The Valley of Death is normally associated with a mid-19th century war in which the Russian Empire lost to an alliance of France, Britain, the Ottoman Empire, and Sardinia. Or so I thought until I recently heard it referenced in relationship to a place where companies, ventures and ideas “go to die’. At first I thought that this was quite a depressing metaphor given that on that fateful day in 1852 there were a total of 271 casualties (110 killed. And 161 wounded) which out of a total of 600 charging horsemen represents approximately a 45% casualty rate. However, success in the business world and specifically when we are talking about the start up/early stage end of the market the ‘casualty’ rate is north of 90% – although comparing men killed in battle with business failure is of course completely odious.
If this statistic is to be believed – the business one of course – it is remarkably high and the thought of 9 out of 10 enterprises ending up in a place where they will expire at any moment is highly depressing. Therefore the obvious strategy is to avoid going there in the first place – far easier said than done!
Perhaps it is better to look at the reasons why they are in there in the first place and to try to avoid them. A radical approach you might say but surely very obvious. Let’s look at the reasons business fail from the owners view point:
1) “I couldn’t raise funds and ran out of cash”- how on earth did you get here and why did you not realise this earlier when you should have been managing your cash flow better. Why did you not have a Plan B when funds failed to materialise? If your business was contingent on funds arriving in time you should have had a much better funding strategy. Did you have one in the first place?
2) “I could not scale revenues in line with costs” – you really deserve to fail if you have let this happen. Where were your contingency plans and your cost controls when all this was going on. What was your financial director doing at the time – looking for more beans to count?
3) “My management team let me down’ – if they did then you have no-one to blame but yourself because you must have had the wrong team in the first place. You are in charge of hiring and firing so if your team is not performing you need to change them before it is too late. The team you start with is not necessarily the one you have to finish with.
4) “The market has changed” – not completely your fault this time but you should at least have been prepared to pivot yourself out of this one.
5) “My product developers let me down” – so everyone is letting you down and blaming it on you then. This was your game to manage so how come you trusted it to people who should have been a minor part of your business.
Now I could go on here but I won’t because I hope that you see by now it’s the same poor planning and bad decision making that afflicted Lord Cardigan when he initiated the Charge of the Light Brigade.
So, how do you avoid ending up in the Valley of Death – just make a good, flexible plan with timescales and contingencies. Not just a decent business plan but also a good operational one with realistic goals, objectives and responsibilities. It’s boring but it’s true that if you fail to plan you are planning to fail.
After the charge Lord Cardigan exclaimed “men it was a mad-brained trick, but no fault of mine” – of course it was he was the CEO.