{"id":33595,"date":"2020-03-04T18:53:45","date_gmt":"2020-03-04T23:53:45","guid":{"rendered":"https:\/\/www.myedme.com\/login\/?p=33595"},"modified":"2020-03-04T18:53:52","modified_gmt":"2020-03-04T23:53:52","slug":"avoiding-the-field-of-dreams-approach","status":"publish","type":"post","link":"https:\/\/myedme.com\/login\/avoiding-the-field-of-dreams-approach\/","title":{"rendered":"Avoiding the “Field of Dreams” Approach"},"content":{"rendered":"\n

In the 1989 film Field of Dreams<\/em>,\n Kevin Costner plays an Iowa farmer who hears a voice that tells him, \n\u201cIf you build it, he will come.\u201d Inspired by this vision, Costner\u2019s \ncharacter turns his cornfield into a baseball field (of dreams), and \neventually the ghosts of deceased baseball players such as Shoeless Joe \nJackson appear on the field as younger versions of themselves. The movie\n coined the popular axiom that \u201cif you build it, they will come,\u201d just \nas the players appeared after the field of dreams was built. Although \nit\u2019s a fun saying for film buffs and sports fans, this approach is one \nyou will want to avoid in entrepreneurship. In fact, the entrepreneurial\n graveyard is littered with ghosts of startups that never gained \ntraction with customers, never to be heard from again. (Seventy-five \npercent of venture-backed startups fail, according to one recent study.)1<\/a><\/sup> Thus, you don\u2019t want to blindly build a product and hope that customers will come. Juicero\n is one recent example of product that conducted little-to-no customer \ndiscovery before launch. A cold press juicer made by this San Francisco \nstartup cost $699 at launch. The juicer squeezed packs of cut up fruits \nand vegetables, but customers found they could just as easily squeeze \nthe juice out of the packs by hand and avoid the hefty price of the \njuicer.<\/p>\n\n\n\n

Customer acquisition and customer retention are \nnot easy processes by any means. You have to work to gain a customer and\n work even harder to get her to return. One study by the data analysis \nfirm CBInsights of why 101 startups failed found that 42 percent of them\n joined the \u201centrepreneurial afterlife\u201d because there was \u201cno market \nneed,\u201d which suggests a customer (or lack thereof) problem.2<\/a><\/sup>\n Current trends in entrepreneurial thinking reflect a customer-centric \napproach: From the start, entrepreneurs infuse their insights into the \nplanning process through a process called \u201ccustomer discovery.\u201d The \nentrepreneurial journey should begin with finding what the serial \nentrepreneur, author, and educator Steve Blank, one of the founders of modern entrepreneurship, calls the problem\/solution fit.3<\/a><\/sup>,4<\/a><\/sup> In a complementary approach, the Mosaic\/Netscape founder Marc Andreesen discussed the need to achieve product-market fit.5<\/a><\/sup>\n In other words, don\u2019t just build a baseball field and expect players to\n show up. This is an oversimplification, but if we extend the Field of Dreams<\/em>\n analogy before blindly believing in the magic, you would want to talk \nto prospective players and fans to see if a field is needed, what type \nof field (corn-to-baseball?), why that field is needed, how that field \nwould be used, and what features of the field would be most useful\u2014before<\/em> you go to bat (Figure 11.2<\/a>).6<\/a><\/sup><\/p>\n\n\n\n

\"Photo<\/figure>\n\n\n\n

Figure 11.2 This field in Dyersville, Iowa, was used in the filming of Field of Dreams<\/em>. (credit: \u201cFieldofDreamsMay06\u201d by \u201cJoeyBLS\u201d\/Wikimedia Commons, CC BY 2.5)\n\n<\/p>\n\n\n\n

Business Model<\/h3>\n\n\n\n

Although there are countless varieties of business models, the Scaling Lean<\/em> author Ash Maurya\n offers three common types: direct, multisided, and marketplace. Direct \nbusinesses are the most common and involve one-sided actors\u2014that is, \nusers\u2014becoming your customers. A coffee shop is a classic example; other\n examples include retail stores, software as a service (SaaS), many \nmobile apps, hardware stores, and stores that sell physical goods. In \nmultisided models, users and customers\u2014multi-actors\u2014are usually \ndifferent people. Ad-based models, big data, and enterprise are common \nexamples where the products are free to users, and their value is \nmonetized by a different customer base. Marketplace models are a more \ncomplex variant of multisided models made up of two different customer \nsegments of buyers and sellers. eBay and Airbnb are well-known examples of marketplace models.7<\/a><\/sup><\/p>\n\n\n\n

