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When is a Startup No Longer a Startup?

When is a Startup No Longer a Startup?
Let’s start the discussion traditionally with a Merriam-Webster definition, a startup means “the act or an instance of setting in operation or motion” or “a fledgling business enterprise.” What does the American Heritage Dictionary suggests is “a business or undertaking that has recently begun operation.” A startup is an organization formed to search for a repeatable and scalable business model. A startup is a business that has the capability to grow very rapidly, ultimately becoming a “real company” with an HR department, divisions, and processes. Steve Blank calls #startups a “temporary organization designed to discover a business model.” Startups, when they begin, have no procedure, no culture, and no recurring business model. All they know is that they have the potential to address a huge market if they can figure their business model out, and then scale quickly enough to stay ahead of the competition. As a founder you set off with a vision of a #product with a set of features and a series of assumptions about all the pieces of the business model. The inevitable questions to be answered are: Who are the customers/users? What’s the distribution channel? How do we price and position the product? How do we create end user demand? Who are our partners or Co-Founders? Where/how do we build the product? How do we finance the company, etc. When you go around and ask people however, startup really means a young company generally building something focused on technology. Every business goes through the same four phases: #Idea Startup Growth Maturity This maps rather well to Steve Blank’s 4 stages described in four steps to the epiphany: Customer discovery Customer validation Customer creation Company creation When is a startup no longer a startup? “A startup is no longer a startup when the product/market fit has absolutely been achieved, profitability or considerable revenue with a path to profitability has been obtained, and if any one person left the company would still survive and not get swayed by the departure.” Being a start-up is mostly about work environment and employee interactions. A start-up graduates to being no longer a start-up when interactions across hierarchies become formalised. For example, if you can no longer walk into the CEOs office to pitch your idea and (s)he does not know you by name, you are no longer working for a start-up. Also, if a company begins to have rules about employee progression (such as you need to spend 2 years before being promoted or moving into a new role etc) then it stops being a start-up. #Companies which have strict rules on which schools to hire from or firm ideas on how many years of experience should be required for which role, are no longer  start-ups. I am not saying that start-ups do not have any criterion for hiring but these criterion, in a start-up, these would be based on things other than simply the pedigree or the number of years of experience. Start-ups hire people if they see passion and willingness to go the extra mile rather than for merely the right pedigree. Source: http://www.quora.com/Faguni-Jain Having made the above points – if a company crosses a certain threshold of revenues and/or profits, it should also declassify itself as a start-up – though it can continue to maintain the ‘start-up environment’ for its employees. Some Startup Mantras for Beginners would be: Be Careful with Cofounders Startups Take Over Your Life It’s an Emotional Roller-coaster It Can Be Fun Persistence Is the Key Think Long-Term Lots of Little Things to be considered It’s much more of a grind than glamorous Start with Something Minimal Engage Users Be Willing to Change Your Idea after User Interaction...
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GE Nine Cell Matrix

GE Nine Cell Matrix
GE NINE CELL MATRIX Another popular “Corporate Portfolio Analysis” technique is the result of pioneering effort of General Electric Company along with McKinsey Consultants which is known as the GE NINE CELL MATRIX. GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises to prioritize their investments among the various business units. It is a framework that evaluates business portfolio and  provides further strategic implications. Each business is appraised in terms of two major dimensions – Market Attractiveness and Business Strength. If one of these factors is missing, then the business will not produce desired results. Neither a strong company operating in an unattractive market, nor a weak company operating in an attractive market will do very well. The vertical axis denotes industry attractiveness, which is a weighted composite rating based on eight different factors. They are: Market size and growth rate Industry profit margins Intensity of Competition Seasonality Product Life Cycle Changes Economies of scale Technology Social, Environmental, Legal and Human Impacts PORTFOLIO ANALYSIS-BCG MATRIX What does the horizontal axis represent? It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below: Relative market share Profit margins Ability to compete on price and quality Knowledge of customer and market Competitive strength and weakness Technological capability Caliber of management The two composite values for industry attractiveness and competitive position are plotted for each strategic business unit (SBU) in a COMPANY’S PORTFOLIO. The PIE chart (circles) denotes the proportional size of the industry and the dark segments denote the company’s respective market share. The nine cells of the GE matrix are grouped on the basis of low to high industry attractiveness, and weak to strong business strength. Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors. So it is also called ‘Stoplight Strategy Matrix’, similar to the traffic signal. The green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion strategies. Businesses in the green zone attract major investment. Yellow cautions you to ‘wait and see’ indicating hold and maintain type of strategies aimed at stability. Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach. This matrix offers some advantages over BCG matrix in that, it offers intermediate classification of medium and average ratings. It also integrates a larger variety of strategic variables like the market share and industry size. Advantages Helps to prioritize the limited resources in order to achieve the best returns. The performance of  products or business units becomes evident. It’s more sophisticated business portfolio framework than the BCG matrix. Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio. Disadvantages Needs a consultant or an expert to determine industry’s attractiveness and business unit strength as accurately as possible. It is expensive to conduct. It doesn’t take into account the harmony that could exist between two or more business units. PORTER’S FIVE FORCES-INDUSTRY...
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Portfolio Analysis and Implementation

