I have seen multiple reports claiming that something like over 40% of startups fail because they offer something the market doesn’t need.  As I dug into the data, I think it should be interpreted more as 40% of the failures can be attributed to not meeting a market need – not that over 40% of all startups fail due to that reason.  But, either way, that number is incredibly high and that fate could probably be avoided by many a startup if proper planning and design principles are followed.

A good business idea is all about demand. About solving something.  It doesn’t matter how good your product or service is if no one wants it. Per a CB Insights report back in 2019, 42.8% of startup failures were attributed to this innovation-market mismatch, while running out of cash was the second most common reason for failure, at 29%; and having the wrong team for the job came in third, with 23% of founders identifying it as the main reason for their lack of success.*

Let’s think about this.  Offering something the market doesn’t need.  Why in the world would a startup put its precious and limited resources towards something no one wants?  Founder egoism?  Self-deception?  A failure to research?  It is likely it can be a combination of each of those.  But, over 40%?  That is an astounding number to me; and one that doesn’t need to exist if startups simply followed a rational design approach to their innovation or invention.

What do I mean by design?  I mean planning your market approach, planning your investor approach, planning your customer approach.  Thinking though all of the elements of your startup and, using guideposts if necessary, making sure that ALL elements are addressed, fit together, and make sense for your enterprise. Think of a set designer for a movie – they look at the WHOLE by focusing on the discreet PARTS and end up with a unified, integrated design.  Same with a startup – make sure that all of the discreet parts are consistent with, and make sense for, the whole endeavor.  Avoid a failure due to a missing part; in this case, the missing need for market demand.

What does design do for you?  It forces you to swim strongly upstream to be certain your innovation is market ready; it means you’ve planned out your cash requirements; and it causes you to assemble the team needed to go to market.  What it does for you is ensure you look at all the moving parts to be sure it assembles an achievable whole.


* https://www.cbinsights.com/research/startup-failure-reasons-top/