New Business Ventures Session #12:Learning from failure – the case of GovWorks

1. New Business Ventures Session #12:Learning from failure – the case of GovWorks.com BALAGOPAL VISSA INSEAD 1, Ayer Rajah Avenue Singapore 138676 --- Office: (65) 67995382 Hand phone: (65) 94244573 Email: balagopal.vissa@insead.edu These notes are intended to support class discussions. They should not be considered a comprehensive set of issues to be dealt with.

2. Lessons Learned At govWorks Mistakes were made in all areas of business: • Strategic • Human resources • Financial • Marketing • Operational • Technical Source: This slide and the following ones are based on Tom Herman’s presentation on “Entrepreneurship In Difficult Times,” available at http://www.recognitiongroup.com/

3. Strategy Lessons Learned • Lack of focus • Scattered attention and resources across numerous products and projects • Lack of clear strategic direction • Reactive instead of proactive strategy: Following ezGov instead of their own strategic plan • Lack of ‘buy-in’ from senior management on a well articulated strategic plan (mission statement, milestones, growth strategy, etc.) • Lack of communication • Not listening to advisors • Not enough time to communicate with employees • Not building a learning culture, one that tracks and learns from its own successes, failures and mistakes • Believing the hype What they did well at govWorks • Identify a ‘Mass Problem’ with a scaleable solution (eGov works)

4. Human Resource Lessons Learned • Hired too quickly without a clear plan • Hired before defining the job description (he/she’s good, let’s hire) • Didn’t have time to prepare adequately for new hires (what will they be doing and who is prepared to supervise them) • Didn’t develop and follow through on a documented employee review process early enough allowing pay/performance linkage • Didn’t develop in house human resources with training programs What they did well at govWorks • Hired team of committed professionals with a ‘Can Do’ spirit

5. Financial Lessons Learned • Poor or inconsistent control of purse strings and resource allocation • Unrealistic budgeting requiring additional and unexpected fundraising in crisis situations • Unattainable financial expectations which disappointed investors and board members What they did well at govWorks • Raised large amounts of capital quickly and cheaply

6. Marketing Lessons Learned • Didn’t pay enough attention to market research • Marketing to investors, Wall St. and the press instead of customers • Spending marketing dollars to create brand instead of revenue • Focusing on the wrong customer (constituent instead of governments) What they did well at govWorks • Created a powerful brand, « govWorks »

7. Operations Lessons Learned • Not bringing in experienced “Grey Hairs” early enough • Not delegating responsibilities • Not creating sustainable organizational structures • Not developing and documenting consistent procedures • Unclear communication channels between groups and functional areas resulting in doubled efforts and conflicting goals • Operational plan changed almost weekly making it impossible to focus What they did well at govWorks • Navigated the logistical transition from R&D organization to operational organization with 24/7 customer support

8. Governance Lessons Learned • Focused on building ‘name brand’ board instead of one which had the time and experience to help with practical challenges • Listening to board members who didn’t read their materials • Avoided giving bad news early enough in the hope that they could to deal with problems on their own • Didn’t include critical executives in all board discussions What they did well at govWorks • Created a high profile board improving their ability to attract quality employees, capital, and press coverage, as well as improving their ability to network and gain access to new clients

9. Technical Lessons Learned • Didn’t call out problems with Sapient (employees) early enough and didn’t insist they be fixed • Didn’t force product, marketing, and executive teams to adequately document requests and requests for changes • Making architecture decisions without enough consideration for HR availability • Trying to do too much at once • Didn’t sufficiently componentize services What they did well at govWorks • Created in 12 months a highly functional web portal which supported complex, customized, and robust financial processing