Failure is the mother of success
There’s a brutal truth that 8 out of 10 entrepreneurs who start businesses fail within the first 18 months. A whopping 80% crash and burn. According to Bloomberg. In my opinion, nearly all of entrepreneurs have great confidence and passion when they start their company and dreaming to become a successful entrepreneur in the future. There are many reasons behind failures, and big part of them just simply running out of cash. However the cracks of foundation start earlier before financial collapse.
Surprisingly, there are more entrepreneurs than we expected. But many of them started a business with an idea instead of a plan or structure. Entrepreneurship is management. Traditional management methods are suitable for companies that have been running for a while, however, it is not suitable to handle the chaos from startups. <The lean startup> explains the process of driving a startup, so there supposed to be a clear destination of where the business is going. It’s called vision. Companies are portfolio of activities. Plus, portfolio means the percentage of effort spends on different activities i.e. marketing and product innovation. As the company grows, the portfolio is changing at the same time.
Business plans all begin with assumption. It creates a strategy that employ assumptions that lead company to achieve the company’s vision. Assumptions can be as simply as we assume there is a potential market of our product. Eric addressed that startups should act as if these assumptions are ture, and this is called leaps of faith. That will experience huge success if the assumptions are true and vice versa. Entrepreneurs should build a mechanism that can test the assumptions systemically. In some cases, assumptions are exceptional.
Designing an engine is critical for every startups that contains small details like timetable to launch a new product and effort to spend on different goals. These give rise to tuning variables that control a startups engine of growth.
According to <The Lean Starup> methodology, developing a MVP is very important for every entrepreneurs. The key of Lean Startup methodology is a build-measure-learn loop. At least one viable product is needed for letting the business going. Entrepreneurs can track the process of MVP to learn as quick as possible.
There is an investigation development was mentioned in the book. It’s called ‘Five Whys’
- Why did the machine stop? (There was an overload and the fuse blew)
- Why was there an overload? (the bearing was not sufficiently lubricated)
- Why was it not lubricated sufficiently? ( the lubrication pump was not pumping sufficiently)
- Why was it not pumping sufficiently? (the shaft of the pump was worn and rattling)
- Why was the shaft worn out? ( there was no strainer attached and metal scrap got in)
With ‘Five Whys’ method it can determine if the learning and measuring is done correctly.
In conclusion, startups require entrepreneurs to learn, measure, and change constantly. Since there are so many uncertainties and challenges when starting a new business.