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Business Breakthrough Series - Part 8
May 2, 2014
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There are no guarantees in business. You can do everything "right" and still fail. For example, a leader can make a fact-based strategic miscalculation; there can be a sudden change in a law or regulation; or, there can be a natural disaster that cuts off key raw material supplies. Failing for the right reasons stings, but at least you know that you did everything in your power to achieve a positive outcome.
Conversely, a leader can do everything "wrong" and still succeed. These leaders are like gamblers. They treat their business like a game of chance rather than a game of skill. Their success is random. Their ability to sustain their success is unlikely and unpredictable.
The worst outcome is a business that fails for the wrong reasons. These companies could have succeeded, but failed because they did not manage the variables within their control. For example, they fail to create a strategic plan; they fail to leverage the insights and knowledge of their frontline employees; and /or they fail to systematize the critical operational and management processes neeeded to remain flexible, scalable and resilient as they grow.
Even long established brands can fail for the wrong reasons. They do not plan for leadership succession, they succumb to employee dissent, or they let their secret sauce sour.
The mass majority of businesses fail in Phases Zero through Three. The Small Business Administration reports that more than 75% of businesses fail in their first seven years. How might this statistic improve if more small businesses managed the variables within their control?
- Can you identify possible scenarios where a business could fail for the RIGHT reasons? For example, a sudden change in regulations or a well-conceived strategic plan that simply did not work.
- What are some examples of scenarios where a business fails for the wrong reasons? For example, a lack of disaster planning, over reliance on a key employee who leaves, managing by gut instinct rather than best management practices.
- Statistics demonstrate a 70% failure rate for startups during early years, with many more businesses closing their doors before a merger or sale occurs. Can you estimate how many of these businesses failed for the wrong reasons?
- What is the likelihood that your business could fail for the WRONG reasons? What can you do about it?
Suggestions for beating the "early stage failure" odds.
- Manage your business with sophistication.
- Systematize and standardize your business processes.
- Improve employee communication and engagement.
To break through to Phase Four, you need to identify and manage the operational and organizational variables within your control. These variables include vital management elements including: strategic planning, workforce engagement, process documentation, continual improvement, quality control, communication systems, project and knowledge management.