A recent well detailed article in ET on the funding squeeze on Start Ups in India mentions that 200 Start Ups have folded up in 2016 and many more this year are scaling down their ambitions. This makes for a sober copy vs the euphoria surrounding the deals in 2014.
I am writing this blog not about the financial aspects and data relating to this funding scenario since that part has already been well researched and covered in the report .
Here, I am looking at the EXECUTION of the business model by the entrepreneurs : what did they miss ?
Is there something new/novel that they could have done ? Is there any new technique or process now being taught in MBA Programmes/Entrepreneurial Courses that they seem to have violated ?
The answer surprisingly is : NO.
Because in the Science of Execution, Old is Gold.
There is no “new” 21st century discovery on how to make the business succeed.
On the contrary, the key to a good execution of any Business Plan is actually an age old and tested formula.
It is :
Building, right at the concept stage, a 100% certainty of winning the Moment of Truth (MOT) with the Consumer for the Product/Service
MOT is defined as that point in the consumer interaction between the product/service of the company and the consumer where the consumer will form an opinion ( positive or negative) about the product/service leading to a purchase/repurchase/recommendation of the product/service for future.
How do you therefore EXECUTE a winning MOT ?
It is actually very simple and brought down from the past :
First, you need a Unique Selling Proposition (USP) for the Product/Service.
Second, the USP needs to be differentiable wrt the benefits ( not features, please note) that it delivers to the Consumer vs Competition.
Third, it needs to be communicated to the Consumer so that the differentiable benefits are understood by the Consumer.
And finally when the Consumer uses the Product/Service, the experience of the usage has to be positive and 100% conforming to the original claim made by the Product/Service.
Only a 100% adherence to the process above will trigger repurchase and build brand loyalty.
It is that simple, this is the Science of MOT.
What happens if you do not have a differentiable USP and are unable to build this 100% certainty at the initial stage ? – then you do have a problem and you can only focus on the in-market execution and hope to do a better job than your competitor. Life becomes tougher, the entrepreneur and their funding partners will sweat more.
For example, while building the next Hyperlocal Grocery App is easy (IT resources are easily available for this), but to make it an automatic choice for the consumer to tap on the smartphone thereby building your business you will need :
a) USP : differentiated and communicated – say Loyalty Points, that maybe not being offered by others currently
b) operational efficiency and delivery as per agreed quantity, quality and in time so that the consumer expectations are fully met and he/she returns repeatedly to the App to enjoy the benefits
Not having either of these reduces the chance of success in the market dramatically.
It is actually that straight forward. Then why am I reiterating this ?
Because in spite of it being so basic, 200 Start Ups in 2016 seemed to have violated the principles of this Science and invited trouble for themselves, their VCs/Angels and a host of others – employees, vendors, etc.
Because there is the feeling that just conceptualising the product/service is itself a major achievement , when in reality the REAL work actually is something quite different :
Executing a winning Moment of Truth is the mantra for success.
Are the entrepreneurs and their funding partners listening ? Maybe the time has come now when they cannot ignore it any longer ….