I am continually amazed by people who take a vision and attempt to turn it into a business reality. Of course, this requires passion, intelligence, insight, and commitment. However, it also requires something else – the realization that the effort is an experiment.
As Vijay Govindarajan and Chris Trimble teach us in “The Other Side of Innovation,” “… the innovator’s job cannot be to deliver a proven result; it must be to discover what is possible, that is, to learn by converting assumptions into knowledge as quickly and inexpensively as possible.”
One such innovator who is in the throes of running an innovation experiment is 34-year-old Ashley Poulin, CEO of SharpHeels. Ashley’s vision with the website is to provide professional women a forum to learn, share and obtain knowledge and services that will help them enjoy, as well as advance in, their careers. She started this as a hobby while working as a marketing leader at a leading computer-hardware company and now dedicates herself full-time to the effort.
Risky, no? You bet.
But in her mind, she is taking “measured risk,” and learning every step of the way. Here are the five key elements of her approach:
Plan: She created a formal three-phase plan to convince herself that the effort was feasible and could result in a successful business. Phase 1, which is now complete, was the creation of content. Phases 2 and 3 are about to be implemented — these are community and commerce. In the plan, revenues were neither anticipated nor required during the content phase, which was simultaneous with obtaining market research to guide the next two phases. Ashley estimates that 30% of Phase 1 plans were rewritten in light of data that were obtained while executing the plan. Lesson learned: Have the discipline of a formal plan, and make revisions based on new information.
Data: In order to obtain the appropriate feedback to optimize the content, she closely watched reader behavior. Unexpectedly, for example, she observed that visitors to the site gravitated toward business travel and women in entertainment; therefore, she beefed-up her offerings and partners in these categories. Going forward, she will be looking closely at conversion rates; for example, content reader to free member; free member to pay member; and paying member to paying consumer of solutions. Looking at these metrics, and the variables that influence the conversion rates, will allow for optimization of the content, community and commerce areas. Lesson learned: Define the data that must be collected to inform the plan.
Time: Realizing that she was entering an area in which she had no experience, she gave herself ample time — 12 months — to complete Phase 1. Actually, she knew after just six months that the brand was working and resonating with visitors. In just a few more months, the content was finalized. She will be launching phases 2 and 3 a couple of months early, which is a welcome surprise, probably resulting from the lack of pressure associated with the planned incubation time. But, had she started with unrealistic expectations of time, she would have been forced to short-cut the content creation and optimization phase, resulting in rushed refinements to the community and commerce plans. Lesson learned: Giving the plan time to work, and defining success according to the plan’s metrics, along with anticipated learning, kept her from automatically and distractedly looking at business results (revenue).
Money: Ashley has one investor; herself. Admirably, she still had the discipline to make a formal business plan, and present it to her investor, so to speak, realizing that this was a big commitment and potential huge opportunity cost. Although outside investors have indicated interest, she has refused their offers thus far, realizing that no matter how much she stresses to them that an experiment is being run and a measured risk taken, they will be inquiring about returns sooner rather than later. Lesson learned: Commit to maintaining an environment conducive to experimentation and risk-taking. This means that no external investors are being sought at this time, which is good news for the plan, but not such good news for her bank account (!).
Comfort with the unknown – Although initial success with the plan breeds some confidence, there is no guarantee that Ashley will be able to turn this once-planned hobby into a business that provides her the returns she desires. But then again, there was no guarantee that she would find a job after graduating college in Florida and moving to Texas to live with a friend to avoid having to move back in with her parents. Lesson learned: People who run experiments and who take measured risk must be comfortable with the unknown.
Don’t embark on an entrepreneurial effort, or intrapreneurial effort for that matter, unless you fully comprehend these five fundamental elements of taking measured risk. There are no guarantees, however, even if you follow these rules. So, perhaps a sixth element should be added: the ability to bounce back from failure.
Nothing ventured, nothing gained.
And, when venturing, have a plan, and plan on learning, a lot.
Joseph V. Gulfo, MD, MBA, is the author of “Innovation Breakdown: How the FDA and Wall Street Cripple Medical Advances” and CEO of Breakthrough Medical Innovations, a team of biopharma and medtech consultants. An Inc.com contributor, he also teaches graduate cancer biology and business and entrepreneurship classes and maintains an educational cancer biology blog. Dr. Gulfo received his MD from University of Medicine and Dentistry of New Jersey, and his MBA from Seton Hall University.
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