The value of failure in business

Although attitudes are changing in this country, there is still a marked fear of failure. When people make mistakes, they don't own up to them, and even worse, many won't risk failing in the first place, writes Chris Ingram.

Thousands of executives in big companies have exactly that attitude. Once you get behind the façade, it’s difficult to figure out what it is they do. They’re very effective at stopping things from happening, but initiate absolutely nothing.

With entrepreneurs, there is a big difference in attitude – they’re desperate to make things happen so they’re prepared to take risks, although the image of the entrepreneur as a big gambler is wide of the mark. The successful entrepreneur is a controlled risk taker, doing everything to reduce the chances of failure in advance.

However, it is true that almost all entrepreneurs are optimists, so they rarely see the risk being as great as others do.

Personally, I always try to have a Plan B in reserve. This is something you must keep to yourself: if employees know that you have already planned for the failure of the venture it could well become a self-fulfilling prophecy.

John Maeda, a designer and computer scientist at the Massachusetts Institute of Technology, argues that ‘only those who are afraid of failure are ever truly creative’. But does it go deeper than that? How much success has, as its genesis, a humiliating experience or failure?

See also: Fear of failure is holding back 4 in 10 would-be entrepreneurs

That my father regarded me as a failure because I didn’t pass O Level Maths at school will always be etched in my mind. I spent decades (literally) trying to impress him with my achievements in business. But his response was usually: ‘Son, when are you going to get a proper job?’ It’s sad, but I don’t think I would have achieved anywhere near as much if I’d had a more normal, caring and encouraging father. I’m sure I wouldn’t have been as driven.

Attitudes to failure in the US remain different. Eight years ago, I was briefly living in New York. I had arrived from London, having been trying to take my public company private. In the City, I had received a dozen or so elegant responses as to why this was not possible.

Within a month of being in New York, an investment banker approached me to say he not only wanted to take us private, but was going to provide a war chest of $2 billion (£1 billion). Since our market cap was under $300 million at the time, I kept pinching myself to see if it was a dream. In fact, I became nervous. In our roller-coaster ride on the stock market, things had not always gone smoothly – far from it. Hadn’t he realised?

I thought I’d better own up before things became embarrassing: ‘You do know we’ve screwed up a couple of times, don’t you?’ The elderly banker immediately replied: ‘Yeah, and I bet you’re a lot stronger for it!’ I could have hugged him.

The ability to bounce back is as important as the ability to be an out-and-out winner. Alex Ferguson, the most successful football manager this country has seen, said after the 2004/5 season when Manchester United won nothing after being close to winning a treble (Premier League, FA Cup and Champions League): ‘The test of any manager or player is how they handle adversity. We can reflect on what might have been as long as we like, but we have to look forward.’

Success and failure are strange bedfellows, and if you are to be a real winner you have to cope with both.

When I was a teenager, my sole interest in life was to run for England. I was in the Surrey Cross Country Championships and even though I had only just started training seriously, I found myself lying fourth out of a field of 90, immediately behind my club-mate, Robin Harwood. Then disaster struck – we went up the side of a hill and I seized up. By the time I got to the top I was 19th and never recovered. My club-mate was picked to run for the County while I looked on.

I decided I was a wimp who needed toughening up and I went out at nights when I got home in the winter months, looking for the toughest hills I could find. I hated hill running, but however I felt, I flogged myself up those hills chanting my team-mate’s name with every step: ‘Har-wood, Har-wood.’ I condensed my frustration into the very personal need to beat my outstanding club-mate. Although those nights seemed very long and miserable, it paid off spectacularly and within six months I was seventh in the South of England Championships.

This wasn’t just a (somewhat primitive) example of how to cope with failure, I learnt an additional lesson: really work on your weak points instead of continually polishing up your natural strengths. It works in business as much as in sport.

Chris Ingram has considerable experience of building and managing rapid-growth firms and is widely regarded as the father of the modern media agency. He started CIA in 1976 with three people and £10,000. It grew into Tempus Group and was sold to WPP for more than £430 million in 2001. He now runs The Ingram Partnership, a strategic brand-building and communications consultancy.

How to learn from your mistakes

Dan Sullivan, co-founder of entrepreneur coaching company Strategic Coach, explains how to extract the essential lessons from business failures.

Back in 1978, I declared myself bankrupt and got divorced on the same day. Many people would see that as a bad day, but for me it was a turning point that made some things very clear.

I knew things had to change. I saw it as a school report from life itself, saying that I had failed at two important areas: relationships and money. What I saw as I looked for the lesson in this experience was that, painful as it was, in order to move on, I had to take total responsibility for these results in my life. It’s easy to waste a lot of energy blaming other people or looking for reasons outside yourself, but by just deciding to take total responsibility you gain back control.

It was then that I started to create the plan for what became Strategic Coach, a business that has grown to turnover of £13 million. Partly because of this, I like to say that bankruptcy is just an extreme form of market research.

A lot of what we try to teach entrepreneurs has to do with taking their experiences and maximising what they can learn from them.

What differentiates entrepreneurs from many others is that they tend to take action, look at the results, and then learn so they can do better the next time. This is quite different from how conventional education works, where the emphasis is on not making mistakes and the student learns and learns for years without gaining the ability to apply much of that learning.

While everyone knows that you should learn from your mistakes, few people have sat down and thought about how that learning process works. I believe there are three essential stages to go through.

Let’s say you just pitched for a new piece of business. The important thing to realise is that whether your succeed or fail, whether it goes brilliantly or is a truly awful experience, you will always be able to sit down afterwards and put the elements of the experience into two categories: what worked and what didn’t.

Analyse as many aspects of the experience as you possibly can, from the pitch team’s chemistry, the rapport you built with the prospect, the format of your presentation, the understanding you had of your prospect’s business needs, and so on. Once each element has been scrutinised in this way, the second stage is to consider, were the experience to be repeated, what would you do differently?

‘Bankruptcy is an extreme form of market research’

It’s best to focus here on the top five or so priorities for change. It might be as simple as saying, ‘That’s the last time we use PowerPoint!’ Or it could be the need to get better intelligence about the specific needs of prospects, related to the product or service you’re providing. Perhaps having your FD in the room really helped deal with technical questions on the figures involved, so they should have been involved at an earlier stage of the pitch planning.

The final stage is to consider what new processes you could introduce that would build this knowledge into your business and improve the results you are getting. This could be a pre-pitch survey that prospects are requested to complete or an early-stage planning meeting between your heads of sales, finance and marketing. The key is to look for recurrent, efficent processes that can be implemented relatively painlessly.

This process keeps you and your team focused on how to improve. The less energy that is wasted on blame and punishment (and that includes beating yourself up), the more there will be for creative solutions and innovation.

Some of the greatest learning comes from things that don’t work, so try to just make sure that the habit of asking the right questions is in place and that people treat each experience, good or bad, as an opportunity for learning and improvement.

Chris Ingram

Chris Ingram

Chris Ingram is a businessman, entrepreneur and art collector who was judged London Entrepreneur of the Year' in 2000 in the Ernst & Young awards and was founder of the CIA advertising agency.

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