Everyone knows that starting and scaling a company from scratch is no small feat, but it has become ‘a la mode’ in start-up circles to speak glibly about failure. Time and time again, we see founders wear it like a badge of honour — their very own entrepreneur’s medal.
Maybe it’s a protective mechanism to inoculate would-be repeat founders from the ubiquity of business death, but it neglects the raw emotions and the real reasons that start-ups actually fail are rarely down to a lack of commitment.
Failure will (and should) always be a reality for many entrepreneurs. Doing something new with limited resources is inherently risky. But too often, the factors that contribute to the termination of a company are avoidable, rather than the result of external market forces beyond anyone’s control.
So why is it that so many brilliant founders with gripping ideas and great teams go nowhere? If you look at the reasons cited by individuals, employees and investors across different sectors and stages to explain why a company has failed, a clear pattern emerges.
Principally, the key causes are the manifestation or lack of organisational alignment around a clear purpose, rather than a faulty idea, a flawed founder, or a frivolous approach. It’s near impossible to make progress (let alone raise funds) without brutal focus. This means clarity of purpose and effective collaboration towards a shared and understood mission (or set of objectives) is crucial.
By recognising many failures are avoidable, we can reduce their number and frequency by asking four big questions:
1. Why are we here?
Building a brand, business, organisation, strategy or team that’s fit for purpose requires first identifying what that purpose is. So, it’s probably worth establishing a quick working definition. As eluded to in a previous article, purpose, put simply, is the reason something exists (and there’s always a reason). It doesn’t necessarily need to be an altruistic aim, but it does need to be authentic. Fundamentally, it’s the answer to that all important question: why are we here? The distinction matters because not every company genuinely exists to save the world. And that’s fine. This doesn’t preclude the company from implementing initiatives and ideas that address social and environmental issues, however adopting or retrofitting a “higher” purpose for the sake of it is likely to do more harm than good and will not deliver any strategic advantage from an alignment perspective.
If you don’t have a reason to exist, you probably shouldn’t.
Case: Let’s say we exist to enable anyone to discover, enjoy and share delicious and experimental natural wine, no matter where you are in the world.
2. How do we win?
How are we going to fulfil our purpose? What’s the plan? By using purpose as a lens through which to evaluate decisions around strategy, you can shape your offering and focus your effort, gaining a clearer picture about the company and the market in context, plus, identifying areas where you can truly stand out and stand for something. Your how may change as the world changes around you, but aligning the how with the why and ensuring everyone within the organisation is on the same page will enable you to make better decisions. This applies not only to what to do, but also what not to do, as well as the agility to execute quickly and move as a whole.
Case: As we’re all about access and discovery, as well as being unobstructed by geography, we need to build a product with a born-global community at its core. We also focus on ensuring the natural wines on our platform are genuinely brilliant (both in terms of taste and pushing boundaries)?
3. What do we need?
Once you’ve identified why you exist and how you plan to win, you can start to develop a clearer plan on what you need to succeed (e.g. who to hire). One can have the most powerful strategies driven by a well articulated purpose, but if you don’t have the capability to execute on those strategies, you simply won’t be capable.
Case: If we want to feature unusual combinations of grape varieties, and offer eco-friendly delivery times at speed, what do we need to be good at? Understanding, agility, and crucially creativity and experimentation, as well as the flexibility and know how to asses which new products to bring to the market.
4. How do we do things?
What type of culture will support the capabilities required to deliver your strategy and fulfil your purpose? What systems do you need in place to enable our people to thrive? Culture will happen whether or not you’re intentional about it, but having developed a clear understanding of what you need, you then have the opportunity to build your culture. Bear in mind there are often tensions and trade-offs that inevitably accompany these decisions. For example, efficiency vs innovation, creativity vs structure, collaboration vs accountability. Your purpose and positioning should guide your priorities here. What’s most important? By codifying what’s most important to the way you operate and reinforcing your values with practices and rituals to embed these elements into everything you do both internally and externally, you can build a culture that’s truly fit for purpose.
Case: We need to fuel our team’s curiosity about natural wine, encouraging everyone’s individual journey of discovery. We want to ensure we advocate for the community while at the same time offering fast, flexible and human e-com services.
Ready for scale
It may sound obvious, but make sure these key foundations of the business are documented for all to access. While a team of 15 may get away with letting things just happen, consensus-driven decision-making and being naturally agile, companies that really want to make a difference need to build frameworks for scale.
Multiple supercharges progress through brand and culture, working work with founders (and funders) to help create alignment, define purpose, refine strategy, clarify vision, build brand, shape culture, acquire customers, raise capital and drive growth.
This article was first published on Medium on 23rd March.