Start-up companies often launching a product, the success of which will often hinge upon the performance of their offerings relative to certain success factors. While products are different implying different success factors, certain success factors apply more generally to explain how product will perform. It is important therefore to identify such success factors to ensure that the new offerings are able to succeed. A useful understanding can be gained through understanding factors that Venture Capitalists (VCs) use to make investment decisions – essentially as VCs have seen the rise or demise of so many investments they have made.
Hence a useful, yet a simple qualitative list of such factors considered by a large number of VCs, and supported by Professor Kaplan of Chicago Booth School of Business follows:
-Product: It is imperative that the product is able to solve a significant customer problem that has either not been solved or has been solved only to a limited extent. Further, the product features have to be carefully designed to ensure that these are not easily imitable at any time and will not be competed away through other alternatives that are more cost-effective, efficient, or serve greater customer convenience. Hence technical expertise in product designing can serve as a great asset.
-Customer, and market: Customer needs serve an important starting point, and are hence pivotal to product success. These needs can be many and collectively determine the value they are willing to pay. Examples of such needs include greater convenience, or efficiency. Also the offering has to be targeted to a customer base with select demographics (such as age, income for individuals, or revenues, assets for companies). Therefore it is important to gage how many of the customers suffer from the problem that a product is trying to solve, along with their propensity, and willingness to pay to resolve this problem. Once it has been qualified through market research, it is possible to design and launch products that shall meet the most value-inducing needs for our chosen customers. Also necessary is to include product features that ensure a repeat customer behavior.
-Market and Industry competitors: Products have to be compared with the value proposition of other alternatives of immediate and industry competitors, and positioned in the market to ensure that the customer value is maximized and managed appropriately. The concept of TRIZ requires that customers desired outcome (in terms of price, convenience, other factors) from product use is maximized compared with alternatives offered in the industry. (Source: Innovators Toolkit).
-Management: The management team is known to make a huge impact on the outcome of product performance. The attitudes of the management team, together with their access to a broader network in this regards can be pivotal. Also, as a product might go through a series of rejection, what is important is effective resolve, and management commitment to engage in iterating their offerings, staying motivated, and keeping the team motivated to realize success. Management should also gather ideas from multiple frontline workers to innovatively deal with product issues.
-Operations: Efforts have to be made to ensure that business operations operate in value maximizing ways, which requires having solid systems, structures, and people. The systems should be devised to ensure maximum value creation for employees. Also structures fostering greater employee collaboration and that are efficiently responsive to customer needs can ensure customer value requirements are timely met.
-External environment: As much as internal factors are important, other external factors can make a huge difference. These include the PESTLE factors such as general business environment (such as boom or recession), political climate, social/cultural factors, legal factors all or some that might be relevant to the product being offered.
As highlighted, some of the key factors for product success can include product, customers/market, alternatives, management team, operations, and external environment which if considered carefully can lead start-ups to path of success.