No. 1 Reason Companies Fail.

By Pascal Finette* (The Heretic), April 29, 2021

A while ago we worked with an incredible leader in a multinational incumbent company. He is smart, driven and wants to do the right thing for the organization — leading its transformational efforts. Alas, he ran into so many brick walls that ultimately he gave up and moved on. After his departure many other execs left the organization for similar reasons.

It is a story which repeats itself over and over again in the corporate world. And it is not confined to only corporates — the very same thing happens (luckily with much lower frequency) with startups, though we tend not to hear about it quite as much (as failed startups are much less of a story than “big company X just lost another key leader”).

As part of our ongoing work on our new book on disruption (working title is “Disrupt Disruption” — you can listen to the growing library of interviews with practitioners we collect here), we are analyzing hundreds of innovation efforts, ranging from big corporates to startups. We aim to get to the underlying conditions which create the fertile ground for disruption, and identify the challenges which make incumbents fail — and the few lucky/great ones succeed.

Let me give you the punchline right here and now: The number one reason why (incumbent) companies fail is ego.

Long before innovation efforts inside of corporations fail due to missing product/market fit, or running out of time or funding, or any other reason is that the people involved get invested into protecting their status, hiding their weaknesses, politicking their positions, protecting their egos. It is telling that Harvard Business Review has a series of articles published under the moniker “How to be Human at Work” (no joke!).

It is crazy and sad that this is where it all begins and ends.

The best piece of advice I ever got on this was from a leader of the British Special Forces: In the end it is all common sense — which doesn’t make it common practice.

Listen to the Podcast  –

*Pascal Finette is Singularity University’s Chair for Entrepreneurship & Open Innovation.

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