A Surprising Reason Startups Fail (And a Solution)

An article on entrepreneur.com recently caught our attention. “The Top 4 Reasons Startups Fail, According to 14 International Accelerators” included one fascinating finding. “Team incompatibility was the second most mentioned cause of startup failure.” The authors said that they were “surprised at how often this roadblock to success was mentioned.”

The second most mentioned! In the world of hi-tech startups and technology-based venture capital, startup failures are common. Anyone who can diagnose the “why” of a failure, and do something about it, will enjoy a substantial competitive advantage.

As experts in executive coaching, leadership development, and team performance, the finding that “team incompatibility” is a major cause of failure in startup businesses is not really very surprising. “While original members of a startup may simply no longer get along, more commonly, what we see is that the founders do not have the skills needed to successfully scale to a larger, profitable organization,” said Maren Perry, president of Arden Coaching. “When a startup begins to grow rapidly, weak leadership, dysfunctional team behavior, and poor communication become more apparent and take a heavier and heavier toll on the company’s overall performance.”

What if these issues were anticipated and addressed early in a startup’s development What if leadership, communication skills, and team development were baked into the initial implementation plan for a new business?

Many founders have no significant leadership experience. A startup plan that includes executive coaching would help founders transition from their role as technical experts and visionary innovators to effective leaders, communicators, and builders of scalable organizations.

Often, founders do not know how to build or manage diverse, high performing teams. The magic that happened in the early days of the startup was serendipitous and can’t be repeated by those who don’t know how. Training and coaching focused on building effective teams would establish long-term team performance in a deliberate and replicable way.

As an entrepreneur or venture capitalist, imagine the competitive advantage you’d enjoy if you added these ingredients to your recipe for startup success!

To learn more about executive coaching, team performance, and leadership development contact us at [email protected] or 646.844.2233.