Why start-ups fail in general?

It starts with the dream, the compelling aspiration of accomplishment. The passion to do something on your own. An envision of being your own boss and large checks at the end of the day. The reality is, however, harsh. It is estimated that 9 out of 10 startups fail. A statistic that a would-be entrepreneur or investor should mark distinctly in their mind. The autopsies of the businesses that failed should be imprinted in their focus. Not to discourage their foray, but a caution to be wise, astute and shrewd as they step into an unpredictable venture.
The passion is there as well as the devotion. But it takes much more than an ardent interest in an idea to be successful. Every year, umpteen businesses are started with nothing more than the entrepreneur’s interest in a particular area. 

Converting that passion into a product or service, marketing, addressing customer concerns, sustaining the growth, revenue production are all distinct tasks which requires acute business acumen. There is a need to be consistently good in tasks across the spectrum of a business, deficit of any would adversely affect the start-up.

The postmortem of many of the floundered businesses point to the simple fact that most startups aren’t built on the foundation of viability. From the initial phase of startups which is deciding on the focus of the business, to the second stage of development there is a long and tough path to trudge. The second stage may require less of creativity and ingenuity, but it calls for meticulous execution of various activities. Lack of experience, skills, or insufficient funding are the major stumbling blocks in this stage of the start-ups.

Start up owners find it easier to raise capital than to continuously sustain the flow of cash. How much ever initial cash you raise, without revenue generation, investors will stop knocking at your door and you will eventually run out of cash. Ventures spend money on products without allocating the needed for sales and marketing which ultimately affect the returns. Many startups run out of cash because of their budgeting errors, poor product management, over-hiring, their burn rate is too high, bad accounting or some combination thereof.
The markets may fluctuate, products may fail or take off and ideas may flame or simmer, it is the fickle nature of business. But what holds the company together and take it forward day after day is the team that forms it. Selecting a group of smart people, a team of strangers who will learn to work together is a cardinal element to the longevity and productivity of the company. The performances of employees should be evaluated and competency rewarded. At the same time, you should remember that carrying dead weight with less

competent people will do serious damage to the company’s prospects. It is also important that the company has the right management team to attract, inspire and retain the employees.

Finally and most importantly, companies must develop a product that meets the market need, at the right price, at the right time. From simple execution flaw to not being to achieve product/market fit, the reasons for product failure can be many. Understanding the target market and moulding the product according to them are essential for successful businesses. Your product should attract your customers. It should surprise them , satisfy them and give them much more than they expected. Not being able to build according to the customers fancy can be a recipe for failure.

With high risks come higher rewards. Startups with all its uncertainties, reap rich benefits when succeeded. From the moment the seed of business is planted, the entrepreneurs must exactly know what they should do at each and every step going forward. In todays volatile world of entrepreneurism, an exit strategy is a must which will help you capitalise on your hard work even when the business fails. If your startup fails, a clear post mortem analysis will point you in the right direction next time. There will always be a next time. And at that point, proper planning, business acumen and dedicated hard work will carry forward your business to the high rungs of desired triumph.

Social innovation and benefits

Exactly a decade ago, the Nobel Prize committee awarded the year’s peace prize to Muhammad Yunus, a Bangladeshi social entrepreneur together with the Grameen Bank. The world, through the prestigious honour recognized their contribution of pioneering the concepts of microcredit and micro finance. It had helped and continues to help a huge percentage of population out of poverty by making them economically self sufficient. A brilliant social innovation, it breathed in a new air to the existing social entrepreneurship system.
Social innovation involves creating, developing and implementing new practices where the beneficiaries are not just the company but society and its people as well. Today, these innovations are helping to untangle the problems around us with new solutions. From United States where President Barack Obama launched the Social Innovation Fund, to Japan, where, following the 2011 tsunami and nuclear disaster, social innovation is serving the country’s rebuilding efforts, the world is waking up to the role of social innovations in making prosperous societies. Closer home, Arab World Social Entrepreneurship Program (ASEP) pioneered by Ashoka is focusing on enhancing social innovations to create and enhance social entrepreneurship ecosystem in the UAE and the Gulf region.
A truly prosperous society is one with interwoven strands of economic prosperity and social prosperity. Societies with economic opulence are truly prosperous only if those benefits are availed by everyone in the society. Social and economic schemes have to work in concert for sustainable prosperity and self-reliance. This requires active participation of the organisations along with other stake holders. Many companies, realising the importance of social entrepreneurship are now investing heavily in social innovations. The fundamental steps to take the plunge are -

• Social initiative should be the expression of the company’s mission. Determine the social action that are in tandem with the company value system, that your product or service can aid.
  
