a difficult undertaking. For that reason, nature, in its wisdom, has endowed us with two eyes and two ears to perceive the world and only one mouth to contradict ourselves.

[Text: http://johnvespasian.blogspot.com]

[Image by foxypar4 under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

The keys to entrepreneurial success: annoyance, dissatisfaction and misery

Have you ever wondered why, in most cases, indifference is the overwhelming reaction to innovation? Is it not amazing that potential customers, who would be so well served by your new service, are not even willing to listen to your pitch?

The world is a barren desert for dreamers and an endless source of opportunities for problem-solvers. “Where there is a will, there is a way,” preaches conventional wisdom. Yes, there might be always a way, but who wants to walk a path leading to waste and disappointment?

If you are about to start a new enterprise, please remind yourself daily of the cold-hearted basic fact of business: 81% of new ventures do not survive beyond their fifth year.

Dreary as this number is, let's not forget that some retail markets show even higher new-product mortality rates, as it is the case of packaged foods, soda drinks, and restaurant formulas.

What do statistics tell us? Is there a way to predict if a new service is destined to be buried in the grave of consumer indifference? How can we make sure that we only launch products that have a good chance of a warm reception by the market? What strategy maximizes our probabilities of success?

My answer is that you should avoid testing ideas at random. Never put all your resources just into making new stuff and throwing it into the market. In that case, hoping for the best is bound to reveal itself as nothing more than an expensive delusion.

Commercial history has repeatedly proven that new undertakings enjoy the best prospects of success when they are aligned with key negative factors such as annoyance, dissatisfaction, and misery.

In this sense, this is the ideal situation that you should strive for:
  1. Potential customers who are deeply annoyed by a problem.
  2. An entrepreneur who is dissatisfied with existing solutions and can propose something better.
  3. A distribution system or retail outlet that is miserably under-utilized.
Although hitting all three trouble spots won't guarantee commercial success to new products or services, it is as close as you can get.

1.- ANNOYANCE: The angrier the potential customers, the more receptive they will be to new solutions. Do you recall the massive irritation at check-in lines in airports before the times of electronic ticketing?

2.- DISSATISFACTION: The more inefficient the current solution, the higher the value that entrepreneurs can add. Do you remember that not so long ago it was impossible to deliver packages overnight?

3.- MISERY: The less profitable the current distribution system or retail outlet, the more avidly it will embrace new products of great potential. How many thousands of retail locations have seen their value doubled thanks to fast-food franchises?

Come up with a revolutionary invention and your product will be looked at with suspicion by potential customers or, even worse, completely ignored.

On the other hand, solve a burning problem and wild success might impose an insane growth rate on your business. Those who prove able to alleviate long-standing pain tend to become leaders of enthusiastic tribes of loyal customers.

Is this principle hard to implement? Yes, accepting reality can be a difficult undertaking. For that reason, nature, in its wisdom, has endowed us with two eyes and two ears to perceive the world and only one mouth to contradict ourselves.

[Text: http://johnvespasian.blogspot.com]

[Image by foxypar4 under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]