There are multiple factors that directly influence the health and wealth of any given business venture. These factors may be diverse and different depending on the nature of the business. The Critical Success Factor, however, is common to virtually all business ventures.
The Critical Success Factor: Earn a Profit Solving Customer Problems Better than the Competition. It is do, or die. A venture dies for one of three reasons: 1] It didn't earn a profit; 2] It didn't solve its customer's problems; 3] It wasn't better than the competitive alternatives.
Earn a Profit Solving Customer Problems Better than the Competition ... The Critical Success Factor for all business ventures.
Critical ... having the potential to become disastrous
Success ... attains prosperity
Factor ... a circumstance that contributes to an outcome
* Earn ... Teamwork! A business employs a team of people working together to continually and profitably solve customer problems better than competing alternatives. Healthy, growing ventures follow a clear business model. An educated, experienced, collaborative, communicative team with key core competencies is paramount to success.
* Profit ... The monetary value captured by a business is appropriately called earnings. After all expenses are accounted, earnings become profit. Profit is a reward for doing a good job solving customer problems. A key source of growth funding for a business venture is earned profit. While the profit reward is "financial", the reward can and should have other elements, too. In a healthy venture culture it can actually be "fun" going to work and being part of the team, and their may well be some "fame" that results from delivering valued solutions to customers.
* Solving ... Solutions to customer problems are typically combinations of products, services, process, and methods. However, the world keeps changing as do customers and competitors. Solving customer problems, new and old, is a continuing process for sustaining a healthy venture.
* Customer ... Customers are the primary source of revenue for a business venture. Some business ventures may have only a few key customers, others may have many. A group of customers that share similar traits comprise a market segment. Many business ventures may serve multiple and varied market segments. A business venture exists to serve its customers.
* Problems ... Customer needs, wants, desires, and situations that can be adequately addressed and resolved in a reasonable time and expense are good opportunities for a business venture.
* Better ... Continually improving value is critical to sustaining a competitive advantage. Scientists and engineers often think about innovative solutions in terms of the fit, form, function, features, and performance. The entrepreneur thinks in terms of the benefits customers will receive. Value is measured by comparing the benefits to the price. Value can be increased by delivering better benefits to customers, by lowering the price, or both. Customers decide what offers the better value. In the long run, the products, services, processes, and methods that deliver a better value win the business. In short: Value = Benefits / Price
* Competition ... There are (almost) always competing solutions and ventures from other sources that are directly comparable to our solution. This competition includes indirect alternatives, substitutes, and replacements that could serve customer requirements. Best to assume we have competition, even if we don't yet know who or what. Competition is not always a bad thing ... competitors can help validate and build new markets, and sometimes competitors can become collaborative partners.
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For 20+ years, I taught in a University of Arizona entrepreneurship program. This Innovation Impact Mindmap started on the whiteboard in my office, a graphic schematic of the course syllabus.
A syllabus is sequential, but innovation and entrepreneurship usually is not. They bounce around a bit, from here to there and round again.
The whiteboard version was fairly simple, but useful. Students and colleagues took pictures of it for reference. So, I thought, why not elaborate it just a little bit?
[OK, OK, so maybe a little bit more than just a little bit!]
I've added elements that I thought would be most useful, but certainly not all apply to every new venture! The "main highway" is the mission statement, highlighted in yellow.
Think of this Mindmap as a checklist of the elements you might want to visit as you travel around on your new venture adventure!