8 — Conclusion: Innovating in 2021
In a post-COVID-19 world we will all have to reinvent ourselves. Given the worldwide competition for the technological edge, it is fair to say that the old model of centralized R&D labs cut from the rest of the world is in bad shape. Institutions and companies broken down in silos, with research centers separated from the rest of the operations can no longer compete with startups ecosystems.
Innovation requires gathering everybody around the table: Finance, Technology, Sales, Operations, Product, HR & Marketing departments who must work together to achieve the so-called “Product/Market Fit”. More importantly, public services and private companies alike must engage with users (clients, employees & citizens) early in the development process to co-create meaningful solutions designed to fulfill their needs.
Wasting years behind closed doors developing products and services that will need to be pushed to the public with expensive marketing & advertising campaigns in order to get adoption is not a competitive strategy anymore.
34% of startups fail due to a bad Product-Market Fit
Even though engaging in a startup venture is still a perilous endeavor, entrepreneurs all around the world now participate in the ever accelerating digital revolution, fostered even faster by the effects of the COVID 19 pandemic. Failure is most common for startups during years two through five, with 70% falling into this category.
The number one reason why startups fail is due to misreading market demand or Lack of Product-Market Fit (34%), pricing/cost issues, user-unfriendly products and product mistiming.
The second largest reason why startups fail (22% of cases) is due to Poor Marketing, then comes weak founding team (Team Problems 18%) followed by running out of funding and personal money (Finance Problems 16%). Failure because of competition most likely happens when a startup has been active for three to five years.
Other major reasons for startup failures are from Technological Problems (6%) and to a smaller extent from Operations or Legal Problems (2%).
Despite these dreadful figures, most entrepreneurs testify that even when failing, they learned much more by several orders of magnitude during their startup venture years than during any other 9-to-5 office job.
Today the approach to technological progress, groundbreaking innovation and thus growth and competitiveness is about building vibrant ecosystems of small teams (small enough to be fed with two pizzas as Jeff Bezos would put it) competing with one another to find the next big thing, based on user experience, prototyping, testing with a real culture of daring, testing crazy ideas, failing, learning and iterating up to successfully making new ideas work in the real world. Companies unable to adapt to this new paradigm are learning the hard way and in most cases are doomed to decline if they fail to reinvent themselves.
This Chapter is the last of a series of 8 daily posts, if you liked it, thank you for sharing!
Here’s the table of all contents:
1 — R&D is dead, long live innovation?
2 — How startups fail, learn and succeed
3 — Why Silicon Valley isn’t just one place anymore
4 — Is Huawei a design company?
5 — How SpaceX agile methodology gave birth to Starship
6 — About Xavier Niel, Ecole 42, Station F and Kima Ventures
7 — How Africa is becoming an innovation powerhouse
8 — Conclusion: Innovating in 2021
