Productivity through technological startups (in Colombia): Innovation Vs Organizational beliefs Part I

If any flag could be shown by a startup incubator or a government innovation campaign, is that of productivity and profitability increase through technological innovation. Productivity through innovation is the unreachable dream, is like that dream cute singer or Hollywood actress (or actor) when you're only 12 years old. It's what peers talk about, what you confess your software provider to be your big dream, a managerial affair.

As with the Hollywood actress, time goes by and you realize it is far more unreachable than you thought before, unless you make a strong, committed and long-lasting effort. Productivity and profitability through technological innovation has two requirements:

1. Commitment, effort and time to understand and dominate the new pieces software or hardware.

2. Open minded approach to productivity and profitability through technological innovation.

Counterintuitively, for part I of this series, I will first discuss the requirement 2. In analysing why and how can a company have such open mindedness, it is important to have common grounds on how to fail to be open minded. Let's have a quick glance at some organizational tradition.

Most organizations financially and logistically able to do breakthroughs with technology and innovation are companies that have established themselves for a prolonged period of time and whose executives and directors are sure they're doing well, solely judging by their demonstrated ability to survive, despite struggling through tough financial times and in the face of powerful competition. These are undoubtedly true merits and achievements, but history and knowledge about past circumstances and surroundings aren't the only conditions needing fulfillment. As a matter of fact, the more you believe you know, the less you're able to shift to new paradigms and so the less able you become to effectively handle the actual context.

This is precisely the faulty side of beliefs, they won't allow you to actualize your knowledge, based on present proved facts and evidence. Even today there are hundreds of thousands of organizations with directors and department heads doing exactly the same that has been done for the last 30 or 40 years and, in some cases, imposing their old fashioned criteria to to their subordinates and their ideas. As an example, many corporate meetings planned to be about problem solving or problem identification, result in a monologue from who is believed to be the best documented and prepared person, generally the meeting caller, the oldest employee, the boss.

Organizational beliefs are hard to remove because they are misunderstood as the true value gathered over the years, which can by no means be denied or even put into doubt in any of its precepts, under the new circumstances and today's context. By nature, innovation is an attempt to cope with present demands and adapt accordingly. Any organization willing to adapt to today's market dynamics, needs to allow for debate about what was before to hold true religiously.

The introduction of new technologies in a company is necessarily disruptive, as it may strongly challenge organizational paradigms and demand extra financial and logistical efforts. 

Do you want to be on the technological productivity cutting edge of your industry? Be really prepared to change your old paradigms!

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5 Reasons why a new unrealized idea is worth nothing

I bet you know a friend with a startup idea in mind. Startup ideas live with us, they intrude in our minds and if we let them grow, they can become obsessions, our next big hit. We may assume it is the product of our creativity or intelligence and that as such, there are no reasons to devalue it. A startup idea is a hope to hang on to, and since we're not living with it being realized, we end up buying it at a high price. Idea "owners" buy it when its so expensive, that refuse to communicate it to others, who may buy it at a better price, seeing as more tangible and doable.

We get sold on our idea. This is a necessary, yet insufficient condition in order for it to become valuable. Here's why a non prototyped idea is worth nothing.

1. There's just so much to do!

This is especially the case if your friend(s) have never tried entrepreneuring. Every junior entrepreneur knows an idea is 1% of the whole startup. There's so much work in the backstage of a startup (value chain, alliances, workforce talent acquisition, etc...) and in the forefront (marketing, selling, CRM, etc... ), as well as in the business model definition, that an idea is little more than what's needed to start.

2. Startup ideas are frequently chameleons by requirement

Even if today you're completely sure your present business model will remain the same, even if you're having success with your current idea and you're, indeed, growing the numbers, even in that case, startup ideas should change over time, adapting themselves to a more profitable version. Every company has done this, ask Instagram, ask Groupon, Facebook or Twitter, to mention a few.

How can we give value to an idea if it's surely not being exactly the same at the end, if it ever contributes to any success?

3. We all have ideas

This is a offer/demand argument. If ideas could be sold and bought with money, we would all be quite rich.

4. There is nothing really known about its value

Ideas that are not tested in the market have no recognized value. Very few ideas have any recognized value before achieving product-market fit, a quite advanced stage, compared to that in which an idea is born.

5. Unrealized doesn't mean unthought, there are really no new ideas

This reason is for those who argue their idea is so fantastic and original, that everybody should be charged for knowing such a magnificent an genuine creation. 

Any unrealized idea is mistakenly thought to be "new". Any "new" fantastic idea might have been in the brain of at least hundreds of thousands of human beings. The reason why FourSquare is so valuable is not because it's an original idea no one thought before, you've got to move!

