Every startup owner looking to have an effective business knows the routine, you must keep your startup lean. Abiding by lean startup principles, many founders choose to only focus on their product in the first stage of their startup, and bring in marketing and sales representation once they get closer to bringing the product to market. More experienced founders will integrate a customer development model alongside product development. In this model, sales and marketing will work alongside the product folks to ensure the first few iterations of the products are resolving an existing customer problem for a specific market. If the notion of customer development is foreign to you, I recommend you read The Four Steps to The Epiphany: Successful Strategies for Products that Win, by Steve Blank. This is a very insightful read as to how product and customer development should work side by side for a successful product. So where does business development fit into this model? The common thought is a business development division comes in considerably after marketing and sales teams are developed. Strategic partnership teams are usually implemented once the product is at market and the company wants to use business development to further develop an already working product and expand their customer base.
As I mentioned in my previous post, Because you need somebody to lean on – the transformation of business as we know it, big businesses are utilizing strategic partnerships in order to develop innovative products as they look to become leaders in the IoT space. If startups want to be major players in the IoT game, they will need to understand that business development will need to start at the beginning of the product development process. The IoT revolution is aiming to create efficiencies in people’s everyday routines and in everyday business operations. The end game for most products will be to create innovative technologies that allow people or businesses and devices to talk to each other to create efficient communication and automated production. In order for machine-to-machine communication to work, two or more devices will need to be able to seamlessly communicate with each other. You will see a plethora of everyday products that have existed for decades interact with each using modern technology such as sensors, analytics software and a new form of internet protocol, IPv6. In order for this combination of products and technologies to form one innovative, world-changing solution, companies from all different walks of life must partner up and form strategic alliances.
In order for a startup to create a quality and effective IoT product, part of the founder’s vision will need to include other software and hardware components produced by other companies. This could go one of two ways. One scenario is the startup could build just one component of a complete IoT solution and leave the other components open for compatibility with devices produced by any other company. The second route would be to partner up with a company (or several) with the same vision, but a complementing product to jointly create a finalized product, service, or combination of the two. If you want your IoT solution to adopt a large user base and your business to survive, this is the route your startup will want to take.
So what does this all mean for startups? This means both the current business model and the product development model as we know it will change. The very first steps of product design will need to include a rough sketch of what components are needed to complete the IoT solution. Before any IoT startup begins pitching to investors for funding, and after talking to potential customers to get an understanding of the customer problem, startups will need to identify partners who can help complete their vision, and pitch these prospective partners to join them in completing the product plan. Once customer needs are identified and the vision of what market your product will cater to is ascertained, it is time to start looking for the right strategic partners to help complete your IoT product. According to John Hitchcock of sandhill.com, IoT hardware startups are leveraging third-party service partnerships as part of their growth plan. These partners could be another startup, or they could be a larger company with a proven software product that will allow your new hardware to grow.
An example of a current trending sector that requires partnerships is the smart home. According to mysmahome.com, United States smart home startups Peeple and Owlet Baby Care, and Germen Startup Swocket are making visits to Taiwan to take advantage of the variety of low cost hardware options available in Taiwan. These startups with creative ideas and intuitive software need to partner with these manufacturing companies to make their ambitious vision a reality. This for an IoT startup, will be the new reality. Whether you are a hardware startup looking for intuitive software, a software startup looking for cheap hardware or a hardware/software company looking for another complementing hardware/software, partnerships will be a necessity to drive business in the world of IoT.
How can a startup achieve this? Startups will need to focus on business development very early. This means at the very least, they will need to hire business development representation at the same stage as early marketing and sales. Strategic partnerships will need to be part of the pre-launch customer development process along with the customer discovery and customer validation stages to ensure the end product constructed from the specific partnership addresses the intended customer problem, achieving a product market fit. If you choose the wrong partner, you may deviate from creating your product for the intended market, which will be bad news for everybody. The right partner will need to be identified by the business development team at the same time the intended customer base and market size is being identified by marketing and sales. These departments will have to work hand in hand to help the product team achieve a product/market fit.
All in all, the rise of the Internet of Things is leading to a very exciting time in the technology industry, and in the wide world of startups. Developers are pushing their limits to find ways to implement this technology in intuitive and cost effective ways. Product folks have an entire new set of possibilities for creating new products in undiscovered markets that will change the way our world operates on a daily basis. Before any of this can come to fruition, the business folks need to understand that the startup business model as we know it no longer applies. Business and Product will have to integrate like never before to achieve strategic partnership and IoT product success. Big companies know this and are accomplishing this early on, and I am confident the ever trendsetting brilliant minds in the world of startups will do so too. It is already happening, and it is only a matter of time when an emphasis on strategic alliances is the new normal in business.