Portfolio Analysis and Implementation
What is Portfolio Analysis ? Portfolio Planning is best advised for diversified companies than the more product coherent ones. Portfolio analysis plays a vital role in planning and implementation of  various #strategic business units of the organization as a whole. Portfolio planning recognizes that diversified companies are a collection of businesses, each of which makes a distinct contribution to the overall corporate performance and which should be managed accordingly. Companies dealing with a wide #product range and divisions are expected to redefine their strategies for each of the SBU’s or Strategic Business Units. Then they classify these units on a portfolio grid according to the competitive position and attractiveness of a particular product market. What are strategic business units? A strategic business unit is a fully functional and discrete unit of the business that builds its own strategic vision and direction. Within large companies there are smaller specialized divisions that work towards specific projects and #objectives. The strategic business unit, often referred to as an SBU, remains an important element of the company and is accountable to their head office about their operational status. Typically they will operate as an independent organization with a specific focus on target markets and are large enough to maintain internal divisions such as finance, HR, and so forth. Types of Portfolio Planning: Analytical Planning: Planning is only at the initial level where traditional administrative tools are used. Process Planning: Here planning is a central part of the ongoing #management process and strategic mission is explicit in activities. Advantages of Portfolio Planning: It promotes substantial improvement in the quality of strategies formulated both at the business and corporate levels. It provides a guideline for adopting their overall management process to the needs of each business. It provides selective #resource allocation to the various SBUs. It furnishes companies with a greatly improved capacity for strategic control when portfolio planning is applied intelligently and with attention to its limitations and problems. Since the road to portfolio planning is a long one, companies often face difficulties trying to implement it and cannot realize the full potential of the approach. In implementing portfolio planning, there is a tendency for the focus to be shifted towards #capital investment rather than resource allocation. #Resource Development is the key: Implementing Corporate Level and Business Level Strategies: Corporate level #strategy is concerned with the strategic decisions a business makes that affect the entire organization. Financial performance, mergers and acquisitions, #human resource management and the allocation of resources are considered part of corporate level strategy. Business level strategy focuses on how to compete in a particular product/market segment or industry. Competitive advantages and distinctive competencies thus become dominant strategic concerns at this level. At the functional level, the primary focus of strategy is efficiency.  Boston Consulting Group Matrix: The business policy portfolio models are most popular and useful to understand the firm’s strategic concerns and choices. They define the firm’s scope or domain by highlighting the inter-relatedness of the diverse factors, such as: #Market Growth #Market Share Cash and Cash flow patterns Capital Intensity #Product Maturity #Stars – Star category represents high growth and high market share – High investments are needed to maintain the share – High cash flow outward movement in this category to maintain status – Usually in the end of the ‘Growth’ #Product Life Cycle stage – Represents emerging and good business for the company, though they need alot of attention and priority #Cash Cows – Represents low growth, high market share – This is the best quadrant of the portfolio as the company basically enjoy the ‘milk’ of success – This is where the revenue stream flows inwards...
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Innovation Strategies

