Tag: Business

Beating a Dead Horse in Business: The Cost of Sticking to Failing Strategies

On By mehranmuslimiblogIn Business, Careers, Success AdviceLeave a comment

In the business world, one of the most common yet costly mistakes is the tendency to continue investing time, money, and resources into failing ventures. This phenomenon is often referred to as “beating a dead horse” — a metaphor that describes the futile effort of persisting with a strategy, product, or business model that is no longer viable. Despite clear indications of failure, companies and individuals often struggle to abandon unsuccessful endeavors, leading to significant financial losses, wasted opportunities, and stunted innovation. This article delves deep into why businesses continue this pattern, the psychological and economic factors behind it, and how organizations can identify and pivot away from doomed strategies.

Understanding the “Dead Horse” Phenomenon in Business

At its core, the dead horse strategy occurs when businesses refuse to acknowledge that an initiative, market trend, or product has run its course. Instead of pivoting, they double down, hoping that persistence alone will turn things around. This reluctance to move on can manifest in several ways, including:

  1. Investing in Obsolete Technology — Businesses that fail to adopt emerging trends and instead pour money into outdated solutions often find themselves irrelevant in the market.
  2. Clinging to Failing Business Models — Some companies resist adapting to changing customer behaviors, holding onto business models that no longer generate profits.
  3. Continuing with Poor Leadership — Keeping ineffective leadership in place despite ongoing failures can further entrench stagnation.
  4. Marketing to a Nonexistent Audience — Businesses sometimes continue marketing products to an audience that has either moved on or never existed in the first place.
  5. Refusing to Adapt to Market Shifts — When industry disruptions occur, businesses that resist change rather than evolve can find themselves on the path to extinction.

The Psychological and Economic Drivers Behind Sticking to Failure

Why do businesses persist in beating a dead horse? The answer lies in a combination of psychological and economic factors that create resistance to change:

1. The Sunk Cost Fallacy

This cognitive bias causes individuals and organizations to continue investing in a failing venture simply because they have already poured substantial resources into it. Rather than recognizing the need to cut losses, companies feel compelled to justify previous expenditures by persisting.

2. Fear of Admitting Failure

Admitting that a business decision was wrong can be difficult, especially for leaders who have publicly supported a strategy. The fear of losing credibility often results in prolonged denial and further investment.

3. Emotional Attachment to Ideas

Business owners and executives often develop an emotional connection to their ventures, making it harder to view situations objectively. This attachment can cloud judgment and hinder necessary course corrections.

4. Groupthink and Internal Politics

When entire teams or companies are invested in a decision, challenging the status quo becomes difficult. Employees may hesitate to speak out, fearing backlash or being perceived as disloyal.

5. Hope and Optimism Bias

Sometimes, businesses hold onto hope that external factors will change in their favor, such as believing that a failed product will suddenly become popular or that a declining market will rebound.

Consequences of Beating a Dead Horse in Business

Failing to recognize when to let go can have severe consequences for businesses:

  • Financial Drain: Continuing to invest in failing projects diverts resources from more promising opportunities.
  • Missed Opportunities: Companies that focus on the past often miss emerging trends and new markets.
  • Employee Morale Decline: Working on a failing project can demotivate employees and lead to higher turnover rates.
  • Loss of Market Relevance: Brands that refuse to innovate risk becoming obsolete.

How to Identify and Stop Beating a Dead Horse

Recognizing when a business strategy is failing and having the courage to pivot is crucial for long-term success. Here are some steps to help businesses make informed decisions:

1. Conduct Honest Performance Reviews

Regularly assess the effectiveness of business strategies through key performance indicators (KPIs), customer feedback, and market analysis. If the data suggests stagnation or decline, it’s time to reassess.

2. Encourage Open Dialogue

Create an organizational culture where employees feel safe voicing concerns and offering alternative solutions without fear of retribution.

3. Set Clear Exit Strategies

Having predefined exit criteria for projects can prevent emotional decision-making and allow businesses to cut losses at the right time.

