How experiments can increase commitment to a startup

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Recognizing how uncertainty can limit commitment to startups

A key challenge when perusing a new venture, especially if the venture involves doing things differently from what has been done before, is gaining commitment from others. You will likely need to convince customers to move to your offerings, employees to join your firm, and investors to invest their money in your business.

Part of the challenge associated with gaining commitment is that new ventures often involve a lot of uncertainty. There may be uncertainty regarding the technology that you are using, whether you will be able to convince others to back your firm, and whether you will be able to deliver on your commitments. Uncertainty limits the likelihood that others will make needed commitments – there is an unknown regarding whether you will be able to pull off the venture or not.

Individuals that may have uncertainty about specific areas

Some of the key individuals that may have uncertainties regarding whether you will be able to succeed on your business objectives include:

  • Customers: May have uncertainties about your technology, whether you will be able to deliver on your promises, and whether you will ultimately survive
  • Investors: May have concerns regarding the viability of your business model, your personal commitment to your business, and whether they will be able to see a return on their investments
  • Suppliers: May have concerns regarding whether you will be able to pay for items purchased and whether you will continue to buy-long term.
  • Potential employees: May have concerns regarding whether the business will be around in several years, and whether this is a good career move.

Experiments can demonstrate the feasibility of specific areas

When considering the various uncertainties faced by different stakeholders face, you will likely recognize certain uncertainties that can be resolved through experimentation. While it may not be possible to address all concerns, other parts you may be able to demonstrate the validity of.

For example, though small scale experimentation, you may be able to gradually remove uncertainties regarding whether there is likely to be customer demand for your products. Speaking to customers, getting feedback, and potentially getting some initial commitments can start to address uncertainty regarding the possibility of whether you will have a market for your product.

Similarly, prototypes may help remove uncertainties about whether the technology itself is viable. By focusing on the most uncertain parts of the technology – the areas where you and your stakeholders are most unsure on, you can systematically look to alleviate concerns.

Allow others to get on-board, further reducing uncertainty

Not only does experimentations to remove uncertainties help to gain commitments from certain stakeholders, but these commitments may themselves further reduce uncertainties of others. Addressing technological concerns and customer interest for example may help gain investor commitments, further helping reduce concerns about the viability of your venture.

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