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5 Why Example

Emerging businesses frequently assert that their tight schedules don’t permit them to create profitable strategies and processes. Among the constant fiscal battles, early stage organizations must consistently adhere to a disciplined methodology involving concept generation, hypothesis testing, and data gathering. The capacity to adjust and make changes promptly lies at the heart of any startup.

Successfully implemented procedures from manufacturing industries often find their way into imaginative business environments and tech-based operations. To demonstrate the significance of justifying a startup’s existence, we’ll examine applicability through the “5 Whys” analysis method.

In discussions with investors, these investigations inevitably arise in various forms. I rely on the “5 Whys” analysis as part of my dialogue with startup leaders, ensuring a baseline of topics an investor might expect to be addressed in a founder interaction.

The “5 Whys” methodology traces back to the Toyota Production System. Taking a broader perspective, we’ve expanded it to include the essential “5 Ws” for root cause evaluation: Who, What, When, Where, and Why. This is a slight deviation from the original system, but it’s commonly accepted in practice and designed to serve our objective – substantiating the need for a startup.

Why you? (Who)

Typically, this is an inquiry about the startup team – who are its members, and what drove you, the founder, to choose them?

An acceptable response might highlight the team’s professional experience, sales and marketing knowledge, understanding of industry demands, or perhaps shared history of success from a past startup or a tricky project.

A less compelling response might go like, “we thought of the idea over lunch or at the office party”. Having an idea is one thing; why should you be the one to monetize it?

Why is the team so important? Given that your business idea may not be as unique as you believe, others can potentially procure funding and develop similar technology. The crux is, can your current team amalgamate all the needed elements, launch the product, provide support, and make critical adjustments to make it a reality? Bear in mind that if your concept has potential, competitors may be assembling their own teams to exploit it. Success thus leans toward those teams that are exceptionally skilled and show great synergy.

Why your idea/product/service? (What)

You’ve unearthed a problem that needs to be solved. What makes your prescribed solution ideal? Is there a potential for a superior, swifter, or more affordable alternative? Maybe a simpler method? Factor in your pricing structure and your go-to-market strategy.

The accelerated time-to-market pathway provided by your solution is what minimizes investment hazards. Engage your customers as soon as possible and promptly begin promoting your remedy. However, this does not warrant rushing a less than perfect product into the market labelled as MVP .

Being prompt to market typically reduces investment risks, such as lack of product-market alignment, an unestablished market, early or late entry, customers unable or unwilling to meet the price tag, among others.

Quick, cyclical iterations are as vital as being fast to market. Iterations provide opportunities for tweaks in the product, its marketing approach, pricing, service needs, and enable testing of fresh hypotheses and collecting additional data during the development of the MVP.

Why now? (When)

Why is “now” the perfect moment to introduce your solutions?

Innovative thoughts frequently propel us, nevertheless, we might face several obstacles when debuting our new solution.

Does the necessary setup exist? Do the customers possess sufficient knowledge to operate your new solution? Or will there be a requirement for initial customer training sessions, infrastructure evolution, and learning to utilize your new product?

Several services, like WebVan, were launched prematurely when consumers were yet to be comfortable with online purchases and home delivery. Fascinatingly, InstaCart successfully echoed WebVan’s vision in 2016, a success that eluded WebVan in 2000.

Ever questioned – if your idea is as brilliant as you conceive and the demand is robust, why hasn’t it materialized yet? It evokes curiosity and stokes doubt. Is the concept too early for endorsement?

Performing a root cause analysis could supply insights about why your idea hasn’t been executed up to now. This investigation could potentially disclose unexpected reasons that may dishearten you.

Market timing exerts a significant influence and indeed, could be the single, most crucial element behind a startup’s triumph (watch this Ted Talk).

Why here? (Where)

The timing of your startup’s launch often takes center stage, closely shadowed by the location of your startup. As a founder, what motivated you to establish your company in its current location and introduce your innovative thoughts there?

It’s worth pointing out that the answer isn’t as simple as “because this is where I live.” Regions vary drastically in terms of market dynamics and demographic profile, factors that cannot be disregarded.

San Francisco has been an advantageous testing ground for an abundance of tech businesses and innovative ideas. If you’re putting forward a tech-based solution or a service that serves tech companies, you can’t find a location better suited than San Francisco, a city saturated with tech.

Nevertheless, if your startup is centered around agricultural solutions, allocating your financial resources and manpower to a place heavily skewed towards tech-oriented startups may not be a sensible approach. The exception here is unless your agricultural resolve integrates advanced technologies such as AI, blockchain, and so forth, thereby standing as one of the myriad relevant solutions you can offer.

Why do you do this? (Why)

The “Why” falls upon each founder’s prerogative, asking them to ponder their startup voyage. It’s vital to admit that there’s no universal answer, and you should strive to discover the motivation that keeps you steadfast to your obligations and helps turn your concept into reality.

The more profound and heartfelt the reason is, the more likely you are to triumph in the daunting task known as “startup.”

Many individuals initiate their startup venture without a lucid understanding of the road ahead. Without clearly delineated objectives and a meaningful reason to persist, the likelihood of the startup’s failure dramatically increases.

The core of this discussion is centered around the pivotal theme of developing a company culture that instinctively answers prospective employees’ questions. Should their anticipations not harmonize with your established culture, they might initially come onboard driven by a task or specific job description. However, the needed dedication and quality to convert your new business into a prosperous venture may fall short.

The creation of a mission-oriented company signifies a unique and groundbreaking tactic in the commerce world. The standardized components across varied industries, like remuneration and perks, advertising objectives, and sales quotas, remain consistent. The game-altering factor arises when your company undertakes to serve broader societal requirements, instilling a sense of pride in the workforce for their contributed efforts.

The importance of the 5 Whys

The essential 5 Whys method is famed for its role as a root cause analysis tool and has broad applications across various sectors to determine the origin of a problem.

In this situation, I sought to slightly alter this method, utilizing it not as a troubleshooter, but as a way to comprehend an investor’s thought pattern. Essentially, this is an inversion of the approach, permitting an investor to undertake a root cause analysis, deciphering the fundamental concept of your venture, and assessing your team’s ability to deliver.

Understanding the need for and justification behind addressing these questions will simplify your discussions with investors and potential collaborators, considerably boosting their efficiency. Adopting this approach will foster the cultivation of a robust company culture and guarantee the successful retention of talent.


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