Too much of the startup world focuses on the mechanics of starting a business. Whilst it’s good to move fast and stay lean, it’s time we made our businesses more human and in the process gave them a better chance of survival.
If you run a business you’ll often be asked:
What’s your exit strategy?
I’ve always found this to be a strange question, probably because I didn’t set out in business with the aim of selling it for a handsome dime. I wanted to take control of my life, do things my way and ultimately build a business in my image. The thought of creating something you’re proud of, only then to hand it over when a good offer comes in doesn’t sit well with me. Likewise chasing investors early on and giving away equity before you’ve found any passionate customers.
“When you take money from investors their business model becomes yours.”
Startup founders should be creating companies so that they can live according to their own rules, not someone else’s – especially investors or shareholders.
Whilst there will always be entrepreneurs that set out with the aim of a $10bn IPO, there is a growing movement of people that are starting out in business for reasons other than money. These people want to build companies they’re proud of. Companies that have their own personal values and purpose as part of their DNA. Meaningful companies.
Will McInnes, founder of social business consultancy Nixon McInnes (and fellow Brightonian), has an interesting take on it:
“I’m a confused entrepreneur - the confusing bit is I don’t do it for the money"
At the Happy Startup School we’re helping this new breed of entrepreneur to realise their dreams. Startups that put people first and place happiness before profits.
In the words of Dave Kashen, a prominent figure on startup cultures:
In the startup world, thousands of entrepreneurs focus their ingenuity on finding ways to make millions of dollars. They look for market inefficiencies and focus on questions like: “Will consumers pay for this?” without asking “Will this make people’s lives meaningfully better?” It’s not that we shouldn’t try to make money, it’s just that money should be merely one of many factors we strive for, and it’s played far too central a role for far too long.
In a recent talk, sustainable branding expert and friend Mark Sears said that companies should be planning a legacy not an exit strategy. Brilliant.
How different the business world would be if we made decisions for the long-term good of the business, not to keep shareholders happy.
So when people ask me what my exit strategy is these days, my response is:
(We even had a chat with our solicitor last week and gave them this response, to bemused faces…).
Anyway, back to the canvas
Most startup ideas are based on a set of assumptions. As convincing as your ideas might sound to you, it’s important to recognise that they are still largely untested guesses that will almost certainly change once they’ve come into contact with the real world. You could take these ideas and turn them up into a 30 page business plan or take the sensible option and document these on one page.
Let’s take quick look at where it all started…
1. The Business Model Canvas
Alex Osterwalder’s 1 page canvas has changed the way organisations, new and old, develop their businesses. It visually captures the essential components of a business model, and the various approaches are expertly covered in his excellent book Business Model Generation. Amazingly, the book was co-created by some 470 practitioners from across 45 countries, and all independent of the publishing industry. Truly an innovative project if ever there was one.
2. The Lean Canvas
2 years later and some variations of Osterwalder’s canvas had appeared. Rob Fitzpatrick’s Startup Canvas better captured the “4 Steps of Epiphany” approach developed by Steve Blank. But Ash Maurya, an early advocate of the lean startup movement took this further with his adaptation, the Lean Canvas.
Ash’s canvas is a great tool and is tailored to the tech startup world, where uncertainty is rife and solutions are often thought about before problems. This tool means that you can rigorously test your assumptions before wasting valuable time on development. Everything is geared towardsbuilding something people actually want.
3. The Culture Canvas
I recently came across the work of Javier Muñoz, co-founder, Happiness Designer & Trainer at Delivering Happiness in Spain. In his own words:
“We are presenting the Culture Canvas in the startup community so they can use this tool to model their culture from the start. Modelling a minimal viable culture and assessing whether there is a product-culture fit is vital even if you are dealing with a two founder startup. It is also important for proven startups that are looking to scale their business.”
I can see this becoming a more widely used tool as startups realise the business benefits of having a strong culture and engaged employees. All the research points to happy teams making more money and so organisations are switching on to this. Startups are next.
