The Upside To Failing
Where do you want to succeed? Is it losing weight, starting a business, writing a NYT bestselling book?
Are you afraid of failure? Ask yourself how many people succeed without first failing? And who succeeds without learning from their failures? I don’t know of anyone, and if you do, please let me know.
So one key to success is to embrace failure as a lesson to be learned. Use failure as feedback to make an adjustment to move forward on your next go around. This as many things in life is easier said than done.
Half of All New Businesses Fail
According to the Small Business Association (SBA), half of all start-up companies fail within five years. I think that’s a low number, because there are many entrepreneural start-up that aren’t on the SBA radar.
Why Learning From Failure is So Difficult?
Because the analysis of what didn’t work and contributed to the failure isn’t (always) obvious. The fact is that there may be a variety of interwoven and co-dependent factors in play that it’s difficult to determine the root cause. Sometimes drilling down into your mistakes and examining the faulty reasoning behind decisions is too painful an experience. You begin ruminating the “If Only I’s”.
Let’s look at the process of examination with an example. Let’s say you created a widget. You find investors to back you to open a company to manufacture and sell your widget. At this point we must decide if our examination is for a company that failed, or one that is failing. In the first case its a post mortem. In the second it’s a step by step analysis for making incremental improvements to optimize the organization and increase its profit.
How many factors contributed and are interwoven into a failed or failing company are like branches on a dying tree. Look for the greatest factor you can identify for failure to examine first.
Primary question: Why did/is the company fail/is failing?
The answer in our example is; Sufficient sales didn’t materialize.
Which leads to the next question: Why didn’t enough sales materialize?
Now we start branching out to additional questions related to sales:
Market? — Did our widget create or fulfill a need or desire.
Was the market already saturated with other widgets?
Who is our competition? What is competitors market share?
Is our advertising targeted to our market?
Is our sale price too high — possibly caused by high manufacturing costs?
Each of the above questions produces a new round of questions. More branches to climb. Let’s assume our manufacturing costs are too high, making our sale price non-competitive.
Why is Our Manufacturing Cost So High?
That branch can be explored using the following questions:
Is our production run failure rate too high?
Do we manufacture the optimum quantity of widgets in our production runs.
Do our production runs best utilize our equipment and resources?
Do we purchase raw materials at competitive prices?
Are our overhead manufacturing costs: rent, electric, labor too high?
Drilling down to these answers can be painful. Especially when you see where you went wrong and how it could have been improved. Imagine if you rented office space to do light manufacturing. You could pay twice as much for office space as you would for factory floor space. Or renting a store front for office space, where you could be paying more rent for unnecessary customer foot traffic in front of your store, than you would for standard office space.
If the company is dead, the post mortem will certainly identify the cause of death and help your next start-up company live successfully.
If the company is failing each branch on the tree needs to be examined. Hopefully you will discover areas that can be improved and optimized to improve the bottom line. Incremental improvements on a branch benefit the health of the entire organization.
The difficulty is we typically want to run away from failure as quickly as possible. Start over. We don’t want to examine the failure, turn it over, look at the back side, see what we contributed. How much easier is it to assign the failure to bad luck, circumstance, soft market, competitors and lazy uncooperative people. You won’t learn anything doing that.
© 2020 John Iovine