In my last article, I discussed how many iconic companies have experienced and worked through strategy and product failure on their way to achieving market dominance. Failure is a process that emerging growth companies--like the ones that our company, Newport Board Group, serves--need to master.
I would like to suggest some basic principles for entrepreneurs to follow in considering the risk of failure.
What Failure Isn’t
- Failure is not avoidable Humans are bound to fail sooner or later, especially when they innovate.
- Failure is not an event, but a process Success is not a destination. In business, success is a journey that consists of what you do day-to-day, learning about and adjusting to market opportunities and risks.
- Failure is not objective You are the only person who can label your actions a failure in the long run.
- Failure is not the enemy It takes adversity to achieve success. It is fertilizer, the ultimate learning process.
How Not to Respond To Failure
- Paralysis Stop doing anything innovative that tests the limits of your company or yourself.
- Procrastination Put off making a decision under the guise of doing further analysis. This steals your peoples’ time and reduces their productivity.
- Purposelessness Avoid making mistakes by sliding into inactivity, while convincing yourself for example that you’re “waiting for the market to settle down.”
It’s All About Your Attitude
Learn from a bad experience and make failure your best friend. Ask the following questions:
- What caused the failure? What assumptions that were guiding me proved to be wrong?
- Was the goal unrealistic?
- What partial successes might the overall failure be concealing?
- How can I cultivate a feeling of gratitude for the unique learning experience I got?
- Who can help me interpret what went wrong?
- What action should I take based on what I have learned?
Creating a Failing Forward Culture
Failure breeds business breakthroughs—and success. Intelligent failures are those that happen early in the process of trying something new. They contribute new insights about your customers. Figuring out how to master the process of failing fast and failing cheaply may be the most important thing that companies have to get good at.
Not every failure is a good one. Failures caused by carelessness, ignorance, hubris, wishful thinking, lack of planning or organizational non-alignment are wasteful—and can cost you your company. Getting good at failure requires hands on leaders who carefully consider risks and share lessons from their mistakes. Objective outsiders such as independent Board Members can help to reflect and learn from failure. Management and employees need to be evaluated in a way that balances accountability for performance with latitude to make productive mistakes. Successful business leaders balance a performance culture with a learning culture.
Risk taking is the very heart of business. Yet fear of failure, like fear of criticism and rejection, is a basic human characteristic.
Successful people bridge this divide because they:
- Take action
- Persist—but are alert to feedback
- Try doing things differently
- Don’t take failure personally
- Don’t waste energy being hard on themselves
- Treat failure as an opportunity to learn
- Seize opportunities that others, who haven’t tried and failed, can’t see
In summary: fail forward. Fast.
About the Author
Bill’s career has focused on emerging growth companies that need to get past No Man’s Land and private equity firms that invest in these firms. He also has extensive experience with his own family's business and several others where he has served as an interim executive and advisor. Contact or learn more about Bill here.
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