The Last Word: The hard test for companies is finding out whether or not they’re willing to stop pretending while they still have a choice.
This week, I read a post about why start-ups fail that stopped me on two lines: ‘Long before the cash ran out, before the announcement, before the graceful post about lessons learnt, they knew the thing underneath was not there. The market rarely kills a company suddenly. It just stops pretending a little sooner than the people running it do.’
The post referred to an analysis of hundreds of failed venture-backed start-ups. Running out of cash appeared again and again, but the report treated it as a symptom rather than the underlying cause. Many of these companies had raised substantial amounts of money, yet poor product-market fit, weak economics, bad timing or a proposition the market simply did not value enough had often become visible much earlier. The final failure may have looked sudden from the outside, but the loss of relevance had started long before.
That is what makes the idea of pretending so interesting, because pretending does not always mean that leaders are knowingly concealing the truth. Sometimes they are. Ego, sunk costs, incentives, reputations, and the difficulty of admitting to a board that yesterday’s confident assumptions no longer hold can all play a part. But organisations are also perfectly capable of convincing themselves, quite sincerely, that the fundamentals are still sound and that the real problem sits somewhere easier to reach. The most dangerous moment for a company is not when something stops working. It is when the organisation becomes very good at explaining why the problem lies somewhere else.
The wrong fix
I have seen this while working with companies preparing to expand internationally. A business may already have one or two foreign clients and conclude that the model has been validated; the next challenge, therefore, is simply to find more of them. On the surface, the problem looks like sales, market access or lead generation, and the obvious response is to invest more heavily in business development.
Then you start looking underneath, and a different picture can emerge. The value proposition is trying to say everything and therefore says very little that is distinctive. Leadership teams are not aligned on which markets or customers matter most, on what their capability gaps and sometimes the things their clients value them for are . Resources cannot easily be moved towards the international opportunity, despite everyone describing it as strategically important, and teams are expected to deliver expansion on top of everything they were already doing. The company may want international growth, but its choices, structures and resource allocation tell a different story.
Another international client will not solve that. It may actually postpone the moment when the underlying questions have to be confronted.
This is where fixing can become a form of pretending. If sales are weak, change the sales strategy. If awareness is low, increase the marketing budget. If margins are tightening, launch another efficiency programme. If growth is slowing, enter another geography. None of those responses is inherently wrong, and each may produce some improvement, but they can also become increasingly sophisticated ways of avoiding a much harder question: what if the thing we are trying to optimise is no longer the thing that needs preserving?
When reinvention matters most
Established organisations may be particularly vulnerable because they have more evidence with which to reassure themselves. They have customers, revenue, history, processes and a record of success. What has worked before has usually worked for good reasons, and that makes questioning it feel unnecessarily destructive when the numbers are still broadly acceptable. Yet this is precisely the point at which reinvention matters most, because once the evidence becomes overwhelming, the organisation is no longer choosing when and how to change; circumstances are choosing for it.
Reinvention therefore requires more than the ability to react when performance deteriorates. Organisations need the institutional capacity to sense what is changing, interpret signals beyond the most convenient explanation, challenge assumptions that still appear to be working, reallocate resources and make choices before those choices become unavoidable. The problem is not always that companies fail to see what is happening. Often they remain so focused on what can be fixed at the surface that they never ask whether something more fundamental has shifted underneath.
Cash eventually runs out. Clients eventually leave. Markets eventually move on. By then, nobody needs courage to admit that something has changed because reality has made the argument for them. The harder test is whether you are willing to stop pretending while you still have a choice.
Photo: Dreamstime.