Although planning is important, adaptability \nwithin the planning process is equally important. That\u2019s what the \nbusiness model approach is all about: outlining an approach but changing\n that approach throughout if or when you discover that your assumptions \nand educated guesses were wrong. For each new iteration, or version, the\n entrepreneur makes a minor change to the current business model to \nbetter capitalize on market opportunities.<\/p>\n\n\n\n

Successful entrepreneurs are often \nmultidimensional: part dreamer, part pragmatist. Adam Grant, Wharton \nSchool of Business professor and author of the best-selling book Origins: How Non-Conformists Move the World<\/em>,\n explores how entrepreneurs are \u201ccapable of recognizing a good idea, \nspeaking up without getting silenced, building a coalition of allies, \nchoosing the right time to act, and managing fear and doubt.\u201d8<\/a><\/sup> Entrepreneur<\/em>\n magazine tells the story of FedEx founder Fred Smith, who, while \nattending Yale University in the mid-1960s, wrote an economics term \npaper on the need for a new approach to overnight delivery in the \ncomputer age. His professor, unimpressed with Smith\u2019s idea, graded his \npaper a C because the idea was not feasible.9<\/a><\/sup>\n After graduation, using innovative thinking, dogged determination, and \nhard work, Smith would turn his \u201cunfeasible\u201d concept into the world’s \nfirst overnight delivery company, and in so doing, change the \ntransportation industry forever. Smith embodied the entrepreneurial \nconcept of being part dreamer, part pragmatist.<\/p>\n\n\n\n

Link to Learning<\/h3>\n\n\n\n

Read about the popular corporate narratives \nrelated to relatively new companies. Consider whether these stories \ninvolve inventor-founders. If so, what is the invention and how does \nthat tie in with the current and future narrative of the company?<\/p>\n\n\n\n

Listen to the NPR podcast \u201cHow I Built This\u201d with Guy Raz<\/a> to hear stories about more than 100 startup companies and their founders.<\/p>\n\n\n\n

Several more brief narratives on how to tell your company\u2019s story<\/a> are also available.<\/p>\n\n\n\n

Sports metaphors offer important entrepreneurial\n lessons beyond insights on customer discovery and planning. In baseball\n and softball, you must field a team to enter the game. In boxing, you \nenter the ring alone to go toe to toe with your competitor (where some \nof the best-laid plans get thrown out after you get hit). The tides of \nentrepreneurial thinking have shifted from the twentieth-century \neconomist Joseph Schumpeter\u2019s\n early belief that it is \u201clone individuals who carry novelty\u201d for wider \nmarket exploitation and benefit to society to the notion that it takes a\n team to innovate and back to the idea that individuals can enact \nentrepreneurial change.10<\/a><\/sup>\n \u201cSolopreneurs,\u201d for instance, are hard-working entrepreneurs who are \ncomfortable working alone on all the requisite tasks of starting a \nventure.11<\/a><\/sup> At the same time, many successful investors preach the merits of teams in entrepreneurship. Venture capitalist Aileen Lee says that people are the second-most important factor behind addressable market when evaluating startups.12<\/a><\/sup> The cohesion, diversity, and makeup of the team all contribute to investable worthiness and potential entrepreneurial success (Figure 11.3<\/a>).\n Many successful accelerator programs have typically required teams in \norder to be considered for entry into their programs. The accelerator Techstars has said that what they look for in a startup is \u201cteam, team and team,\u201d13<\/a><\/sup> and the accelerator Boomtown requires at least two present founders for the duration of its accelerator program.14<\/a><\/sup><\/p>\n\n\n\n

\"Photo<\/figure>\n\n\n\n

Figure 11.3 While\n solopreneurs can certainly find success, many ventures find value in a \nteam approach. (credit: \u201cachievement agreement arms business\u201d by \nrawpixel\/Pixabay, CC0)\n<\/p>\n\n\n\n

Multiple shifts in sources of innovations and \nrapid business model exploration may reflect high startup failure rates.\n Lack of planning is also a major reason for failure. Most small \nbusinesses fail within the first few years because of cash-flow issues. \nWith more people today willing to field a startup team or enter the \nentrepreneurial ring, failure is more often than not a part of the \nentrepreneurial journey. Serial entrepreneurs launch numerous ventures, \nmany of which fail, before moving on to other efforts. Entrepreneurs are\n the modern-day equivalent of Hamilton: An American Musical<\/em>\u2019s Hercules Mulligan to the world: They get back up again after getting knocked down.<\/p>\n\n\n\n

