Learning from business failure
Learning lessons from adversity
Failure is difficult but it can be a good thing. Learning to turn setbacks into something positive can be transformative, empowering and beneficial for your business.
Can failure be a good thing?
It's always difficult when we face a setback, but we can all learn valuable lessons from mistakes or errors of judgement – in life as well as business. Sometimes great strength can be found in adversity. Think of it as a stepping stone to getting it right next time.
With the tech sector alone contributing £170 billion to the UK economy annually1, it would certainly be a huge loss to our economy if entrepreneurs simply gave up every time a fledgling company got into difficulties.
Failure and transformation
Painful as it may be, failure sometimes comes with taking chances and trying to transform the status quo. Alexei Levene, successful serial entrepreneur and co-founder of water purification venture Desolenator, admits he has a couple of "spectacular" start-up failures on his CV. He says: "If you're pushing boundaries, failure is a necessary condition – otherwise you're not on the edge.”
Gerald Ratner agrees, as he’s been there. At the start of the 1990s, his £500 million jewellery business collapsed after a joke about the quality of its products backfired and hit the headlines. He says: "You can't succeed the whole time. But it's better to have been in business and failed than never to have been in business at all."
So how do you turn adversity to your advantage? Successful people are often adept at putting the emotional burden of failure aside and focusing on the lessons learned from a setback so they can use it to their advantage in the future.
Another good tip is to break down problems into digestible bite-sized chunks – you don’t always have to try to solve the whole problem straightaway.
Challenges often prompt people to find the resolve and determination they need to succeed – qualities Paralympic gold medallist, Karen Darke, showed after being paralysed from the chest down in a climbing accident. She says her inspiring journey began when she realised she'd been thinking about things she couldn't do instead of things she could do.
Negative thoughts or doubts can sometimes be valuable in tackling setbacks if you analyse the causes. Try writing them down to help you think about what can be done about them. Simply identifying the issues can sometimes be a big help.
Challenging cultural norms
It seems that failure is a particularly taboo topic in the UK compared to some other countries and perhaps a change in attitude is needed. “The word failure is so loaded with negative cultural connotations, especially in the UK, where we don't tolerate it at all well. So let's talk about learning, opportunities and experience," says Levene.
In the US, by contrast, setbacks are often viewed in more positive terms. Rather than being immediately put off by an entrepreneur's past difficulties, American venture capitalists are more likely to see them as evidence of an entrepreneur's practical experience.
Of course, that attitude works both ways: a start-up may need to work with people or organisations that understand that doing something innovative comes with risks. Being open about past failure can be part of testing that a potential partner has ideas and expectations that match your values.
Avoiding the blame game
Entrepreneurs often rely on a good team to get ideas off the ground and that support is just as important when trying to work out where things went wrong. "Playing the blame game is definitely not what you should do – it's toxic,” says serial entrepreneur Damian Kimmelman.
A more productive approach is to work out what success and failure look like as a team. This can be a powerful bonding exercise. There are usually multiple causes behind failure, rather than simply one person's mistake, so try to unpick what went wrong in an open, honest way and learn from it.
Learning to cope
Of course, failure can get to you. Ratner says: "I began to believe what the press were saying about me – that I was unemployable and the poster boy for failure. You tend to wallow in your own grief – you lose confidence and I gave up for a long time after I lost my job." However, a positive by-product for Ratner was that he took up cycling, an activity that helped him to rebuild his confidence. Now that he is back running a successful online jewellery business, he still cycles to clear his head and make better decisions.
He is philosophical about his experiences: "There is always a silver lining. I do appreciate things second time around. I'm happier now than ever before because I have a proper work-life balance,” he says.
Learning to cope with setbacks can give you the emotional strength that enables you to change difficult situations. Examining your fear of failure or embarrassment about it can help you to realise it's not so bad, put it into context and help you see the bigger picture.
Darke says family and friends can make a real difference in difficult times. She says: “Being vulnerable presents huge opportunities to connect more deeply with other people and ourselves. It can provide profound learning opportunities to go forward in a more positive way.”
It’s clear from these stories that we all need to embrace so-called failure and be willing to learn from it. Richard Heggie, Head of High Growth and Entrepreneurs at Barclays, says: “I think of Andy Murray as an example: in defeat he says he analyses what went wrong and then applies those lessons to win next time. I think we can all learn from this and it’s an approach that can help create the entrepreneurial champions of the future."
How to embrace failure and learn from it
- Accept that as an entrepreneur you're pushing boundaries and that risk of failure comes with the territory
- Reframe failure as a learning opportunity. Try to understand what went wrong and then apply those lessons in order to win the next time
- Break down problems into smaller digestible parts
- Difficult circumstances can help you to connect more deeply, not just with other people, but with yourself
- Examine your fears about failure. Put them into context, stay positive and remember it's better to have been in business and failed than never to have been in business at all