Predicting the future & other crazy ideas
1 March 2011
After reading ‘How Great Entrepreneurs Think‘ in the February issue of Inc. Magazine and at about the same time reading Fred Wilson’s blog post on Marketing I had some thoughts that I wanted to get on to a screen.
Some excerpts on great entrepreneurs from the article in Inc:
“A survey of Inc 500 CEOs found that 60% had not written business plans before launching their companies. Just 12% had done market research.”
Most of the CEOs involved in the Inc piece decided that instead of conducting formal market research they would just try to sell what the envisioned the final product would be. This would allow them to easily assess obstacles, pricing, and target market.
Entrepreneurs have learned not to base their ideas on prediction of any kind.
Entrepreneurs let their experiences that occur along the way shape the plan.
Worry about product before you worry about competition.
Entrepreneurs don’t let product limitations get in the way, they think broadly about the products and all the ways it could be applied.
Some excerpts from Fred’s blog post on marketing:
“Marketing is what you do when your product or service sucks or when you make so much on ever marginal customer that it would be crazy to not spend a bit of that profit acquiring more of them.”
“Early in a startup, product decisions should be hunch driven. Later on, product decisions should be data driven.”
Analysis
Most of my background in this area comes from classes and experiences I have had since being involved in the entrepreneurship program at K-State and it seems to completely go against what most of my classes have taught. It’s plays directly into my post on higher education called, ‘Don’t teach me what to think, teach me how to think.’
When it comes to Marketing, I think, if you are intelligent in the least and knowledgeable about the field it should be either straight forward who your target market is or there will be a long list of potential customers. This is where my classes seem to get it wrong, surveying these potential customers to see if they would use your product is pointless. You need to sit them down, tell them you have a brand new product about to launch, and want them on board. Then you walk them through some mockups of the product and ask them to commit. If you get a yes, it validates your market. If you get a no, you need to ask them why and course correct.
This strategy also plays into the study that was the basis for the Inc. article. It states that great entrepreneurs are effectual thinkers, not causal thinkers. They start out with a broad goal and as conditions change they change their strategy and potentially, future goals. This plays a role in pivots, that have become a buzzword as of late.
Another ridiculous notion that is drilled into students is the concept of planning and prediciting the future. Let’s face it, we have no idea what tomorrow could bring, we have a general idea but if we try to predict further out all those little variables in every second of every hour begin to add up and make prediction an art left to bookies and investment bankers. When I am told I need to have financials for 3 years out I laugh, because it involves so much guesswork that leaves those predictions as only wasted time. Oh, you want me to project my revenues for 36 months from now? I may as well pull a number out of thin air.
Everything, in my area at least, hinges on product. If you have a great product you will have customers, if you don’t you better have a kick ass marketing plan.