Consultation: Root Cause Identification
If you’ve been reading my blog for awhile, you would have noticed that I began questioning and researching the possible root causes of over-hyped startups earlier this year. Essentially, the question is: why do a majority of venture capital firms over-value and glorify certain startup visions?
Because tech is a very data-driven field and great venture capital firms have no shortage of talent to share these insights, I looked to a16z. Specifically, I looked to their examination of the marketplace startups. The problem appears to be that consumers like all things that are immediately gratifying and superficially satisfying: food, grocery, wholesale, travel, celebrities, streetwear, beverages. Celebrity engagement, indie brands and streetwear are growing the quickest. Wholesale category growth shows our collective deeply embedded values in consumerism and self-consciousness of identity through brand attachment. Healthcare wasn’t a category that shows growth. You can conclude from these stats that mortality isn’t a relevant theme or even a category that consumers care about. (Oh, Death, pfft. Complementary eye rolls included if you like this post today.) What if we can multi-prioritize: emotionally attach to streetwear and also invest in staying alive? Then again, you can argue that healthcare startups have yet to find their scalable disruptive strategy in this niche. I’ve found this industry rather interesting and decided to have an entrepreneurial go at the chronic illness problem that’s costing $4.2 Trillion in lost economic output and treatment costs. While I’m still in pre-product phase, you’re most encouraged to sign up for beta product access when it launches. If you know anyone suffering from any form of chronic illness (or anyone you know is an influencer in this category), please encourage them to reach out.
These marketplaces are a triumph for traditional industries that were previously cluttered with physical intermediaries. These intermediaries are rendered non value-adding or diminished in value-add potential after online marketplaces were invented.
The Consultant’s Way
Root cause identification was a business problem solving concept I learnt at Rotman B-school. We have a professor who used to be a practicing consultant at McKinsey. Specifically, this is a method to evaluate the existing processes with the goal of eliminating non-value add processes or steps. The focus on process needs to be emphasized because any further debate or argument can derail the discussion onto existential root causes. What causes healthcare wait times at hospitals? Clearly, sick people being alive and sick are the root problem. This close examination of process activity is reductionist, focuses on the essence of the problem, and is ultimately, result-oriented. It is about scrutinizing the process to identify the correct problem that needs to be solved, and ensuring that the solution would contribute the most value to the intended business result from your existing business’ process. The implication here is that stakeholders of varying interests usually contribute solutions that do not generate value because they identify a variety of tangential problems. People like to demonstrate that they’re working by adding more to the process, regardless of the intended result. From a startup’s perspective, it is about understanding established processes, their necessity or there lackof, and having insight about your differentiation amongst your competitors.
If you’d like to try the root cause identification method for your startup or your portfolio’s startups, please reach out to Jacqueline [dot] gotomarket [at] gmail [dot] com for a consultation.
