How to Make a Successful Business

I am a huge fan of Seth Godin, and this is a riff based on one of his recent blog posts.

If you want a successful business model:

Start with the fact that everyone has problems.  They want and NEED a cure for those problems.

1. Identify a problem.

2. Develop a simple solution for the problem.

3. Price and market it correctly.

4. Rinse and repeat.

For example, Apple found a problem.  The cell phones that let you look at your email on the road or cruise the net were button full, and performance mediocre.  So they developed the iphone.  It’s a pretty mediocre ipod, but it is an awesome phone and mobile computing device, for me.  I have never been so happy with any one gadget I have ever owned.  And it has the geek lust factor on top of it.  It’s beautiful to look at, as well as simple to use- something people would want to show off to their friends.  And like all of Apple’s products, the user interface is made so that it is intuitive and easy to use- no manual required for basic use.

But the phone was expensive, although competitively priced with other business phones.  Now with the 3G phone, the phone is cheap enough and fast enough to reach a whole new segment of the marketplace.  They took the same concept, tinkered with the existing problems- limited sales because of price point, people wanting faster speeds- and then gave people what they waned, as announced at the WWDC. – Lather, rinse, repeat.

This same model works for any business- you have to provide something someone needs- if you are just a luxury, a want over a need, your shelf-life will be short.  If you fill a need and solve a problem better than the other guy, success is much more likely.

As always, the devil is in the details.

The 90 – 10 Rule

One of my core beliefs is the 90 -10 rule. In life, it’s often easy to get 90% of anything done, but it’s that last 10% which can be so difficult. However, that last 10 % makes the absolute difference between success and failure.

The Pareto Principal dictates that 80% of the profits of a business come from 20% of the clients/workload. Likewise, Occham’s Razor says that the simplest solution is most often the right one. Combine these two life laws, and you get the 90-10 principal I propose- the easiest and quickest way to fix your life is to concentrate on the final 10%.

The problem often is we get so close to the end of a project, the last little bit, needed to take it from mostly done, to closed out and completed, is the most tedious. Think how many students finish all their PhD work, except their dissertaion. Think how many people never finish a marathon, or drop out of colege with only a few classes left to take. This lack of completion often makes all the work that went before for naught. People care about the dgree more than “I almost got a PhD”. “I almost won a Olympic medal” is far different than “I won the gold.” So why do so many people stop short of the goal?

I think part of it is enertia; part of it is we get so close to the end we succumb to “good enough” syndrome, and our interest starts to focus on the next big thing. Yet, every time I take that last step and close out a project, I feel so much better about myself, so much more ‘grown-up’, so much less guilty. The feeling afterwards is so good, it makes that last painful bit of effort so worth it. And that extra little bit has such a big impact, it’s amazing how often we neglect it.

So if there’s any advice I can impart to parents kids, adults, anyone- it’s finish that last 10%. It is the only thing standing in your way from true excellence.