Characteristics of failure – what is its look and feel?
Failure is natural and intrinsic part of life
Failure is universal – it is found everywhere and affects everything
Failure is inevitable – perfection is illusory
Failure is pain – always some negative consequences
—————————————————————————————————————
Failure is opportunity – offering the chance to try line and make a fresh start
Failure is learning – teaching us that further effort would be wasted, helping us not to repeat the same mistakes again
Failure is information – detail about what not to do
Failure is directional – closing off potential parts but leaving others open
Failure is stimulation – encouraging and challenging us to innovate
Failure is fun – giving is freedom to think and act unconventionally
Failure has some positive aspects as well as negative ones and we must be careful in not polarising views about success and failure. Remember also that some of the negative aspects don’t relate to the failure itself, but the fear of failure which can lead us to be overprotective and preventing us from taking worthwhile risks and opportunities. In other words, not exploring our comfort zone sufficiently. If you want to explore your comfort zones personally, there is a website www.whatismycomfortzone.com
Types of failure
Is this an absolute failure – does it succeed or not? Is it as simple as pass or fail? What is a relative failure? Something which is below some threshold or has failed to reach the desired standard? Perhaps we can expand on these as well:
Technical failure – it doesn’t work.
Competence failure – I can’t do it
Parameter failure – okay except late, over budget, too slow etc.
Hierarchical failure – okay for you, but not me (happens a lot in organisations where a project is on time, on budget, with full specification but does not deliver the expected value)
Subjective failure – I don’t like it
Resilience
The ability to bounce back, to persist, to get back quickly and completely to the original state. Resilient people tend to be able to take in their stride whatever life throws at them, and they also tend to be more able to adapt to new situations and willing to embrace them.
You can test your resilience at www.testyourRQ.com and re check it every six weeks.
Resilient businesses have a shared corporate culture with robust processes and values that allows the business to absorb unforeseen changes. A typical example is a business continuity or disaster recovery plan, although resilient processes should be built in throughout the organisation so that you do not have to invoke such a plan.
Those that survive failure are not necessarily the cleverest, strongest or most talented – they are the ones who continue to turn up.
Helping your resilience
Mindset – failure is inevitable and natural so we should be able to accept and expect failure. But should we persist or not? Not usually black-and-white, but measurements (more later) will help. The positive aspects of failure, coupled with natural entrepreneurial optimism may encourage us beyond any point of realistic optimism such that we need to recognise wishful thinking for what it is, and rely upon the facts as we know them.
Minimising the occurrence – it’s not our goal to fail, so we need to employ risk management and project management techniques to help. Proper project management involves setting clearly defined goals and milestones and measuring them. A good part of what we discussed in how to innovate relates to this. Remember Mike Tyson – the first plan will fail. Experiment, are we doing something that is plausible, economically scalable at all? Can we correct the course of this experiment should we need to? Can we achieve early profitability as a test and to reduce risk? What are the idea’s 4P’s – population, price, penetration and purchase frequency? (Are you measuring existing projects/sales lines etc. like this – why not?)
What are the most critical assumptions – what does success look like, then what are the most two critical things necessary to make it happen? Can we launch this in miniature to learn about it or simulate it in some way? Can we do an everyday experiment just to see whether our assumptions are valid?
And measure everything. Do the detail – entrepreneurs, please note. Test assumptions – entrepreneurs, please note. An issue may be the need to resource this – one of the keys to growth is having something that is rare in these recessionary days – excess management capacity. That’s what we do.
Summary – make small bets, be clear what your customers think is important. Ask them, measure everything, test assumptions. And to be clear, make sure you explore the details in your assumptions – “we are going to sell £10k of new product”. How many at what price point makes up £10K? Always volume AND price for everything, so you can determine which assumption (or both) is wrong and by how much. If you are struggling with pricing, see 14 Ways to raise Your Prices and Keep Your Customers.
