Why so many great ideas fail - a researched opinion

So many folk go on about innovation, new ideas, developing different ways of doing things, yet so few of these great entrepreneurial (or intrapreneurial) initiatives seem to come to fruition, or if they do, few become sustainable. Think about the alarming failure rates of SMEs...

Besides the fact that it takes two kinds of people to make an idea work - those that can conceptualise one, and those that can coordinate resources to make it happen - it also takes a tight integration between these two types of people to make the idea work, sustainably, and that's a link that's often missing, especially during the business growth phase.

Being CEO of a listed company in a New Business Development portfolio teaches you many lessons about why things fail, sometimes even before it reaches the market. It also teaches you that the business school contexts of entrepreneurship are way to theoretical, indeed weak, at the practical level, to turn an idea into money. In this context, I recently challenged business scholars from some of the best business schools around the world (over 40 countries) at an academic, peer-reviewed conference in the US about why academia has failed entrepreneurship. What was surprising was the general acknowledgement that there's truth to this... including the fact that academia is too far from practice, and that academia seems to be getting caught up in it's own dogma, and seemingly failing to add real value in a world that needs practical research into SME development. 

In summary, if there's no disciplined linkage between the business model (how you will make money) and the operating model (how you will organise resources to make the business tick), you're likely to fail, if not early, at the point of deciding you wish to scale your idea.

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This post was inspired by a paper I wrote and presented to the International Council for Small Business in the USA, showing where academia failed entrepreneurship by not sufficiently researching operating model dynamics, specifically since failures here are responsible for most small business failing:

Boyle and Desai (1991:39) observe that most of the causes of business failure are internal to the firm, with a major reason for failure being lack of management practice (Lawrence 2008:89), with the key missing element being lack of control over operations, without which business has little chance of long term survival in a competitive market (Boyle & Desai 1991:40). Furthermore, an important consideration is that the operating model must evolve to support the growth strategy outlined by the business model (Kapur et al 2006:11).

In other words, academics have found that the major cause of business failure rests in a poor operating model and linkages to the business model, and also when changes to the operating model do not keep up with changes in the business model. Having identified this problem though, academics have not found research into operating model dynamics being of sufficient priority, even though it has been shown that this is a major reason for small business failure, an issue of obvious major concern globally. Even more, academics admit the shortcoming:

Studies on ‘operating models’ are lacking (Getz, Jones & Loewe 2009:18; Sharma 2009:iii; Khadem 2008:29; Moore 2008:3, Parnell 2008:1278, Gumbus & Lussier 2006:407).