Why You Learn More from Failure than from Success

Bizadvisor.com Legal Services About Mary Hanson Business Articles

WHY YOU LEARN MORE FROM FAILURE THAN FROM SUCCESS

by Mary Hanson

Who knows more – the business person who has experienced many failures or the business person who has experienced many successes?

If both have the same ability and a strong work ethic, the person who has experienced more failure is probably a much better-trained and experienced business person.

Why is failure a better teacher than success? There is an easy answer. It has nothing to do with pain building character.

When a business is successful, the many various points and aspects of success are not obvious. The particulars that contribute to success often do not stand out. Success does not command attention to details. The business owners and managers who operate a successful business often do not actively question and pursue insight into the factors leading to success. They may not even consider the possibility that mistakes can be made.

In contrast, when a business is failing, each mistake in assumptions, planning, and implementation stands out. When a business fails, the business owners and managers who operate the business often question what went wrong in agonizing detail. Bitter failures are relived in the minds of the those who feel responsible. Even if bad luck, the economy, or some misfortune beyond the control of management is the real cause of the failure, every wrong move and unwise decision is examined. They question "Why did we do that?" and "Who should have seen what was happening? Why did that happen? What could we have done differently?" The level of detail in this examination is typically far beyond the detail that is available in looking at success.

This is not just a matter of looking at what should have been looked at in the first place. The benefit of mistakes is that they often highlight issues and possibilities that simply are not obvious and not foreseeable without the benefit of the particular experience.

The manager who has been stunned by failure knows not only the importance of preparing and planning, but also that the unexpected can happen. He or she plans with an eye on a much broader range of possible situations.

Business mistakes that seem obvious in hindsight are made all the time. A "seasoned" manager who has seen such mistakes made can tell you how it is possible for good management to make such "obvious" mistakes. He or she knows that such mistakes can creep up on even the best managers.

The following are examples of areas in which experience (including mistakes and outright failures) are most effective as valuable training:

Unmanageable debt levels. Who knows what an unmanageable debt level is? The business owner who has failed because of too high a debt burden is more likely to know what that level is than the business owner or manager who has never faced failure. The manager who has only known success will most likely miss some of the non-obvious difficulties that can arise with managing debt. The manager who is confident in his or her success is likely to underestimate the burden created by debt and fail to consider all the various possible problems. Interest rates can rise, revenues can drop, and other expenses can increase, squeezing the funds available to service the debt. Projections can be wrong.

The gung-ho manager who thinks his or her calculations of debt service are accurate may miss some of the subtle consequences of debt burden altogether. For example, lines of credit at attractive rates are not made available to high debt businesses. If cash flow dips and payments are missed, late charges will be incurred, increasing the burden of the debt. Some vendors may choose not to sell to the business with too high a debt burden. Vendors may be very quick to put the business on C.O.D. if payments are late. The business person who has failed knows this and knows how it all happens more keenly than the business person who has known only success.

Trust. Every once in awhile we hear of an employee embezzling large sums of money. Those who have never experienced this wonder how in the world such a thing can happen without the financial scheme being detected. Meanwhile, many business owners or managers use "trust" rather than proper business controls to handle financial matters. Someone who is "trusted" is given control over more than one financial function, without regard to proper checks and balances. Again, the manager who has been through the heartbreaking situation of embezzlement knows how it can happen, while everybody else is amazed (and many of the "amazed" continue to do what the "burned" managers know to be the exact behavior that opens the doors to theft).

Hiring the wrong people. A common mistake is hiring people who are going to "take your business to the next level" or "turn it around" or "dramatically increase sales" without properly investigating the capability of the potential employee or considering the real likelihood of the results being promised. If the promises or projections are believed, the individual may not only be hired, but hired at a level of compensation that is not appropriate and that makes termination more difficult.

The business person who has been burned by disappointment or failure due to employment of the wrong people without proper review and investigation, will know to dig deeper for information. It may be important to do a background check and call former employers and contacts in the industry to check out his or her record. The experienced employer who has been burned will not employ an individual based only on the potential employee's presentation or promises of great performance. He or she will not only do a more thorough investigation before hiring, but will also consider using probationary periods of employment, bonuses based on performance, and lower beginning salaries to be increased if performance levels are reached.

