What's there to learn from Business Failure?


This is a question I asked my Trainer friends often, without ever receiving a satisfactory answer: Why isn't there a course on understanding failures?

Business failures are more common than business successes. Failures teach more - 'double loop learning' is what the learning theorists would say - and understanding what not to do is indeed the bedrock of a sound strategy. Yet, while various trainers sweat out in the endless quest of differentiating themselves, they all offer different formula of success - this method or that, always fool-proof, always the only route to success - no one wants to talk about failure. Why?

Apart from the explanation that talking about failure would be bad omen, there are hardly any good explanations for this rather inexplicable omission. That Business Executives don't want to talk about failure is wrong: Read any business book, and the narrative is often structured as a struggle, that things got worse before it got better! It is so popular a formula that often one would invent failure and struggle. But, yes, all such failures end in happily ever after successes: Or, at least, that's the myth, because the subsequent failures don't get written about. [One example: Theresa May's current Chief of Staff, Gavin Barwell, ex-MP, won the Croydon Central Seat by a few hundred votes in 2015, and promptly wrote a book - How To Win A Marginal Seat - but did not bother to update it when he lost by more than 5000 votes in 2017!]

On a more serious note, I think people don't want to train on failure because of two reasons. First, most training is usually structured as clear, short and sweet intervention FOR something specific, usually as the best way to achieve the promised outcome. There is no place for reflections or ruminations in training: Life is too short for that. And, since no one wants to train FOR failure, and there is no scope for anything oblique, no trainer wants to talk about failure.

Second, we have this assumption that success is replicable whereas failure is not. We believe, after Tolstoy, that while all successful businesses are alike, the unsuccessful businesses are unsuccessful each in their own way.  In short, there is nothing to learn from another person's failure.

It is perhaps I believe the opposite. First, I believe that there is much to be trained THROUGH analysing failure. The entrepreneurs crave for someone who would tell them what not to do, and allow them to know possible downsides of the decision. Surely, no one can anticipate all the possible outcomes of a decision, and downsides are context sensitive: But no one considers such nuances when speaking about sure-fire ways of success.And, second, empirically, it is easy to prove that the same mistakes are done again and again, and businesses fail following well-trodden path. There is much to learn from failure, and some training on business failure is surely useful. In fact, the right maxim should be - all successes may have the same ending but different origins, whereas failures may look different in the end but may often begin in a predictable way.

So what can we learn from business failure? I believe we can learn a lot about Risk, Integrity and Loyalty by studying failure.

We get a limited view of Risk if we don't study failure. Risk is understood in terms of potential impact of doing something. However, there are downsides of not doing something, a point we completely miss if we only look at examples of success. Besides, all risks are not born equal and there are 'above the waterline' and 'below the waterline' risks: The former impacts a business but the latter may sink them. This analysis would be completely missed when we are talking only about business successes.

Integrity as a concept is at the core of business success, but one doesn't see all its contours and impact unless one sees it in a failure. One may have a cavalier attitude about users' data, but one has to see this in the context of a huge breach, or a wilful misuse as in the current case of Facebook, to understand what Integrity, or the lack of it, may mean. In success, integrity is a nice thing to have: In failure, it's the life-blood of business. Because the conversations are so skewed to successful businesses, we get such blatant failures even from within the very successful ones.

Finally, Loyalty: Business failures show Loyalty, of customers, employees and even suppliers in a different way. In successful businesses, loyalty is often taken for granted. Failure shows what the erosion of loyalty may mean, and particularly its symptoms, in terms of the twin expressions of Voice and Exit. Too many companies, as we know, remain too focused on Exit and less on Voice, trying to stonewall customer complaints with fine print and obfuscation. Studying failure illustrates the golden rule of loyalty: Turning Exit to Voice is the path to success, and the opposite, Voice to Exit, is the recipe for failure.

  









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