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Why Tech Companies Fail

Heather Grace. 21 November 2016, 6:58 am
Why Tech Companies Fail

There are many reasons given when a tech company fails. Some of the quoted reasons are real, others are simply poor excuses. When you delve deeper, past the media spin and the stakeholder frustration, most failures are predictable. So why do so many tech companies fail? What goes wrong? Today we will look at the 5 main reasons and drill down on a big one.

I work with hundreds of tech companies. Some are doing famously and bring me in to help them get through a major growth phase, others call me when their business is on the brink of failure. So in my line of work, I see the common pitfalls more than most. Here are the top 5 that I see, time and time again, in no particular order because often 2 or 3 of these are happening at the same time!

  1. Us and Them Syndrome
  2. Sales and Marketing Failures
  3. Feast or Famine 
  4. Boiling the Frog
  5. The Vapourware Snare

Over the next few weeks we will look at each one in turn. Today we will start at the top, with the US and Them Syndrome. Many successful tech companies have this problem but have not recognised it - yet. If they fail to take action it may cause the business to fail.

To get Us and Them Syndrome you have to have been fairly successful with your technology and your sales and marketing, at least successful enough to grow past a handful of employees. In fact, the danger is higher as your staff numbers grow larger. Non tech companies may also experience a bit of "Silo Effect" or "Us and Them" attitude between departments as they grow. But for tech companies the problem is much, much bigger. Why?

Tech companies need a bunch of clever tech people to design, develop, fix, support and upgrade the technology that the business is based on. Like any other company, a tech company usually employees a team of marketing and sales people, backed up and managed with financial, admin and management roles. The reason tech companies have a different dynamic to non-tech companies is because the whole business is reliant of the clever tech people to produce the technology stuff. And there is a communication gap.

Mind the Gap

The real issue with Us and Them, for tech companies, is about how big the communication gap is between the tech and the non tech people in the business. 

I often hear sales and marketing people complain that the tech people don't seem to be team players, are anti-social or they don't participate in discussions. Some sales people even accuse the tech people of being lazy!

On the other hand, I also hear tech people complain that the sales and marketing people are too loud, annoying, talk too much and don't listen. Some tech people find sales and marketing people expect them to have a magic wand to fix problems or create features on the spot instead of allowing for realistic deadlines.

Sometimes I hear managers complain that the tech people don't communicate, don't speak up about issues, and don't share good ideas.

Sadly, I often hear tech people complain that they choose not to speak up about technical issues or potential problems because they are afraid of rocking the boat, or stepping on the manages toes, or stating the obvious (even though it may not be obvious to us mere mortals).

If you have ever had any of the thoughts above, or you have overheard others in your organisation presenting similar views, your organisation is at risk of failure.

Without an excellent understanding of each other and excellent communication skills between all parts of the organisation, failure is just waiting around the corner.

Internal tension and miscommunication leads to mistakes, missed deadlines, project failures, unhappy customers, low morale in the workplace and a downward spiral for the business.

Let's face it, we are all different. We all have different strengths and different personalities. We all communicate differently. The first step is to accept that absolute fact. You cannot change other people and make them behave like you do (and maybe that is just as well!). Don't get frustrated about it. Accept it. Then work on how to communicate more effectively with each other.

With a little of the right coaching and training it is possible to have confident, empowered, happy tech people who take ownership, participate well and contribute in a clear and concise way. It is also possible for tech people to gain respect and understanding from managers and people in other departments. With a bit of help, maybe the sales and marketing people won't be quite so annoying anymore either!

But if you do nothing about the great divide that is growing in your company, you too may fall victim to the Us and Them Syndrome. 


Take a look at the full series of posts on why tech companies fail:

  1. Sales and Marketing Failures
  2. Feast or Famine
  3. Boiling the Frog
  4. The Vapourware Snare


Success With Grace is home of the TechBiz Success Academy, coaching and training to help technology based businesses grow. For information about TechBiz programs go to Also check out Business Communication and Customer Support Communication workshops in


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