It's become something of a clichÉ - that in order to succeed in business you have to have failed monumentally at least once. But does this really give your business the edge?
Failing in business - so long as you"re an entrepreneur, preferably in tech - has never been so cool. Did you start a high-risk venture that flopped? Well, never mind. Write your mea culpa, post it on your website, then book yourself onto a failure convention where you can seek solace from other gung-ho entrepreneurs who wear their flops like badges of honour. If you work for a large organisation, why not arrange a celebratory failure party?
In the past, business cock-ups would have been a major source of embarrassment. But in these unpredictable times, where fleetness of foot and creative big thinking can lead to spectacular success (though more likely dismal failure), risks that go wrong aren"t such a bad thing. Blame business heroes such as Steve Jobs or Richard Branson if you like. If failure is inevitable, why not make the most of it?
“No one ever has a career in business, or any other field, which doesn"t involve some failures,” says John McLaren, Chairman of Barchester Group, which provides strategic and corporate advice at board level to international companies. “The only difference with entrepreneurs is that the unsuccessful outcome is far more visible to the wider world.”
In more conventional jobs, failures tend to result in the stalling of a career trajectory by failing to get a promotion, being given the chance to jump to another job or just getting the boot. “This is less spectacular than going bankrupt, but the failures are there all the same,” adds McLaren.
If failure is to be celebrated rather than swept under the carpet, then a certain mindset must be cultivated. “Today"s customers and markets are changing so rapidly that you need to continually be in a state of innovation,” says Alexsis Wintour, Founder and Director at Marbral Advisory. “That means being fearless of failure and reframing this into learning lessons, gaining experience and moving forwards.”
But failure means nothing without learning the right lessons or changing complacent behaviour.
“It shouldn"t be forgotten that we can focus too much on the beneficial side effects of prior failures,” says McLaren. “Real successes can be equally important lessons - and far more pleasurable.”
Learning lessons
Entrepreneurs" failures might seem more numerous than for the rest of us, but Wintour argues that the risks they take are often very calculated. “They are brave enough to invest in new concepts and recognise that some will not make it and some will,” she says.
Karen Jones, CEO of Citywealth, explains how three companies that she has worked for have failed. “Two were because of a lack of understanding of how long it can take to generate income versus costs, and the ability to lose money to multiple "good ideas" or trying to be too perfect.
The third was because of a market downturn and no cash reserve,” she says.
So what do we typically learn from our failures? “Early on, I had enthusiasm but a lack of business acumen - the basics, like understanding and generating cashflow, and negotiating or navigating inevitable business problems,” reflects Jones. “I was naive and I learned by painful experience.
“But the worse things are your own personality and capability faults, which
just show up like the sun shining every day. The world celebrates us as a success but you kick yourself every day for some thing you wish you did better.”
Jones" hard-won advice for entrepreneurs includes guarding your money, launching enough products or services so that a steady income is generated throughout the financial year, and having enough reserve cash to cover low-income periods.
What"s more, make time to talk and listen to everyone in your business so that you have a real understanding of what everyone is up to - “because the boss is the one who gets the blame for financial or legal mess-ups”, says Jones.
Also learn that while ideas are great, they also sap money and energy. And finally, “stop style drift - that is your staff deciding to wander off with their own agendas”.
Wintour argues that the source of most failure comes from a lack of leadership. “I"ve just been involved in scoping a large transformation project, and there is nothing wrong with the technical content, it"s just that people"s hearts are not in it,” she says. “The success of the project would require the leaders giving up too much personally for the organisation to succeed.”
It can happen to anyone
Failures for entrepreneurs are immediate and painful, but mistakes made by large organisations are a different experience. While there might be a shift in how we perceive failure for the former, for the latter - unfortunately in many organisations - it"s still something to hush up, blame others for and quickly forget.
If a large, successful company with the best brains in business launches a service or a product that"s a flop, then serious misorganisation is probably the cause, says Professor Chris Bones, Joint Managing Director of digital specialists Good Growth. “This is when you have talented people with the right strategy that ends up being badly executed,” he says. “The failure might be down to a poor understanding of the market, not testing the product or perhaps going for a big bang at a time of great uncertainty.”
What you end up with is “a huge amount of blame”, he adds, with everyone involved trying to absolve themselves of it.
Why? “Because most large organisations reward perfect management, not perfect disasters,” says Prof Bones. “Most businesses" attitude towards failure is atrocious. Management expects you to be perfect, but there is no such thing as
a Mary Poppins manager.”
Whether failure is big or small, does having it in your past really make you a better businessperson? “For any person to continue improving their business,
they have to keep learning in all sorts of ways,” says McLaren.
“Previous failures can be one useful input, though not the only one, and perhaps not even the most important.”
Most people still feel ashamed of their failures, though the level of their embarrassment depends on how recent the failure was and whether or not there was massive incompetence or any moral opprobrium involved. “Provided the failures don"t have these connotations and were long enough ago for the person to have evidently learned the lessons, there"s no reason why failures can"t be seen as honourable scars,” says McLaren.
“Whereas some decades ago, if employed in a large organisation, it was probably possible to keep your nose clean, be a safe pair of hands, and avoid any serious risk either for the individual or the corporation,” he adds. “Today that is much harder. Any organisations, even very large ones, that take little risk will over time produce below-average performance. So risk-taking is unavoidable.”
Hence to Silicon Valley, where “the biggest parties are held to celebrate failure,” says Wintour. “In the Channel Islands it"s taboo,” she says, but argues that failure is “something we will have to get used to as our society needs to become more creative, innovative and take some risks”.
But do some people actually crave mistakes? Prof Bones has a theory. “The most successful people, whether leaders, innovators or change catalysts - people who like to get things done - are able to live with failure. They think about a failure not to cast blame on themselves or anybody else but to make sure they"ve learned from it.”
The really interesting thing, he adds, is that people never seem to say they"ve learned from someone else"s mistakes - it"s always their own.
Ultimately, then, is failure really that significant? “Failure is a wake-up call that something is wrong,” says Jones. “It"s tough, horrible, but allows change and breakthrough. And it usually allows time for reflection that you rarely get in business because everyone is in a race.”
Wintour encourages her team to take a few risks and try something new. “If they fail, we"ll all be there to help pick up the pieces, see what happened and move on."