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… or, rationalising the change from technology-driven to commercially-driven software development…

In the commercial world the purpose of any software development is to meet a certain set of commercial needs – put simply, without commercial needs there is nothing to develop.

And in today’s fast changing landscape those needs change or vary very frequently. The route that a startup embarks upon often changes out of all recognition as its business develops and responds to the market. Therefore it is important to have a free and frequent flow of information both ways between technology teams, commercial teams, and their expected customers for any development to continue to generate real value.

That’s not to say the communication is one way, its not, but what this means is that development teams must continue to drive innovative ideas into the mix themselves, but that the commercial teams must also be vocal in inputting what they see as required to generate new commercial value. The highest value is created when technical and commercial teams align on the best mix of technical, functional, and commercial innovation – no one group has the monopoly – and that happens only through communication.

A business changes as it moves from startup status to a commercial operation. Not only does the organization grow in size, with responsibilities being distributed accordingly, but its direction is often shaped in new and sometimes unexpected ways. These and other changes create challenges for the growing business trying to map out its future product development:
• Difficulty in communication with larger numbers of people across different geographies
• Perceived loss of control for original managers
• Dilution or modification of focus

In order for a product to develop and for a busiess to create value in a market these challenges must be addressed.

Communication must be maintained (it’s easy when you’re all in the same room, and many times more difficult when you are not). Communication includes both the formal statements of strategy and development roadmap (so a common goal is held) which must come from leadership, as well as the informal exchange of information and ideas that go into shaping that strategy and roadmap. The first may be regarded as top-down (given by leadership), and the second may be regarded as bottom up (where good ideas bubble to the surface to contribute to strategy).

Perceived loss of control comes about when responsibility gets distributed as new people join in. Co-workers must be given direction, but also trusted and allowed to carry out their directed roles. This means firstly a clear goal is known by all, and secondly, like any sports team, players need to play their positions to make the team work successfully. Each player has a job to do towards the goal, but with a degree of flexibility to respond fluidly as the game unfolds. In a soccer game metaphor the difference is clearly seen: either everyone is running after the ball at the same time (remember those school-boy games), or the ball is passed between skillful players each performing a function to take the ball closer to the goal (the professional game).

Dilution or modification of focus occurs as the leadership team grows and as more ideas and different experiences are added to the mix. Leaders must remain open to new evidence and use it to shape their ideas and product roadmap - that’s not to say they should change their ideas to adopt new ones without question, but that all new information should be considered and judged to either reinforce the existing focus or cause it to be modified in light of new evidence. When modifications are made they must be communicated clearly back to the teams.

At the outset startups need ‘dictators’ with a clear goal to retain focus – often the opportunity that a startup seeks to seize is not commonly evident one, and the entrepreneur finds themselves out on a limb – it’s their unshaking belief in something that is not obvious to others that lets them seize the opportunity that others miss. Once the driving principle of the business is firmly established by these dictators there must be a shift towards a more democratic ‘government’ style of product management in order for the business to grow and compete. In this evolution a prime leader (with a prime principle or belief) leads a group of senior managers (with distinct business function responsibility assigned) to reach a consensus of opinion on direction. Each of these new people in the mix has specialist knowledge to bring to the decision making process, all of it evidence and inputs into decision making. The role of the ‘dictator’ morphs onto one of ‘leader’, where other information and decision-making resources are orchestrated to make the most appropriate leadership decisions, and once again to distribute the outcome to the rest of the people in the organization.

In terms of product management what this means is that the initial idea must have a single-minded focus and must simply not allow other influences to take it off course. And, as the business grows and the commercial organization forms around the core technology new commercial-lead and customer-lead information must be taken as inputs to the product roadmap.

Despite views to the contrary, good product management does not dictate what gets built, nor does it seek to take over from the original dictators. It listens to and gathers inputs from all relevant sources, it adds market knowledge and insights of its own to the mix, it orchestrates the decision-making process amongst the senior decision makers, it ensures decisions get made, it confirms what decisions are made, and it communicates this back out to the distributed business so that all teams understand the common goal. Furthermore it tracks the success of the evolution of its product and feeds this back into the cycle for future iterations and generations of the product.

When this doesn’t happen the result is chaos, in several ways, here are some of the symptoms:
- Not all people in the enlarged organization have a common understanding of the central goal and the supporting product roadmap, indeed they all have different views
- Technical development occurs without reference to commercial needs, resulting in some features that are either not needed or have marginal value
- What is found to be needed in the commercial organization is not known to the development organization, resulting in some commercial opportunities being lost
- Development teams build what the commercial teams are not selling, and commercial teams sell what the technical teams are not developing

An oft-cited study estimates that just two-thirds of all start-ups see their second birthdays, and less than half make it to their fourth.

Whatever the exact figures, no one would argue that scores of budding new ventures die on the vine. One of the most common killers: lack of focus.

With precious few resources to expend, hewing to a specific, well-defined vision is critical for start-up companies. When entrepreneurs attack too many problems or chase too many opportunities at one time, they often end up with nothing to show for it.

