“The essence of profound insight is simplicity”
– Jim Collins: Author of Good to Great.
Jim Collins in his book Good to great did an in-depth study of over 1435 companies over a 40 year period. He and his research team looked at major indicators from revenue to profits, leading CEO’s, External Markets, Stock prices and business strategies. From the research, they were able to determine indisputable characteristics that all the companies shared which over time, moved them from average businesses to great organizations.
Among all the companies examined, their findings resulted in just three common factors. Each company:
- Chose what they were passionate about doing.
- Stuck to what they were great at producing.
- Chose in which area they could make money.
Now the list above is not in the order of importance that Collins put them in, but from my experience after consulting with over 400 startups over the years, I have definitely found that it works well with startups that have embarked on the journey from scratch – starting from idea all the way to monetization.
Lets look at these 3 elements in more detail.
Passion – Here’s Why I Believe in This Particular Order
When you have a service or idea, it is important to first take a self-assessment. It’s important to know why you want to start your business in the first place. In fact, it is probably one of the most important questions you will ever ask yourself. Why? Because the truth about starting anything new is that it is hard work. It will require countless hours, commitment, resources and a relentless consistency in effort until the idea gains any traction. From my experience, passion for what you are doing is that secret ingredient needed when it comes to launching your startup. More often than not, it boosts the immunity of the idea that will help you weather the storms that surely come in the initial stages of your startup—the very storms that lead to success.
The second element is skill-mastery. Skill mastery can be defined as “an ability and capacity acquired through deliberate, systematic, and sustained effort to smoothly and adaptively carry out complex activities or job functions involving ideas (cognitive skills), things (technical skills), and/or people (interpersonal skills).” – Business Dictionary
The second reason performing a self-assessment is important has to do with a skills stock-take. It is not enough to have a pretty idea or to simply identify a trend in the market that “looks like it’s making money.” Both these factors seem logical, but before you start-up, I would suggest you take stock of what transferable skills you have already mastered.
Your level of skill-mastery dictates your value in today’s market. The higher the skill-level you have in a particular area – the more likely you will produce a high quality product or service in a timely fashion. Conversely, the lower your skill level you own your field, the lower your quality will be for your particular product or service. Your outcome will suffer as will your ability to meet deadlines and produce deliverables in a timely manner.
On the same note, skills mastery has nothing to do with having a qualification. One can hold an MBA from Harvard University (which is nice to have), but that does not mean he or she has the necessary skills to run a successful business. The skill of being an effective entrepreneur comes from deliberate, systematic, and sustained effort to produce a great product or service.
By the same token, it is impossible to gain mastery when you spread yourself thin by doing too many things. To achieve anything noteworthy in life, it takes an unwavering ability to focus on one thing, never yielding to distractions or the “latest opportunities.”
If You’re Not Making Money, You Don’t Have a Business
Lastly, it is important to choose a product or service in which you can make money. I believe this should ALWAYS come last in one’s evaluations. Why? Because in 2013 there was a survey conducted by Deloitte Shift Index which indicated that on average, 89 percent of workers were dissatisfied with their jobs. This study revealed that some of these people even earned high incomes. This goes to prove that money, though it is important, is a poor driver for most people to achieve fulfillment.
If you are seriously considering creating a valuable startup around a great lifestyle, then make the first two elements your priority. Passion and skills-mastery will enable you to target a market or niche on which you can focus your efforts—an area where you can pour your heart and soul into producing extra-ordinary products or services that consumers will love to pay you for. This ability to create demand is what I call “profit-ability” or “monetization ability.”
Unfortunately (or fortunately), the clearer you are about what skills you are great at, the easier it is to zone in on a specific industry—one which will be delighted to pay you to provide solutions to their unique problems.