Keys to drawing up an annual strategic plan for entrepreneurs
A new year is beginning that promises to be very productive for Spanish entrepreneurs. On one hand, the cities of Madrid and Barcelona are strengthening their position as entrepreneurship hubs, the latter being particularly alluring for international talent due to its cosmopolitan character and its strategic position in the Mediterranean area. On the other, new environments are emerging, such as the case of Malaga, where the company Globant has developed an AI centre and is hiring 100 employees for its new headquarters, and Vodafone which has also installed its new R&D centre and created 600 jobs; or the case of Álava, where the Spanish company Aeternal Mentis is to promote the construction of an artificial intelligence hub.
For entrepreneurs who decide to start or continue their activity this year, here are some points to consider when establishing their strategy.
4 essential keys to an entrepreneurial project
There are four keys to success for any entrepreneurial project that pursues innovation. The idea, the business model, the timing and the team must always be considered when studying any strategic plan, especially when starting a new business.
The first two will be discussed later in this article. Timing is an aspect that is not always taken into account but is undoubtedly essential. In many cases, ideas that were later successfully implemented by other companies failed initially because they were considered at a time when the context was not mature enough. A key concept here is that of "digital density".
Presuming that most of the innovations of the 21st century are based on the use of digital technologies, the first aspect to consider is their penetration into the collective or context in which they are to be implemented. If it is still unable to reach the necessary critical mass, it is very likely that the project will fail. A good example of this is the case of Netflix which, despite beginning its journey in 1997, did not truly take off until 2007. The main reason for this was the deployment of broadband in homes, particularly via fibre optics, which led to its mass use. In this example, it is the technology deployment that is critical. In other cases, however, it may be the culture of potential users and their relationship with the technology that hinders the process, or the way in which the relevant sector of activity is structured.
Unstructured sectors: the most attractive for digital entrepreneurship
In this sense, it could be argued that it is precisely the most unstructured sectors that offer the greatest opportunity for digital entrepreneurship and, in this case, what is important for timing purposes is to get there in time, before others seize the opportunity. A good example is the case of Uber and urban transport, by definition highly unstructured. Companies like Uber seized the opportunity in time.
With regard to the training of the team forming a start-up, this is also a critical aspect that is not always considered and which has a major impact on the level of success of any project. Apple is a typical example of creating a company with the right team. Right from the start, Apple had a visionary aspect and the omnipresent leadership of Steve Jobs on one hand, and the in-depth technological knowledge of Steve Wozniak on the other. This tandem was an essential part of Apple's success. It should not be forgotten, however, that throughout its history Apple has hired the right people for the right role at the right time, such as John Sculley, who had been vice-president of Pepsico and was a key player in Apple's growth.
The business idea as the basis of the strategic plan
With regard to the business idea, the core aspect of the project, it is essential to clearly establish the vision of the company in terms of several main aspects. Firstly, it is necessary to be very clear about the problem that the product or service to be developed solves and how it solves it. This is the starting point of any venture, and the success or failure of the project depends entirely on whether it is well defined and corresponds to a demonstrable reality. The creators of Zapos, the US online shoe retailer that was sold to Amazon for more than €1 billion, had a very clear vision: in a €40 billion shoe market where almost €5 billion of sales were mail order, it seemed reasonable that at least €1 billion of sales could be shifted to the then nascent e-commerce market, which was indeed the case.
On the other hand, demonstrating a business hypothesis requires a minimum viable product/service (MVP) based on which the true interest of potential customers can be tested. In the digital age, it is becoming less and less necessary to complete product development to demonstrate its viability. Conversely, some form of prototype can be developed at very low cost that fully emulates the actual product/service and allows for the working hypothesis to be reliably tested. Once again, the case of Zapos is a good example of using the concept of minimum viable product. In this case, the entrepreneurial team based in New York City used simple photographs of shoes taken from a shop window on Fifth Avenue to see if they could be sold on a very simple website. In view of the great success, it became clear that the business hypothesis made perfect sense.
Analysing the validity of the business model
Finally, the proposed business model should be analysed in detail, as this is a key element to generate innovation in many of the ventures of the digital age. Tools such as the business model canvas can be extremely useful for detailed analysis. In this sense, a very interesting concept, which we will analyse in detail in future articles, is that of the digital platform. In as far as a product/service using digital technologies can set up a platform in which third parties can innovate and do business through it, the value for users will steadily increase and, with it, the chances of business success.
For all those who are currently implementing their entrepreneurship project, I would encourage you to start the year with all these ideas in mind, and wish you all the best of luck.