Via Forbes.com

Why do so many entrepreneurs lose focus? The same reason they became entrepreneurs in the first place: ferocious ambition. Entrepreneurs are dreamers; restraint is unnatural.

When it comes to staying focused, here are some lessons to keep in mind.

Perfect One Idea First
Start-up Internet company Kiko was off to a terrific launch in 2005. The online calendar service was attracting high-profile investors, impressing industry luminaries and garnering fantastic press with its new product. By all accounts, Kiko was ready to take off.

But instead, a year later, the company went from being at the top of its game to being auctioned off on eBay (nasdaq: EBAY - news - people ) for $258,000. What happened?

Many speculated that Google’s (nasdaq: GOOG - news - people ) new calendar service spelled Kiko’s demise. But if you ask the founders and investors behind the company, it wasn’t just about losing to Google. It was also about losing focus on their product.

“One of the reasons Kiko died was that the founders spent several months working on another project,” says YCombinator’s Paul Graham, a Kiko investor. “If they’d spent those months working on Kiko instead, they might have been far enough along to withstand Google calendar when it came out.”

Graham admits that focus alone may not have been enough to survive Google’s onslaught, but it would have given Kiko a fighting chance.

Don’t Attack Too Many Problems At Once
Face it: You don’t have enough money, time, brains and limbs to fix everything that’s wrong with your company. That’s why you have to focus on the handful of issues that truly demand attention.

Jessica Livingston, author of Founders at Work, has profiled dozens of start-ups. Many have struggled to maintain their focus–even companies that eventually sold shares to the public.

Take TiVo. In its formative years, TiVo (nasdaq: TIVO - news - people ) wanted to build a network server that could provide an array of home-media services, from movies to music. Soon enough, writes Livingston, the company realized its snazzy box would not only be complicated to install, it would be hard for customers to understand. TiVo’s decision: Focus on one killer application and branch out later on.

That “killer app” was the digital video recorder, or DVR–now a market unto itself. TiVo’s current market cap: nearly $600 million.

Identify The Real Opportunities
Sometimes the challenge is not focusing on one value proposition, but being flexible enough to recognize when another is more compelling. It’s not uncommon that entrepreneurs find their greatest opportunities in products they didn’t even realize they were building.

Flickr, the popular photo-sharing site, started life as one feature of a totally different concept: a multiplayer online game called “Game Neverending.” Soon the developers started noticing that their photo-sharing feature was stealing the show.

The founders knew they didn’t have the time and resources to work on both opportunities, so they shifted their focus (with some regret at the time) to Flickr. Good move: In 2005 Yahoo! (nasdaq: YHOO - news - people ) shelled out a reported $20 to $30 million for Flickr, now the cornerstone of the Web portal’s popular photo-hosting service.

Stick To What You’re Good At
Yes, the world is full of opportunities. But the key to making money is recognizing the thing you can do better than the competition.

In his book, Focus: The Future of Your Company Depends on It, author Al Ries describes how behemoths like Dell Computer (nasdaq: DELL - news - people ), Home Depot (nyse: HD - news - people ) and Best Buy (nyse: BBY - news - people ) have all built powerful franchises based on one simple concept: being good at one thing.

Like your high school English teacher said: “Keep it simple, stupid.”

Forbes Top 5 Startup Killers

Colorado-based startup incubator TechStars has launched their second company today, Intense Debate. Techcrunch covered TechStar’s first company, MadKast, earlier this week.

Intense Debate is a souped-up blog commenting system that adds a lot of features for publishers and commenters alike. Installing the plug-in on your blog (WordPress, Blogger, and TypePad) adds threading, comment analytics, bulk comment moderation across all your blogs, user reputation, and comment aggregation. You can test out the system on the TechStars blog, but you’ll have to apply to the private beta if you want to install it on your own.

This is the second recent acquisition announcement for Hearst Interactive Media - UGO for around $100 million last month, and tonight they are announcing the acquisition of Kaboodle, a social shopping service that launched in late 2005.

Kaboodle, founded by Manish Chandra, Keiron McCammon, Chetan Pungaliya, closed a key distribution deal with eBay a year ago. Comscore numbers show rapid growth, with 2 million or so unique monthly visitors currently.

The acquisition price is not being disclosed, but its reported to be somewhere between $30 - $40 million, all cash. The company raised three rounds of financing totaling $5 million from Shea Ventures, Kanwal Rekhi, Jeff Clavier, Ron Conway, Garage Ventures, Georges Harik, Rajeev Motwani, Iggy Fanlo and others.

Investor Ron Conway was said to be very “instrumental” in putting this deal together.

I’ll be making a 5 minute prezzo and joining the panel discussion at the next North West Startup event in Manchester in June. The event is sponsored by KPMG.

The keynote speaker is Ajaz Ahmed (Freeserve, Callserve, Tiva Services, Browzar), and other presenters include Sam Sethi (Blognation, Vecosys), and Alain Falys (OB10, Omnis Mundi).

The organizer and moderator is Manoj Ranaweera (founder of ebdex, founder of OpenCoffee Manchester)