Thursday, October 15, 2009

Entrepreneurship - Start with a conviction

I have interacted with entrepreneurs in many areas - most of them own a business, few of them are corporate entrepreneurs. Most of these entrepreneurs were successful - in terms of getting a ROI higher than bank deposits. But I could see very few leaders in their market category. To illustrate this, let me take up a simple example of a food court. In any food court, there will be multiple food vendors - but there will be few dominant players, many of them will be successful & profitable and there will be a few who are struggling to keep their shops open.

The story is the same in all the sectors, in all places (with a few exceptions of monopoly markets). Take for example of Internet Search engine business: There is one leader - Google, few successful players - Microsoft, Yahoo & few strugglers -, etc.
In my observation of things, I found few simple truths. Winners have a stronger conviction to be the best in the market place, Winners follow the customer & winners focus on ROI. The ones that can do all the three will be the market leader.

I have seen few entrepreneurs who started with a very strong conviction of being the very best in the market & have steadyfast held that conviction. Many entrepreneurs often start with the notion that "the market opportunity is big and I am here to make a few bucks" or "Let us release this product in the market and see how customers react/adapt to it." or "We need to counter the competition else we are doomed".

When it comes to product positioning - I have seen entrepreneurs behave differently. Very few of them start with a customer centric mindset and are determined to understand customer requirements and deliver for it. But a vast majority start with saying "Here's what I think the customer wants." While few others start with saying "This is my product offering - let the customer adapt to it."

Pricing is a key differentiator between the winners & losers. Winners price the product to the value it provides to the customer & then builds a business model around that selling price, while survivors price the product based on margins, while losers have got the value proposition all worng.

In the end when results are seen the differences between the winners and the rest is clear.

Closing Thoughts

Entrepreneurs who start with a strong conviction to be the best in the market, follow the customer requirements, and deliver value to the customer (without comprmising on ROI) will emerge as the winner.

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