Innovation Strategies
Innovation – The BUZZ Word Execution with Perfection: Technological advancement in the fields of aerospace, computers and communication has transformed the world we live in today, into a ‘GLOBAL VILLAGE.’ While most of the countries look to the U.S to adopt and follow management techniques , it is quite amazing to know that the U.S look to Japan for implementing these techniques more effectively. As we all know that Japanese are very good when it comes to “Execution with Perfection.”The point here is not to establish or brand that one is better than the other but rather to suggest that many countries can contribute to innovative managerial theories  and practices and let it be a mutual affair. Management practices and thinking: Innovation is the Buzz word that has defined the paradigm shift in the approach of management practices and thinking. This has helped organizations grow and sustain regardless of competitor and market pressure and challenges. Innovation management gives entrepreneurs the liberty to think out of the box and come up with new ideas leading to the development of new products, processes and services.  Change is Inevitable: Change is inevitable and change is the one that never changes. People love variety and it is the responsibility of business people to satisfy the customer wants and requirements. New approaches are required to avoid monotony and stereotyping. “Old wine in a new bottle” concept may come in handy when you feel that your product has reached the saturation point and about to decline in its life cycle. Inspiration from the Internet Let us look at some services available on the Internet that exist as proofs for innovative and strategic thinking:  1. IRCTC– The e-ticketing portal of Indian Railways. Saves lot of time and effort. Connects huge number of metros and small towns.Tatkal scheme is a huge hit and a great revenue generator for the railways. The interface is very user friendly and interactive. 2. Bharat Matrimony-Online matrimonial service that assists brides and grooms to find their perfect partners. Profiles can be created to express your views and expectations on your life partner.  3. Make my Trip-Helps you to plan your travel, ticketing and accommodation, all in one place. Extensive data is available for people’s benefit.  4. Facebook-Gives you the liberty of having your own space to connect with number of people. Helps as well to promote your business. Facebook generates huge revenue through advertisement banners positioned at the right niches.  5. Twitter-Again a social networking portal that helps in link building. Retweets make the scope of you reach wide and bright.  Education Portals: Educational portals that offer online learning, management portals that teach online MBA, Auction websites with numerous products at affordable prices, travel websites, online portals for paying tax and duties have transformed the lives of individuals and organizations for good. The full bloom of internet is yet to be seen when many more third world nations will have the opportunity to access the...
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Product Innovation

Product Innovation
The Realm of Product Innovation A manufacturer or a service provider, who aspires to be successful in a business market, must indulge himself in research, pertaining to consumer preference as well as the various stages of a product life cycle. This will give him a better chance to make his future decisions concerning the product and also the wisdom to evolve strategies accordingly. Developing a product and introducing it into the market demands certain amount of forethought and prudence. The first step is to study the market, to understand consumer preference as well as to gauge whether your product will be appealing to the customers existing in that market. The prerequisite for this would be market segmentation, that is to statistically estimate the demographic quotient (people belonging to different age groups and ethnic societies) of the sample population and decide on the customers whom you want to target. A product’s success depends mainly on two things: 1) Innovation-lateral thinking, by which you let loose of all your unorthodox methods and stick onto some novel ideas of marketing. 2) Customer-oriented marketing rather than product oriented. This customer oriented concept is advocated by modern marketing consultants and it has proven to be a fantastic proposition. More than the actual product, people like to know more about the values that they obtain out of that product. The secret behind success will be to hit the right note, by propagating more about the value added services that go with the product. Expectations Created by the Product When a product is introduced in a market, say, automobiles for example, since every tom, dick and harry is fond of cars and bikes and they talk a lot about it. It is looked upon by prospective customers with great expectations, which might be due to the great hype created by the manufacturer through advertisements in electronic media, papers and magazines. The product as it hits the market will instantaneously make it big, if it has the right mix of intangible and augmented benefits that make customers happy and they feel that they have bought something worth the money paid for. A luxury car is well received by the market, irrespective of the price tag that is stuck to it, just because of the value added benefits such as, delicacy, great speed, high-performance, safety, insurance and warranty. Product Pre-Launch Analysis Before launching a product, industry analysis is a must, as various similar products might exist and it comes to the question of how different and appealing your product is, for market acceptance. Even minor things can make a big difference, say, for instance, if you are able to float the cheapest car, in terms of price but with great fuel efficiency, the results are obvious. The strategy would be to introduce innovations not only in your product but also in your thinking. Best products emerge as a result of tuning in your wavelength with that of the consumers’. Product Life Cycle A product gets introduced, grows, matures, stabilises and slowly withers off, just like a human being. No man is eternal and so is a product. You may argue that some products are in the limelight for more than their share of lifetime. If you keenly observe, that would have been the result of makeover changes to the product in lieu of the change in people’s liking and analysis of market trend. Some products have a second chance to prove their mettle. They go into hibernation for a while and then re-enter when market conditions seems to be favorable. The perspective from which you look at the life cycle of a product may cast a different idea...
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