The business person who has always had success and good employees may take the potential employee's promises at face value. He or she may think that the new employee will simply be terminated if "things don't work out," while the seasoned employer knows to be prepared for possible employment claims, lawsuits, and workplace disruptions.

Co-ownership. The business person who has not been in business with others is likely to see only the positive aspects of going into business together - someone to help carry the weight, someone who can help with expenses, and someone who will contribute valuable skills. The business person who has been through a horrendous situation with a co-owner will balance those general benefits with concise details of how people really work day-to-day and how difficult it is for two people to manage or control a business together. The seasoned business owner will know that someone's being a friend and a good, honest person, does not mean that he or she would be a good business partner.

The person who has lost a business as a result of co-ownership can tell you all about the difficulty of co-managing a business. He or she can tell you exactly how unlikely it is that you and a partner will feel the same way about long hours, reinvesting money in the business, spending money, taking money out of the business, expanding the business, hiring other managers, giving bonuses, and taking time off for family matters. There are just too many issues that good people can differ on. Many of the possible points of disagreement are not obvious or do not seem important to individuals going into business. However, the business owner who has been through co-ownership and has been burned knows how important these subtle issues are.

Marketing assumptions. The marketing person who has seen marketing failures will know that markets are not always what they seem to be. Even the greatest product may not sell, even in a market that seems perfect for that product. A seasoned marketing manager knows many ways to try to determine whether a product will sell in a certain market, through certain distribution channels, etc. Even then, the seasoned marketing manager knows that even the best research can falsely predict successful sales. He or she knows how to handle expecting the unexpected.

The person who has been involved with the successful marketing of a product and has not experienced the failures that are often involved in marketing may make incorrect assumptions about a product, its market, the distribution channel, or potential sales. He or she can develop a detailed plan and still miss the issues one learns by experience and failure.

WHAT WE CAN LEARN

In business, it is not uncommon for an individual to be successful without really mastering many aspects of business. In a big company, an individual can get by because of the work of many other people. Even in a small business, it is possible to lack knowledge in many different areas. As long as someone else performs well in those areas, the business owner is saved from his or her own inexperience or inadequacy.

But what if the manager or business owner does not realize that he or she has been "carried" or "saved" by the work of others? That individual may eventually get lessons direct from the great teacher called "failure."

An important key to avoiding mistakes is knowing what your level of competence is, knowing what you can handle and what you can't, and knowing when to call on others for help.

What can we do to learn from failure without failing ourselves?

h Learn from others’ mistakes. Whether the source of information is a friend who has been through a difficult business situation, or an article in a business journal, consider how you can take steps to avoid the mistakes made by others.

h When you hear of a "failure," try to actually picture yourself in the difficult situation described. Picture exactly what you might do and when you would have to take action if the same things happened to you.

h Learn more from your own mistakes. Force yourself to visualize in detail how you should have handled a situation and what might have been done differently. Imagine the words you would use, the reports you would generate, etc. The next time the same thing comes up, you will have a better approach to use, instead of repeating the same mistake or making a new mistake.

h Ask for advice from others when going into something that is new or different. Don’t assume that you can’t make mistakes or that bad things can’t happen to your business just because you have been successful in past business activities.

h Learn to anticipate what can go wrong. Picture exactly what different outcomes there might be for any product, service, contract, engagement, association, etc. Visualize not only the positive results you are hoping for, but also as many as you can of the real possible outcomes. Try to look at the issues with the intensity you would have if you were facing failure. Then try to address or avoid the problem outcomes without having to experience them.

Those who can examine their mistakes in the greatest detail and apply the lessons from those mistakes to the greatest extent will be best prepared.

The lessons from failure are stronger lessons than those of training, projection, or preparation.

In business, those who have "failed" should recognize the value of their lessons. Those who have never agonized over bitter failures must attempt to learn from the experience and failures of others or else risk learning their own bitter lessons first hand.

When you go through difficult times - whether due to the economy, your market, employment issues, or financial problems - this is when your lessons are most effective.