Is success of a business based more on the decisions or the idea?
I recently attended an event where one of the speakers talked about the large number of businesses that fail. She said that most business failures are less about the idea and more about the poor decisions made. I am curious if others agree with this. I think decisions are important, but also having the right idea is critical to success.
In a recent Innovation meeting where people come together to get help with start-ups, the speaker told the audience that the idea is worth 6% of the business. I would venture to say that the idea probably contributes to about 6% of the success of the business. The rest has to come from consistent persistent effort, AND the right mix of other ingredients.
I've seen businesses that blow me away by how successful they are when I look at how simple the product is. I know a man who had a hugely successful company where they mad custom painted hair barrettes with little girl's names. "How could this idea make a man rich?" I wondered. They only made about $0.20 profit per item. The answer is: SALES and DISTRUBUTION CHANNELS. The guy set up a network of specialty stores that had orders pouring in from all around the world.
Another example is the guy who started selling rice crispy cookies to gas stations. he and his wife made them in their kitchen after they had the idea, and wrapped them in plastic wrap. Nowadays, commercial kitchens must be used, but back then, they did it from home. They set up a network of gas stations buying their products, and got to the point where they were working 16 hours a day before they moved into a factory.
I know a guy who just invented a new process for 3D printing. His idea was revolutionary enough that he is signing a deal with a large Aerospace company, and he will need an manufacturing facility. Sounds like an easy dream come true...until you realize that he has spent $10,000 getting patents, and $25,000 in prototype costs, and lots of hours in the evening trying to perfect something over the past two years...and he has a regular job, so all this had to be done with extra effort. Nobody came along and said, "I'll fund your idea." He had to show a prototype before anyone would notice. Maybe this is how it all shakes out...Idea: 6%
Vision and hard work from founder to get there: 25%
Mentorship, or Connections: 20%
Manufacturing processes or production environment: 24%
Distribution channels: 25%
Many entrepreneurs come up with great ideas. Some work and some don't. Their decisions following those ideas are critical. Rolling up their sleeves and doing the hard work - creating a business plan, marketing plan, etc. and a timeline for implementation are key. Knowing when to delegate to others is really helpful. Testing their idea, being flexible enough to adapt and change, and accepting that disappointment is simply a pothole in the road are the hallmarks of those who succeed and those who do not. I have seen many people start businesses with an idea, but fail to do the work needed.
I've watched friends and colleagues invest in their own start ups, and I've seen the main idea either grow or fall despite the intelligent or poor business decisions they're making. So to answer your question, I think success or failure is based on every business decision you make. But without a sustainable main business idea, there won't ever be success.
Success depends on the confluence of ideas, decisions made, execution against the decisions made, timing, and a good deal of luck. You might want to check out Reid Hoffman's interview on This Week in Startups, you might find it enlightening (http://bit.ly/1Fl12IH).
I agree with speaker as would most investors. History shows smart money usually prefers to invest in people, not ideas. To me it makes sense because I've seen great ideas fail because of poor decisions and I've seen very ordinary, unoriginal ideas succeed because of good decisions.
If, as Jen says, she has seen good ideas fail despite intelligent decisions, I would say these people likely made some good decisions, but they also must have failed to make some other critical decisions correctly along the way. Or more likely, failed to recognize there was another important decision to be made and failed to make one at all.
Otherwise, as Ed pointed out, they failed on the first big decision they made - evaluating the idea.
Ideas are easy. I hear million dollar ideas all the time. I totally agree with what the woman said. Although I have seen my fair share of poor business ideas, poor business practices far outweigh them.
Both are important. It's like saying what's more important a leg or an arm? I believe there are six main factors that will determine likely success and I have developed a model which allows those to be mapped out. The most important factor is Customer Need or Want. If nobody wants to buy your product or service then whether the decision was good or the ability to make decisions become irrelevant.
The best idea or technology rarely wins unless it has a need or want plus a path to market. Then worry about the other factors.
Hello Abby , I think it depends on decisions more , its very important to decide when to take the decision , the perfect time , other wise , there is no use to decide even it will not have any effect if its late even though the Idea is perfect ,
it is based on you the founder being aligned with your true purpose and higher self. realising your true potential to connect with an infinite universe that can turn a simple seed into a tree. it takes faith to get through the dip. it takes courage to imagine into being your vision.
The contribution / degree may vary; but both - decision as well as idea are important for business success. A brilliant idea is likely to get lost with no decision...and what decision one can take with no worthwhile idea.
But, it is a fact that many great ideas have gone down the drain with no or poor decisions. So, you can say that decision is MORE important than an idea.
I've seen many smart and creative ideas fail because of poor decisions been made. For me business is a combination of all the major aspects good idea and decisions are part of 'em. But as a Strategic planner & Marketer I believe that good decision comes first, cause the right decision in the right direction based on the right information can lead even a weak idea to the right direction shaping it amazingly and got prospects convinced.
From my experience Businss success is not about what you do it is how you do it, the sales, marketing, leadership, teaming, distribution channels, etc.
Any Business that thrives to be successful needs to be sustainable in first place. And thinking sustainability comes from innovative thinking. However, only great ideas can never make it to the ground unless empowered by firm resolutions. So, one-line answer to your question would be - Business growth is the result of Innovative Ideas put to work with Strategic Decisions, I believe!
We spend a lot of time researching what differentiates high growth businesses from ordinary growth businesses, and what is clear is that the ability of the leadership team to make timely, effective decisions is a significant factor.
If two businesses start out at more or less the same time with very similar ideas, it will be the team that makes the best decisions along the way that survive and thrive.
Effective decision making includes the ability to identify and mitigate risks which, to me, is one of the core competences every director/business owner should possess. A high growth business' appetite and attitude towards risk will be different from an average growth business, and this will lead them to make different decisions, and gain greater success.
Its both really.
You first need a good product idea, for what a customer or client base will want, and will be willing to pay to acquire, enough for you to get a Return on Investment over what you spend to avail the product.
Then you need to make the right educated decisions to manage your costs, be visible to your market, comply with laws as well as standards, maintain your image and presence, adapt to market changes and grow effectively.
It is a simplistic answer to a straightforward question regarding a complex subject; business.
I thing business idea is very important than any other factors, because through a business idea we can develop our business to conceptiual goals that can achieves potentials. While decisions is important too in business the acurate decisions will affect business postivly.
vision is the spirit of your business, yet, if there are decisions that are not coherent with the vision, or are completely out of touch or resources, it wont work. you need harmony and balance between inspiring vision and actions.
I agree with the statement, because the idea is the concept. It is how you execute on the decisions, which lead to either success or failure. There is an old saying, “Sometimes the best deals you make are the ones you did not chose to make.” (It goes something like that.)
to me , central decision is better a business unit . When everyone in a business unit believe in one decision , the business will definitely move fine .