Tuesday, December 10, 2013

Prioritizing Stakeholders for your start-up to reduce uncertainty

Murphy's Law seems to follow entrepreneurs more than anyone else - Yes! anything you believe wouldn’t happen, will most possibly happen. So the challenge is really of being able to live through all these experiences and eventually be able to get the business they intend to create see the light of the day. 

The notion of such unpredictability in what one does is generally called - uncertainty. There is really nothing certain about the entity that entrepreneurs are trying to create. They have a thought about the need for something they believe would be required by someone... Yes! It is only a thought when it starts like many other thoughts! The entrepreneur chases the thought and attempts to create value - economic, social etc out of the thought by manifesting the thought into the realm or reality.

In the process there are numerous challenges that come in - beginning with the thought - the entrepreneur would need to really see if the intended product/service is something that would be found valuable and useful for people. The second question is really to see if someone could pay for the same! I have mentioned multiple times about the need for early customer engagement in earlier blogs [read here and here]

The maximum uncertainty would definitely be on the customer's end of the chain. The thought that the entrepreneur would have initiated invariably would have come from his/her prior experience/ability/capacity - essentially - the response to the questions: who am I? What do I know? Whom do I know? She/he would also have attempted evaluating what would it take to create something of value and how someone could and then figure out a way to reach out to the person who could not just use but also pay for the same. 

This mean the maximum uncertainty for a business is not on the customer's side of activities and would progressively reduce in the following order - investors, suppliers and employees. The following diagram indicates the same:
High Uncertainty                                                     Least Uncertainty
Customer    >    Investor      >    Supplier       >        Employee
The uncertainty in the above context could be understood as containing two components - the predictability of the behavior of each of the stakeholder and second, the effective control on that the entrepreneur could have on the behavior of each of these. We could visualize the spectrum of predictability and controllability to be as below.

Least Predictability                                              Most Predictability
Customer    >    Investor      >    Supplier      >        Employee 
Least Controllability                                             Most Controllability
Customer    <    Investor      <    Supplier      <        Employee

An effective approach for an entrepreneur to be able to leverage and grow his/her business would be to reduce the zone of maximum uncertainty and steadily build the other stakeholders commitments to effectively handle the reduced uncertainty. 

(click on the stakeholder link to be directed to some best practises in finding a better stakeholder)

1 comment:

  1. You spoke my thoughts after my journey started as an entrepreneur...