Startups/Young Company
The term startup refers to a company in the first stage of its operations.
Startups are founded by one or more entrepreneurs who want to develop a product or service for
which they believe there is a demand in the market.
What is the difference between a startup and a small business?
Startups are typically online or technology-oriented businesses that can easily reach a large
market. To operate a small business, on the other hand, you don't need a big market to grow into.
You just need a market and you need to be able to reach and serve all of those within your
market in an efficient way.
Why Do Software Ventures Fail?
● Lack of Funding: Running out of cash is one of the top reasons startups fail.
● Outdated Technology or Product: Failing to innovate or adapt to market trends can
make a product irrelevant.
● Poor Leadership and Communication: Weak leadership can lead to poor
decision-making, lack of direction, and low team morale. Miscommunication within the
team can result in missed deadlines and unmet goals.
● No Market Need: Building a product that doesn’t solve a real problem or meet customer
needs is a recipe for failure.
● Ineffective Marketing: Even a great product can fail if customers don’t know about it.
Poor branding, messaging, or targeting can lead to low customer acquisition.
● Scaling Too Fast: Expanding too quickly without a solid foundation can strain resources
and lead to operational inefficiencies.
● Ignoring Customer Feedback: Failing to listen to customers can result in a product that
doesn’t meet their needs or expectations.
How Does a Software Startup Survive and Grow?
1. Walk in the Shoes of the Customer Understand Customer Pain Points: Conduct surveys,
interviews, and usability tests to deeply understand what your customers need.
2. Create a Unique Value Proposition Differentiate Your Product: Clearly articulate what
makes your product unique and why customers should choose it over competitors.
3. Make Effective Financial Calculations Manage Cash Flow: Keep a close eye on expenses
and revenue to avoid running out of cash.
4. Invest in the Right Team Hire for Skills and Culture Fit: Build a team with the right
technical skills and a shared vision for the company. Encourage Collaboration: Foster a culture
of open communication and teamwork.
5. Enhance Leadership Skills Lead by Example: Demonstrate strong work ethic, integrity, and
vision. Communicate Clearly, Be Adaptable: Be willing to pivot or change strategies based on
market feedback or new opportunities.
6. Focus on Product-Market Fit Validate Early: Use an MVP (Minimum Viable Product) to
test your product with real users before full-scale development. Iterate Quickly: Use customer
feedback to refine your product until it perfectly meets market needs.
7. Build a Strong Brand Develop a Memorable Identity: Create a strong brand with a clear
message, logo, and tone of voice.
8. Leverage Technology and Automation Use Scalable Tools: Invest in tools and platforms
that can grow with your business (e.g., cloud infrastructure, CRM systems). Automate Repetitive
Tasks: Free up your team’s time by automating tasks like marketing, customer support, and data
analysis.
9. Build a Community Around Your Product Engage with Users: Create forums, social
media groups, or events to connect with your customers. Encourage User-Generated Content: Let
your customers share their experiences and become advocates for your brand.
10. Scale Strategically Grow at a Sustainable Pace: Avoid scaling too fast without a solid
foundation.
Important Guiding Factors to consider before a start-up
1. A great idea “No business can develop in the absence of a great and unique idea that stands
out.”
2. Funding and budget Identify the sources through which you will be able to get the funding
for your business.
3. Analysis of competitors Know what your competitors are doing and what their strategies are
4. An effective business plan To help you determine if your idea is feasible and provide
direction.
5. Legal documentation: Complete all legal documents for your business.
6. Positive attitude Positively face and overcome all the challenges and difficulties
7. Know when you need help The development of a business is not a matter of seconds, it will
involve a lot of time that is spent with hard work (experts and advice)
Things to Consider when starting a business
01 | Write a business plan Field research is a key part of analyzing your market and will help
you build a successful business plan and brand.
02 | Choose a business structure Sole trader or limited company? Partnership or LLP? look at
the pros and cons and comparisons for your start-up
03 | Name your business How do you choose a business name? Choosing a business name is a
vital first step in bringing your business to life.
04 | Develop branding How do you create a logo that properly represents your business? Find
out key fundamental points your logo should convey to your customers
05 |Find finance Eg applying for a startup loan, using your networks etc
06 | Get an accountant How do you pick the right accountant for your business?
07 | Set up premises What exactly do you need to consider when choosing office space for your
business?
08 | Get software Free and low-cost software options available to help you start a business and
save money
09 | Understand legal issues
10 | Learn how to sell
Giarratana mentions three types of entrepreneurs: (In each case the entrepreneur will have
to understand something about the business positioning of the new company.)
● The innovator creates new products
● The arbitrageur exploits market inefficiencies
● The coordinator introduces an alternative use of resources
Cusumano suggests that there are some basic questions that need to be answered:
Creating Value
Value proposition: suggestion to customers on how a new product or concept will meet their
needs and create value.
Value configurations: tells how resources and activities need to fit together in order to create
and sustain value.
