One of the most complicated questions to answer in business is why some ideas succeed and others fail.
In that time, Bill has helped launch over 150 startup companies, and had over 45 of them either go public or be acquired. And he asked himself whether he could find the common threads which would explain why a startup would succeed or fail.
He set out a hypothesis to rate all of his startup companies across five capabilities which might explain it. They were:
- Ideas: How good / original / valuable was the idea which the startup was working on? What problem were they trying to solve?
- Team: Did the company have the team and leadership to actually execute the idea?
- Business Model: Did the company know how it would make money?
- Funding: As the companies were predominantly technology-based, how much money did they raise to fund their growth?
- Timing: Was the company working on the right things at the right time?
What Gross then did is he analysed not only all of his own companies, but also some other major startups which either succeeded or failed.
He then rated each company against the 5 criteria set out above, and finally tried to find the statistical trends which would indicate which of the 5 essential elements was the most likely to predict future success, and which of the elements was the key component differentiating success from failure.
What he found when he crunched the numbers surprised him, especially as he had predicted that things like the quality of the idea and successful funding would likely predict success.
What he found instead was that far and away the biggest predictor of success was what he had identified as “timing”.
Now before going any further, I want to note one important thing, especially when it comes to the likelihood of innovations at non-startups succeeding. In my view, do not in any circumstance take this to indicate that the business model is not important for innovation.
In my professional view, figuring out the ways to have the business model drive value for the company and the customer is vital for the innovation to succeed.
But, I want to highlight why this concept of “timing” is so important as well.
To me, success driven by timing means that you are offering something which at that moment is not only attractive to a customer, but accessible to them as well, and viable for the business to manage.
It forms the Triangle of Innovation Success
In order for any innovation to succeed, it needs to add value to all involved. And for this to happen, the timing needs to be right in all three aspects of the Triangle of Innovation Success:
- Desirability: At that moment in time, does the end customer see enough value in the offering to consider buying / using it? This includes a number of aspects, such as it being easy enough to use, affordable, accessible and have some indication that it will deliver on its promise (proof / track record etc). It also needs to provide value, even when compared to the competition.
- Feasibility: Is the currently available technology at the time able to deliver a good experience? For example, is broadband internet speed high enough to finally stream video of a watchable quality, are microchips fast enough to run a programme at an acceptable speed, or are new metal alloys light enough to allow an airplane to have fuel economy high enough to travel across an ocean?
- Viability: Can a company make a business model which sustains itself from the offering, or add enough additional value in other ways to make it worth offsetting costs? For example, is there a profit margin with a large enough market in this offering to make investing in it worthwhile?
In order for any innovation to succeed, it will need to meet a minimum threshold for each of the three aspects.
And if any of the three aspects is not high enough, then the innovation cannot work out in the long term yet.
Often, an innovation may start out in a laboratory, and show a lot of promise but not be ready for the mass-market yet. At this point, it may be desirable, but not feasible yet until the technology is advanced further, and it is far from viable. Currently, a technology which fits into that category would be graphene, which has a lot of scientists speculating about uses for its amazing strength and electrical properties, but no way to manufacture it at a large enough scale for companies to make money from it.
And when startups say the “timing was right”, it often just means that finally a moment came where all three of the aspects were finally working together.
So when you are looking at your innovation projects, ask yourself whether it really meets all three aspects of the Triangle of Innovation Success.
If it does, then the timing might just be right for it to succeed as well.