I recently went to an event that brought together a dozen female entrepreneurs. They shared their stories of how they’re building businesses around offerings as diverse as gourmet ice cream and micro-financing platforms. In talking about their experiences running startups, I found that their learnings were applicable to both entrepreneurs and innovation managers alike. Based on their collective experiences, I was able to extract three key lessons that any innovator should consider before launching a new product or business.
This past August, Mass Innovation Nights launched its 11thMIN FOODIE event in Somerville, Massachusetts. Bringing together ten food and food tech startups, the night was an opportunity for these new business to showcase their ideas and get the word out about their companies.
It was impressive to see quite a few startups address tasks that consumers would like to prioritize in the everyday but struggle to get done. One company, for example, launched an app to help individuals find and buy local. Another made it easier for people to eat all-natural foods. A third focused on enabling people to reward themselves without feeling guilty. Having worked with a number of leading food companies, we have seen that customers are often willing to pay a premium for these exact types of services. This suggests that these young startups may be on to something.
Looking at the winner and the runners-up in the event, three big lessons stand out on how companies can differentiate themselves in crowded markets:
As Google Glass fades to distant memory, yet another alliterative wearable is trying to turn our faces into cameras. Why? Even Google — a company that we trust to develop self-driving cars and deliver burritos by drones — was heavily maligned for daring to add a camera to our glasses. The criticism was unrelenting: the glasses were expensive, they looked ridiculous, and they could be used to covertly take video of others without their knowledge. In some ways, Snapchat’s Spectacles address those concerns. They’ll retail for roughly one-tenth of what early adopters had to shell out for Google Glass, and the Spectacles camera has lights to indicate when it’s filming. How fashionable they are remains to be seen.
Millennials are no longer turning to their banks for advice. In fact, over 70% of Millennials would rather go see their dentist than listen to what banks have to say. Since the financial meltdown of 2008 the perception of banks has been significantly marred. Trust has been eroded and loyalty ruined. Adding fuel to the fire, today’s digital revolution is poised to impact the financial services industry in a way that hasn’t been seen since the ATM was introduced in the 1970s. Technological progress is affecting every sector of the industry including asset management in the shape of robo-advisors. These robo-advisors are growing at unprecedented rates by meeting Millennials’ jobs to be done – an important segment to attract as Millennials are now the largest generation in the US and are about to command the largest share of wallet in the US with an estimated $7 trillion in liquid assets by 2020.
Most new startups fail. That’s particularly true in the food and beverage space, where entrepreneurs often have great homemade products but lack the resources and business expertise to get their products to the next level. However, those skilled few that do succeed can be valuable bellwethers for how the industry will evolve. What’s more, the startups that take off often have important lessons for even the biggest consumer goods incumbents. That’s because those that succeed don’t do so based on luck. They thrive because they take a different view of the market – one that focuses on consumers’ jobs to be done.
The team at Mass Innovation Nights – an organization that helps local entrepreneurs promote their businesses – recently hosted an event to connect New England food startups with media members and innovation experts. Several of the companies featured at the event were already showing promise. Looking at how those businesses got their start and why they’re gaining so much traction, we’ve extracted three lessons that any consumer goods company would be wise to pay attention to. And in the process of learning from these young companies, we may well get a better idea of what’s coming down the road in the food and beverage realm.
TechCrunch recently hosted its Boston Pitchoff, giving eight startup finalists a chance to pitch their businesses in front of a panel of VCs and tech journalists. Clique Chic - a website that gives members access to designer clothes and a personal stylist - won the competition and will advance to the final Disrupt NY competition later this spring.
The competition boasted healthcare wearables, social networking apps, gamified education tools, and even a foray into personalized medicine. Amidst this heavy competition, Clique Chic demonstrated that it's the business model - not the buildup - that makes a startup successful.
To learn more about the featured startups and to see what strategies set Clique Chic apart, check out our piece on Forbes.
This post was written by David Farber. To learn more about how New Markets Advisors helps companies enter new markets, click here.
For the past few years, tens of thousands of entrepreneurs have been flocking to Kickstarter to seek the funding they need to get their ideas off the ground. The crowdfunding site has given these innovators a platform to truly embrace the Lean Startup principles that companies large and small have used to launch breakthrough innovations. By putting the core of the Lean Startup practice to use – including getting cheap, early prototypes in front of real people, gathering feedback, and iterating based on that feedback – these entrepreneurs successfully funded over 22,000 projects in 2014 alone.
The most successful campaigns have shown us that winning also depends on how successfully you can utilize familiar platforms and growing trends, how significantly you can reduce trial costs and pain points, and how concretely you can demonstrate tangible value. We have extracted some of the key innovation lessons that can help companies – regardless of their size – better understand what they can do to increase their chances of success in launching new products and services.
Read our piece on Forbes to learn more about the lessons we can learn from the Kickstarter standouts of 2014.
This post was written by David Farber. Learn more about our work in strategy or building innovation capabilities.
A New York start-up called Vringo aims to become the next big trend among young people seeking to express themselves. Providing a twist on the relatively longstanding practice of downloading ringtones to your cellphone, Vringo allows its users to choose the ringtones that will play when they call their friends. Is your phone ringing with a tune from Motley Crue? Pick up some hairspray and get ready to rock. Your friend could even send you a video to play during the ringtone -- perhaps of him playing air guitar.
It's a neat idea -- some people's need to express themselves is almost never satiated, and the business builds on an already established behavior of paying for ringtones. There's just one problem: both phones need to have Vringo's software installed. It would be wonderful (for Vringo) if everyone had their software, but it's unclear how the company will arrive at that destination.
This is shortcoming associated with many early movers. Network effects in new markets can be very strong. There is big potential to create innovative interactions among groups of people -- a field that has generally been under-targeted by marketers compared with their efforts to change the behavior of individuals. When firms win at creating networks, the payoff can be huge. Think of eBay, SMS, Facebook, "dark pools" of liquidity for investment banks, and Microsoft Office. By creating a critical mass of users, firms providing these innovations made the usefulness of their offerings stand out from competitors. Once leaders emerged, they tended to gain strength as their networks grew, creating a virtuous cycle of growth.
Organizations frustrated with their innovation capabilities sometimes seek inspiration from the world's most innovative firms. Too frequently, this can lead to a misguided quest for beanbag furniture. The most visible trappings of innovative firms arise after management has already created an environment that facilitates the rapid creation and testing of ideas -- they are a result of innovation, not its cause. The real infrastructure underlying innovation capabilities tends to be less flashy: clear strategies, distinct approaches for disruptive innovations, HR policies that tolerate failure, rigorous systems to capture project learnings, and the like.
But once in a while we find flash that really works, for any kind of firm. Facebook's Hackathons fit the bill. With the company having grown from tiny start-up to 1,200 employees in 6 years, management has worried about how to retain entrepreneurial flexibility and imagination. One way Facebook has kept its verve is the Hackathon -- an all-night quest to dream up an idea and make it real, immediately. This isn't just for engineers; marketing and even legal regularly attend. Anything is fair game, and resulting ideas have ranged from video messaging to a friend suggester. Facebook users can suggest ideas too. Usually the result of one night's work isn't something ready to go live on the site, but it is real enough to trigger detailed discussion and feedback.
The Hackathon can have plenty of flash (click for a short video) but don't be fooled by the sizzle -- the guts of this idea apply anywhere:
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