In one of my previous post, I used mathematics to show the importance of pivoting for a startup. In this blog post, I am proposing a tool that one could use to make the pivoting process easier.
Pivoting - a term popularized by Eric Ries, the author of Lean Startup. It essentially means: When your startup isn't doing well enough, you either change the product, strategy or business model. A lot of the times, it means to go into a different business. If you follow news about startup close enough, you will notice that a lot of startups ended up doing something completely different from what they originally did (read more).
While chances of pivoting is inevitable, I believe creating a core ideology is beneficial for starting a company. In this post, I will go through how I arrive at this thought process.
I was born in Malaysia to a father who started a business in his 30ths. My father spent many years working very hard to build his land surveying company with $0 funding. At one point, he and his partners has over 100 employees. Eventually, it came to a day where the partners decided to split up due to financial reasons and the company has gone down hill since.
Fast forward to 2014, I had the chance to work for MathWorks, a truly visionary software company that not a lot of people heard of. MathWorks build mathemtical software for engineers and scientists and their annual revenue is roughly $800 million. They have 0 investors (meaning they are privately held) and 0 debt. Truly amazing.
But, what is more amazing is how they keep their employees' focus aligned. MathWorks has only one vision - to accelerate the pace of science and engineering. It was this vision that most employees believe in, kept our focus align and keep pushing the boundary.
Within the first few month at MathWorks, our CEO (as he does routinely) gave all new hires a book to read: Built To Last by Jim Collins and Jerry Porras. This book writes about how to build a visionary company. Unfortunately, I didn't read it back when I was working due to lack of time, which I regretted.
Eventually, I came back to Canada to start a company - Resohub (and eventually Build-2-Master). Both of them flunked (Build-2-Master is more of a side project for me). Through my experience of starting companies, I realized that Canada doesn't really have a lot of visionaries (large) technology companies. At one point, I began to ask myself: Why did my startup failed? Why doesn't Canada have that many visionaries companies when compared to the USA? Is there a good way to pivot a startup?
This is when I decided to read the book: Built To Last, which I have gained my insights.
Insights from Build To Last
Built To Last, by Jim Collins and Jerry Porras, is a rare, high quality book. The authors did many case studies on many different companies to find out what exactly makes a company visionary. By visionary, they mean companies that last through time and recognized as a leader in their industry.
There are 3 main messages for building a visionary company in this book:
1. Have a core-ideology and continuously preserve it.
2. Always stimulate progress.
3. Plan and execute for the long term.
A core-ideology gives your company, the founders and its employees an identity. It is a bit like a religion. In MathWorks case, it was "accelerating the pace of science and engineering". Core-ideology should have very little relationship with finances of your company. It should be something that will never change even if your business changes or your startup pivots. Creating a concrete core-ideology is probably one of the important things that a startup should do early on.
To stimulate progress simply means to continuously pushing the boundaries. A visionary company will always reinvent themselves or create new product lines. It shouldn't be a company that is built so that it is something that can be sold.
Using these insights, I shall answer the questions that I have previously posted in the section below.
Answers to My Own Questions
1. Why doesn't Canada have many visionaries companies like the USA?
In Canada's startup ecosystem, I find that tech companies view success as being able to build a company that worth a lot of money. I think Canadian entrepreneurs should focus more on building a visionary company rather than making more money for themselves. Selling a company certainly yields a lot of long term benefits for an individual. But, for other Canadians, the benefits are next to none.
One thing I found interesting about the US is that there exists many individuals who have a strong vision on how the future should be. This is why they are able to create a strong core ideology in the company. These people value the impact more than the financial returns and therefore they are able to drive the company to a stage where it would last for a very long time.
2. Why did my startups failed?
I think there were two factors (related to the book) that caused my failures:
(i) My team and I did not have a core ideology for the startup. Our company was more about the product rather than the company itself. One lesson I learnt from the book is, if you set a core ideology, then you should pivot your business using your core ideology as a guideline.
(ii) I was seduced by the financial returns and, hence, not ready to go invest into the ideas for the long term.
3. What would be a better way to pivot a startup?
Some startups jump randomly into other ideas and hit some success. I don't think that it will help create a healthy company. Startups should create a core-ideology for their companies that would hold true at least 100 hundred years. Then, start creating products or ideas that reflect your core ideology. Even if one product doesn't work, you can always go to the next one.
One of the main benefits of doing this is a lot of knowledge about the market (that your company has gathered) is retained. Therefore, your product or service is simply something you build on top of that market. By doing so, you save time and, hopefully, you know what would be a better product for the market you have been targeting. Also, it would mean less stress from your employee because they will not need to start from scratch.
This blog post reflects some of my thoughts from this book and my experience so far. Please feel free to leave a comment if you have any further thoughts on it.