Common wisdom is that great companies are built by business leaders who out-vision and out-innovate their competitors. In truth, groundbreaking businesses tend to come from entrepreneurs who were smart enough to out-execute everyone else in their niche. Smart entrepreneurs know how to get products to market and grow a loyal customer base, instead of engineering a product until it’s perfect.
Microsoft is a great example of company that has succeeded by execution. The software behemoth has rarely been first to market with any of its products. Microsoft’s strength lies in its ability to successfully get products to market, improve them, then introduce the products again and again. This is the approach that puts you in the Fortune 500.
Why do entrepreneurs believe so fervently in the myth that they need to be first to market with a never-before-seen innovation? Because that’s what they’re told in business school. The problem with this piece of wisdom is that it encourages business leaders to wait until the mythical breakthrough business idea is fully formed.
This myth is fed by the public perception of groundbreaking companies as having come out of nowhere to rock the world. But companies like Facebook rarely, if ever, spring into being with no predecessors: MySpace and Friendster were in the market first, but Facebook did social networking better than anyone else had done before. Likewise, Google wasn’t the first search engine ever; AltaVista probably deserves that title. But Google advanced the search experience to the point that we all believe it was the breakthrough innovator.
The point I’m making here is that you don’t need to have the breakthrough vision to launch your company — you need to have breakthrough execution. Launch your company even if your concept is similar to someone else’s idea, and figure how you will change the business model.
When you stall your entry into the market, you run the risk of getting outrun by competition, who will have gathered valuable on-the-ground information and solved problems before you’ve even planned your launch party. At a certain point, the ecosystem within your market will have become so strong that consumers will not be willing to accept a new entry. For example, anyone who launches a Facebook-style social network right now will have to hope that people are willing to totally rebuild their friend networks from the ground up.
On the other hand, if you can tweak this idea for a new market — for instance, a social network that specifically serves the healthcare community — you can launch without an entirely new concept. Or you can go to a location where you’re not first in the market, but where there is greater potential to become a player.
In other words, you can be first to market in Seattle with widget XYZ, where there’s only a moderate interest and market potential for your product. Or you can be tenth to market in Tulsa where there’s a far greater need for widget XYZ, giving you plenty of room to gain customer share.
Here are some tips positioning yourself for entrepreneurial success without playing the waiting game.
Follow your heart, but use your head. As an entrepreneur, you should always develop businesses you’re passionate about, since that enthusiasm will keep you pushing ahead when times are tough. But that doesn’t mean you can’t think rationally about how to apply what a competitor is doing to a different market segment or locale.
Listen to the market, and tweak as needed. The reason for launching sooner rather than later is to gather feedback from initial customers, so that you can redesign or retool as needed. Without this early feedback, you can only guess what customers are willing to pay for.
Don’t wallow in brainstorming. Time spent fiddling with a business plan or filling up whiteboards with ideas is time you could spend actually launching your business and testing the market. Real feedback from customers is far more valuable than the imaginary “what if” scenarios you dream up in a conference room.
Launch early enough to be a little embarrassed by your first product release. Entrepreneurs are likely to be somewhat off-base about their first launch and what features customers really want. But there’s no way to know how to improve a product until people are actually using it. LinkedIn founder Reid Hoffman says his co-founders wanted to delay launch until they introduced the professional social network’s “contact finder” feature, but it turns out it wasn’t necessary — eight years later, LinkedIn still hasn’t added that feature.
Be your own worst nightmare. Once you do have a toehold in the market, ask yourself how you would outflank your company if you were a competitor. Constantly push yourself to improve, making every product or service over time.