● Value chain (Porter, 1985)
● Value shop (Stabell and Fjeldstad, 1998)
● Value network (Stabell and Fjeldstad, 1998)
Creating Value:
Value Proposition The value proposition is the core reason why customers should choose your
product over competitors. It answers the question: What unique value does your product provide
to customers?
The revenue model defines how your startup will generate income from the value it creates. It
answers the question: How will you monetize your product?
Bringing the Product to Market
A. Target Customers Define Your Ideal Customer Profile (ICP): Identify the specific
demographics, behaviors, and pain points of your target audience.
B. Channels Distribution Channels: Decide how customers will access your product (e.g.,
website, app stores, retail partners).
C. Scope Geographic Scope: Decide whether to target local, national, or global markets.
D. Activities Product Development: Continuously improve your product based on customer
feedback.
Constraints of an Industry
1. Industrial Capacity Definition: The maximum output that an industry can produce given its
resources (e.g., infrastructure, workforce, technology).
2. Novel Products Definition: Introducing innovative or disruptive products that challenge
existing market norms.
3. Regulation Definition: Laws and regulations that govern an industry, such as licensing, safety
standards, or data privacy rules.
4. Social Norms Definition: Cultural or societal expectations that influence consumer behavior
and acceptance of new products.
5. Financial Constraints Definition: Limited access to capital or high costs of operation.
Logic Behind Experimentation
1. Small Initial Investment Why: Start with minimal resources to test the viability of your idea
without significant financial risk
2. Prototype Fast Why: Quickly create a prototype or MVP (Minimum Viable Product) to test
your concept in the real world
3. Get Customer Feedback Why: Customer feedback helps you understand what works, what
doesn’t, and how to improve
4. Greater Investments Why: Once you’ve validated your idea, invest more resources to refine
the product and scale operations
5. Vigorous Scale-Up Why: Scaling allows you to capture a larger market share and achieve
economies of scale
Perspectives on Developing Competitive Advantage
● Resource Based View (RBV) of the firm (Barney, 1991): firms in the same industry
perform differently because they differ in their resources and capabilities
● Dynamic Capabilities View (DCV) of the firm (Teece et al., 1997): the dynamic process
of capability building in gaining competitive advantage
A software business model consists of four elements
● A product strategy (what kind of software and applications do we write)
● A revenue logic (how do we earn money out of them)
● A distribution model (how do we get them to our customers)
● A service and implementation model (how do we keep them working when our
customers are using them)
Types of Business Model
1. Software tailoring – building tailor-made software for specific customers; example Logica
developing the clearing system (CHAPS) for the British banking system
2. Applied formats – customized solutions based on common platform; example SAP offering
solutions based on the its Enterprise Resource Planning (ERP) software
3.Resource provisioning – developing software components or middleware designed to
integrate with other software; example Red Hat developing their own version of Linux and
offering software and services around it
4. Standard offerings – own products sold widely and used without customization; example
Apple selling integrated hardware and software products direct to private users
Innovation metrics
1. Measure What Matters Innovation metrics should align with your organization’s goals and
provide actionable insights. Avoid vanity metrics that look impressive but don’t drive
decision-making
2. Metrics Are People Innovation is driven by people, so metrics should reflect the human
element. This includes measuring employee engagement, collaboration, and creativity.
3. Measure the Macro While micro-level metrics (e.g., individual projects) are important, it’s
equally critical to measure the macro impact of innovation on the organization and industry.
Analysing and Managing for Growth
Internal Conditions for Growth
Technology entrepreneurs may be limited by:
● his ability to understand and interpret market opportunities;
● Insufficient industry experience;
● Weak connections between strategy, leadership and organisational culture.
Start-up have limited resources and limited access to capital Too much capital may mislead
entrepreneur towards faster growth
External Conditions for Growth
Start-ups may meet different barriers to growth:
● Hard to find profitable position in the value chain;
● Institutional conditions may be more or less supportive for business-growth;
● Company’s network may be more or less able to provide access to resources.
Engaging with potential users during the innovation period. A growth-oriented crisis: firm run
out of cash; mismatch between market growth and organisational capacity.
Organizational culture and climate play a critical role in shaping how a company operates,
grows, and navigates challenges.
1. Clarity refers to the extent to which employees understand the company’s vision, mission,
goals, and values. It ensures everyone is aligned and working toward the same objectives.
2. Commitment reflects the level of dedication and loyalty employees have toward the
organization and its goals. It is closely tied to employee engagement and motivation.
3. Responsibility refers to the extent to which employees feel accountable for their work and the
outcomes of their actions. It empowers individuals to take ownership and make decisions.
4. Encouragement encourages creating an environment where employees feel supported,
valued, and motivated to contribute their best work. It fosters creativity, collaboration, and
resilience.
5. Community refers to the sense of belonging and connection among employees. It emphasizes
teamwork, collaboration, and a shared identity.
