In recent years, we've witnessed countless brands transform from startups into household names. We've also had a front row seat to the catastrophic fall of several Silicon Valley favorites. While the factors contributing to failed ventures can seem obvious in retrospect, the margin between success and failure is razor thin. Most of these organizations encounter two critical turning points along their path to growth, and the decisions they make on how to navigate these challenges is what separates the winners from the losers.
1. Can You Set & Execute the Vision?
The popular phrase, "fail fast and often" has inadvertently become a mantra that justifies short-term thinking. Gambling on perceived quick wins without a strategic plan can result in a gross misuse of resources and worst of all, a failing company. Jeff Bezos has famously stated that failure and innovation are inseparable twins, but he also said "good leaders are right a lot." Some company leaders are visionaries, others are masters of execution. Some prominent leaders, like Jeff Bezos, are both.
Vision Meets Strategy
When discussing LinkedIn's 1,000% membership growth rate with Forbes, Aatif Awan, Vice President of Growth, said it was a combination of vision and strategy that fueled their success: "...the most important thing has been to develop clarity on the goal of our growth efforts. It's a common pitfall to think of growth as moving a metric up-and-to-the-right but that often leads to short-term tactical thinking." LinkedIn has pushed beyond a narrow focus on member acquisition and developed a strategy informed by the overall vision of the organization, which is to create economic opportunity for every member of the global workforce. The growth team created an onboarding process that enabled them to learn who their members were and what goals they wanted to achieve. This led to more personalized content, product offerings and contact recommendations. Each line of business worked cohesively to deliver better products and overall customer experience which ultimately increased value and engagement for their members, resulting in higher rates of member acquisition and rapid organic growth.
Visionary Force for Good
CNN hailed Marc Benioff, Salesforce founder and CEO, as the most important leader in tech. The cloud-based CRM provider is on a three-year streak for exceeding revenue growth targets, with more than $10 billion in annual revenue for the 2018 fiscal year. Salesforce.com was identified as a top-performing computer and tech stock by Zachs Investment Research, reaching number four on their list of 594 companies. How did Salesforce get here? They were disrupters, delivering an uncomplicated product with a value proposition that few industries could deny. In addition to creating a culture of tight alignment between each team they built trust by consistently demonstrating how their product made their clients more money. This strong foundation enabled Salesforce to survive the dot-com bust and thrive as one of the first and largest companies in the cloud computing market.
In a climate where several tech companies have been fixtures in the news due to PR scandals or privacy and security concerns, Salesforce continues to thrive in part due to its CEO's perspective on the importance of establishing trust. Benioff shared with CNN that trust needs to be every organization's "highest value" over "power" or "monetization of ... your social network." Otherwise, he says, "the company risks losing customers, employees and top executives."
2. Knowing When to Switch, Pivot or Quit
Creating solutions for common problems is a great start to building a promising business. But what do you do when you discover your products are easily copied or you've overestimated demand? When the viability of your company comes into question, you have to take a hard look at your business model and be willing to make the difficult decision to switch, pivot or quit.
An infamous example of a company finding success after switching to a completely new service is Twitter. Twitter's founders, prior to becoming social media giants, formed Odeo, a platform where visitors could discover and subscribe to podcasts. When it became clear that Apple was going to dominate the podcasting market via iTunes, Odeo's operating team quickly and correctly focused their efforts on a new microblogging service project. Twitter creators Jack Dorsey, Noah Glass, Biz Stone and Evan Williams knew they were onto something, but they couldn't have predicted the iconic status their brand would reach or just how ingrained it would become in our daily lives. Users can tweet about an experience or check into their location without even opening the Twitter app. The features now synonymous with social media (@mentions and hashtags) were behaviors first introduced by early Twitter users and later permanently incorporated into the Twitter user experience. Adaptation is what led to Twitter's creation and given present day challenges, continued evolution could be the key to securing continued success.
When your business finds demand and profitability, it takes a special type of visionary to see beyond initial success to identify even greater opportunity. One such visionary is Brad Hollister, who left his successful startup Freight Access to launch the fastest-growing private company in America. After a difficult conversation with a top client, Hollister realized that while marketplace clients liked Freight Access' idea of selling freight space, it introduced new processes to manage. What his clients really needed was a better approach to supply chain logistics. Despite a bevy of clients and a successful venture capital round, Hollister left Freight Access to create Swan Leap, a platform that leverages AI to help large organizations across multiple industries save money on shipping and more efficiently manage their supply chain. Hollister tapped into a goldmine of opportunity by listening and pivoting. His new company has a three year growth trajectory of more than 7,560%.
Lastly are the once-heralded brands that, despite having every advantage, are forced to shut their doors. The reasons for their demise are varied and unfortunate. One unforgettable example is Jawbone. They started liquidation in 2017 despite once being a leader in bluetooth earpieces and speakers before transitioning to wearable tech and raising over $900 million in funding. It's been argued that the funding itself led, in part, to the company's failure. Tech entrepreneur Sramana Mitra told Reuters that raising that level of funding can "create this artificially bloated valuation that doesn't compute with the revenue." It's also worth noting that Jawbone's struggles escalated when they entered the fitness trackers market. Plagued with product quality and production issues, along with complaints of deteriorating customer service were compounded by high leadership turnover. Collectively, these difficulties could not be overcome.
Jawbone may have pivoted to the wrong product and clung to an ineffective model for too long, but CEO Hosain Rahman is transitioning again to the healthcare market. With a small number of Jawbone employees and a few investors, Jawbone is being rebranded as Jawbone Health. The new company will focus on health related products while continuing to support current Jawbone devices. The lessons here are plentiful. It's definitely clear that effective timing of a business pivot is critical. You may also have to accept that your business model needs to change multiple times in order to thrive or salvage your brand.
The Final Word
Market changes, organizational deficiencies or challenges with funding can signal the end for many organizations. For others, navigating the variables that contribute to the success or failure of a firm presents thrilling opportunities to adapt or diversify. As we each seek success, even if we falter, great achievement can be found if armed with:
An in-depth understanding of your industry and organization
The ability to envision, execute and adapt
Social awareness and the drive to build upon an ethical foundation