Have you ever wondered if the popular belief that “failure is necessary to succeed” is a lie?
If you ask failed entrepreneurs about the reason the business failed, they’ll tell you that “we ran out of money”. But, running out of money is not the reason businesses fail.
It is only a byproduct of failure.
I want to believe that we can fail and still succeed, but I no longer believe it to be true.
There are failures you learn from and there are failures that destroy your business.
It is also important to note that you can succeed and still fail.
Kodak invented the world’s first digital camera in 1975, yet they were bankrupt by 2012. You’d think that management would jump to joy, owning such a disruptive technology, but they didn’t take it seriously.
The 131-year-old company failed because it refused to adopt to the demands of a new world where consumers wanted digital photography.
Kodak failed to change.
Complacency destroyed innovation.
Kodak was in the center of the shift from film to digital photography. They invented the technology. Instead of monetizing the technology everybody wanted, they desperately held onto the past, film. Instead of creating a “Kodak Moment” they created one of the biggest business failures in history.
Here is what you can learn from Kodak’s demise:
- Never ignore new trends and technologies. For years, Kodak used lame excuses such as too complicated, too expensive, too slow, and more.
- Kodak refused to make a serious commitment to digital photography. If you make a decision, don’t half-ass it.
- Make it your mission to really understand the world around you. Care less about what you want and worry about what your customers want.
- The Kodak brand transitioned from “Pioneer of photography” to “Relic of the past”. Newcomers can move fast and dethrone relics of the past.
- Don’t let margins alone influence your decisions. Kodak had nearly 70% gross margins on film which pushed the company to prolong the life of film.
Failure has a dollar value.
Look at the decisions you make in terms of money.
If I fail how much will it cost my business?
You might not have an exact dollar amount, but at the very least you should be able to come up with a range.
For example, you hire an employee and the employee turns out to be a low performer.
How much money does the low performing employee cost your business?
There are only two possible answers.
Answer 1. I don’t know. If you don’t know, you have no business hiring an employee.
Answer 2. The wrong employee could cost the company $25,000 per month.
Once you can connect a failure with an actual number you can understand its negative impact on your business. So, considering the above example, how many months can you afford to lose $25,000?
Never look at failure without considering what it will cost your business.
It is the only way to make educated decisions about your business.
Before you take action, ask yourself the cost of failure.
How much does it cost your company if you fail to:
- Get your company on the first page of Google for your most important search phrases.
- Sign up new customers at a cost that enables you to stay profitable.
- Hire the right people at a cost that your business can afford.
- Convert your customers into raving fans.
- Create a product or service that is good enough to grow through word of mouth marketing.
- Outsmart your competition.
- Develop your Unique Selling Point (USP).
- Differentiate from the noise in the marketplace.
- Get out of your own way and hire smarter people than you to help you build your business.
- Understand your financials.
In the comments below, let me know what you think are the best ways to measure the impact on failure on business.
Latest posts by George Meszaros (see all)
- 7 Key Ideas to Do Strategic Planning The Right Way - April 20, 2018
- 7 Tips to Make Smart Financial Choices When Starting a Business - April 19, 2018
- 3 Secrets to Start a Small Business on a Budget - April 14, 2018