Newsletter Q2/2024: Surprise is a marker for learning

Surprise is a marker for learning. Some examples of entrepreneurs who have learned from their surprises and are expanding their businesses.

Surprise is a marker for learning


Surprise is a marker for leaning

Startups often operate at the limits of their capabilities and resources, stretching to achieve new and better results. Once off the beaten path of past performance, surprises are common. These surprises often mean that they are learning and can develop new capabilities that will allow them to differentiate their offering from competitors.

Entrepreneurs should structure their approach as a series of prototypes, experiments, and scouting expeditions that include a wide range of conversations, careful observation, preliminary offers, and time to make sense of what they have encountered.

Here are some examples of visionary entrepreneurs who have learned from their surprises and are expanding their businesses.

The obstacle is the way

One startup we work with woke up one morning to find that their goods were trapped in a warehouse by a combination of an inflexible government bureaucracy and an unethical counterparty. They investigated and persevered, navigating through a series of bureaucratic hurdles and unethical practices to recover their goods.

This experience revealed a broader market need, prompting them to create a new service that helps other companies manage similar situations involving bureaucratic entanglements and unreliable partners. This pivot transformed a significant obstacle into a business opportunity, demonstrating that sometimes unforeseen challenges can lead to innovative solutions and new business models.

The startup had initially focused on solving the immediate problem but realized the potential to assist others facing similar issues; they created a service that turned a setback into a profitable venture. This story highlights the resilience and adaptability of businesses in overcoming adversities and capitalizing on them to develop valuable services for a broader market.

Delegation actually makes you more effective

A solo founder has experienced several surprises as he scaled up his business. Initially operating as a “one-man army,” he now leads a small team. He has learned to delegate routine tasks like customer inquiries, which he has streamlined through scripts, allowing his team to handle these without his direct intervention. This delegation has freed up considerable time consumed by daily operations, allowing him to focus on more strategic business opportunities and new capability development.

Furthermore, he has started consulting external experts for complex issues, such as attorneys for user policies and developers for advanced features, thus leveraging specialized knowledge and gaining new perspectives that exceed his expertise.

One of the major challenges he faced was an initial reluctance to delegate due to his fears that others wouldn’t treat the business with the same level of care he did. To overcome this, he has been running delegation experiments to build trust and establish performance standards, assessing team members’ strengths and reliability.

Narrow focus to go from artisanal to industrial

We helped a team navigate a series of challenges to move down the learning curve in the burgeoning field of IoT applications. The founder was motivated by a desire to monitor air quality because of her daughter’s asthma. As the team’s technology matured, they branched out to automated methods for occupancy monitoring.

The evolution of simple surveillance methods (like manual checks) to sophisticated, non-intrusive IoT solutions (like IR sensors at desks and pressure sensors in hallways) highlights a significant shift towards privacy-preserving, efficient space utilization.

The team shifted from a hands-on experimental approach in lab-like settings and small office spaces to a streamlined industrial process as they scaled to larger installations. They improved efficiency, reduced errors, and cut the cost of mistakes associated with earlier manual methods. Their journey from tinkering with prototypes to systematic deployment reflects a typical journey many startups must travel as they move from ideation to large-scale implementation.

To continue to improve their offering, they had to stay at the edge of what they knew. They would ask to bid on projects where it was not entirely clear when they started how they would deliver what the client was asking for. They refined their approach, did more detailed site surveys with specialized equipment up front, and more planning that included a separate staging before deployment.

These improvements made deployments less exciting–fewer surprises–but also more reliable and predictable. It was a dynamic process of learning that included improvisation in the face of surprise, adaptation to prevent similar problems in the future, and refinements to lower the overall cost. The early, less efficient efforts were scouting exercises that were crucial to gaining a deep understanding of customer needs. The ongoing refinement efforts were integral to sustaining innovation and competitiveness in the fast-evolving tech landscape.

Surprise is the marker for learning

Unexpected results need to be acknowledged and treated as opportunities. Instead of triggering a retreat, the unanticipated should encourage a deeper and more thoughtful analysis of the situation

Additional blogs about surprises

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Postscript Wed-May-15: This has proven to be a surprising popular newsletter. I originally used this in “Quotes for Entrepreneurs Curated in May 2017” in a reflection on Ash Maurya’s take on customer interviews:

“Customer interviews are about exploring what you don’t know you don’t know.”
Ash Maurya (@ashmaurya)

Only if you are alert to your ignorance: surprise is a marker for learning but entrepreneurs can reject it as noise. I have blogged about the importance of recognize and acting on your surprise a couple of times:

What’s interesting is that the most popular link was Time to Market: Making Tough Decisions as Founders. A reflection of where the economy stands in 2024, I suppose.

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