This question originally appeared on Quora: What are the most common reasons that start-ups fail?
Optionality. One of the core strategic things that most smart people get wrong is that they overvalue optionality. Businesses that value optionality will start a few different products with the hope that one of the businesses takes off ... or they may make multiple bets valuing portfolio theory over focus.
Optionality usually leads to a worse outcome than focus.
By having multiple strategies, it often means that a company isn't investing enough in the most promising path. The best businesses are clearly focused and say "no" to almost everything. They deliberately cut off options and they publicly declare that they will not go into business lines in the future (even when businesses are adjacent to their core market).
Focus is the act of eliminating options. One should create a strategy and execute on that strategy. One should not A/B test a strategy. One should have conviction in their strategy. One should be deterministic about what path will work and follow that path. A CEO might be wrong about the path or the business might not execute. But without a deterministic path, you are leaving yourself vulnerable to the focused entrepreneur.
If you make the analogy to our personal lives, the ultimate elimination of optionality is getting married. And when marriage works, it is the single most fulfilling thing of our lives. Marry your business to a single strategy.
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