Failing is inevitable if you zoom out 1000 years. Failing within a year or two, not so much.
Among the more risky endeavours when starting a high-scaling business within a short amount of time (called startup), there are some interesting reasons why they failed. I am not talking about the wework-type of monster endeavours, I am interested in the more apporachable businesses you and I would build. There, we can learn a thing or two.
As I am from Switzerland, let's use Swiss ideas that never saw the daylight: (Also, it is pretty hard to know what companies do not make it / don't make it out of early stage.)
No need fails
No need fails are fails due to non existing needs from customers or the market in general. Actually, these ideas might be valuable, there is simply no need.
sPliNt was meant to create social financial networks. You could keep overview over purchases among people with dynamic social networks such as friends, flatmates or organisations they part in. Paying of bills and keeping track of these payments, or saving together becomes easier.
The reason it failed was, that it there is simply no business Case that justifies the expensive development and complicated legal form the idea needed. They started and even though the idea had a lot of potential in several aspects, it was nowhere feasible - and at some point, simply disappeared from everyones radar.
It was inevitable - Fails
Sometimes you are not really surprised they fail. You feel that the idea fails, and retrospectively it was obvious that it will crash at some point sooner or later.
ImmoBuddy aimed to simplify the real estate search for potential buyers and tenants. The application utilized Beacon and GPS technology to notify users when they are in proximity to a suitable property. ImmoBuddy wanted to allow users to access all necessary property information instantly and schedule viewing appointments directly. On the seller's side, the app automates applicant screening based on predefined criteria.
In the context of innovation, the text emphasises the importance of having an innovation champion who passionately supports the idea for the project to thrive.
Fails by following management
Some fails happen because you were not able to convince Management or the higher leadership. Maybe you were not able to convince your sponsor, or maybe you were not able to convince the investors, and they decide to go into a different direction - or to shut it down entirely.
PostFinance aimed to be the first Swiss bank offering biometric identification for customer access, eliminating the need for cards. Encouraged by successful trials and compact vein scanners, the initiative streamlined processes and opened a new business field. However, the potential challenge arose from the susceptibility of a central database to fraud. The learning emphasized the success of decentralized solutions like fingerprint or Face ID on smartphones in mitigating fraud risks.
Epic Fails
These are the fails that really hurt. Especially if everything is there, team, idea, model, business partner. Until it isn't anymore. My first startup that failed miserably would also fit this category. But that is a story for another time.
Interest aimed to be a digital marketplace for daily and fixed-term deposit offers from selected third-party banks, allowing them to attract deposits from private customers. The innovation allowed savers to use these offers through their home bank account without opening a separate account. PostFinance provided attractive interest rates despite a low-interest environment and deposit fees. Their business model marked the first open banking solution in the savings segment for private customers, potentially reshaping the market. Switzerland has not adapted openbanking yet though.
The organisation chose not to take the risk, emphasising the learning that testing innovative projects on a small scale without dependencies is often more effective. And shut all access down.
So what may we learn from them?
Think Big but Start Small: Pursue a grand vision in small steps to avoid later searching for problems. Starting with significant ambitions without a clear plan can lead to challenges.
No Revenue Source = No good: Ambitious ideas need a viable revenue source. Without income, even the best idea is ineffective.
Knowledge and Flexibility: The decision-making panel for early-stage innovation must have knowledge of relevant trends, technologies, and market developments. Lack of imagination and risk aversion can stifle ideas. If you don't know the vertical you are in, you are in for a rough ride. Downhill.
Problem First, Then Solution: Validate assumptions early. Statements like "People will love this" or "Customers need this" do not work. Understanding the business model and customer willingness to pay is crucial.
Passion and Commitment: Passion for the subject and the project is essential. Without sustained commitment, a project can quickly end up in failure. Existing teams in early phases should not be replaced hastily.
Of course, there are a million takeaways if you go into detail for more and more cases. Ultimately, you have to figure out how to build something that scales (if it is supposed to), and something that works for you and your customers. Thus, don't get emotionally attached to the first prototype you come up with. (Just a bit)
Being unwilling to change your model or idea based on customer feedback will potentially hinder your progress in the long run. Forward-thinking involves taking two steps forward, one step back to look at where you are going. Just keep the end goal in mind, it's a long game.
Cheers
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