• Establish frameworks like conditions and time frame. Work with the various stake holders as you build prototype and implement the pilot programmes in the society around.
  

• Incorporate social innovation into the company’s ecosystem so that the employees get involved. Organisations achieve the best results by allowing the stake holders inside and outside the company to collaborate and innovate.
  
• Social innovations should grow to match the needs of the society they serve. Scaling up and scaling out the innovation to solve social problems can also lead to new business opportunities for the company.
  Social innovations should be applied from margins to mainstream and to every strata - health care, education, nutrition, environment, sanitation, knowledge, social inclusion, housing among others. From self-help health groups to Wikipedia, microcredit to consumer cooperatives, zero carbon housing schemes to community courts you can witness the examples of social innovation where new ideas immensely improve peoples’ lives.
  Social enterprise can be a key aspect of economic diversity and development too. Many companies use social innovation, as a double-edged sword, to not only improve the world but to gain a competitive advantage too. Instead of just focussing on profit maximization, spreading out the business to the realms of social innovation can help you to impress a positive influence in the minds of your customers and employees, which in turn will help in revenue growth. Companies can get maximum results from social innovations when they operate it as a part of a system including employees, competitors, NGO’s, customers, investors and policy-makers.
  Unfortunately, not many countries have a decent action plan for social innovation that is equivalent to the strategies for innovation in business and technology. There is a long way to go for social innovations to be treated on parity with commercial innovations. Across the GCC, social and environmental needs have at times been drowned in the frenzy of economic surge of the past two decades. A pinch of creativity, innovation and goodwill would go a long way in ensuring the area’s forward march, along with the world’s.
  

Community focus - the need of the hour

The times are ever so changing. Communities that once provided the cohesiveness with its support, protection, cooperation and the camaraderie, have slowly waned into alienated individuals. The change in jobs, life styles and technology have shrunk the life of people into the four walls of their houses. But technology, with its global connectivity, has also ensured that people are, today, aware of the problems faced by humanity around the world. Of late, more and more people are becoming increasingly cognizant of the pressing social issues of their communities and are eager to engage with them.
This changing environment has urged the companies and businesses to interact with the communities, locally and globally. People, today, demand that businesses actively take up an extended role in solving the social problems. Awareness of the relevance of corporate social responsibility(CSR) has been growing in the GCC over the last 10 years. But survey reports and studies by Dubai Chamber of Commerce indicate that, in the organizations of the area, there is significant gap between organizations’ acceptance of CSR and ability to implement these initiatives.
At this juncture, the traditional approach to community engagement by businesses will no longer be adequate. The companies must force themselves to explore new and innovative CSR strategies to replace traditional philanthropic programmes. The programmes also must advance, adapt and appeal to the local needs of the communities. There are various ways for businesses to collaborate with communities. These include sponsoring a community event, offering company products as gifts, mentorship programs, employee volunteer programs, scholarship programs, environmental initiatives and many more alternatives by which they can reach out to the people around
The effects of focusing on communities are multifold. It includes-
Customer loyalty and building customers base : Many studies on the subject hint that customers tend to purchase products/services from businesses that are supporting the causes that they believe in. A solid customer base, crucial to any business, can be developed by getting involved in community-based activities. It will, over a period of time, help in establishing customer rapport and loyalty.
Sales growth and increase in revenue : Harvard Business School research found that companies with efficient CSR practices outperform their counterparts over the long-term, in stock market as well as accounting performance.

Many factors like customer loyalty, brand visibility and networking are directly associated with increase in sales and revenue. 
 
