This is the question I asked myself when having a look at Olivier Laffut’s LinkedIn profile. The founder of the successful venture “Les Tartes de Françoise” (now striving for a market in New-York) is actually coming from the finance world which is seemingly unusual for someone in the fast food industry. I immediately made a parallel with Olivier Van Espen and Frédéric Duqué, the founders of Guapa, another entrepreneurial success of Belgium. Both came from sectors far away from the fast food industry and yet were able to drive formidable growth.
The knowledge corridor principle states that entrepreneurs recognize opportunities primarily in the field where they have been professionally active. This knowledge corridor (Ronstadt, 1988) principle is further divided by Shane (2000) into three entities (prior knowledge of markets, prior knowledge of ways to serve markets, prior knowledge of customers’ problems) which constitute competitive advantages for those who possess them.
If this pre-knowledge can seem to constitute a competitive advantage at first, it may also become a hurdle. The entrepreneurs may become blind to signals which do not confirm his/her knowledge of the market. I’ve seen numerous entrepreneurs believing they had found THE idea, starting their venture, and eventually failing because they felt to recognize (or accept) contradictory signals coming from the market. Humans are strange animals who don’t like to be contradicted.

My take:

An interesting assumption to test would be that, all others things being equal, entrepreneurs not suffering from the knowledge corridor have better chances to succeed. There are at least examples like Guapa and Les Tartes de Françoise which confirm that you can be highly successful even without prior knowledge of the market.

Generally I’m not easily convinced by new businesses and I rarely get enthusiastic about a young SME. Well, I think I must make an exception. I was in Paris this week where I met up with Alban Cordier who co-founded Cerdan Heritage with Nicolas Cerdan, Marcel Cerdan’s grandson.

Marcel Cerdan was probably one of the first sportsman (with René Lacoste) to use his name as a brand on clothes. Nicolas discovered this pretty unknown aspect of Cerdan when  reading the correspondence with Edith Piaf. This heritage became the starting point of Nicolas’ and Alban’s idea to rejuvenate the concept and launch a modern but nonetheless vintage-tainted line of sportswear clothing.

Their company has been selling products for less than 2 years and when entrepreneurs usually focus on growth and survival I was struck to talk to an entrepreneur who had already a very clear strategic vision and was very professional in all the aspects related to running the company. I will not deal here with financial aspects and will merely focus on some key points of the marketing.

Passion in general and passion for quality in particular is the cornerstone of Alban’s and Nicolas’ strategy. Not only is the highest quality required for the products themselves, but Cerdan Heritage went beyond that and ensured quality at the different touch points with the customer. I actually don’t know whether they performed a systematic analysis of the touch points but let’s admit the result is excellent. They designed a luxurious bag for the sales points, improved the packaging used for shipping articles purchased via internet and include a satisfaction survey with each order.

My take:

I’ve seldom seen such a level of professionalism at all levels of the company. With some many positive points, the odds are good that Cerdan Heritage will be successful.

We recently participated to the “SME week”organized by the Brussels Chamber of Commerce. As experts in strategy and marketing we advised free-of-charge SME which had previously registered for an appointment through the Chamber of Commerce.

We were invited to share our experience in the journal “Entreprendre” (Dec. 2010 issue) and discussed the common problems entrepreneurs were faced with.

I was recently reading an interview of Bill Draper, an American Venture Capitalist, recalling his good and less good experiences with the SME’s his firm invested in. This guy is certainly not the less talented in the industry since he invested in firms like Skype, Hotmail ad OpenTable.

I was particularly interested in his answer on the most common mistakes made by entrepreneurs. Here is en excerpt:

“[…] They overestimate market size and underestimate how long things will take. But what happens most often is that entrepreneurs underestimate the importance of what they don’t know. They know their competition as it is today, and they know that their own product is going to be significantly better. But they don’t know what’s going on in the backroom of their competition”

Oh my God … this is so true. Draper mentions three mistakes that we see very often when starting new projects.

1. Overestimation of market size
   Remember first that the minority of new businesses are backed by a meaningful business plan and even less by market research.
   I always remember Hills and LaForge saying that 60% of bankruptcy could be avoided with a better market study.
2. Underestimation of lead times
   Entrepreneurs are inpatient by nature and are by definition based in their estimation of how long their project will take. At IntoTheMinds when an entrepreneur tells us that his new product will take 3 months to launch, we use to double that estimation to get a more realistic idea.
3. Knowledge corridor
   You can’t estimate what you don’t know. Because entrepreneurs usually start ventures in the same industry / sector that the previously worked in, they suffer from what academics call “the knowledge corridor”

My take:

Years ago 10 venture capitalists (who invested in more than 200 firms) were asked to choose and rate the most importance criteria for the success of a new venture. Surprisingly marketing came first and was rated 6.7 on a scale of 7 and without exception all VC’s were calling for more marketing research.

I was chatting last Friday with the managing director of one the most famous real-estate agencies network in Brussels.

I quickly discussed with him the two posts that we recently published over his industry: the first was showing the state of amateurism of agencies in Brussels, the second the innovations launched by Century 21.

After confessing that he couldn’t grasp the aim of publishing ideas and thoughts on a blog (I’ll come back to that later) he said the following about the non-professionalism of real-estate agencies kn Brussels: “I know it, everybody knows it … so what?”

My take:

At IntoTheMinds the intention of our blog is to share our thoughts, ideas and knowledge with the largest number of readers. We want to offer entrepreneurs the opportunity to open their minds to other ideas, to make them look at the big picture and eventually to question their assumptions. Here’s the difficulty. Human Beings hate questioning their assumptions which often result in inertia. So many opportunities go last that way … what a pity.