Innovation life cycle for startups
From the moment you get an idea that seems valid as a business, you are on the verge of entering the startup life cycle; a journey that starts with a creative thought that could eventually become an established business which, if planned and executed correctly, can achieve the desired growth and reach maturity. Developing an innovative product or service has become increasingly challenging in our world today, so understanding your position in the startup lifecycle is crucial and just might help you stay ahead of the game as you defy the odds and shift them in your favor. As your business grows and develops, so do your aims, objectives, priorities and strategies – and that’s why awareness of what stage of the business lifecycle you are currently in can be helpful. The five stages of the innovation life cycle of startups as defined as follows:
1. Ideation
The development of a successful, innovative product starts with the theoretical application of an idea to one or more markets. The first step in this stage is to derive the challenges & opportunities from your existing idea to identify where you stand in terms of limitations, strengths and market position. After that step, the target market should be scanned thoroughly for solutions to those challenges. When these solutions are clearly identified, they should be reviewed in detail and filtered down to one viable solution; the designated one that will take your product or service to the next level.
You have now found a solution to your startup idea’s challenges in its target market. What’s next? Contacting potential partners that are likely to be interested in your fresh business is the next step that should be addressed, however you should be simultaneously defining your business proposition as well as your team capability. This is critical information which the potential partners you are in the process of contacting will need in order to make an informed decision about your startup, so you have to be ready to provide as much answers as possible. After generating a solid list of interested partners, you can shortlist them and decide which partners are proceeding with you to the next stage.
2. Qualification
The second stage in the startup innovation life cycle pertains to establishing whether the communicated idea qualifies as an applicable & feasible business or not. Having chosen your business partners, discussions about the detailed proposition and solution should be conducted with them to make sure you are all on the same page. The favorable outcome of these discussions is to agree on specific use cases for the business, while breaking them down to the last detail to avoid any misunderstandings or conflicts on their real-world application. Finalizing the business and operating model comes next, with a focus on setting the final team members in stone, identifying the scope of technologies being used by the product or service, finalizing legal & regulatory processes and establishing data protection protocols for the company.
As far as Fintech products or services are concerned, the Ideation & Qualification stages are considered pre-seed stages in which the product and business model are still a proposition.
The typical duration for both the Ideation and Qualification stages in the startup innovation life cycle is 1 year.
3. Proof of concept
Moving on to the third stage, Proof of Concept is a realization that demonstrates the feasibility of the idea and verifies that it has practical, applicable potential in the market.
The first activity in this stage is to define the legal terms that pertain to the startup’s proof of concept. Once those are identified and confirmed, the product is now ready to be built as a prototype. At this point, it would be beneficial to differentiate between Proof of Concept (PoC) and Prototype since the two terms are often interchangeable. Prototypes are defined as a working interactive model that showcases the design, navigation, layout and overall experience of the end product. Simply put, PoCs establish that a product or service can be developed whereas Prototypes show how it will be developed.
When the PoC is ready, a robust test environment should be prepared in order to stress-test the model and refine all functionalities & features to finalize any needed adjustments and assert their viability. This test environment usually reveals issues and as such should only contain dummy data to eliminate the possibility of compromising data from the real world, since it is still an experimental stage.
Assuming the PoC functions as intended, it’s time to define the success factors that are necessary to achieve the startup’s mission. In parallel, it is also recommended to assess the extent of the company’s risk appetite; the amount and type of risk that you’re willing to take to achieve your idea’s strategic objectives will further bring things into perspective and help you & your partners make smarter decisions.
4. Pilot
The Pilot stage represents the creation of a working prototype of your product or service to see how the market will react to it. The purpose of your product’s first live trial is to evaluate the overall experience by getting feedback from the sample audience that is testing it. This sample audience, the beta testers that you rely on to give true and genuine feedback, could be family members, friends or other close acquaintances.
At the Pilot stage, it’s safe to assume that the main question to ask your sample audience is: “What would you change about this product to make you want to buy it?”
It is probable that these potential users are polite or unwilling to disclose their full thoughts on your product or service - especially if they are family or close friends – which is why the pilot is crucial at this point; to shed light on hidden thoughts and reveal if the audience is willing to truly invest in your idea.
After getting feedback from your testers, it’s time to break it down into opportunities & challenges, evaluate them and pave the way forward into the fifth and final stage of the startup innovation life cycle.
When it comes to Fintech products or services, the Proof of Concept & Pilot stages are considered seed stages in which the startup concept is validated and ready for market launch.
The typical duration for both the Proof of Concept and Pilot stages in the startup innovation life cycle is 1-2 years.
5. Implementation
Reaching the final stage of your startup’s life cycle means that all conditions in previous stages have been met and you are ready to release your project to the masses. However prior to launch, it is critical to define the full commercial agreements that pertain to any partners, sponsors or brand partnerships. Once that is done, arrangements must be done to provide help & support to internal processes as well as to customers of your business.
Fintech products or services typically reach the early stage of implementation after 2-3 years from when they initiate the life cycle and then aim to scale according to their market strategy and reach maturity.