Brand awareness, credibility and networking : Brand awareness, marketing, increasing the visibility of your business and building its credibility among the customers are some of the key aspects of sustainability in this highly competitive world. Getting involved with the local community is an excellent way to achieve this. Interacting with people help in creating new opportunities and giving you feed back about your business. Ideas to create effective promotion strategies, improve product/services, increase customer retention and much more can stem out of these interactions.
Employee satisfaction : Volunteering in the local communities is credited with having positive effect on the lives and careers of the employees. Employees of companies with CCI (corporate community investment) initiatives are committed to their employers, according to a University of Bath study. Encouraging employees to be part of the community engagement programmes stands to help in employee retention.
The time is always right to get involved in community linked activities. Many programmes like ENGAGE Dubai (which is part of an international network of businesses and community organisations that collaborate to develop healthy and sustainable communities by facilitating employee volunteering in their local communities) are already in place to promote the connect with the local communities. The end results are increased revenue, loyal customers, happier employees and stronger communities. It is a win-win situation, gratifying to all involved. Along with impressing the socially empathetic consumers and employees, you will also be the change the present-day world needs.

Will this bubbly fly or fizzle? An investors perspective

Bubbles are interesting, and have an element of mystique…till poof, they go bust. 

No doubt, it’s a question of timing. The world over, all classes of assets—be they stocks or bonds, late-stage financing of tech firms, easy funding for companies with no obvious revenues, or real estate—are pricey. Riskier investments are not just the result of low interest rates but also because central banks the world over have been pumping capital into the global economy. 

With valuations allotted to technology companies getting huge, in came the start-up baby boomers. The tech investment scene could be described as youth-obsessed. Apart from being extremely profitable at a quick turnaround, these companies and their stocks are getting richer and richer. The under-four publicly traded firms are trading at nearly nine times their sales, as per Nasdaq data.

The scenario is thus one where:

·      companies are growing at amazing speeds;

·      they are stretching their horizons beyond imagination; and

·      the winners are appearing way too soon in the market, are way ahead, and are easy to spot.

More firms are being valued at and exiting at over $1 billion, and large sums are pouring in, from Asia too, into private technology companies. Yet, there is increased dilution, higher cost of entry, and changing preferences, all indicating that big business is costlier than ever before. When it comes to venture capital funding, investors are paying more for stakes in private tech firms than they would for publicly traded ones. But what keeps firms going is the ever-increasing investor pool of money.

The returns from major assets in 2015 show that investors should have made good money in the past five years. Global stock markets were up by nearly 50 percent, and the numbers better these in the developed markets. Global bonds and commercial property funds too did well, at 21 and 43 percent, respectively. All these have led to the bubble talk, of the same telltale signs of 2000!

However, the fear of history repeating more often than desired still looms large. The latest shocker is the plunging oil prices, which is having quite an impeding impact on the GCC economy. The GCC countries have responded with resilience, but with the slump not showing any hope of improvement second year in a row, evidences of economic stagnation are surfacing. The risk of another possible economic slowdown is slowly taking firm roots and so have the dangers posed by impulsive investments in the baby boomers and the "next best innovation" multiplied.  

Opinions are divided. However, given the ever-unstable market conditions posing sudden threats to seemingly well-established economies, experts are right in warning against chasing the big bubble mindlessly when it comes to making investments, especially in disruptive innovation. Maybe this baby bubble will take time to pose a problem, if at all, but some prudence will definitely go a long way.

Service(s) with a Smile!

Dizzying growth, buy-ins, buy-outs, booms, and busts are the material that the services segments are made up of. A major contributor to GDP and comprising key segments that attract foreign investment inflows, the fast growing sector is governed by factors domestic and global. Seeing its importance, governments and private players alike provide incentives to boost engineering, communications, information technology, banking, and so on.

The evolution of Smart Cities and investments in data-enabled services are key areas where the private sector plays a prime role in developing “open” services. According to the OECD, a large portion of the $1.8 trillion global annual investment required for infrastructure projects between 2010 and 2030 will be invested in cities. No wonder policy leaders, citizens, and business houses – in the Asia Pacific, Barcelona, Bengaluru or Boston – are fast forwarding to the future!   

On to startups, the latest entrants into the asset class in the product portfolio and on whom the eyes of the high net worth bracket are trained. Investment is through either personal wealth or angel funding. India is a case in point, the risk nevertheless. GCC governments too have made considerable investments in the services sector, and rightly so by improving ICT infrastructure. GCC business leaders and governments still face challenges, funds being among them, at times.

