Anatomy of Failure

THE FAILURE BOGEYMAN IS COMING

As soon as we hear the word ‘failure’ we run for the hills for fear of catching the disease. Some high achievers (Branson, Gates, Jobs and the like for example) tell us to embrace failure, but we all secretly think that is easy for them to talk, because they are already successful.

If I was that successful, I’d also be happy to admit my historical failures.

But what if the failure is recent? What if your failures outnumber your successes? Most importantly, what if you believe that you are currently not ‘successful’? Would you be prepared to admit failure?

Most people don’t and won’t. The average entrepreneur succeeds less than 30% of the time. On the other hand, Bill Gates has a 100% success rate with company start-ups. He tried once, and succeeded. Who do you think knows most about what works and what doesn't; the average entrepreneur or Bill Gates?

I tallied up all my business ventures and my pass rate is 2 from 7. That is less than 30%. (In the spirit of honesty, I wasn’t referring to the average entrepreneur; I was referring to my own track record.) I reckon I know more about failure than Bill.

There are MANY more failures than successes in the world. The real stats are:

  • According to Bloomberg, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months - that is approximately 20%.
  • According to an IBM study, only 40% of projects meet schedule, budget and quality goals.
  • For every seven new product ideas, about four enter development, one and a half are launched, and only one succeeds - that is less than 15%.

I can’t find a statistic to prove it, but I don’t believe this state of affairs has improved - ever. So that leads us to the conclusion that we are not dealing with failure like we are with other challenges.

What is failure and why are we so afraid of it?

WHAT IS FAILURE?

Success/failure is and can be more than material things like possessions and money. Success is defined as a state of affairs that are as desired, so failure is therefore non-existence of the success state.

For example: If you define success as a million bucks in the bank, then failure is not having a million bucks in the bank. If you define success as happy kids and time for your art; then failure is unhappy kids and no time for your art.

There is one important assumption in all of this and that this ‘state’ is able to be influenced. If you are physically unable to have kids, then you obviously won’t have ‘happy kids’ either. One can hardly classify that as a failure, even though it is not the desired state.

HOW DO WE RESPOND TO FAILURE?

1. We respond irrationally

The reason why we don’t want to admit failure is that we can’t separate the ‘FAILURE’ from the ‘ME’. We can say ‘it’ was a failure, but we really feel “I” am a failure. When we succeed, we are quick to explain how and why “WE” did it. When we fail, we are quick to find something or someone else to blame, because we take failure is personally.

We all know that synchronicity/luck plays a role, sometimes the dominant role in an outcome. When we succeed, we don’t acknowledge it, and when we fail, we feel like losers for blaming bad luck.

Psychologists will talk about our ‘locus of control’. We tend to internalise events, which is great when things go well, but not if they don’t. People can be trained to shift their locus of control.

2. We make failure relative

Because we want to disassociate ourselves from failure, we define it out of existence.

It is possible to define success anyway we like so that we can describe our current situation as ‘successful’, so that is what we do.

Ganador is a 2.5 person business. That is our business model and that is how we designed it and planned it. However, if I DID win a million dollar contract over several years requiring me to employ more people full-time, would I have done it? Of course I would have, right?

Since that makes the business less successful than it could have been; does it make it a failure? If we were honest, it probably does. I simply settled for less and moved the goal posts to make me feel successful (enough).

If you have a $5m a year retail chain that could be doing $8m, does that mean you are successful or that you are failing?

So, success (and failure) can be defined to suit, and that is a benefit and it is a trap. We end up believing we are as successful as we can be, even when we are actually failing.

Ganador has/does a lot of work with ‘critical retailers’. After eight years, I can say with some confidence that we are intimately familiar with failure. If one can be an expert about failure, then we are. And in eight years of dealing with under-performing retailers, not once did anyone ever take any personal responsibility for the state of affairs. Not once. (On the other hand, I can tell you that John Howard, Kevin Rudd, Julia Gillard and Tony Abbott have a lot to answer for…because they pretty much caused all the problems.)

3. We ignore failure

Our irrational fear of failure pervades our organisations, to the extent that it perpetuates failure. We don’t deal with it. Because dealing with it means we have to admit it, and we can’t do that at all. The consequence of this is that we actually don’t learn about failure, why it happened and how to avoid it in the future.

The people involved in a failed business or project will disband as soon as possible, avoid reference to that ‘black mark’ on their resume and move on.

HOW SHOULD WE RESPOND TO FAILURE?

Instead of a prescriptive list, maybe a few questions to suggest some possibilities will do:

  • How many organisations plan for failure?
  • How many organisations celebrate failure?
  • How many organisations extract maximum value from a failure by constructively engaging with failed teams and failed projects?
  • How many organisations document failure?
  • How many organisations invest in failure training?

HOW we may do these things would not be immediately obvious to some readers, and that is more or less the point. We don’t know what failure training looks like or should look like, because we have never done a course in ‘capitalising on failure’.

Over the course of the next few weeks, I will explore why retailers fail – and then conclude with how we may be able capitalise on it. It is time for FAILURE to come out of the closet. Hiding has zero benefits, and sharing the light of critical analysis on it helps equip us for the present and the future.

Let’s face it, if we work on our failures we have more raw material than if we simply try to replicate our successes.

Dennis Price

Helping to develop businesses less likely to fail at GANADOR