Take a good look at your Board. Notice anything missing?
Adding Women to the Board isn't All that’s Needed to Diversify
Summary: Most companies don’t have marketing expertise on their Boards, so they don’t even realize that their company is struggling because of market-related issues.
November 13, 2019 — In response to the homogeneous nature of corporate Boards, California-based public companies are now required to diversify, and must add at least one woman to their Boards this year. Not only is there too much “sameness” on these Boards, they must stop being so very passive is strategic matters related to the company’s success, especially in tech startups.
Being more active in directing the company requires more diversity in expertise. Boards need to look beyond the typical roles of audit, compensation, and governance, and consider that, at the heart of many corporate failures, there is a complete lack of marketing experience and expertise on their Boards.
And yet, it remains the case that approximately 90% of Silicon Valley’s technology companies fail in the first five years. Does that mean that the Boards of those companies have failed them? Yes, I think so. Let’s take a look at why small companies don’t succeed.
THE TOP 10 REASONS STARTUPS FAIL. According to recent articles in Forbes and on CBInsights.com, here are the top ten reasons, based on an analysis of 101 startup post-mortems:
The chart (above) reveals that most startups fail for reasons that are largely market-related.
I’ve managed my own marketing consulting firm in Silicon Valley for almost 20 years. Having worked with about 50 different startups and small tech companies, I can attest to the fact that most companies who ultimately fail do so before their Boards even realize they have a market-related problem.
By far, the primary reason that small companies fail is “No market need”: they're building a business around something for which there is no demand. Pet rocks aside, if there’s no need for the product or service they’re making, it’s doomed from the start. That’s not as straightforward as it might initially sound. Although VCs do some due diligence that includes market validation, it tends not to be as thorough as it should be. A surprising 42% of young companies learn the hard way that there's not a significant market for the product they’ve created. For technology in search of a market, the cost in venture capital, time, energy, wasted resources and missed career opportunities is staggering.
Another key reason small companies fail is that they don’t listen to their customers. So they are offering a product or service that is just ‘not quite right’ for the user. I just ran into this last year. My client wanted to sell a product to DIY homeowners, but required customers to be more technical than they were, figuring out complex screens and coding challenges. As a result, the product was hard to use and people simply did not want to put in the effort to overcome the obstacles. We were making it too hard to use our product. If that seems like a minor issue, it’s not. Success comes when people want to buy and use what you’re offering, at the price you’re asking, with the features you’re including. Anything else just isn't going to fly.
Good marketing is so much more than just social media and events. Good marketing strategy, positioning, product launch timing, and a truly customer-centric approach can ensure that your company is on track to offer an identified group of target customers a product or service that will be useful to them at a price they want to pay, along with the features and functionality they need.
Most companies have no marketing expertise on their Boards. They don’t even realize that their company is struggling because of market-related issues.
Boards of Silicon Valley companies, both public and private, could take a different approach: add marketing expertise. It doesn't have to be an additional committee, it could be just one person with expertise in technology marketing who could make a significant impact on the future growth trajectory of the company. Marketing analysis and expertise is a critically-needed viewpoint for Silicon Valley companies taking disruptive technologies to market and hoping to win significant market share.
If more companies had marketing experts on their Boards, it’s almost guaranteed that the failure rate of small tech companies would not be anywhere close to the 90% it is today.
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About the Author: Theresa Marcroft is a CMO and marketing expert who has built brands and increased revenues to grow market share for pre-IPO startups, as well as small- and medium-sized public companies. During 20 years of consulting, she has led over a dozen clients to successful exits: three IPOs (BLZE, ACRU, SSTI), five acquisitions, and four client companies who are still privately held and doing well. She specializes in marketing network security and enterprise software, services and SaaS solutions. Working with Silicon Valley companies for three decades, she has built a consulting business as an “interim CMO” for young technology companies, and has observed many of them meet these business growth challenges — or not.
Contact me on 408.656.1876 or email TMarcroft@Market-Savvy.com
Theresa Marcroft, CMOBoard Member, CEO Advisor, 'Interim VP Marketing', SpeakerPublished •
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