Success is dependent on the CEO

There’s no doubt that a startup’s central idea is crucial for its eventual success; if it has no originality or innovation, or the idea doesn’t resonate with a target audience, it’s bound to fail. Of course, you also need to have a good CEO in place -- someone who can take charge, oversee the execution of that idea and lead the company to success.

But which of these is the more consistent predictor of success: a good idea or a good CEO to support the company?

There are a few ways to approach this question, but we can start by looking at businesses that have failed, and studying what they did wrong to get to that point. CB Insights recently reviewed more than 242 startup postmortems to uncover the motivating factors for their demise. And what it found was that the most frequently cited factor for failure was a lack of market need -- at 42 percent. In other words, a poor idea was one of the root causes for nearly half of all failed startups in the study.

However, other factors tell a different story: Roughly 29 percent of companies examined in the study cited running out of cash as a chief concern, while 23 percent cited not having the right team as a core problem and 19 percent cited having been outdone by competitors.

A CEO was directly or indirectly seen as being responsible for all these issues. And equal blame went to CEOs and the ideas they supported, for the companies' being out-competed by competitors. Other common issues, such as pricing/cost, poor user friendliness and products lacking a business model, might be attributed to both the idea and the CEO -- but tend to be dependent on a CEO’s control.

Leadership styles. There’s no one type of leadership or direction that works better than others. Some successful CEOs are aggressive; others are passive. Some are perfectionistic and demanding; others prefer to delegate and trust others to get the job done.

This means that there’s no blueprint for what makes a “good” CEO, in contrast to an idea, which can be measured based on its projected income, market demand and other factors.


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