How Vision Leads to Failure

How Vision Leads to Failure

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Google ‘the importance of having a clear vision for your business’ and the search engine will return over 4 million results. Consult a management guru and the importance of company vision is almost unquestioned. Jim Collins talks of the importance of creating an “envisioned future” and making it more specific and concrete with a “vivid description”; Steven Covey recommends “beginning with the end in mind”; and John Demartini is adamant a “clear vision” is the important first step to business success. This is sound advice if your vision is correct, but what happens if it is wrong?

A cautionary tale

In the late 1990s, Webvan.com had a vision to reinvent the grocery store. The company was oozing talent. The founding team had managed to attract some of the world’s smartest investors, assembled a management team to envy and had developed state-of-the-art facilities that would deliver groceries to customers in under 30-minutes. Unfortunately, the vision was wrong.

Fewer customers signed up than planned; costs were higher than expected; and efficiencies never paralleled with the original vision. Undeterred the founders marched on implementing the original plan. But then, reality kicked in. The result was R6,4 billion in losses and one of the most spectacular flame outs from the dot.com era.

Getting your vision right

Webvan, however, is not alone. In a recent study, “Premature scaling”, Max Marmer and a team of researchers from the Start up Genome project set out to test how many start ups failed due building a business before they had aligned their visions with reality. The study looked at 3,200 internet start ups and found that 70% of the start ups failed due “premature scaling”.

Premature scaling is when the founder grows the business with a vision that doesn’t make sense, just as Webvan did. It may be the value proposition doesn’t attract enough customers, or the cost structure is wrong or the marketing isn’t attracting attention it should. In short, if you vision doesn’t fit with reality your dream will stay just that, a dream.

The truth is that great entrepreneur’s visions seldom come from “ah-ha” moments; rather they are moulded as they learn more about their industry, products and customers. Each time obstacles or opportunities are encountered they change and adapt their vision to fit. They will switch products, features, costs, industry or any other part of the business until they find what works.

When Evan Williams launched Odeo a podcast service he had no idea the final outcome would be twitter, the world largest micro-blogging service, or when Richard Branson started Student magazine he didn’t know it would lead to mail order record business that would be the inspiration for his first major success, Virgin Records. So, great entrepreneurs don’t have crystal clear, unchanging visions. No.

They have broad flexible changing visions that have been moulded by interactions with the real world. So, the key to your business success may not be sticking doggedly vision, but rather changing it repeatedly on your path to success.

Tips on finding your company’s vision

  • Change and adapt your vision until you have a reliable and repeatable way to acquire customers.
  • Change and adapt your product or service until customers are beating down your door.
  • Change and adapt your cost structure/pricing until there is enough profit to fund growth.
  • Don’t start any heavy investment in your business until you have proven that all of the assumptions of vision fit with reality.
Paul Smith
Paul Smith is a writer and startup scientist. He currently manages an accelerator, Ignitor, which helps entrepreneurs start and grow their businesses. Ignitor has developed a new model that significantly improves early stage start-ups odds of success. His primary research interests include understanding the behaviours of expert entrepreneurs, as well as, how to most effectively support high potential start-ups. Follow him on Twitter and visit his website.
  • Musakalu Kabamba

    LOL! Great Article. I started off as a software development company for small business and I’m in the process of innovating it into a Brand Innovation Agency!