How to avoid startups failures?

As per Harvard Business School’s Shikhar Ghosh research, all 75% startups fail. That means, every three out of four startups fail and only one out of four survive.  If the risk of failure is so high, then what should be the mantras of success?
 

LEAN philosophy- a Success behind Toyota Production System
A Japanese engineer Ōno Taiichi developed the LEAN management philosophy. It was applied in Toyota Production System, as Lean manufacturing. 

Lean thinking is a business methodology that aims to provide a new way to think about how to organise human activities to deliver more benefits to society and value to individuals while eliminating waste.

What is LEAN?
Lean is management Philosophy of Ono, which can be simply described as an “elimination of Waste”. Every Lean manufacturing organisation should eliminate following 8 types of wastes;
1. Waste of overproduction (largest waste)

2. Waste of time on hand (waiting)

3. Waste of transportation

4. Waste of processing itself

5. Waste of stock at hand

6. Waste of movement

7. Waste of making defective products

8. Waste of underutilized workers

 

Formulas of Success

For the success through Lean, Ono has given 10 formulas ‘to think and act to win’.
1. You are a cost. First reduce waste.
2. First say, “I can do it.” And try before everything.
3. The workplace is a teacher. You can find answers only in the workplace.
4. Do anything immediately. Starting something right now is the only way to win.
5. Once you start something, persevere with it. Do not give up until you finish it.
6. Explain difficult things in an easy-to-understand manner. Repeat things that are easy to understand.

7. Waste is hidden. Do not hide it. Make problems visible.
8. Valueless motions are equal to shortening one’s life.
9. Re-improve what was improved for further improvement.
10. Wisdom is given equally to everybody. The point is whether one can exercise it.

Lean for Tech startups

Later, this Lean is developed in sales, marketing, service sectors and in tech-startups.
In 2008 Eric Riesthe proposed a LEAN methodology from the failure of his previous startup and developed a Lean methodology for Tech startups.


He said, there is a misconception about lean and it is not true that it is suited only for manufacturing. Rather, Lean applies in every business and every process. It is not a tactic or a cost reduction program, but a way of thinking and acting for an entire organisation.


According to him, Lean means creating more value for customers utilising fewer resources. Startups and organisation should understand the customer value and keep focus to increase of its key processes with zero waste.  (Lean Enterprise Institute).

 

Learn from Failures
The quote of Morihei Ueshiba is well-known; “Failure is the key to success; each mistake teaches us something’. But the question is: Can startups afford to mistake?
Geman Philosopher Friedrich Nietzsche once said, What Doesn’t Kill You Makes You Stronger.

Ries’ said that the failure of his ‘Catalyst Recruiting’ is;
1. Not understanding the wants of target customers by him and his colleagues and
2. waste of time and energy on too much focus on the initial product launch

Be Smarter

As quickly Entrepreneurs grasp the philosophy behind the failure, as quicker, they can lead their startups for success.

The single best piece of advice for entrepreneurs is this: Know what not to do (David Collis).

Following four formulas can be derived from ‘Lean Enterprise Institute’ for the success of Lean Tech startups;
1. Eliminate waste along entire value streams, instead of at isolated points
2. create processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems.
3. The company should be able to respond to change customer desires with high variety, high quality, low cost, and with very fast throughout times.
4. Also, make information management much simpler and more accurate.

Sources:

https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Loizos, Connie (26 May 2011). “‘Lean Startup’ evangelist Eric Ries is just getting started”. PeHUB.

https://www.brainyquote.com/quotes/quotes/m/moriheiues183597.htmlthat mistakes make every one perfect.

Ohno, Taiichi (1988). Toyota Production System: Beyond Large-Scale Production (English translation ed.). Portland, Oregon: Productivity Press.

https://hbr.org/2016/03/lean-strategy

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