Pivoting A Start-Up: How To Avoid The Big Disaster

As one CEO of an NTT corp division told me, “I have seen more disasters in my lifetime, let’s try to avoid a disaster on this one!”

Commitment To Failure

A few years ago in my MBA program at Florida Atlantic University (FAU) I remember studying the concept of Commitment To Failure.  This is when a business has chosen a strategic initiative where they are going to finish the project or literally die. It’s often an ego thing, and the company doesn’t want to lose on any project.  But you have to lose sometimes to gain.  Some executive or business owner has made the choice to hit the target or go out of business.  They typically don’t talk about it this way, and denial is part of the issue, but somewhere in the back of their mind there is a chance that they will not make it.  Everybody knows that is the risk of business.  But why go out of business when you could have stopped or changed direction or made an adjustment and survived.

The Strength Of The Human Mind

Someone recently told me about a businessman he met with who dominated the conversation.  This web development consultant had started a contract with a small business owner who would not let him talk, and shut him down if he opened his mouth with a never ending barrage of words.  Even at lunch the consultant was not allowed to look at the menu.  The guy shut him down and controlled everything.  The megalomaniac, smartest guy in the room syndrome, is the one you have to spot right away.  I often joke that these are the guys or gals who sometimes make millions because of their crazy ways, but on the other hand they kill themselves with their all-knowing, god-like complexes.  Hope you haven’t had the opportunity to work with this kind of person.  They make life difficult for everybody for no reason.  And it doesn’t have to be that way.

The Inevitable Future

I love this book Inevitable Surprises by Peter Schwartz (hope I got his name right), where he tells us that the seeds of the future are always around us in the data.  We can see through a crystal ball if we really want to.  Once the future hits and something becomes a reality we are always surprised, but the tea leaves were always there.  People sit around now and say the mortgage industry collapsed for instance, but most of us remember the housing bubble, the 40 and 50 year mortgages, the no questions asked mortgage and lots of other programs that were obviously going to sink the housing business.  These red herrings were right in front of us and the future was something you could sense.  Often we see all the signs but we ignore them.  I have.

Stop, Drop And Roll

So why be ignorant about your own start-up and make the right change early, not when the business is on the ropes?  Great companies have done this and pulled themselves in a new direction.  It’s a rarity, but it happens.  Look at Bill Gates 1995 in the wee hours realizing that the Internet is big and waking up and changing his company! It does not matter how big the company is, sometimes you have to change directions and give up on an idealistic trend that did not make sense.  Can you take what you have already created and go in a new direction, or do you have to start over from scratch?  It depends.  Is your business division doomed to failure down the road?  Then start a new direction, now, not when the division has been laid to rest.  Great businesses know when to say no to a project and either stop or switch gears.  A good example I am going through right now is taking my Take It National software project and possibly switching directions and markets from national event software to national wifi content management software.

First Success Syndrome

One particular syndrome I have notice for start-up guys and gals who have hit the big one the first time around is First Success Syndrome.  Just because they were 23 and created Facebook, they think they now know everything they need to know in life.  This is the kind of person that typically makes the commitment to failure the second and third times around.  I hear a lot about 2nd time failures and many failures for first time successes.  Why does this happen?  I guess our minds play a trick on us and we end up thinking that we know what we are doing and we stop listening.  I would say listening and looking at information can tell you there is a problem and there is a failure coming down the line.  For instance when any young entrepreneur tells me that he is going to create a new non-profit and will make tons of money, I look at him and say “No, not going to happen”.  Non-profits don’t make you rich (unless you are ripping people off).  So some of the logic here needs to be applied up front and directly to people.  But who knows, I don’t know everything.

The 911 Here

Like I said, I don’t know everything.  I think that is the first attitude you need in looking at  your business, your business division and any business situation.  Listening to people is the key to success and not knowing everything!

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