Why Do Most Businesses Fail?

After watching a one minute video of Mark Cuban talking about why most businesses fail, I had a brief but enjoyable conversation with a colleague online.

The Conversation

Friend: So if you try hard and are born smart you always win?

Me: No, if there is a lack of brains or effort, a company will fail.

Friend: But what of the system? I imagine many people at Blockbuster were smart and tried really hard. It’s kind of easy when you’re Mark Cuban to decide that your success is down to being smart and trying hard. Effort itself is pretty worthless if applied to the wrong thing. Likewise intelligence. Seems like an oversimplification at best to me. I did like the bit about giving customers what they want though.

Me: Interesting. You’re hearing him say that you’ll be successful IF. I’m hearing him say that you’ll fail IF. If there is a lack of brains or effort, a company will fail. Maybe not today; maybe not tomorrow; but they will fail in time. All the more reason to collectively work harder than competitors and surround yourself with smart people. Blockbuster was successful for a long time. I think they failed because they didn’t evolve with their market and competitors like Amazon and Netflix gave customers what they wanted.

I wish the conversation had gone longer.  It made me go back and watch the video a few more times and really listen to what he said and to consider if I misunderstood.  Even though we watched the same video, we came away with somewhat polar understandings.

So, why do you think most businesses fail?