How do you navigate conflicting priorities between immediate profitability and future market competitiveness?

Isolated seen profitability has to be the most important goal for all types of companies. If you do not have the profitability you may not have any future market. So get to your profitability as fast as you can. Stealing market shares in the future can come by expanding your service offering or quality; and this can happen in many different ways. This will again lead to expanding your profitability in the future.

Much depends on which industry you operate in. Immediate profitability is far more important on our industry (renewables tech) than several others. It's a difficult balance especially for tech companies as traditional metrics for growth and return multiples are often challenging to meet.

From my perspective achieving immediate short term profitability in any sector and geography is very hard today. This is due to competition and the highly innovative world we live in. Entrepreneurship is growing and more people are starting their own businesses to solve problem or create a disruption. If you can be profitable in 2 years that is very excellent. But generally aiming to be profitable in 4-5 years is more realistic.

Navigating the tension between immediate profitability and future market competitiveness starts with a clear assessment of your company's current needs. Recently, we faced a similar challenge where prioritizing short-term financial stability was crucial due to market volatility. We analyzed our cash flow, immediate market demands, and overall financial health to identify essential expenses and key revenue streams. This analysis allowed us to allocate resources effectively, ensuring the company's short-term survival while still setting aside investments in innovation aimed at future competitiveness. Striking this balance is critical; it ensures we are not just surviving now but are also positioned for future growth.

Actually the way I see it is, Effectiveness comes before Efficiency. Which means, you need to ensure the product market fit, scalability, TAM etc. There is no point in worrying about efficiency at this stage. Once you have found the PMF and know your numbers, that's when you need to think about profitability. Thinking about profitability too early in the journey can do more harm than good. And market competitiveness is not a function of profitability / margins alone. there are lot more parameters where you can achieve market competitiveness.

You must always understand your customers needs and wants. In the early stages of your business the more time you spend understanding your customers problems and needs the more likely you are to create a product/service that will be unique and innovative. If you don't understand the customers needs and problems early on you will find it very difficult to build a sustainable long term business.

It is a tough balance. You may have a clear vision of the future industry and customer needs (and you may be correct), but the company needs to survive to benefit from your foresight. That is why the first to the market with new product or service is usually not the ultimate winner. I don’t think there is a clear formula here. I believe that having options and agility is what helps. Betting the farm on your vision may not work well for stakeholders with “normal” risk tolerance.

It is very important to drive 'continuous innovation' in startups as I describe in my book - Entrepreneur Heretic or Hero of Innovation sold at Amazon.com. Our laser focus on innovation while keeping the overall vision of delivering the best critical and emergency communications capabilities to the market helped us win customers and exit successfully. I recall when the mass shootings escalated during our second startup and we worked with our team to deliver critical alerting features like mobile 'I-am-Ok' and Panic buttons 10 years before they became standard on mobile phones as well as gunshot detection sensor integration to get people to safety to meet our simple vision of 'Save Lives'.

While managing immediate profitability, it’s crucial not to lose sight of future market competitiveness. In my role, I ensure we continuously scan for emerging market trends, evolving customer preferences, and technological advancements. This foresight enables us to identify strategic opportunities for innovation that will meet future market needs. For instance, recognizing early trends in sustainability, we invested in eco-friendly technologies, positioning our products ahead of the curve. Such investments not only align with future consumer demands but also secure our competitive edge, ensuring our business remains relevant and proactive in capitalizing on new market opportunities.

Navigating today’s challenges without losing sight of the future is crucial for sustained success. It is not just about meeting current demands but about anticipating where the market is headed. By continuously tracking industry trends, evolving customer preferences, and technological shifts, businesses can identify opportunities for innovation that align with future market needs. This approach can ensure that your business not only stays relevant but also leads in emerging markets, turning future vision into a competitive advantage.

Absolutely. Balancing immediate profitability with future competitiveness requires a detailed cost-benefit analysis which involves comparing the potential returns from innovative projects against the risks and costs of inaction. The long-term benefits of investing in future businesses can sometimes surpass the short-term gains from focusing solely on current operations. However, achieving this balance demands strategic planning and thoughtful decision-making to ensure that current investment can pave the way for a sustainable growth and future market relevance.

Risk management may seem like the antithesis of agile development in tech and AI. But examining your risks is very important in running a business. Even if you enumerate them in a list and cannot find solutions to all of them, it is key to know what risks you are facing with stakeholders, investors, your teams, your customers and plan a path to mitigate them.

Considering risk management as an integral part of strategic planning is crucial because it identify risks in the short-term and long-term thereby allowing businesses to develop contingency plans and allocate resources effectively. This proactive approach ensures that immediate profitability is safeguarded while positioning the company to capitalize on future opportunities. Understanding potential risks beforehand permits companies to mitigate them, which involves protecting their current position and preparing for future growth without undue exposure to risk. This strategic balance is crucial for sustainable success in a competitive business environment.

There will never be the same answer to the question of what to prioritise between immediate profitability and future competitiveness. At every juncture of this type of decision making would be in a unique situation for a specific objective. We can observe this mercurial approach in many examples. Very few people know that Indian operations of Nissan- Renault JV or Stelantis Group (Citroen) are very profitable though their products are not sold in numbers. They make money by leveraging low cost Indian operations for exports. In my opinion such a choice of prioritising this or that can be culture driven. The right priority should be the one which leads the enterprise towards the wealth maximization of its share holders.

Foster a Culture of Innovation. 1. Employee Involvement: Encourage employees to contribute ideas for innovation and process improvements. 2. Continuous Learning: Invest in training and development programs to keep your team updated with the latest skills and knowledge.

Satisfy both: I think both is important and with clear planning we can achieve both. First we need to create dedicated budget and resources for each and don’t reduce the budget for innovation even if you need it as that will create your product of future and your profit. Then create good timeline and plan and push both aspects at the same time. In this way you can have immediate profitability and future innovation. Make sure to include the environmental aspects and sustainability in your planning as well as that will be one of the main competitive advantage of your company. Be kind to our planet! ✅✅✅

Agile innovation is very important in the balancing act between immediate profitability and future market competitiveness. Startups in tech and in AI more specifically must stay ahead of the market and keep an eye on their competitors as they are also keeping an eye on them as I write in my book - Entrepreneur Heretic or Hero of Innovation sold at Amazon.com. In our startups we were always very opportunistic in terms of selling and delivering new features to customers but also monitored the space to target the 'catch me if you can features' as I describe in the lessons learned chapters of my book. Prototyping new tech quickly and showing customers is key with agile software development if you want your startup to win.

This is always a tough question to answer because true innovation, surprises people, and they are not ready for it. The best kind of innovation is the kind where at first most people will say no I don’t understand it that doesn’t make sense to me. This is also where the greatest risk lies. Incremental innovation is safer in that you can utilize data, common sense and Testing to validate, whether or not the incremental innovation of a product can impact your existing audience. Incremental innovation will not shock people. It will most likely delight them, because there will be a new feature set or a new style of an existing platform that they already like enjoy and are customer of.