Elon Musk, an entrepreneur behind famous ventures such as PayPal, Tesla, and SpaceX, sets a compelling example for aspiring entrepreneurs. His global influence and groundbreaking ideas offer insights for anyone considering launching their enterprise. In addition, Musk’s entrepreneurial journey is often considered a source of valuable lessons and inspiration among startup entrepreneurs.
How to build a company according to Elon Musk
Elon Musk has determined five success factors when building a company (Haroon 2021).
- Work super hard
- Right product
- Hire great people
- Signal over noise
- Take risks now
According to Musk success in business means working hard and making a better product than the competition. A team of skilled people helps the business grow. The focus needs to be on giving customers the best value possible. Only by daring to take risks can a business find success.
Blue ocean strategy to form unique value proposition for new markets
Strategic thinking plays an important role in our conversations on entrepreneurship at Haaga-Helia Startup School. For those building a new venture, crafting a solid strategy is vital. This concept is particularly emphasized in our (Re)-startup pre-incubator program, where we encourage participating entrepreneurs to use methodologies such as the Blue Ocean Strategy.
Blue Ocean Strategy is a business strategy that focuses on creating new demand in an uncontested market space. This uncontested market is called the “blue ocean,” and the existing market is called the “red ocean.” The concept originated from the book Blue Ocean Strategy (2005) by W. Chan Kim and Renée Mauborgne.
This strategy aims to create products or services that are different from those offered by competitors, allowing a business to stand out and capture a new market. This can be accomplished by identifying untapped customer needs and delivering innovative solutions that meet those needs in ways that competitors do not.
Combining Musk’s five success factors with Blue Ocean Strategy
Blue Ocean Strategy is still relevant, even though implementing it can be seen as challenging. Creating a new market space requires significant time, resources, and expertise, and many small businesses may need more capabilities or resources to do that successfully.
However, with hard work, implementing a business strategy that has yet to be tested can be done correctly. When entering a new market with a new product, entrepreneurs must study their target customers diligently and be open to innovative solutions to see if there is an unexpected customer need that their company can cater to.
The same applies to the product-market fit, which is the concept of making a product that people really want and are willing to buy. There is a strong and common argument that the Blue Ocean Strategy should focus more on creating new demand at the expense of meeting current customer needs.
A lack of customer insight can lead to a disconnect between a business and its customers. A business needs to know if its product matches what customers need. To achieve product-market fit, a company should research and understand its target customers’ needs. Then develop a product that solves a problem and meets demand, and keep refining the product based on customer feedback and ongoing market changes.
Targeting new markets is a demanding challenge to new entrepreneurs and young companies. This is why startup entrepreneurs must surround themselves with talented and motivated team members willing to test different ways of doing things. They continue working even if the first try was unsuccessful.
This also applies to Musk mentioning signal over noise. The company must focus on the product and make it superior compared to others to create its own space in the existing market.
Implementing a Blue Ocean Strategy is risky because it involves venturing into uncharted market spaces, where uncertainty, unpredictability, and a lack of established markets make decision-making difficult. As a result, businesses may struggle with execution, high initial investments, and attracting customers, while also facing potential imitation by competitors, regulatory challenges, and resistance to change within the organization.
While the risks of implementing a Blue Ocean Strategy are real, the potential rewards can be substantial for businesses that can successfully navigate the challenges. By carefully considering the risks and diligently working to mitigate them, organizations can take advantage of the opportunities presented by blue oceans and achieve long-term success.
Relevant knowledge boosts success
When considering startups, there is a clear advantage in blending strategic theory with innovative perspectives on entrepreneurship. In today’s information age, entrepreneurs face the challenge of identifying the most relevant knowledge to boost their success.
This is where a university of applied sciences can play an important role as an advanced incubator program provider.
Haroon, A. 2021. How To Create a Successful Company│Elon Musk’s 5 Rules. Vocal Media.
Kim, W. C. & Mauborgne, R. 2005. Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Boston (MA): Harvard Business School Press.