How to make small bets – do it like an auction – decide in advance how much you are willing to lose – this is the allowable loss (failure). STICK TO IT – don’t be seduced into giving it one more try. Decide what customer centric measures are critical and measure them. If these numbers work, keep going. Don’t get stuck on ego bound ideas. Be humble, ask everyone else in the organisation for input and listen to it. (do you want staff or colleagues?) Remember the bottom up model (slide) – customers are kings and queens, customer facing colleagues are minor royalty, business owners are service leaders –they exist to enable minor royalty to get kings and queens to pay everyone’s wages (including owners).
Maximising the value of failure
Gain as much advantage and information as you can. You have a range of lessons from the failure – capture them and learn from them. Build up a body of evidence-based wisdom and experience to inform our futures. Make sure you build in learning time. This is good project management.
What is the worst – can you ring fence it so it doesn’t infect the rest, and can you live with it?
Measurement
Measure everything.
Plan, for the unexpected not just the optimistic version. Do SWOT analysis, run what if scenarios. Your measurement method will depend upon your project. In particular, the critical assumptions that you have set – maybe number of extra sales, sales value, new customers.
But know the decision and don’t get hooked up on the number. Measurement systems are not necessarily designed to give you an absolute answer when all you need to know is whether you need to change your decision. You can let yourself be guided by what the number isn’t rather than having to know what it is.
You should have a measure which not only tells you when to stop but hopefully when to start stopping so that you don’t overrun too far into failure and waste resources. A good foundation – and I don’t just mean bookkeeping system – will help you measure changes and give you a reality check to know when to push on, possibly when to change direction and in what direction, and when to stop.
Your measurement system should also help you with determining when you are at the edge between success and potential failure. Of course, every time you do something new – some innovation (especially outward facing), you must be by definition at the edge.
When to stop
This is now becoming a lot clearer – deciding when to stop is simply at one of these points:
When the measurements tell you that the loss or risk of loss is too great or the chances of success too small;
When you have stopped learning, or the cost of extra learnings is too high;
When risks outweigh benefits
When to stop old ideas/projects sales lines – as before. But also evaluate maybe using a Pareto measure. Do 20% of your customers/products etc. give you 80% of business? What would happen if you dropped some? We do – annually. We don’t just innovate annually, we drop customers annually. And we encourage our clients to do the same. Better use of resources for the remaining customers ensures better relationships, more sales opportunities and better margins.
Here’s another idea – especially true in hard times when sales are difficult to come by – don’t take them all. Make sure they fit your company plan and way of working. Too often businesses take anything that’s going and spread themselves too thinly, and that leaves them at risk of many competitors, all of whom do more in each little market the small business is trying to get into. As a small business, you can compete with the big boys. Fill your market niche –competitors then can only buy their way in. And you have no chance of being a busy fool. Less work, more profit.
Learning
One of the key benefits is what you can learn even if you fail. Good project management dictates that that the end of every project there is a reflection time. At least a wash-up meeting between all the project members so they can discuss what has gone well, what has gone wrong, and what can be done about it in the future.
This should be documented – it doesn’t need to be good English, just bullet points will do. The important point is to disseminate this so that everybody, not just the project team, can learn from it.
I am very keen in getting my clients to write case histories. These have a number of benefits – as internal documents to record what has gone on in any new project so that everyone can learn from it, and as a marketing tool on your website and to give to customers. It’s important to produce a collective memory so the organisation does not have to repeat mistakes just because Bob has now left and taken all his experience with him. His experience and his anecdotes will not be replicated in the future, but they will showcase how he thought about problems and quite often that insight can be adapted and implemented for existing problems. The key in writing these things up isn’t just what happened, but what you were thinking and how your thinking drove those results. Beware expert induced amnesia – you are writing to other people, who by definition don’t know what you know. Write as though you were telling a customer.
Conclusion
We now know how:
Where the edge between success and failure is
How to measure it
How to learn from it
When to stop – new and the old
When to persist and how to change tack
And we know not to fear failure.