In the software industry, however, growth rules are far different. A 20% annual growth in a healthcare firm is cause for cheer, but it spells doomsday for IT. To sustain investment, firms anywhere need to plan with foresight as to:

·       How much growth is needed, and how quickly?

·       How much growth is left in core markets and how secure is the firm?

·       What are the chances of expansion and to generate cash for further investment?

·       What new opportunities exist, and when is the move?

Concern about one’s country, the world, its people, and environment has led to a new breed of investors promoting concepts they feel strongly about, to influence decisions that could detrimentally impact society. Socially Responsible Investing has thus come to stay.  

 As Stephen Covey wrote, “To be successful requires beginning with the end in mind.”

Live and let live, balancing ecosystems!

It took over 50 years for the word ecosystem, as we know it, to be transported from the natural world to that of business and commerce. Coined in the 1930s by British botanist Arthur Tansley, it was given a new dynamism by business strategist James Moore. Companies working together, cooperating and competing to promote new products while keeping the customer in mind was Moore’s vision of an ecosystem for the business world.

Fighting to find a footing in the jargon-oriented business setting, the term scored brownie points for its value and has since found a permanent place in the lexicon. From technology to platforms as diverse as media and healthcare, the scope of the possible was continuously put to the test. And pass it did with flying colors, in serving communities and harnessing talent.

The operative word here is platform, as, magnet-like, it attracts participants or players to the field with a purpose. Such platforms bring about resource sharing to access untapped assets or markets and improved customer satisfaction. Platform business models led to the evolution of apps-based businesses. The early birds stood to gain, the smartest opening the doors to Smart initiatives.

The financial technology ecosystems that took wing in the developed countries look set to branch out to other regions, for instance, to the GCC countries. Governments and financial institutions have come to realize that such ecosystems are imperative for growth. Architects of business ecosystems in the GCC countries would do well to:

·      calculate the financial benefits of having such systems

·      develop the strategy to achieve the aim

·      choose the partners

·      build an operating structure and model of the system

·      put together all criteria for best use of available resources

In countries such as the GCC, however, the governments have a more crucial role to play than in the developed world, and the challenge lies in developing the necessary coordination. So, let’s connect, cooperate, collaborate, and co-evolve!

Healthcare: wired, smart, and upwardly mobile!

Healthcare: wired, smart, and upwardly mobile!

The world is getting Smarter by the day. Shopping, banking … and more are accomplished at the click of a mouse or the press of a mobile button. Healthcare, too, has come within the ambit of this Smart world. According to reports, 70% of the world’s population is expected to use smartphones capable of monitoring biometrics and lifestyle data by 2020. 

This calls for concomitant Smart teams with access to constant, real-time data on lifestyle diseases or chronic conditions, such as diabetes and hypertension, and the ability to remote monitor and manage patients and situations. Users and their families will, in turn, have access to full medical records, test results, history of appointments, and related services. 

The benefits include better management of health conditions, lesser complications, fewer hospital visits, cost reduction, and faster return to the workplace. Patients’ medical queries are answered quickly, diagnosis is faster, and people understand their health and well-being better. For patients and countries battling healthcare costs, competition, and shortage of physicians, the use of telemedicine and mobile health technology or m-health is a blessing.  

Downloaded healthcare apps on the rise, and GCC countries, too, are upwardly mobile. The tech-savvy population is eager to adapt digital solutions for healthier lifestyles, and private and government entities are taking steps to provide on-demand healthcare. Cloud-based systems are used to connect healthcare professionals and cloud-based solutions to provide aid, for instance, in administering immunizations and conducting medical investigations.

GCC healthcare leaders could ensure that:

• 1.      Hospitals improve their admission, discharge, and transfer process. This will lead to shorter hospital stays and higher occupancy rates; reduced costs for patients and improved productivity for hospitals; besides patient satisfaction.

• 2.      Data, both internal and external, are used in better ways to gain maximum value.

• 3.      Collaboration and exchange takes place between organizations and the broader ecosystem.

The overall goal should be to capitalize on the advantages and carry through the digital imperative to completion.

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