Unfortunately, business failure is common – and it’s not just startups and small businesses that fold every year. Fifty percent of the Fortune 500 companies that existed 20 years ago are gone, and the life expectancy of multinational corporations is limited and shrinking.
Let’s explore the top 10 reasons businesses fail – plus an important bonus tip.
Arrogance is a business killer. As soon as leaders become complacent, their businesses begin to fall behind. To be successful, companies need humble leaders who always harbor a hint of fear that motivates them to act. Leaders need to be aware that they cannot afford to cling to past or current successes because sitting on their heels will cause their business to lag behind.
2. Not prioritizing sustainability
The number one task of any business is to help make our world a better and fairer place. Every business must address the world’s most pressing sustainability challenges. Consumers and investors are already demanding more accountability from organizations for sustainability and diversity, equity and inclusion – and this trend will continue to grow as they increasingly vote with their wallets.
3. Not putting customers first
Everything a business offers should bring value to customers and make their lives easier. Putting customers first also means not being afraid to abandon existing products and services and get rid of anything that doesn’t add value to customers.
4. Not relentlessly innovating
Our world is changing incredibly rapidly and new and innovative ways of delivering products and services are emerging every day. Companies must constantly innovate to maintain their competitive advantage. Many companies are reluctant to change established products, services, or processes, but if they don’t, many innovators will be more willing to change. These companies will take the lead.
5. Not thinking of themselves as tech companies
We have never lived in an age with so many transformative technologies. Technology trends like machine learning, robotics, blockchain, and metaverse are reshaping every business in every industry. With the rapid pace of change – and technology becoming the priority in the business world – every company needs to think of themselves as a technology company and put these digital transformations first.
6. Do not treat data as a key business asset
Data is the cornerstone of successful businesses. They use data to make better business decisions, understand customers and market trends, create smarter products and services, and improve their business processes.
But with all this data comes a huge responsibility. Companies must protect information and comply with all applicable security laws. Successful companies in the future will need to have a solid strategy in place that gets the most out of their data while protecting their partners and customers.
7. Failing to attract and retain talent
Recruiting and retaining top talent is a challenge for organizations today, but it has always been true that people are at the heart of every business. Successful companies work to develop the right culture and prioritize diversity. They are also setting up flatter, more agile hierarchies and management structures where people feel good and can be their most authentic selves.
8. Failing to develop future skills
The skills required to succeed at work are changing faster than ever, and the half-life of current skills is rapidly shrinking. Every organization needs to ensure that its employees continually develop the right skills, otherwise they will simply be left behind.
9. Failure to build strong partnerships and integration with others
No business can operate in isolation, and in today’s world, building strong and resilient partner relationships and supply chains is more important than ever. For business leaders, this can mean teaming up with traditional competitors — a type of cooperative competition called “coopetition” — to tackle the biggest challenges in their industries.
10. Lack of authenticity and transparency
To build and maintain a successful organization, you must have the trust of your stakeholders and your customers. Earning that trust requires transparency, authenticity, and honesty, even when things go wrong. Organizations need to communicate their purpose and mission, and be transparent about the business processes that affect customers.
A good example of this problem is transparency around a company’s use of data. Companies that attempt to hide how they use data (or exploit user data for nefarious purposes) will fail, and those that are completely transparent about how, when and why data is used will thrive. by strengthening consumer confidence.
Hidden cause of failure: Lack of business plan and execution
Many businesses will fail due to a lack of short and long term planning. Your business plan should include where your business will be in the next few months to the next few years. Include measurable goals and outcomes, as well as specific to-do lists with dates and deadlines.
In my work with a wide variety of organizations, I help them prepare for the future and translate their goals into a very simple plan and strategy that anyone can understand and implement.
Read more about the trends shaping our world in my book, Business trends in practice: 25 trends that are redefining organizationswinner of the best business book of the year 2022. To stay up to date with the latest business and technology trends, be sure to subscribe to my newsletter and contact me on Twitter, LinkedInand Youtube.