Startups fail. There’s no easy way to make that statement without being blunt. But as much as that statement may be true, it’s also misleading. The seldom-heard story is that not all failures are bad and fewer are catastrophic. Startup ideas fail, yes, but the right pivot at the right time can change everything.
There’s something compelling about the notion that startup success is a ‘knife’s edge’ game. The ‘one in ten’ story resonates better with a crowd and creates an ‘against all odds’ underdog scenario that striving entrepreneurs get to run with. Starting a business is a difficult endeavour, and while failure is a reality in the startup world, believing it’s 90 per cent assured is not something most entrepreneurs spend any time dwelling on.
Success is a series of failures
Success stories often revolve around hockey stick or rocket ship analogies, and there’s no doubt that when success hits, it can be fast. But the missing chapter is the one that focuses on the series of downturns, pivots and changes a company had to navigate to stay alive.
Making it in the startup world is tough. Entrepreneurs don’t have the market share to compete directly with industry incumbents and they lack the big-dollar budgets typically attached to customer acquisition or marketing strategies. What the startup industry has, however, that big business lacks, agility. And this is a key to how startups are able to set about picking up precious slices of market share from existing players.
By listening to customers’ wants and needs and by reacting quickly, startups have the ability to meet specific customer pain points before the larger corporations have noticed that they even existed. This often doesn’t happen the first go round. Startups typically miss their target a whole lot more than they hit it, but with the ability to work with tight development cycles and get products or services to customers quicker, they can maneuver far better than an industry giant is able to.
Ownership breeds failure
‘Fail fast’ and ‘fail smart’ are sayings that have taken the startup ecosystem by storm. The communities that have formed out of these ideas teach entrepreneurs that not all failure is a negative or a systemic problem in their organization. But what does tend to lead to lasting problems is founders doggedly sticking to their founding ideas and refusing to adapt.
There’s almost no scenario in which the founding idea of a business will continue to be the right idea throughout its lifecycle. Ideas come and go, and in order to truly pivot, startups need to move beyond the notion that anything will always stay the same and be correct. A company should be constantly sourcing feedback and studying analytical data from their consumers, and founders must have the flexibility to act on the answers the data is providing.
The timing of the pivot
Startups success is often made up of a series of key actions taken at key moments; critical decisions must be made at critical times. The strength of a good startup is the validation it gets and the ability to spot a problem early and fix it quickly.
Take picture-sharing powerhouse Instragram, for example, which started a a check-in style app called Burbn before making the shift to mobile photography. This shift got it out from under the saturated market of check-ins and into a fresh and burgeoning field of social image sharing which led to its meteoric growth.
Knowledge is power and it’s the key to informing startups whether or not they should pivot. It could be changing consumer tastes or habits, or the rise of a new competitor. Regardless of the situation, if startups are ill-informed, they may pivot far too late and halt any serious momentum.
Failure of a founding idea is okay. Pivoting, when done proactively, is not only okay, but can open a startup to a whole new world of possibilities. Entrepreneurs who doggedly stick to a single path, while all signs point in a new direction, might well find themselves destined to become part of that infamous 90 per cent.
Cameron Chell is the Co-founder and CEO of Business Instincts Group, a venture creation firm in Calgary that finances and builds high-tech startups. To learn more about his work with sustainable startups you can visit www.CameronChell.com