SUMMARY: A great idea for a start-up is no guarantee of success as Peleton and Away are finding out the hard way. In order to excel start-ups need experienced operational and HR people who can execute the brand’s vision especially when it comes to customer service.
The Verge did a great job reporting on the struggles of the start-up Away. The report was so devastating that the CEO resigned. In addition to a pattern of employee harassment, it seems that employees at retail locations had to put up with stores without any heat, no working toilets and no place to store excess cash from sales. I’m not sure they are going to survive.
A great idea for a start-up requires a lot of things in addition to cash. A great vision doesn’t mean a thing to employees who don’t share your goals. Operational excellence is something that requires experience even if it means hiring older employees who know how to implement a business strategy.
I talked about Peleton’s problems in my last post and frankly, I believe that in a couple of years they won’t be around. There are so many start-ups vying for consumer dollars but how many meal delivery services do we really need?
Seth Godin said in All Marketers Are Liars “get to know your customers, then craft a special and authentic story just for them. Make sure every aspect of your business – from your staff to your products to your logo – fits in with that story. Use harmless fibs if it helps you and your customers, but don’t ever commit fraud against them. When you reach out to people in a meaningful and sincere way, you’ll build a relationship that benefits both sides”. But you also need the ensure you deliver on customer expectations.
Apple’s Tim Cook is a great example of operational excellence but he is missing the vision that Steve Jobs brought to the company. Apple has executed very well by delivering new products but they are not visionary products; they are line extensions and new models often with a lot of bugs.
Venture capital money is finally starting to slow down because of potential flops like Uber and Peleton. What seems like a great idea doesn’t mean anything without a detailed business plan on how to execute and adapt to the changing competitive environment.
According to Harvard Business Review, “experts have opined for decades on the reasons behind the spectacular failure rates of strategy execution. In 2016, it was estimated that 67% of well-formulated strategies failed due to poor execution. There are many explanations for this abysmal failure rate, but a 10-year longitudinal study on executive leadership conducted by my firm showed one clear reason. A full 61% of executives told us they were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles. It’s no surprise, then, that 50%–60% of executives fail within the first 18 months of being promoted or hired.
Strategy, at its most basic level, is a set of choices and trade-offs about where an organization will invest, compete, and win. For more complex organizations, that means every “yes” to an idea or initiative requires a “no” to several others in order to secure the success of the first initiative. Limiting the number of commitments requires focusing all resources on a narrower set of priorities, intentionally deprioritizing other efforts. Despite this, most executives struggle to understand the implications of not making effective trade-offs. In companies that poorly execute strategy, a staggering 60% do not even link their strategies to their budgets, guaranteeing a disconnect between commitments and resources. By contrast, in companies that successfully execute strategy, 76% limit the number of strategic initiatives they focus on and 64% actually build their budgets around their strategy.
A common reason start-ups fail involves the lack of business acumen held by a management team or business owner. In some instances, a business owner is the only senior-level personnel within a company, especially when a business is in its first year or two of operation. While a business owner may have the skills necessary to create and sell a viable product or service, he is often lacking the attributes of a strong manager and the time required to successfully manage other employees. Without a dedicated management team, a business owner has greater potential to mismanage certain aspects of the business, whether it is finances, hiring, or marketing.
The lesson here is simple: marketers have to ensure that their company executes their strategic vision with every employee and every customer.