Innovation<\/h3>\n\n\n\n

One of the fundamental theories of entrepreneurship is that it brings innovation,\n which can be a new addition to the market or a novel change to an \nexisting product or service. The famed management guru Peter Drucker put it simply: \u201cEntrepreneurs innovate.\u201d15<\/a><\/sup> Of course, we should note that not all entrepreneurial ventures involve innovation. Even for those that do, however, the term innovation<\/em>\n can be ambiguous. Further complicating the issue, a plethora of \ndifferent extensions (or \u201ctypes\u201d) has arisen surrounding the concept of \ninnovations\u2014such as radical, incremental, and disruptive\u2014that have been \nused to describe and emphasize different innovations in different \nsituations.16<\/a><\/sup> Innovation<\/em>\n can also refer to products or processes because there are differences \nbetween product innovation and process innovation. In other words, not \nall innovations are created equal.17<\/a><\/sup><\/p>\n\n\n\n

As it pertains to entrepreneurship, the creative\n destruction of old markets with inferior technology and the creation of\n new markets, as defined by Schumpeter back in the 1930s, occurs through\n disruptive innovation.18<\/a><\/sup><\/p>\n\n\n\n

The adjective disruptive<\/em> also became a bit of a catchphrase in the 1990s during the first Internet era, largely due to the popularity of Clayton Christensen\u2019s Figure 11.4<\/a>\n theory of incumbent failure in the face of what he first termed \n\u201cdisruptive technology\u201d and later renamed \u201cdisruptive innovation.\u201d19<\/a><\/sup><\/p>\n\n\n\n

\"Photo<\/figure>\n\n\n\n

Figure 11.4 Clayton\n M. Christensen has contributed many ideas about innovation to the field\n of entrepreneurship. (credit: \u201cFollow Business of Software – Clayton \nChristensen\u201d by Betsy Weber\/Flickr, CC BY 2.0)\n<\/p>\n\n\n\n

As Christensen defines them, disruptive \ninnovations are often more advantageous to new entrants than to \nincumbent firms. This is because once market uncertainty occurs as a \nconsequence of the disruption around the disruptive product, established\n firms consider it irrational to abandon their existing paying customers\n for the smaller customer base of the new, initially small market for \nwhat they believe is inferior technology. New entrants challenge \nincumbent firms by either creating markets where no markets exist, \nturning nonconsumers into consumers, or by targeting overlooked segments\n of the market and later moving up market as the product improves. \nLeading firms\u2019 decision criteria for developing new products and \ncommercializing innovations are all biased toward supporting incremental\n innovations that build on their existing technology base and help \nmaintain or grow revenue and profitability in established markets. This \nopens the door for startups to develop and introduce disruptive \ninnovations and profit from them. Table 11.1<\/a> lists some disruptive innovations.\n\nDisruptive Innovations\n<\/p>\n\n\n\n

Area<\/th>Timeframe<\/th>Established Market<\/th>Disruptive Innovation<\/th><\/tr><\/thead>
Medical imaging<\/td>1960s<\/td>X-rays<\/td>Ultrasound offered a new type of\n imaging; X-ray companies lost out to the market and could not match the\n innovation, although eventually they purchased many ultrasound \ncompanies<\/td><\/tr>
Screens<\/td>1990s\u20132000s<\/td>CRT (cathode ray tube)<\/td>LED\/LCDs innovated to overcome \ntheir display limitations, replacing heavy and bulky CRTs. More recent \ninnovations like foldable screens and retinal scans have added more \nfunctionality and \u201cintelligence\u201d to link to Internet of Things devices<\/td><\/tr>
Entertainment<\/td>2000s<\/td>Video rental<\/td>Streaming services ousted much \nof the video rental market and companies like Blockbuster found \nthemselves irrelevant in the market. More recently, multiple streaming \nservices along with proprietary content (and \u201cOver the Top\u201d menu \noptions) have disrupted cable TV companies<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Table 11.1 \n<\/p>\n\n\n\n

Are You Ready?<\/h3>\n\n\n\n

Netflix\u2019s Disruption<\/h4>\n\n\n\n

Netflix, founded in 1997 in California, disrupted video rental stores such as Blockbuster\n with its subscription service, which mailed DVDs directly to customers\u2019\n homes. The rental stores, whose business model was predicated on \nrevenue from late fees, could not compete with the ease and convenience \nof home delivery coupled with lower costs than the per-tape rental fees.\n But as streaming video content directly to televisions or over-the-top \ndevices disrupted Netflix\u2019s original DVD-by-mail model, Netflix moved to\n offer a streaming service in addition to the DVD by mail model. In both\n instances, Netflix\u2019s prevailing model was predicated on serving as a \ndistribution outlet for content created by other businesses. Netflix in \nrecent years has begun not only distributing others\u2019 content but \ncreating its own TV and movie content as well. (Orange Is the New Black<\/em> and The Unbreakable Kimmy Schmidt<\/em> are both original Netflix series; The Irishman<\/em> is an original Netflix film.) Now content creators such as Disney and Marvel\n are creating their own streaming distribution platforms to exclusively \ndeliver their own content, eventually pulling those shows from Netflix.<\/p>\n\n\n\n