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CIOs: Startup Best Practices = 95% failure rate

We can all agree that “best practices” is a vastly overused term.  An article by David Barrett reminds us that every start-up begins with a set of “well established” industry best practices as their disposal, and yet 95% of them still fail.  If agreed upon best practices only yield a 5% success rate, are they really the best practices available?  The simple answer, according to Barrett, is that there is a problem when you try to use what works for a big company and use it to try to benefit a much, much smaller company.  Barrett notes that even his entrepreneur friends see the error in this: Remember, 95% of all startups utterly fail. No return to any investors. That’s why VCs have a portfolio theory: they invest in 20 companies with the expectation that 1 will pan out. They really don’t care which one — they have no particular reason to hope that you succeed over the other 19 companies. They just push them all as hard as they can, knowing that 19 will fail, and 1 won’t.  The thing is, as an entrepreneur, you don’t have a portfolio. You have 1 company. And are you sure you want to bet your whole company on a strategy that has a 95% failure rate?  To be clear, I don’t know that any other plan has a higher success rate. But I don’t know that other strategies necessarily have a *worse* failure rate either. I’ll also say that other strategies are a lot more fun and satisfying, and provide a better balance of risk/reward. If investors do not really expect a start-up to succeed, it does not really matter whether that start-up sticks to a group of best practices or not.  The goal should be to pick and choose what works best for your individual company or organization.  Barrett goes on to say that companies that thrive in the start-up market often do so because they create innovation from within instead of listening to steps and advice that may or may not have worked for their competitors.  If you want to separate yourself from your competitors, using the same best practices they use seems silly. Ultimately, no one can say when a start-up is created whether it will succeed or fail.  Some no so great companies flourish while others with genius ideas and impeccable planning fall flat and ultimately fail.  Relying on established best practices is not the guaranteed path to success.  Best practices are fundamentally designed to make the user feel smart, but nothing will make you feel smarter than having your start-up become a success.  

About Matthew Kabik

Matthew Kabik is the former Editor of Computer Aid's Accelerating IT Success. He worked at Computer Aid, Inc. from 2008 to 2014 in the Harrisburg offices, where he was a copywriter, swordsman, social media consultant, and trainer before moving into editorial.

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