4. Be Willing to Pivot

Successful companies recognize when to shift focus. If a product, service, or market isn’t working, exploring new directions can be more beneficial than forcing a failing initiative.

5. Embrace Failure as a Learning Experience

Rather than fearing failure, businesses should treat it as an opportunity to learn and evolve. Some of the most successful companies today, including Amazon and Netflix, have pivoted multiple times before finding their winning formulas.

Case Studies: Companies That Knew When to Move On

1. Netflix vs. Blockbuster

Blockbuster failed to recognize the shift from physical rentals to streaming, while Netflix adapted and thrived. Blockbuster’s reluctance to pivot resulted in its downfall.

2. Kodak’s Digital Misstep

Despite inventing the digital camera, Kodak continued to invest in film photography, ultimately losing its industry dominance to competitors who embraced digital innovation.

3. Nokia’s Smartphone Struggle

Nokia’s insistence on sticking with outdated mobile operating systems instead of embracing the smartphone revolution led to its decline in the market.

Know When to Let Go

Beating a dead horse in business is a common but avoidable mistake. Recognizing when a strategy is failing and making the necessary changes can mean the difference between stagnation and success. By fostering adaptability, encouraging critical thinking, and being willing to pivot, businesses can ensure long-term growth and relevance in an ever-changing market. The key to sustainability isn’t persistence in failure — it’s the ability to recognize and embrace change.

Challenger banks are on the rise

On By mehranmuslimiblogIn Banks, Business, Economy, GovernmentsLeave a comment

Image result for banks

Challenger banks, neobanks, whatever you want to call them, have been making significant in-roads in the banking sector and are attracting large chunks of venture capital investment says KPMG. There are some subtle differences between the two: challenger banks are often established firms that compete with larger financial institutions, while neobanks tend to be completely digital and favour operating via mobile devices, but the difference between them is somewhat blurred. What they do share in common is this: “these banks don’t carry the weight of legacy technology, so they can leapfrog over traditional infrastructure and disrupt the status quo.”

Two of the most prominent – Monzo and Atom Bank—raised $93 million and $140 million respectively last year. Starling Bank, which is ‘digital-only’ is raising a further $54 million in a new funding round. These are all British startups by the way.

Why are so many challenger banks British?

The chief reason for the fact that so many challenger banks are UK-based is this: Britain isn’t as saturated with big banks and their branches as the US, so there is more opportunity for non-traditional financial institutions. Furthermore, the UK was an early adopter of digital banking, dating back to the dotcom era of the late 1990s and early 2000s. Basically, the UK has had a head start in this financial area, although it would be a mistake to think that challenger banks are a UK-only phenomenon.

Challenger banks worldwide

There are currently about 100 challenger banks worldwide: Brazil has Banco Original and Nubank, while Germany is home to SolarisBank and N26 and in Asia there is MyBank, WeBank, Timo, Jibun, K Bank and Kakao.

What advantage do challenger banks have?

They don’t have a legacy system and because most of them don’t offer a full suite of banking services they don’t have to operate within such tough regulatory environments. This means they have more freedom and flexibility, which in turn allows them to develop their customer base faster, especially in developing countries where bank branches are more rare than in the west.

What services do challenger banks offer?

Their focus is usually on niche products rather than trying to provide all the services that the big banks provide. For example, customers can open a current account with a relatively high rate of return and get loans, but they may have to go elsewhere for services such as credit cards, mortgages and wealth management. Some of the challenger banks do have banking licences, although not all follow this model.

Although challenger banks are on the rise, the old guard hasn’t disappeared just yet, and the traditional banks are aware of the threat the challengers pose and are preparing for battle. The traditional banks have the advantage of a large and well-establish customer base and strong branding that promotes trust. The challenger banks will have to earn trust. That will most likely come from the millennial generation over the next decade, because they are the group that have lost trust in the banks their parents use, and this is the audience that challenger banks will need to court if they are to become an established sector in banking.

