Archive for November, 2014

Often times start-up ventures have difficulty identifying how to do business in their market. The question of how in this sense is not in absolute terms, but in relative terms. This is important to understand because relative can outweigh absolute in a competitive market. A business can offer a great product at a great price, but how is the “greatness” determined? Is it by absolute measures, or relative? Often it is due to relative measures, as a product is compared to the competition in an open market and therefore the relative advantages of a product determines how it is viewed in the market. For a start-up venture, this is important because they must focus on how to differentiate from the competition, and this is certainly done in a relative manner.

There are many ways we can apply this idea for start-ups, or for any entrepreneurial activity (which is essentially any activity based in growth efforts), but I want to talk a little about it under the framework of the replication-adaptation continuum. I became familiar with this idea in the book “Scaling Up Excellence” by Bob Sutton and Higgy Rao, which was in the context of leading a scaling effort within an organization. We can apply this idea to business development also, with a lot of connection to benchmarking and deciding where to start when in an ambiguous state. The replication-adaptation continuum is basically the idea that a new process can be placed on a continuum where sometimes it is better to replicate from elsewhere and sometimes it is better to adapt and innovate. Obviously for a business this can be applied as well, as innovation is always something that a firm looks to do, even if it is innovation from within.

For an entrepreneurial action, we can take the idea of benchmarking and of replication as a way to help figure out where to start. Maybe you are familiar with the idea of Bright Spots, in context of identifying successful practices, and use them as an appropriate starting place to determine how to move forward. For benchmarking, this can be done by looking at another firm that has done a similar thing and look at what worked or didn’t work and then understand why. This should be sounding like a familiar idea that understanding the market and our competition is vitally important for any firm, but we can take this idea and use it as a way to help determine starting places and next actions. Sometimes we may decide that a given action will be more influenced by replication and other times by adaptation, but we should have reasons for choosing one or the other (in line with System 2 thinking discussed by Daniel Kahneman). Of course, we are always looking for a way to differentiate and gain a competitive advantage, but this does not mean that everything has to be different all the time.