There are many reasons why businesses fail. Failure can be the result of bad management, missed opportunities, market shifts or just plain bad luck. And it’s not as though failure is a rarity; research by the Boston Consulting Group found that the corporate mortality risk for a given company in the consumer goods or the industrial goods sectors was just north of 30% across a five year period. Of course, it’s not as though the nearly 70% of businesses that do survive don’t experience failure. Rather, more often than not it’s a case of ‘what doesn’t kill you makes you stronger’. Here are some of our top tips to leverage failure for future business success.
Don’t Avoid Failure At All Costs
Some business articles suggest taking a glass half full approach to failure – that is, opting to treat failure as a positive experience. This doesn’t mean you should be complacent about failure; failure is costly, and you should avoid it where possible. On the other hand, failure is not something to be avoided at all costs – if you don’t take measured risks, you’re unlikely to innovate and keep pace with the competition. A degree of failure is the cost of most business success.
Know When To Give Up
A business takes capital, but it also takes energy and time. After you’ve invested a lot in an opportunity, it can be very difficult to walk away. The greater the loss, the harder it can be to move on. Fighting your way out of a hole is commendable, but not if it means risking new opportunities.
Pause and Think
Once the initial stress of failure has passed, take time to reflect. What opportunities was your team hoping to realise? What went well, and when did it become clear that things were off track? Tools such as a SWOT analysis are commonly used in the planning stages, but they can also be a useful way to structure your thinking post facto.
Avoid the Blame Game
In most organisations and cultures, failure is synonymous with fault. Sometimes fault is relevant, but it is important not to let assigning blame get in the way of learning from failure. Holding poor performance to account is important to create a high performing culture, but this does not mean coming down hard on staff every time something goes wrong. Failure is often complex, with many factors unrelated to an individual contribution.
Disseminating Knowledge for Business Success
Once you’ve identified what went wrong, making sure to share that knowledge widely in the team is of crucial importance. In the aftermath of a major failure, stakeholders are likely to have questions – explaining your team’s current thinking creates a feeling of transparency and can bolster staff and customer confidence. In this vein, it is incumbent on senior leaders to create a positive culture regarding failure, such as by avoiding blame and by reminding people that failure is a necessary, yet difficult, part of discovery.