Failure as a Business Tool

Whilst on the surface, we as entrepreneurial business owners say that we understand the role of failure in innovation, to truly embrace failure as a learning tool we must have a predetermined mindset to effectively manage failure in the moment.

Failure is a key ingredient of any success according to Michael Dell, founder of Dell Computers and author of the book “Play Nice but Win”. Dell revolutionised the supply chain of personal computers taking out the middle retailer and building a direct-to-consumer model. They were able to do this because they often got it wrong. Dell started the company in his shared university dorm room, took it public then ultimately brought it back again into private ownership. He has had quite a journey the success of which, he puts down to the willingness to fail and learn.

Any entrepreneurial business by definition, is a research and development project. A scientific process whereby a hypothesis is developed, experimentation undertaken, learnings captured, and progress made. So how do we accept failure in a commercial enterprise and still stay in business?

I think part of the solution was highlighted in Jim Collins awesome book, “Good To Great”. One of his five key behaviours he outlined in good to great businesses was confronting the brutal facts. Collins outlined four fundamental concepts to create a climate for innovation and learning where failure and commercialism could co-exist.

1. Lead with questions, not answers;
2. Engage in dialogue and debate, not coercion;
3. Conduct autopsies without blame; and
4. Build” Red Flag” mechanisms.

As leaders of our organisations, it is critical that we have predetermined our mindset and actions to organisational and individual failure prior to any event occurring. In ensuring we are clear about how we and our teams view failure prior to any event and triggering this mindset in the moment when something happens, we give ourselves and our organisation the best chance to innovate bravely and evolve uniquely to create a business by design.