THREE ASSASSINS THAT CAN QUICKLY KILL ANY VENTURE!
Ever heard the old adage that, “Business is about relationships.”?
I would bet that most of us have and understand this as a fundamental key to the success of any enterprise. Many of the opportunities we are able to pursue in business stem from our relationships. Our relationships are key to our ability to raise capital, make that business critical sale, or simply recover after things have not gone according to plan.
This post is about what I have found over the years to be the three deadliest killers of business. They are destroyers of our relationships, whether they be with our friends, customers, or investors. These killers with ninja-like precision divert us from our goals, make us suffer from needless delays and alienate us from success.
Make no mistake, any profit-making venture MUST employ these mercenaries and apply them to the cause. The true danger lies in letting these guys run amok, in either your psychology or in the business, unchecked.
Assassin #1 : Pride
AKA Ego, Vanity, Honor, Hubris, The Brand Promise
THE DANGER OF THE DOUBLE-EDGED SWORD
Pride, in this group of three, is potentially the most dangerous, since it is a double-edged sword and a necessary component of any successful venture. Any negotiator knows how important it is to know the value of the deal and have the ability to project that value confidently.
The danger is when one possesses an inordinate or irrational sense of value.
Although ego is often associated with CEO’s and artists alike, there are times when what would ordinarily be a healthy level of self-confidence turns to fear, e.g., of failure, loss of time, money, and the oft most-dreaded loss of reputation.
Risk goes hand-in-hand with success. Oftentimes the riskiest ventures are the very ones that will yield the greatest gains upon success. Excessive levels of pride can interfere with our ability to take that necessary, but risky, step, whether it be a conciliatory call to an upset customer or those disappointed investors after missing last quarters revenue targets. Although failure may have very real consequences, fear of failure should never be the obstacle to pursuing a viable venture.
Pride can keep you from seeing or asking for what you truly need when it is most important.
It can keep you from letting go of old grudges that keep you from truly achieving success. Finally, pride in its negative aspect can keep us from making the self-assessments and taking the corrective actions that we invariably need to make during the life cycle of our business.
Pride generally goes before the fall, but in my experience it is generally too late by the time you are in free fall to find a parachute and reorient yourself so that things work out in your favor.
Pride can keep you from seeing why you failed.
I do not like having to acknowledge my personal failures. I imagine no one does. Pride and our personal sense of self-esteem often walk hand-in-hand. Everyone fails, and it is important to be able to take an honest look at those failures to ensure that the next engagement is not simply a repeat of the same set of mistakes made in the last venture.
Remember, experiencing failure does not make you a failure; letting failure stop you from achieving your goals, if those goals are realistic, is what separates the achievers from the failures.
Excessive pride is a relationship saboteur.
Arguments where our “pride is a stake” quickly devolve into no-win situations, since even if we are technically correct we tend to leave the “loser” with the feeling that we do not respect them and do not care about preserving their sense of dignity. In the case where the “loser” is your friend, co-founder, customer, or investor the stakes are high and the chances of damaging your relationship over the long term are profound.
In the end this particular assassin can lead us to win the proverbial battle while losing the war in one fell swoop of its “vorpal” blade.
Assassin #2: Greed
AKA Selfishness, Excess, Piggishness
In modern business, greed as a principle is generally thought by the lay person to be a good thing. It is not. Greed is the second deadliest threat to business and it works by rendering an enterprise unsustainable.
For the purposes of this post, greed is wanting more than the market is willing to bear. That is not to say that you cannot offer your products at price points that offer phenomenal margins.
It is often the case that businesses are able to charge what might seem to many ridiculously high prices and do so ad infinitum as long as there is appropriate demand. Profit making in this category should not be considered greed, since generally business in this category is usually backed by a brand or some other competitive advantage like a patent, contracted infrastructure, low cost source of materials or a set of services that may simply be quite difficult for competitors to replicate and serve as a barrier to entry to those who aspire to take a chunk out of your market share.
Greed is a powerful motivator. The quest for “more and more” drives just about every aspect of consumer economics.
GREED IS OFTEN A CATALYST FOR ECONOMIC BALANCE
And just like its associate pride, greed unchecked is a certain destroyer. Often greed acts as a catalyst for balance.
In the case of consumer products and services, greedy companies generally find that they have competitors seeking to grab marketshare. Big companies tend to be slow companies when it comes to reacting to market disruptions and, although it is arguable if this ultimately is to the benefit of consumers, it is generally considered a beneficial outcome to have multiple providers in a free market economy.
