EXTERNAL DELIVERY – Successful Business Failures
Taking responsible risks and making mistakes that lead to failure is a part of business life. Almost everyone experiences failure in business at some point, but not everyone reacts the same way. Most people react to a business failure as though it is the end of the world. Those responsible for taking the risk that resulted in the failure are often chastised by management, may lose responsibility, and might even lose their job.
Today, however, management may look at risk-taking that results in a business failure as an event that may eventually lead the company to success. By risk, I am talking about responsible risk. This is risk where you have an idea, developed a detailed business case, consulted with others who are experts in the area, met with management to secure their buy-in, and if necessary, ensured the infrastructure can quickly be in place to support the idea should it be successful. Responsible risk is not taking a flyer on an idea and hoping for the best.
The obvious potential outcome from a business failure are job losses; brand damage; customer and vendor losses; a Chapter 7, Chapter 13, or a Chapter 11 bankruptcy; an auction, a liquidation, or a 363 pre-pack sale. What’s not so obvious are the benefits that can be derived from a business failure.
One of things I learned early on at Sony was that taking responsible risk and then experiencing a failure was not going to cost you your job or career. Akio Morita, the Co-founder of Sony Corporation, always taught us that one of the paths to success was to take responsible risk. If that risk ended up as a failure, then our obligation was to determine why there was a failure and to learn from it.
Another positive outcome that can happen from a business failure is the recognition of, as the saying goes, a new door always opens when one has closed. That new door is a unique opportunity for success, so rather than focusing on a failure, why not focus on the potential for success? I once read that success does not breed success. It breeds failure. It is failure that breeds success.
Charles Dyson, the inventor of the Dyson vacuum had 1,526 prototype failures after building 1,527 prototypes. His failures drove him on to eventual success when he built the 1,527th prototype.
Another major positive benefit that can be gained from a business failure is strength and courage. It takes strength and courage to experience failure after failure and to continue on learning from your mistakes and not giving up. So I believe a business failure should not automatically be considered by management as a negative situation, especially when there is reasonable belief that these failures may be stepping stones on the pathway to success.
I believe Jim Belosic, the CEO of ShortStack, sums it all up for many of today’s leaders in his statement that, “Most people see the word failure and think unrecoverable. Instead, I see failures as mini test results. I tried something, it didn’t work, so let’s gather up what we learned and try again.”
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John A. Bermingham is former Executive Vice President & COO of 1st Light Energy& Conservation Lighting, Inc. and former Co-President and COO of AgraTech, a biotech enterprise. He was also President & CEO of Cord Crafts, LLC; President & CEO of Alco Consumer Products, Inc., Lang Holdings, Inc., and President, Chairman, and CEO of Ampad, all of which he turned around and successfully sold. With more than 20 years of turnaround experience, he also held the positions of Chairman, President, and CEO of Centis, Inc., Smith Corona, Corporation, and Rolodex Corporation as well as turning around several business units of AT&T Consumer Products Group and served as the EVP of the Electronics Group, and President of the Magnetic Products Group, Sony Corporation of America.
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