Top 3 Failure Patterns in New Business: What Are the Key Points to Increase Success Probability?

My main business is supporting the rapid launch of new ventures. There are various cases, ranging from developing new products and services to business expansion through approaches different from the past, or entering completely different industries.

In new challenges never attempted before, one can fall into unexpected pitfalls. Many company presidents feel frustrated and irritated, wondering why things aren't going as expected.

There are patterns to failure. While it seems like knowing the patterns would allow you to avoid them, knowing and doing are different things. It is also a common pattern to get carried away and waste effort in the moment, even if you could have figured it out by thinking.

You can find plenty of information by searching, but there is so much that the essence is hard to see. Therefore, I have organized them into three simple patterns to make them easier to utilize.

I will introduce the core points extracted from the content of a two-hour paid seminar.

Failure Pattern 1: 'Thinking Too Little'

Hypothesis Testing

The foundation of a new business is hypothesis testing. It is fine to get excited about a good idea you've come up with, but at that point, it is merely a 'hypothesis.' It is essential to 'verify' whether it is truly the case. The habit of thinking about 'how can I verify this?' is important.

Customer Understanding

Once you have formed a hypothesis, go to the customers and ask them.
Sometimes you interview them about various things, or you might quietly observe their behavior.

We call it customer understanding, but it is the work of thoroughly digging into the customer's true intentions.
It is an activity to explore the customer's true feelings and insights.
Since it is difficult to get certain results or quantitative analysis like in a physics experiment, you often end up making a conclusion based on insight. You have no choice but to think for yourselves and be convinced. You build your own logic that it will probably be okay.

Small Tests

Once you have a scenario for customer understanding and hypothesis testing, try testing it on a small scale.
'Small' is the key point. If you do large-scale tests, it takes too much time and money.
Keep it small, very small, initially within a range that can be done in a day, and reflecting on it daily is just right.

Formulate a hypothesis like, 'If I do XX, will I get the result of YY?' and
once you actually test it, reflect on it immediately.
Verify it by asking: Is it as hypothesized? What are the differences? What are the factors?

Tests do not end with one attempt. Be prepared to keep doing them countless times.
Since there are people who like hypothesis testing and those who dislike (find it troublesome), it would be good if you can cooperate with each other.

Failure Pattern 2: 'Thinking Too Much'

This is the exact opposite of Failure Pattern 1, 'Thinking Too Little,' but there are also many cases where people fail by 'thinking too much.'
What is bad about this is that actions become slow.
Speed is life for a new business!

If you are slow, it can lead to fatal problems such as making corrections difficult or becoming too late.
Think about why it becomes slow, and remove the causes of the delay.
Let's think about mechanisms that allow you to move stress-free and mechanisms that accelerate speed.

Perfectionism

Thinking, 'This isn't good enough,' and feeling embarrassed to show an idea in its early stages. If you think you need to organize it more properly before showing it to others, it will take an enormous amount of time.

Forgetting to test on a small scale

In the first place, it is important to test on a small scale, so there is absolutely no need for it to be perfect. Rather, you test to find problems early. Starting by showing it to acquaintances and asking for their opinions is also a valid approach.

It is reassuring to have peers with whom you can fail easily and receive constructive feedback.

Failure Pattern 3: Poor Team Building

New business must always be done as a team.
Even if it starts as one person's idea, it is better to assume that it is impossible to execute it alone.

If team members are not aligned or are pulling each other down, there will never be success.
Many projects start by focusing on the idea, neglect team building, and end up falling apart. Without people (team members), a business cannot move forward, and there is no success.
The fact that people are the foundation applies to all businesses.

Three Elements of a Good Team

A good team where a sense of unity can be felt possesses the following three elements:

• Sharing the goal of wanting to achieve the final objective (understanding and agreement on a common purpose)

• Having a certain level of confidence that there is something you can do (willingness to contribute)

• Having a relationship where you can say anything without hesitation (good communication)

It is not easy, but it is an essential element for business success.

Even in the case of a solo startup, having multiple external partners will significantly increase the probability of success. If funding is a bottleneck, you will need to gather partners and peers without spending money.

Member Selection

Furthermore, it is no exaggeration to say that the selection of team members determines the success or failure of a new business.
Who are you doing it with, and why this person?
Put therolesandexpectationsfor each member into words and share them.

When people are expected to do something, they try harder.
When roles are clear, you can move freely.

In the initial stage, it is better to have overlapping roles rather than a division of labor. It ensures nothing is missed, and it is more about helping each other—or to put it coolly, co-creation.
When testing, it is definitely less likely to miss things if three people look at it rather than one.

Diversity and Management

Enjoy diversity. Because it is diverse, there will be occasional friction, but that is all part of the charm.
Team power exerts a tremendous effect on accelerating speed and conducting hypothesis testing without omissions.

As a business grows, the number of team members also increases.
There are various tips for building a good team and managing an increasing number of team members, so I will cover that on another occasion.

Efforts to avoid failure patterns increase the probability of success

Think properly (hypothesis testing, while testing on a small scale),
but do not overthink (keep the speed accelerating),
and if you keep a good team in place, you will manage.

Focus on the important points that should be considered.
The best way to know what is important is to ask someone who knows.

Have you organized the important points for success?

This article was written by
Mousou Biz Planning Representative Shigeki Kawahara
https://mousoubiz.com/
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