A MARKET WITH ZERO ACTIVITY IS A BALANCED MARKET
Greed can also destroy markets and opportunity by destroying demand (which zeros supply) and, although on its face it may seem counter-intuitive, a market with zero activity IS an inherently balanced market. Put bluntly, excessive greed can destroy your opportunity to enter the market as well as the market itself. For a recent example one need look no farther back than the Emergency Economic Stabilization Act, signed in 2008 authorizing $700 billion dollars in bailouts for a set of companies deemed “Too Big to Fail”; an expensive lesson to say the least.
The nature of the destructive activities tied to greed vary but include excessive valuation of shares (your mother may think that your eco-friendly napkin company is worth $10 a share but trying to retain that value for a Series A round is NOT going to happen), to poor product economics (it costs us .35 USD per recycled paper napkin produced but they are completely carbon neutral), to an overly aggressive consumer pricing model ($1 per napkin to the eco-saavy consumer sold in a box of 10) are all quick roads to oblivion.
Management can also set policies that cripple the company’s ability to make a market as well. It may not be the case that your top sales performers request for 20% commission is an act of greed; it may be well deserved and it is greed (or that prime assassin pride) that has you balking at the idea.
GREED CAN BE CURTAILED
From the perspective of your customer, always do your best to understand what they value in your product or service and then do your best to master its efficient delivery. Of course this is easier said than done, and that’s why you are offering that magical product or service to a customer who is probably quite happy to let you handle all of the tedious delivery details.
If the customer is not happy, then they are still looking for a solution and your relationship is in jeopardy from the next competitor that comes along offering one.
Assassin #3: Misalignment
AKA Dystopia, Complacency, Misunderstanding
If you are sure that you have the right strategy, tech or business model but you cannot seem to close the deal, maybe it is this third, and potentially most insidious of the assassins sabotaging your success.
Strategy is not sufficient for success. Execution is critical. Alignment is often the difference between strategic success and ignominious failure.
MISALIGNMENT IS PASSIVE AGGRESSIVE.
Just ask Senior Management.
Organizational misalignment operates like cancer and often it is difficult to detect and virtually impossible to cure by the time it has reached the attention of senior management. If you have ever been in a large organization that seems to reorganize once every few years then you have definitely experienced crisis management around organizational misalignment.
Of course often senior management is the cause for the very misalignment it is trying to avoid or resolve because the top down approach is better at allowing management to explain things to shareholders or third-party stakeholders than it is at allowing the easy flow and adoption of solutions provided by the employee-base on the front lines.
In the case of large organizations, senior management is often able to author and adopt a strategy. Communicating this strategy to the employee base is always problematic, but it generally is the case that, given the correct information, the general goals of senior management are communicated in such a way that the lower level employees or members of the team are able to more or less regurgitate the goal set.
The fundamental problem is that communicating a set of goals is not sufficient to have your employees make decisions based solely on the achievement of those goals. The primary reason for this is simple; most employees do not report directly to senior management and are not empowered to do so. They report to the person who is ultimately responsible for giving them raises and making sure that they are able to work in a tolerable, if not enjoyable, environment.
Usually the above is not an inappropriate approach for the employee but it is absolutely the adoption of this “Business as usual because nothing has truly changed for me!” viewpoint that stops organizational change in its tracks.
SMALLER VENTURES DIE BY MISALIGNMENT AS WELL
Misalignment can happen when you least expect it.
When your “friends and family” backer dies and the family decides that this last investment was either not sound, taking too long to develop a return, or because of tax timing it may be better to pull the plug and take the loss to offset gains in other areas.
Or when your partner has made a deal with your competitor to sell their stake in the business you both founded.
Or when that federal subsidy you were banking on lapses due to lack of congressional alignment.
Just like cancer, misalignment kill indiscriminately and is often aided by factors beyond your control.
DEATH BY A THOUSAND DECISIONS… OR JUST ONE OR TWO BAD ONES
Successful execution requires a variety of things to align; people, process, product or service, delivery and cost. All of these things must be initially aligned and remain in alignment for reproducible success.
Since we as leaders are aware of this from the start, it is our job and unending challenge to ensure the capacity to maintain adequate protections against nefarious enemies to our enterprise.
Speaking strictly from experience, our failure to do so may be the reason that years down the road we are weighed down by the demise of a venture we truly believed in.
One of the attractions of entrepreneurship is that the next big opportunity is always there waiting to be discovered. One of the best decisions I believe you can make before embarking on that next journey is to prepare yourself for the inevitable onslaught of the three above. Fortune does favor the bold.
Good luck to us all!