Entrepreneurship Acumen [5 of 7]: On Failure

The fifth Acumen Fund question (see the firstsecondthird and fourth) went like this: We believe that learning from our mistakes and failures is an important leadership quality. Please describe a personal failure and what you have learned from it. This is a tricky one, and much has changed since my original reply. But first, this is what I had said:

In 1999, after completing my first undergraduate year, I started a small company together with a colleague. By the following year, the company had gone bust and, partly due to the energy invested in the venture, I failed my second year examinations thus having to repeat the academic year. Financial losses were minimal. The emotional losses of a simultaneous double failure – business and academic – were substantial. When I eventually got around to objective self-reflection, I believe the most important things I learnt were the following.

I learnt that engaging in activities from which a high return is expected (successful business, a degree, etc…) requires focus. Splitting my time between two large projects led to disorganization, desperate last minute work, and results that were not nearly good enough.

I also learnt the importance of not doing things by yourself. Be it friends, family, colleagues or mentors, having somebody to provide support and a balanced external perspective is invaluable.

I learnt that gut feelings are good things to have: our company was building products that with a little bit more effort and focus might have been successful. I also learnt that gut feelings are not the whole story: while a ‘hunch’ may provide enthusiasm and interest, sober analysis is required to build confidence and commitment. Similarly, whereas enthusiasm may easily be acquired overnight (or over a beer), confidence needs to be built up organically and iteratively by creating realistic milestones, celebrating successes and regularly revising future expectations in light of how hard achieving a milestone actually turned out to be.

Most importantly, I learnt how to learn.

Why this is still (not so) relevant to me today:

There is a strong tendency in the entrepreneurial/VC/business world to consider “the ability to learn from failure” an important trait. This is not untrue but neither is it the whole story.

First, why it’s not untrue. Simply put, if you’re the kind of person who will run away and hide the moment something goes wrong then you won’t last long in an entrepreneurial role. Things will go wrong. And you need to get up and keep going or start over.

Second, why it’s not the whole story. Indeed not even half the story. Although you may fail at times, you will probably also succeed in some areas. The successes could be small or big things, from producing a memorable business card to signing a large client deal. It is much more valuable to focus on these bright spots and learn from them. Focusing on your successes is infinitely more useful for two reasons.

  1. The obvious first is that its better for morale.
  2. The more practical second is that you’re more likely to find actionable things to replicate by looking at what you did right.

The problem with focusing on failure is that what you learn is that a particular approach (/tactic/attitude/action) was wrong. You don’t learn what the right one is. Even worse, you don’t learn what the things that you specifically need to do are. Let’s take a trivial example.

  • Scenario A: I designed a memorable business card
    • Next time I will repeat the process. I will have a brainstorming session with my team, I will produce mockups, I will get feedback from the team and from clients, I will hire a skilled designer and use a reputable printing press.
  • Scenario B: I didn’t
    • Next time, I will, er, do better?

A contrived example you will agree but a useful one nonetheless. In the first scenario I have a list of things that I can point to and say “Yup, those are good things to do”. More importantly, I can hand them over to other team members/employees and use the principles behind them in other areas of the business. In the second scenario all I know is that one approach out of a infinitely large possibility space did not work.

What I’m getting at is that focusing on failure makes you run away from an approach while focusing on success makes you work towards an approach. ‘Towards’ is better than ‘away’. You can build a strategy around ‘towards’ but not around ‘away’.

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