Platt Perspective on Business and Technology

Building a startup for what you want it to become 14: adding in disruptively innovative products and product portfolios 9

Posted in startups by Timothy Platt on April 22, 2016

This is my 14th installment to a series on building a business that can become an effective and even a leading participant in its industry and its business sector, and for its targeted marketplaces (see Startups and Early Stage Businesses and its continuation Page 2, postings 186 and loosely following for Parts 1-13.)

I began to explicitly, formally discuss product portfolios per se in this series in Part 12 and Part 13, after laying a foundation for that through a succession of seven installments that focused more on individual innovations and on product innovation in general. I continue my discussion of innovative product portfolios here and begin that by briefly repeating a point of distinction that I have been developing this ongoing discussion around. I formally categorically divide innovation-oriented product portfolios into two relatively distinct groups:

Innovatively simple product portfolios, that might offer a range of product models and types but that collectively include in them at most just one innovative development that is repeatedly used. This, as noted in Part 12 can mean multiple distinct model variations on some single basic innovation, and even with essentially zero real difference in the underlying technology that goes into them.
• And innovatively complex product portfolios that are built around a succession of innovations that are coordinately developed or acquired and then offered in the same product line portfolio.

I focused on innovatively simple product portfolios in Part 12. Then I offered Part 13, in effect as a bridging discussion of how and why a business, and even a startup with its more limited finances would want to at least plan for transitioning into pursuing an innovatively complex product portfolio approach.

• If a startup seeks to develop itself as a source of product and/or service innovation, it has to be prepared to at the very least keep new innovations flowing into its production pipeline at a rate that will insure it always has at least one truly innovative offering that it can bring to market.
• As I noted in Part 13, innovation per se can have a short shelf life and particularly for businesses that operate in fast paced, innovative industries and that compete for market share in markets that are always demanding new and different, and on an ongoing basis.

This leads me to some fundamental questions and issues. I stated at the end of Part 13 that I would more thoroughly consider innovatively complex product portfolios here and I will. I further noted that this means my reconsidering liquidity and reserves, and startup and lean and agile business finances per se and I will couch this discussion, to a significant degree in terms of that set of issues. And my goal for all of this is in better characterizing and analyzing the possible conflicts of meeting fiscal due diligence and risk limiting needs, and developing and offering of several or even many distinct innovations simultaneously, or at least in very rapid, overlapping succession.

• A startup might have to focus on doing one thing very, very well as it first starts out if it is to remain fiscally solvent and be able to keep its doors open.
• But it has to start building a capacity to go beyond that from day one and from even before then in its founders’ initial planning, if it is to smoothly and effectively make that transition.
• And if this is a business-to-be that seeks to become known as a font of innovative excellence and a source of the new and exciting, the requirements that I make note of here, have to be seen as guiding essentials and as underlying that venture’s core business model as a whole.

So you are an entrepreneur, and you seek to build an innovative business, and you have a series of possible innovations that you might bring to market that you are thinking in terms of as offering unique sources of marketable value that would define your new business in the minds and eyes of your prospective customers. Where do you start in developing these potential innovations and in deciding which of them to actually start with? When do you decide when to start working towards adding that second innovation to what you envision as your business’ product portfolio? How do you best pace this business development process, so as to both keep your offerings fresh and innovative, and your business finances secure and balanced? Let’s start addressing all of that with the first step of what I have just outlined in question form, as a more extensive path forward.

This discussion is all about finding an effective balance among competing needs and drives, so I offer sets of questions in groups, the answers to which have to be balanced off against each other:

• You have a perhaps relatively loosely organized but conceptually connected set of possible starter innovations that you could settle upon here in initially framing and packaging your new business, as it would be seen by your target market and potential customers.
• Which innovation that you have in mind for development would best serve as an effective centerpiece that your further innovative offerings would add to and supportively connect to? And which of these potential innovative offerings would best be seen as add-ons, that would enhance the value and extent the apparent innovative quality of a more central innovative offering? (And which if any might be nice to be able to offer, but that would not fit into such an overarching, business-defining pattern?)
• At the same time, and focusing entirely on the first two of those categorical types and primarily on the first of them, which of the potential starting innovations that you might launch first, would be easiest and the most cost-effective for you to develop into actualized products that you could bring to market first? Which could you most securely develop in your new business’ early pre-revenue and pre-profitability days and without overextending financially? (See Understanding and Navigating Burn Rate: a startup primer, at Startups and Early Stage Businesses, postings 67-78 for a basic discussion of relevant startup finances issues.)
• Stepping back from these balance point questions, what is the core innovation that drives and motivates you as an entrepreneur and as a business founder, to make that effort and take that risk in the first place? What could you offer first that you see as addressing the compelling needs that have prompted you to move out of the tried and true and the familiar to try this in the first place? How can you best develop this source of potential innovative excellence so that it is the answer that floats to the top for the above balance questions?
• Being an entrepreneur here is not about taking anything for granted and it is not about passively accepting a first perspective understanding as the only possible truth. It is about actively moving forward to create value and realistically realizable value out of potential opportunities and challenges faced. How can you best turn the spark that motivates you into the business of your dreams?
• And then when and how should you add new innovations into the pipeline of what you offer and into a growing product portfolio? And this means adding in new entries from that initial list and new entries that you could not have imagined without feedback and experience working with and serving the needs of your market and your customers.

I begin this type of discussion with more analytically precise reasoning and with financial and related calculable considerations. But ultimately, any successful new business venture is build upon a foundation of drive and persistence and creativity and passion too. And succeeding in this, with that including developing a sustainable innovative product portfolio as only one element, is all about addressing all of these considerations.

Some might argue that clear logical analytical reasoning and the experience needed to reach goals are all that are needed here, but people who only bring this to the table rarely even try to build new businesses. They are most more apt to rise through the ranks of already established businesses for their technical excellence. These qualities and these points of focus are essential, but so are drive and determination – and yes a passion to try and to succeed too. And this enters into the determination of when and how to develop a more complex product portfolio too. This is where acceptance of risk, that more analytical skills and experience make clear, takes place.

I am not writing about eliminating the risk of expanding what a new venture does to include new innovations here. I am writing about understanding what risks and opportunities are available depending on what business decisions are made and when, so a business’ and particularly a new business’ founders and leaders can make informed decisions and improve their odds, while fulfilling the core goals and requirements of their new business venture and its intended business model.

I have in effect already been discussing next steps past initial startup here in this posting. I will more explicitly continue this discussion in their direction in a next series installment where I will more explicitly discuss business expansion and development in what is offered, in an early stage business (pre-profitability but with some revenue coming in), and in an early profitability stage where real business growth can begin. Meanwhile, you can find this and related material at my Startups and Early Stage Businesses directory and at its Page 2 continuation.

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