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Why are official and private funding initiatives failing? Part 3

Grant is a 8 year old kid. He's seen money is nice because it allows him to buy gums, hot dogs and videogames. He's also fond in being the coolest guy in elementary school and he's up to the task of conquering attention.  He realizes he needs some money. He seeks a job relentlessly, going back and forth all close shops, but Grant discovers he needs to learn writing and reading proficiently,  adding fractions, calculating percentages, dealing with counters and much more.

What would you say to Grant? I bet you would advise him in being patient, educate himself and enjoy whatever he's up to right now. You would also try to let him understand there's plenty of time, dedication and money to be invested, in order for him to learn what he has to learn to be a prosper lawyer, engineer, marketer, scientist or even a retailer. Furthermore, you would insist that even if his parents are rich, he needs to manage budgets wisely.

Why not encourage Grant to keep seeking employment? Because he doesn't know many facts of life he needs to know to earn some cash. He'd be better off being encouraged to learn and educate himself about his surroundings and objectives.

3. Because we can't understand we'll always be kids in Entrepreneuring with Real Innovation 

We are the Grant version of the tech startup success world. We think we can be successful without finding out what the market looks like and if we're interested in national demand for tech startups we need to find out how the colombian market behaves. We need to educate ourselves about our objectives, our surroundings, the right marketing strategy, etc... We need to be patient, we need to understand it takes time, dedication and money to educate ourselves in order to profit in the future.

It is precisely the kind of attitude we colombians are not up to. In general, the world is not up to this, but Colombia has a particular history of easy-living through commodities commercialization. For some reason, we have some of the richest and laziest people in the world. Wake up! The globe is up and running and you need to educate persistently.

Official and private funding initiatives aim to finance something that doesn't exit. There are 100 awards (something typical), say. If there's any chance of finding 3 candidates who know what they're doing and are having a nice product-market fit (and traction), we're in great luck! If we had more than 3 successful startups, we would all notice at least one of them (assuming Steve Blank's statement that 8 out of 9 startup fail), but we don't! What happens with the other 96? Money lost!

What a paradox! this is exactly what the initiatives are keen on preventing, by requiring solid traction and market research reports before funding.

Hey! Hello! This doesn't help our public funds management and investment perception. I'm glad I'm given the chance to recall that tax payment is one time-consuming, unproductive, ultra defensive endeavour, it's the reason why bureaucracy is obvious and one of the reasons why distrust is the dish of the day. Still, we're burning money! Why? Because we can't understand we need to learn first. Before shooting a rocket high in the sky, we need to try many toy experiments. Fancy a scientist for public funds ROI? Do contact me!

You can't fly if you don´t understand what jumping is, you can't dive if you don't understand swimming, pretty basic, I must say. If you've read something about Lean Startup methodology, you have just immediately been aware of the waste of money we're suffering from not learning.

Who told you we don't know? C'mon! we are ancient marketing sages! 

Look, if innovation wasn't innovation, old marketing would be enough. Yeah, if this wasn't innovation, it would be rather easy: Here's our established product, for an established segment, through this well-known channels, with these resources and these well respected ancient sages.

But innovation is quite the opposite! Nothing established, almost nothing known, no history whatsoever, no old clients, nothing! We need to learn, and we need the best and the fastest way to do it! And trust me, this has nothing to do with old beliefs that may apply anywhere, but here. Just think about the pricing of truly innovative products...

Some evidence

I've been personally meeting several of the tutors who teach tech entrepreneurs get their way in the market. They're great people, with postgraduates and PMP's, with a fun job, but they lack motivation. They have consistently revealed to me they lack motivation. As soon as I ask why, I get the same sad answer: "Well, I know all the theory, but I have no entrepreneuring experience at all. I don't know how it works! This makes me feel compelled to quit".

I'm, of course, not naming these people, but they are some of the tutors of the most respected official and private institutions in question. Maybe we can find 2 or 3 experienced tutors, but we need 100, so that tech startups can really build the traction they need to apply for funding. In any case, none of these 2 or 3 tutors know the colombian market (recall these initiatives strive for local consumption).

Don't misinterpret me, I'm not looking for a mentoring job in a Tech Hub. I'm just saying project managers and product managers are not enough! They might be some of the least important people in a startup. 

Now what?

Well, learning is open! For the first time value learning as a money-making strategy, do not underestimate it for not bringing short term results. You don't stop feeding a youngster for not being profitable today, you let him learn and grow. You learn about yourself with him, you change perceptions and eliminate beliefs for him. You change your approach to him, you understand you can't completely control him. In the end you become a better person.

Do I have solutions? Yes. This blog is about reasons for failure. I will write to propose some possible solutions.