The Lean Business Blog

Does a Startup really have only one Business Idea?

Posted by Yngve Dahle on September 16, 2015

This blog post was co-written by Yngve Dahle and Mark Robinson.

Does a Startup really have only one Business Idea?

One concept within entrepreneurship has always been taken as a given. A successful startup has one Business Idea. Prospective entrepreneurs always talk about how important it is to find the Business Idea. Singular - definite form!

If you read entrepreneurship textbooks, application forms for government grants, or articles in business newspapers; you will experience the same thing. They all talk about the Business Idea. Singular - definite form! But, does a startup really have only one Business Idea?

We should start by trying to find out what a Business Idea really is.

According to Canadian professor Chris Bart (2002), the Business Idea (or mission as he calls it) consist of three components:

  • Key Market: Describe your target group or customer.
  • Key Contribution: What do you do for this customer?
  • Distinction: Why does the customer choose you?

Say that as a skateboard designer, you have developed a longboard with an electric helper engine. Your Business Idea could be to help longboarders take longer trips without getting tired by utilizing your unique propulsion technology. This will definitely be a Business Idea or mission that would satisfy Bart’s definition. But would it be the onlypossibility? Can’t this technology satisfy other needs for other key market groups?

If you are an entrepreneur, you may feel that this discussion is a bit academic. Our response would be that the discussion is distilled from our practical experience. Over the last four years, we have consulted with hundreds of startups, in most industries across many countries. And – according to these experiences, acknowledging that your startup has many possible Business Ideas is the best medicine against it failing.

Most startups try to satisfy a range of needs for a number of target customer groups. Particularly in the initial trial-and-error phase, it is very tempting to try to cater to anycustomer that might drop in your door. Our opinion is that sorting these different combinations of needs, target groups and unique distinctions into potential Business Ideas is the most important strategic task you can complete.

You are, in fact, creating for yourself a repository of options. In this way, you can get an overview of the various needs you can satisfy with your technology or uniquely differentiated competence. Then you can prioritize the different Business Ideas, and use all your resources to solve the need that will most likely make your startup successful.

Sometimes two different Business Ideas can support each other. eBay successfully combines car sellers’ need to find car buyers with car buyers’ need to find cars. In other situations, two different Business Ideas cannot be combined in the same startup (such as a shop selling both sporting goods and cigarettes).

If you find that the Business Idea(s) that you initially supported are not feasible, you will have a ready list of parked Business Ideas that you can try instead. Switching between Business Ideas this way is what Eric Ries calls pivoting. Continuously evaluating your Business Ideas like this is one of the main characteristics of a “Lean Startup.”

Let’s return to the longboarding example above. In addition to solving eager longboarders need for extended range, the longboard could be used as a mere means of transportation. Perhaps it would be perfect for transporting train commuters the last mile from the railway station to the office. The board would be easy to carry on to the train, and it would bring them quickly and effectively to the office without making a carbon footprint. This means that you now have two competing Business Ideas to choose from.

You could prioritize one idea and park the other. If the customer rejected the first one, you could pivot quickly to the other one. Stay nimble, learn from your experiments and interactions with early users and VCs, update your options, and go for the new best idea.

This way you would avoid the trap that almost all first-time startups get into: stretching your limited resources trying to realize multiple Business Ideas simultaneously. Trying to develop and market a product that would satisfy both the eager longboarders looking for extended range, and the train commuters looking for last-mile transport would probably result in a confused solution that does not work optimally for either task.

We hope that this blog post may inspire you, and perhaps start a discussion. If some of the entrepreneurship terminology used is new to you, you will find it explained more extensively in the Business Idea chapter of The Lean Business Planning book.

Topics: Business Idea, Lean Startup

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