I recently ran into a colleague I had not seen in a few years. We had a quick few minutes to catch up before he took the stage to speak to an eager audience of designers. He was now the VP of Innovation at a global company and I reminded him that the last time we talked I was involved in a startup, and let him know that the venture had since come to an end. Given that he now managed a startup portfolio at this company he was curious to know the reason for our failure.
By this time a few years had passed since Kenari, a local food system venture I had co-founded with a friend, closed its doors. I had desperately tried ever since to block this experience from my consciousness. When asked the same question previously by others my pat response usually was “under-capitalization” – though that wasn’t quite the whole story. But it seemed like a satisfactory answer, both to me and the enquirers. In this case, because I was pressed by someone I knew would totally understand, I blurted out “Timing”. To which he responded “I see this all the time in my work now.”
Failure is a part of the innovation game. A common meme in the world of business innovation goes something like “9 out of 10 startups will fail”. To better understand the reason for entrepreneurial successes and failures Bill Gross, CEO of IdeaLab, systematically studied this subject and found out, surprisingly, that the highest contributing factor to entrepreneurial failure was timing. And that makes sense to me. The other factors: idea, execution, business model, and funding. Here’s his TED Talk on the subject.
One would think that a great idea has to be the primary factor that determines success and failure, but we know that that is not true. The world is full of mediocre business ideas that thrive – we all encounter them every day.
The same is true of execution. In recent decades, operational excellence has been the principal tool employed by companies to drive growth and performance.
Many of today’s successful companies started out without a clear business model but figured one out once they gained a sizable number of engaged users. YouTube comes to mind.
Likewise for funding – if there is traction for a product or service, access to funding should not be a problem these days.
Which leaves us with timing as the most significant success factor.
Clearly, all six factors are vital for any business, but here are a few examples of ventures where timing may have been the principal factor for success:
Cirque du Soleil | The mid-80s seemed like the perfect time for a reinvention of the traveling circus experience. Sentiment against the use of animals in circuses was growing, there was an influx, to the West, of talented acrobats and gymnasts from The Far East and Eastern Bloc countries. Parents were primed for an entertainment experience that they too could enjoy along with their children – and were willing to pay a premium for it. Cirque du Soleil – the contemporary circus – is now an entertainment empire with a global footprint.
Netflix | Blockbuster dominated the video rental marketplace for many years, but customers began to tire of the trek to the store, and more importantly detested their punitive late fee policy. Enter a startup with a different attitude and a new model – “eat all you can” for a fixed monthly fee, and movies delivered to your mailbox. As this new idea was gaining traction and slowly eroding the traditional video rental business, Netflix was building an even better delivery system in anticipation of the coming broadband internet. Blockbuster and others, like Walmart, caught on to this, but it was too late. Netflix now accounts for almost 40% of all downstream Internet bandwidth during peak periods in North America, and Blockbuster is a bust.
Zipcar | In terms of timing, Zipcar was arguably ahead of the curve. In fact, it lead the way to what we now know as the sharing economy movement. It’s this movement in which consumers – especially younger ones – have eschewed the purchase and ownership of homes, fashion, automobiles, etc. in favor of sharing, borrowing, or renting them as the need arises. Zipcar was also at the leading edge of another movement – young people favoring an urban lifestyle over their parents’ car-centric suburbia. Zipcar was acquired by Avis in 2013. It remains to be seen how it will fare with competition from the likes of Uber and Lyft.
There is a graveyard filled with ill-timed innovations as well. Apple’s Newton and WebVan are two notable examples.
So timing of innovation – is it art, science, or just plain luck?