Navigating Failure

Growing Pains

‘About half of all new businesses will survive for just five years’, according to the US Small Business Administration. However, even during those first five years the waters are choppy. Even if you manage to stick it out longer than five years, you will still experience plenty of growing pains.

 

Fail Fast… Fail Forward

Despite the well known mantra ‘Fail Fast & Fail Forward’, you may very well be fooled into thinking that things are going well, even during those first five years.

According to recent research, ‘The Rise and Fall of Startups: Creation and Destruction of Revenue and Jobs by Young Companies’, George Foster and Carlos Shimizu of (Stanford), the rocky road to failure or success is often unpredictable. Source: L. Dishman, Fast Company

First Five Years

  1. Only 7.5% of startups add jobs for three years in a row.
  2. Most startups cut employee numbers during their fourth, and their fifth year.
  3. 34% of fifth-year revenues were pulled away from competing businesses (not created from new markets).
  4. 50% of startups saw their revenues grow in year three…but! 
  5. 50% experienced revenue setbacks in the fourth, and the fifth year of business.
  6. 50% were unable to post revenue increases for three years in a row.

The reality; expect that nothing will run smoothly!

Fail Fast (2:30)

Jagi Gill (Tenex Health)

The challenge is that you are faced with a lot of headwind.

NOTE: video starts & stops at pre-assigned times

Failure Sucks?

“There is no such thing as failure… there is only learning”

Learning From Failure

Learning from failure is important, according to Prof. Rita McGrath (Columbia Business School). Prof. McGrath has some tips on failure, which can be enlightening to all of us.

Don’t run from your emotions, but remind yourself that failing at a business is different from failing at life. ‘You are valuable, you have a lot to offer, who knows what you will do next, but you’ll do something good’, are things struggling entrepreneurs don’t hear enough.” ~ D. Mendell

Failure Avoidance

  1. Some Failures Are More Useful: Understand the cause and context (preventable, complexity-related, and intelligent).
  2. Define What Success/Failure Look Like: Before you start, consider why you are doing a startup; solve a business problems, innovate to attract customers, expand markets, gaining access to new capabilities or channels. Consider also; what does a successful startup look like, compared with an unsuccessful one?
  3. Convert Assumptions Into Knowledge: Document your assumptions down and share them with the team. Everyone should seek out information which might indicate that those assumptions are incorrect. Also consider potential barriers: internal (culture and process), relational (alignment of goals and trust), and environmental (legislation and geography).
  4. Fail Fast: Develop key performance indicators (KPIs) to measure progress. Continuously capture data and feedback. If your current model isn’t working, iterate FAST.
  5. Cheap Failure: Begin by deciding on a realistic budget, and adhere to that budget. To be ‘thrifty’, also minimize resources by partnering with others.
  6. Limit Uncertainty: Make the startup process seamless and structured. Set expectations about startup culture with colleagues, be clear on the process and timing. Be crystal clear about technical, legal (IP) matters.
  7. Celebrate Intelligent Failure: According to Facebook’s CIO Tim Campos, “Move fast, and break things!” Facebook embrace failure, and strongly encourage it, ‘a license to fail’. Being tolerant to failure, helps people do things differently.  
  8. Psychological Safety: Embrace messengers of bad news, celebrates intelligent failure, rewarded those who intelligently fail (vs. punishment). Learn from the failure.
  9. Document and Share What You Learn: If you don’t document the failures, and you make the same mistakes again, again, and again, your organization will not learn to practice intelligent failure.

Fear being left behind, but not failure itself!

Source: Kati Holland, RocketSpace

FAILURE (2:00)

Prof. N. Wasserman

What is the big mistake entrepreneurs can make in the founding and early execution? Ignore people problems (your own and those of your team), at your peril.

NOTE: video starts & stops at pre-assigned times

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FINAL Quiz

46 Questions

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