Startups entering the growth phase face new challenges resulting from a bigger scale of activities. It is a moment when they can either stumble or surge. What are the key levers for startups in the growth phase to develop and succeed?
In my interview with Zofia Kłudka we discuss a list of “critical growth factors” coming from our experiences in projects with local and international startups, such as Business Model Mastering – a Program organised by Google For Startups Campus in Warsaw, where we both advised startups on their growth strategy.
Agnieszka Węglarz: Many startups grow intuitively. They have the initial idea, they build the minimum viable product, they launch and if there is enough need on the market for the offer, the product builds traction. At the beginning it seems quite easy to manage the business – the product is simple, the team is small, it is relatively easy to divide tasks, organize work and achieve results.
As the business grows things are getting complicated. There are more and more ideas about how to go on with the product, sales and marketing. There are new people in the team that don’t know where the initial idea came from, there are many decisions to be made and usually most of them land on the founder’s desk. From your observations, what are the most common mistakes that are made by startups at that stage?
Zofia Kłudka: Usually founders started with an idea of a product which they personally missed on the market. This makes them emotionally attached to the product. I fully understand it – I can’t imagine starting business and going through so many challenges along the way without a strong belief in your product. But at the same time it is equally important to be able to challenge your idea and to be open to negative feedback from the market. Founders who do not question their products, especially on the relevance and practicality of their offer may soon mismatch the customer needs and fall out of the market. Founders and their teams should try to constantly gather insights from clients and potential clients to improve their value offer.
Another thing is focus. Especially when we don’t have precise vision of our customer needs, every new idea, every new opportunity seems to be equally exciting. If we embark on all of them at the same time, our customers may lose clarity about what we offer and lose interest in our brand.
Agnieszka: In Business Model Mastering we mentored founders and their teams by showing them how to adopt a structured approach to their businesses and achieve strategic focus. Every edition of the Program shows the power of such an approach.
Our participants delivered with the right knowledge and tools – business model canva, segmentation models, value offer templates – within just a few weeks were coming to a clear understanding of what was the essence of their business. Good understanding of their business models allowed them to concentrate their energy only on those activities which give them higher return on their money and efforts.
Zofia: I have heard so many times that “tools and tables” don’t create business. I can agree with that. Intuition and creativity in business are precious and very often are the cornerstone of founding a startup. But at a certain level it’s barely impossible to go further without strategy and strong operations. At the growth stage creativity is not enough. That’s also very common in the startup world that successful teams have both creative and operations skills in the C-level team. Hard to find it in one person 🙂
Agnieszka: Summing up this part of our discussion I would say that one of the critical success factors of startups at that stage is sound business acumen. Business acumen in short means that someone understands precisely how his company makes money. Leaders with business acumen understand various parts of their business models, how they are connected with each other and how this influences their ability to generate profits and grow.
Managers and teams with good business acumen are able to focus on key elements of their business, find right solutions to the problems and make wise decisions. Business acumen is a very important factor that leads the team to goal achievement.
Zofia: Definitely! To be financially self-sufficient you need to find a way to monetize what you are doing. I saw a lot of great ideas that couldn’t make it because their authors couldn’t find the right way to monetize their products. That’s why it’s so important to make sure that what we are doing might become a profitable business.
It is another challenge that I see among the startups at that stage. Markets are full of products. Many of them are already global or ready for worldwide scaling. We need to bring real value to the customers in order to stand out and to make people need, love and choose our product. Strong value offer and monetization perspectives are crucial check points for VCs who might potentially invest in a startup.
Agnieszka: I fully agree. I strongly believe that businesses need to create real value to customers in order to grow. I also agree with the point that “tools and tables” will not do the entire job for us. Business Model Mastering sessions showed how brainstorming and creativity are important in finding new solutions. That is why I always encourage group discussions when I work with my clients. More voices increase the degree of creativity and then, in the implementation phase, teamwork helps to achieve more in a shorter time.
Indeed, I never underestimate the power of creativity in business, yet from my observation so called “tools and tables”, when applied with a good understanding of the purpose, can help us to increase our creativity by structuring the initial data, information and insights in the right way.
When talking about what helps startups to move fast in the growth phase, one should emphasise here the importance of the right team. In the situation when the future of the organisation depends on our ability to grow fast, the team must consist of people who have the right attitude. My judgement is that the ownership attitude is key. The right startup team should consist of people who have a strong focus on objectives, results and finding practical solutions to the problem. In short – they all should think like an owner.
Zofia: Definitely the team comes first. It’s the starting point of everything. Do you have necessary and complementary competences on board? Will your team be open to get feedback from the market, to search for new solutions if needed?
The team is crucial for investors, especially at the early stage when barely everything you have is an idea and first traction. And so is the right company culture, that will attract the best people to join you when you grow.
I can fully agree that taking ownership by team members is crucial, especially when you need to act fast and deliver results. It’s true not only for startups, these days even corporations who want to innovate are looking for people who will take ownership.
At this point I have to mention why creating company culture from the day one is so important. If you build a psychological safetynet which gives people freedom and space to try new things without blaming them when they fail, they won’t be afraid of taking ownership and trying new things. Some of those things might happen to be the next big thing for your company.
Coming back to the teamwork look what happens during Business Model Mastering – our participants usually begin with many question marks and in a very short period of time, thanks to their will, hard work and engagement – they come up with clarified business models and ready to implement transformation roadmap. What I also like so much during the feedback sessions in BMM is how startups learn from each other’s experience and thank each other for the feedback. That’s how communities are built and they are powerful tools on a long entrepreneurial journey.
Agnieszka: True. In general, positive emotions and trust are very important – especially in current, turbulent times. When people feel that they can count on each other, that they can trust each other – they can achieve so much more.
Agnieszka Węglarz is a business strategist and practitioner in B2B and B2C, as well as lecturer, speaker and blogger. She has over 20 years of professional experience working as a manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development. She has founded Go To Market in 2014 and since then she works as an independent consultant, using her long term executive experience and training expertise to assist CEOs and their managers in building their business strategy through a series of workshops. She specializes in business modelling, segmentation, value propositions, sales and marketing strategies and consultative selling. She runs her business blog on www.agnieszkaweglarz.com and her own YouTube channel – Biznes Ring by Agnieszka Węglarz. You can contact her by writing to: agnieszka.weglarz@g2m.biz.pl or by directly sending a message via LinkedIN.
Zofia Kłudka is a startup advisor and project manager. She’s active in the startup ecosystem, having experience in working for a VR/AR startup Immersion and supporting development of European startups and their founders at Google for Startup Campus in Warsaw where she created business and leadership programs. Graduate of sociology and management, combining business knowledge with soft skills.