 

 

 

 

A decentralised business is better for you

On By mehranmuslimiblogIn Bitcoin, Blockchain, FintechLeave a comment

The background of a magnificent city

Let’s start by looking at Equifax. This is a U.S. company, and one of only three, that provides credit reporting on American citizens. Last year there was a massive security breach, which meant that the personal information of at least 143 million was in the wrong hands.

The problem here is that your personal data is centralised when these big credit-rating companies have it, and that means it can be manipulated; by them or by other parties through theft.

If Equifax stored consumer data on a blockchain-based system, the information would not only be better protected, the company itself wouldn’t be able to mess around with it in any way.

The blockchain uses cryptographic hash functions that both encrypt your data and track historical changes to it. Therefore, at any point in time, if any piece of your data is tampered with, you personally will be able to immediately see where and when the information was changed.

However, security isn’t the only advantage decentralised storage of data can bring. The communities using decentralised ledgers are incentivised to show more respect and this contributes to more efficient operations.

The incentive of having a stake in the business

Some platforms, especially those decentralised ones that have utility tokens, engender a sense of community, because every person involved has something to gain by making sure the platform runs for the benefit of all. It also means that they literally have a stake in the company just through token ownership. Also, all the community members can see how a platform uses their personal information and the steps taken to protect it.

There will always be bad actors in any company, and sharing economies are no different, although you’d think that in this particular sector, people are less likely to take advantage of other community members, but we’d be naïve to believe everyone really gets the idea of ‘sharing’. However, in decentralised communities, any bad actors are actively disincentivised, because if things go well, the stakeholders all benefit. If a bad actor contributes to making the company less successful, then they are shooting themselves in the foot.

If you take the example of Uber, which is s centralised company; none of the Uber drivers have a stake in it. They have no incentive to act in a way that makes the company more successful, because all the benefits of success go to the founders and shareholders. If Uber was a decentralised business, with drivers having some form of stake in it, it would be a very different story.

We may see an increasing demand for companies to adopt a decentralised approach, because ultimately it benefits the consumer, and they could be the driving force that increases the use of a new decentralised business model.

 

 

 

EU to combat fake news with blockchain

On By mehranmuslimiblogIn Blockchain, Business, GovernmentsLeave a comment

 

043_dpa-pa_1233_88399632-755x491

The election of Donald Trump as President of the United States brought with it, amongst other things, the whole idea of ‘fake news’. POTUS is always talking about it and has done a lot to create an environment where the public now doubt whatever they read.

In the past we generally accepted that what we read in newspapers or heard on news bulletins was reasonably close to the truth, although the smart people have always been aware that every paper has a specific political agenda and that any story needs to be read with that bias in mind. But, now we have reached a stage where completely false stories are pumped out, with social media channels being the chief way of ensuring they spread like wildfire.

The European Commission (EC), according to an article published in Techcrunch, has announced that it is going to use blockchain technology in a bid to combat the spread of ‘fake news’ and its press release said it has “identified blockchain as a critical part of what it will call the Code of Practice on Disinformation, which it intends to introduce by summer 2018.”

The announcement also stated that blockchain is, “one of emerging technologies which are changing the way information is produced and disseminated, and have the potential to play a central role in tackling disinformation over the longer term.”

The EC points to the fact that DLT can aid the transparency, reliability and traceability of news on the Internet. It said:

“Innovative technologies, such as blockchain, can help preserve the integrity of content, validate the reliability of information and/or its sources, enable transparency and traceability, and promote trust in news displayed on the Internet. This could be combined with the use of trustworthy electronic identification, authentication and verified pseudonyms…”

The commission’s next step is to develop the EU-wide Code of Practice on Disinformation that will be published by July 2018.

This represents a new application of blockchain technology in a very important arena – that of the news media. We cannot underestimate the value of once again being able to know that information has been verified and sources checked. And those who claim that certain stories are ‘fake news’, as POTUS frequently does, will find it harder to do so. This could change voters’ views in elections, as well as of government policies, in the coming years. We will be able to trace the trail of truth and lies, and that will be a good thing.