How many people remember that Steve Jobs wandered in the wilderness for quite a while as a leadership outcast from Apple, after he was eased out by John Sculley? Business failure can lead to success. In Silicon Valley, you are considered a better bet if you have failed at least once. This is less true for Main Street businesses.
It turns out that business failure can lead to success more often than we think, and not just for tech guys. In fact, the failure of one business combined with a willingness to try again indicates a higher likelihood of success in a subsequent attempt.
In Business Week, Karen Klein writes, “a new study suggests that people who try and fail at business are far more likely to succeed if they pick themselves up and start over again. Maybe if more entrepreneurs fessed up to failure—and more would-be entrepreneurs listened to them instead of succumbing to survivorship bias—the pitfalls of startup ventures could be avoided more often.“
Survivorship bias is the belief that those who survive are somehow better leaders than those who fail. There is no accounting for luck, timing or undercapitalization in survivorship bias.
What Makes for Business Success?
In an earlier article Klein wrote, “A 2008 Harvard Business School working paper (PDF) on persistence among venture-capital-backed entrepreneurs shows first-timers “have only an 18 percent chance of succeeding and entrepreneurs who previously failed have a 20 percent chance of succeeding.” Other studies show that this number rises with each failure. Two reasons are cited: people learn far more from their mistakes than their successes, and failure weeds out those likely to not succeed the second time round.
Owning the Mistake
As Gretchen Gavett writes in her blog, When We Learn from Failure and When we Don’t, “In their recent HBS working paper, Christopher G. Myers, Bradley R. Staats, and Francesca Gino identify what they call an ambiguity of responsibility, which plays a powerful role in determining when you learn from failure and when you don’t.
It goes something like this: When we fail, we internally pinpoint what the authors call an “attribution of responsibility – namely taking personal ownership for the outcome or blaming it on external circumstances.” If you take personal ownership, their research shows you’re much more likely to learn from and work harder after that mistake.” Clearly, owning a failure is important to learning from it.
Executing a Mistake
In their book, Billion Dollar Lessons: What you can Learn from the Most Inexcusable Business Failures of the Last Twenty Five Years, authors Paul Carroll and Chunka Mui write that really big failures often result from flawless execution of bad strategy.
Klein quotes author David McRaney writing about cognitive bias, “Really, always think to yourself: What is missing from this story? When you’re looking for advice from a person who’s only telling you what to do—but never saying what not to do—you’re getting a biased view of the world.”
So how do you learn to get an unbiased perspective?
Take heart that learning from your mistakes will help you succeed this time or next time. Get a good strategy and think it through to save yourself from failure. And, if you fail, you will do better next time.
OR call me to think that strategy through and how best to execute it. Email me at firstname.lastname@example.org to set up a time to talk.