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4 Ways Companies Fail – and How to Fight Them

Vasiliy Ivanov
Vasiliy Ivanov

A lack of clear vision can wreak chaos on your business. Here are four ways your company may fail, and how you can avoid them by facilitating proper goal-setting and communication.

In a successful business, everything runs like clockwork: Every team member knows what they are doing, every action is meaningful, and every plan is well designed. In a failing business, everything can unravel quickly: Losses stack up, creating chaos across the board. A product undergoes incessant changes, and communication problems begin to snowball. Customers aren't sure whom to contact with their questions, tasks are difficult to track, and the results are impossible to measure.

Of course, no business is perfect. Every company can improve how it works. This is often a gradual process, and as companies go through this journey, they often look to the Japanese philosophy of kaizen. Kaizen aims to improve productivity, effectiveness, and communication, and to reduce waste. Kaizen has an extensive classification of different types of waste, but they all boil down to three classes: muda, muri and mura. Muda, or ineffective processes that do not add value, is probably the best known and most common of the three. But what makes processes ineffective? And how can a business improve its effectiveness to minimize losses and give meaning to its actions?

I've collected some typical cases of how businesses experience losses – and how they tend to get stuck in traps like overworking and missing every deadline. Through these cases, I also explain how you can break this vicious cycle by changing your mindset about goal-setting or by selecting a dedicated goal management system

Case 1: Losses due to constant changes

One of the most critical types of loss is caused by constant alterations and remodeling. How many times have you heard a team member say, "Well, I thought this change would be helpful," triggering yet another round of product redesign? In a company, this often implies misalignment between the high-level vision or goals and the ground-level methods of achieving them. 

Example

A company launches a new product line, but the vision for the final product changes repeatedly. The product is redesigned multiple times to accommodate the ideas of the marketing team, the engineering team and key stakeholders. The development process becomes unacceptably long – and yet, once the product enters the market, it lacks critical functions and fails to meet customers' core needs. 

Cause

The team is focused on the process rather than the goal. The goal itself lacks clear criteria: The objective of "creating a good product" allows for too much interpretation, creating a rift in the team instead of bringing staff together. 

Company's losses

  • Bad customer experience
  • Wasted resources
  • Low team morale

Solution

To eliminate this type of loss, it's crucial to define your final goal clearly and specify the benchmarks necessary to achieve it. Without a clear definition, your goal isn't much more than a shapeless dream.

The easiest way to visualize your ultimate goal (and intermediate goals) is to build a goal tree of interconnected, time-linked objectives. 

Case 2: Losses due to meaningless work 

Meaningless work is work that contributes nothing to a business and accomplishes nothing. This often happens when staff don't see a purpose in the work they are doing and measure its effectiveness only by a narrow set of criteria, such as the number of code lines written, meetings held, or emails read. 

Example

Several teams jointly decide to add new features to a product and develop an action plan. During the development process, it turns out that the features contradict each other and only confuse users. As a result, management decides that the features can't be used together in one product.

Cause

Every team is working hard to achieve their own specific goal but fails to coordinate their work with others. As a result, the efforts of at least one team go down the drain.

Company's losses

  • Wasted resources
  • Low team morale

Solution

Before your team starts any work, it's important to understand clearly how it relates to the bigger picture, and the associated expectations and anticipated results. If the whole team shares a single, strategic vision and concept for a product, the problems related to misalignment will disappear. 

Case 3: Losses due to poor human resource management 

Another key cause of company chaos is the failure to leverage team members as intended. Imagine, in a hockey game, if the coach put a strong forward in net as a goalkeeper. The result would be disaster. A strong business values employees' ideas and supports their ambitions to learn and develop. To make the most of your team's talents, it's essential to find a role for each team member that best suits their abilities. 

Example

A customer service star is promoted to a role in the sales department. However, this employee struggles in the new job, feels that their efforts aren't producing results and eventually resigns. This employee's talent was caring – and a willingness to achieve the best results by supporting people. The sales role focused more on assertiveness than empathy and care, which made it a poor fit for the employee. 

Cause

The company didn't understand how to unleash employees' potential. First of all, management had no clear vision of core business needs, or of the specific skills needed from an employee to add value to the business. They also lacked sufficient knowledge about the employee's strengths and qualifications to pair them with the most appropriate work. 

Company's losses

  • Low morale and high staff turnover
  • Head-hunting costs (to replace the employee)
  • Time spent on education and onboarding
  • Risks related to hiring a new employee   

Solution

The key starting point is to understand the purpose of your product or service is – the specific problem it solves – and how value is created throughout the production process. This will help you anticipate customer requirements and expectations, and determine your specific skill and resource needs. 

Case 4: Losses due to staff rotation and idle time 

Constant changes and goal misalignment aren't the only reasons why companies slide into chaos. Adding staff to a team at the later stages of a project can slow down the development process significantly, leading to further losses.  

Example

A company often adds new projects, and each new project has a different set of requirements, technical stacks and necessary skills. As a result, the bulk of the company's time is spent on staff onboarding and transitions, rather than on actual product development.  

Cause

New team members always need time to get up to speed. Repeated adjustments to ever-changing needs and circumstances prevent the team from focusing on bigger and more important goals. More time is spent on learning than on adding value to a specific project. 

Company's losses

  • Exhausted team
  • Time spent on education and onboarding  

Solution

Rallying your team around a shared goal is a key action to lead your company to success. Strategic approaches to planning, like the balanced scorecard goal-setting framework, allow your team to forecast the required resources and skills – and achieve synergy between multiple goals. 

Bringing it all together

These examples show that vague goals or a lack of shared vision can kill any project, leading to reputational and operational losses for a business. To reduce waste, it's crucial to set achievable goals, define clear success criteria, and then break down each goal into a hierarchy of measurable benchmarks. Management studies have produced multiple frameworks that any company can use to facilitate goal-setting and create a goal tree – a structure of interconnected objectives and the actions necessary to achieve them. Either manually or with a carefully selected goal tracker, setting proper objectives will streamline your business processes, focus your team's needs and requirements more effectively, and rekindle employee engagement.

Image Credit: jacoblund / Getty Images
Vasiliy Ivanov
Vasiliy Ivanov
business.com Member
Vasiliy Ivanov is the founder and CEO of KeepSolid, a company that develops modern security and productivity solutions for corporate and personal use. Ivanov is an industry veteran with over 15 years of experience.