The Happy Startup Canvas
Cue today and my attempt at taking the best elements of the above canvases, along with our learnings from working closely with dozens of entrepreneurs over the years, to create a framework for early-stage startups to create the DNA of their organisation.
The canvas is also inspired by the work of Jim Collins and his vision framework. Jim is author of 2 great business books – Built to Last and Good to Great. I thoroughly recommend you read them both.
So, on to the key components of our canvas.
1. Purpose & Vision
This should be the starting point for any startup founder, but it’s often overlooked. Too often people dive straight into their shiny solution ideas without thinking what change they want to see in the world, or even question why they’re doing what they’re doing. Having a clear purpose can help to give your brand real weight as it has a reason for being so it’s worth spending time shaping and articulating this. It will also help you to make quicker decisions and attract an audience.
“Your purpose is the wind in your sail”
Umair Haque, the renowned writer and economist recently stated that“we’re on the cusp of a values-driven revolution.” He highlighted that consumers now are much more careful about who they buy from and whether they represent the values they hold dear.
Therefore it’s important to pin down your values and what you stand for. Think of your core values as those that, when the chips are down, you believe in so much that if you took them away your company would cease to exist. However, don’t just brainstorm some values only to then forget about them – you need to live and abide by them everyday. Your values are howyou behave not how you would like to.
“In the absence of values all decisions go to profits”
3. Your story
What story do you want people to tell about you? If you have a simple story, it will make it easier for you to tell people about what you do as well as help them to tell others.
“Start-ups are great at securing funding, explaining what they plan to do for people in the know and designing products and services. Increasingly, though, what separates start-ups that go on to success and those that might not survive after the venture firms pull the plug is linking what they do to a coherent and compelling narrative. It’s about a story.”
What are the top 3 problems (or opportunities) that you’re looking to address? Frame these as hypotheses to test against the real world.
e.g. Selling second-hand goods is a hassle for most modern parents.
Is your product or service a pain reliever or vitamin ie. are you solving problems or making people feel better (or both)?
“Work on something that matters to you more than money.
Create more value than you capture. And take the long view.”
What solutions are you proposing? This section is deliberately small as the solution you design will no doubt change after you speak with customers and partners and test out ideas. Use this as a guide, not a brief.
“Be strong on vision, but flexible on detail.”
Jeff Bezos, Amazon
6. Early adopters
Which customers will be so passionate about your business that they’ll be your advocates – coming back regularly and telling their friends? Or another way of thinking about it:
Who will love you so much that they’ll get a tattoo of your company?
OK, maybe a bit far fetched but it’s a useful exercise and people do it…
At a recent workshop we ran, someone flipped this round and considered what sort of company they’d need to build for them to get a tattoo. Something you may want to think about yourself.
“Try to appeal to everyone and you’ll end appealing to no-one”
7. Value proposition
This can be one of the hardest areas for a startup to get right early on. It really helps to focus on a niche, keep your offering simple and do one thing well. Trying to appeal to too wide an audience and over-complicating your offering can dilute your proposition and confuse customers. As a rule of thumb, keep it simple.
“Almost every client I’ve ever worked for who is seeking greater market share has had no clear value proposition.”
To help with this use the value proposition designer (also by Osterwalder).
The canvas is meant to be a starting point for creating the DNA of your organisation. It’s not meant to replace the business model canvas (or lean canvas if that’s your preference), but rather a way to pin down who you are and what you stand for before worrying about everyone else.
Hopefully this will get you on the road to becoming a happy startup.
A good place to start if you're needing a little more direction is to join a tribe of likeminded others at a similar stage as you. We've helped 500+ people through our home school program and in the first week, the tribe define exactly what their startup DNA is, sharing their work for feedback and advice from fellow entrepreneurs across the world.
Hope you enjoy using the canvas. Let us know how you get on.