Everyone who starts a business wants to increase its chances of success and the Radical model is the ultimate way to do that. Founders hope that they have some “edge,” like a better team or a firm grasp of the market, and it isn’t just about ensuring a return for investors, but about satisfying the founder’s sense of meaning.
By having an edge, we can convince ourselves to plow dollars and time into a business, but even with an edge, most businesses fail at a rate of 70% over a course of ten years. Think about this: the overwhelming majority of entrepreneurs spend up to ten years on something that does not have a successful conclusion. What about an edge that increases your chance of success? Would you adopt it? The Radical model is the “edge” that can satisfy that sense of, I did it!
The reasons entrepreneurs go for what turns out to be a failed startup are all the things that they hope will differentiate them: Understanding the market, a great team, or a superior ability to raise and use funds. When things don’t work as they had hoped, this is what they declare as their top problem: we mistimed the market, my partner and I hate each other now, or we burned through money more quickly than we expected.
Fiat Hierarchical Businesses
In traditional, Fiat, businesses, you have a hierarchy, at first embodied by the founding team: CEO (why we are here), COO (how we are going to do it), and CFO (how we can fund it). As the team grows, a static chain of command springs from these folks. If you are in the lucky 30% of Fiat businesses that survive, the founders and their employees solve the startup-killing-problems before they get huge. They adapt to the market, they solve interpersonal conflicts, they raise more funds, and use them efficiently. All the while, they develop their product and sell it. They get to ring the bell at the end of the day and declare social and economic victory. There’s a big end of the year office party, and everyone goes home glowing.
For the other 70%, the story does not go so well. The startup killing problems outrun them and they are destroyed.
How Does This Happen?
If you have worked at any Fiat business (i.e., you have), you will notice that management can sometimes seem disconnected. Let’s say you find some market problem that is out of your purview, so you tell your boss and it goes up the chain, sometimes passing through many layers and meetings and emails before a decision is made on whether or not to solve the (now corrupted) version of the problem that you already identified. It’s like a slow train crash and the very thing you wanted them to avoid happens before a decision is made. It’s stressful and can make you feel hopeless. Fortunately, there is another way to do things.
Advantages of the Radical Model
In the Radical model power is decentralized. You can work on a prototype solution without pleading with the traditional, Fiat chain of command for permission. If you see a problem, you either address it with the resources at hand, or you post a Banner. If others support your Banner and fund it, then you get to work on a solution. The Banner replaces layers of hierarchy. On the other hand, your peers may not fully fund your Banner or you can make mistakes and end up on a dead-end street. Nevertheless, there is less information loss, it is more time efficient, and the problem gets addressed on a timely basis.
If 70% of failures come from the inability to address problems in a timely and cost efficient way, then the Radical model increases your chance of success.
More Chance of Success
Lets say, we have one unit of problem solving ability. Further, assume a Fiat business with three layers of management and a message bounces up and down the chain 1 to 3 times. In the worst case, the message has to traverse the chain six times.
In the Radical model, you post a Banner describing the problem and how much you need to prototype a solution. After some discussion with anyone who is interested, funds are raised, and the problem is addressed. Count this as one node that information had to pass through.
If we assume that a message traversing these nodes is analogous to the odds of a business succeeding, then a business that stands a 30% chance of success now has its one unit of problem-solving ability multiplied by six in the Radical model. This means that the Radical company can solve problems six times faster than the Fiat company and it has a 180% chance of success. This means that you have an 80% buffer. Even if people make mistakes, the solution may not work, or unpredictable things come at you decentralization and transparency give you an extra 80% higher chance of financial success.
We may finally have a way to escape the tragic possibility that you may have ten years of your life come to nothing. We may be able to herald a new dawn of prodigious results and wealth for all of us.
