Fail Faster, Fail Often with Poor Design

2014

There has been disappointing news in the entrepreneurial / new venture world in recent weeks.

Recent studies by the Economist showed a decline in new ventures and entrepreneurial activity in the US and this article by James Surowiecki in The New Yorker, tries to analyze the phenomena of large scale failure among startups.

Start up – Runner on the blocks

While it is generally assumed that entrepreneurship is for those who have a healthy appetitie for risk, he argues that that is not necessarily true. What distinguishes this class of adventurers according to him is their self-confidence.

There is a culture that has been created around entrepreneurship too – advice that recommends “Fail often and fail fast”, the relatively easy task of getting money and started and other circumstantial and contextual aspects that encourage such risk-taking.

Somewhere in such a system are mechanisms that are supposed to identify and filter the good from the poor ideas. It is assumed that the financiers have the acumen and wisdom to identify the ventures most likely to succeed. Then why I wonder is the failure rate so high.

I have had some exposure to a number of such entrepreneurs due to the location where I work in Cambridge. I am surrounded by the highest density in any one location of startups anywhere in the world. These are really smart people with great ideas, energetic, often young, enthusiastic, and also sincere.

However, I have often found, whether due to the culture of the entrepreneurial sector or due to their self-cofnidence, that their ventures are usually based primarily on product ideas or rooted in some novel technology. However, in most cases, they do not seem to have robust business concepts.

There is however also no appetite or patience for the effort it would take to design a venture. Having developed a business plan, in their mind, is a good enough substitute for a business design. I do not think they are to be held a fault here. The system encourages such thinking.

One argument is that, a good design evolves. Evolution does indeed happen in business, but then it also leaves too much to chance. Perhaps, the failure of an individual entrepreneur or venture is but a matter of statistics for the venture capitalist.

But, there is indeed a better way. It would do all in the system good to take the time to design the venture well – even if in visionary terms, before going too far forward. It would take some more deliberate work up front, but we would not see the kind of failures we see.

It is romantic indeed to think in terms of the tooth and claw nature of the world of competition and failure and extinction of species in biological/ecological terms. But, we are humans, our social systems are an improvement on that logic. We can change things through design.

If, I want to be an entrepreneur, I do not want to discover what the Germans found – that failure does not necessarily guarantee future success. I do not want to be a statistic in someone’s portfolio. I can design my way to better outcomes.