You don’t ask a school kid “how much money you are making”. If you did, that would guide them to skip school and get the odd job they are qualified for without education. And that would be the end of their development – they would be stuck with that for the rest of their lives.
What people normally do is ask about how kids are doing at school and what new did you learn today. If they keep learning every day, by the time they are adults they are ready to be working and then “how much you are making” will be a reasonable question to ask.
For grown up companies, revenue growth, EBITDA, quick ratio etc KPIs the traditional (and dominant) business literature (not to mention former corporate executives) is full of, are perfectly valid metrics. But what about companies who are still at school, i.e. startups?
By definition, a startup enters uncharted territories and its job is to do exploration so that it can draw a map. The success criteria for exploration is – learning. Finding the answers to the unknown.
The results of learning do not translate to revenue, profit, growth etc then and there. So what happens if success is measured as revenue growth, profit etc? You get what you measure. Startups skip learning and are trying to get the odd jobs they can, to get the instant results. Forgetting what their reason to exist is. Eventually, this may result in premature scaling – the #1 reason startups die. Pretending to be an adult when one is not.
In startup world everything is extremely context dependant. The context being your position on the learning curve – the “Startup J Curve”. Like a kid growing from child to adulthood, a startup is growing from a set of hypothesis to real business. How its success is measured should reflect their place on that journey. A conceptual illustration of that below.
As you get what you measure, knowing what is the measurement that matters at each stage on the way is crucial. You should understand what is the indicator that guides you best given where you are and where you want to go next. You first need to validate that your plan works before you start tracking your performance against it.
Note – I focus entirely on the business
implications, personal health & safety is of course #1 priority and I leave
those matters for the Healthcare professionals to advise on.
cry wolf than regret later, and as “only the Paranoid survives”, I’m OK to be
knows yet what the end outcome of the Corona issue will be. But already now it
has caused a visible disturbance on businesses and economies worldwide and the
ripple effects are yet to be seen. Some businesses are affected more than
others, but very few will be completely immune. For some (like face mask
producers or remote working solutions) this can create a massive windfall.
Your business will be affected as well. In what way, when and how severely, depends. That’s what you should now form a view on, and do mitigation accordingly.
scenario for anyone selling to corporations: In the 1st wave, they
focus on their people risks: they cancel attending events, making business
trips, they ask people to work from home etc. In the 2nd wave they do
the immediate adjustments to their own business (such as airline industry), in
the 3rd wave they start calculating the cost of all that, and how to
balance the effect. They will try to assess what their customers do and how
that will affect their own business. The 1st thing they’ll do is
step on the brakes and will do only the mandatory until the dust has settled –
which means anything non-mandatory will be postponed. They will try to manage
costs, in anticipation of their revenues declining. This may mean layoffs,
freezing any new costs (such as development projects) etc. They will have to
add new issues on their agenda, changing the priorities. At this point you will
start feeling the heat.
“never seen before” crisis are part of the business cycles. I’m older than any
of you so I have experienced a few (and their direct consequences) myself: oil
crisis 1973, Chernobyl 1986 (this was particularly scary in Finland, due to the
typical wind directions), Iraqi war and 2nd oil crisis 1990, dot com
crash 2000, Financial crisis 2008. Not to mention the next tier – SARS, Thailand
It’s not a
bug, it’s a feature. If you sail across the Atlantic you’re likely to get into
at least one big storm. You know that from the start so you prepare
accordingly. And when the weather map turns dark, you get ready: you take down
sails, close all holes, tie everything down, eat and rest while you still can,
make raingear readily available. When the storm hits you, you are prepared.
Then you do what you must to stay afloat, and just wait. Even the worst storms
end one day, the sun is shining again and smooth sailing can continue.
sailing after is no different from sailing before, business after a crisis is
never quite the same as before. Oil crisis triggered the need to reduce
dependency on oil, Financial Crisis tightened regulation of financial markets
etc. The mankind is trying take measures that “this could never happen again” (rather
successfully, as the next major crisis is always a “never seen before” kind). Those
changes create a ton of new business opportunities.
situation – once over and back to normal - will trigger such changes as well.
What exactly, we all can make educated guesses about. They too will create
made during the high season. Strategic moves are made during the low season.
My call to
action to all of you:
The eventual consequences of Corona
will affect all of you (and us, as a result). Meaning you all need to take it
on your agenda.
You should analyse your situation
(and that of your key customers), play with some scenarios and form a view on what
you assume the implications to your business to be
What is it you can and should do to
mitigate the negative effects. Create an action plan on what to do if the storm
hits you, and what is the indicator telling you the storm is on
What new opportunities will this
create, once the storm is over. How could you best benefit of it?
hope none of this is ultimately needed and the world goes back to normal soon.
But it would be irresponsible to just count on being lucky. Hope for the best,
prepare for the worst!
Steve Blank wrote ” The difference between winning startups and those whole lose is that the winners understand why customers buy. The losers never do”.
This is the material question of problem/solution fit.
There are different ways to address the problem/solution fit. One of the first tasks is to segment the information you have verified on customer segments. This should continuously be kept up-to-date.
On good tool we have found is from Ideahackers ( https://ideahackers.nl/ ) and their problem/solution fit canvas: