Every business is looking for the next thing that will help the business grow. Hardware vendors, software vendors, and the companies that use their products often use their yearly strategy reviews to find the perfect product to insert into the market at the perfect time. But, as often as those activities result in success, the less discussed result is failure. Maybe not massive failure, but failure. Wrong product, wrong feature, wrong time, or wrong price can contribute to the sad event.
And that’s OK!
Failure is an option.
Let’s start with the idea that every investment must be quantified and justified, and if it is, success will follow. Business history proves that life doesn’t work this way, especially when the market is in flux. The spreadsheets and forecasts can build a framework, but there will be risk. While some companies may be blindsided, the best practice today is to build plans with flexibility. That may take rethinking how you build your strategy, when you test your progress, and how you respond to failures.
Failure of a strategy or a project is not the end of the business if you are prepared. The odds tell us that every project will not succeed. Even the Harvard Business Review and McKinsey are awash with examples of failure. The math tells us that 70% of transformation projects in the last decade have been failures, but that doesn’t mean they didn’t bring value. To realize the value requires careful review of the strategy implementation, consistent metrics, and honesty.
Review what lead you to the strategy as well as the implementation plan. Markets can change in an instant, as we saw in 2020. For some companies, the 2020 plan flew out the window, while for others, there was some tuning to take advantage of what the market brought their way. If your plan flew out the window, that alone is not a failure. Things happen. But how you responded is the likely determinant of failure.
Interviews with companies for projects completed in 2020 and into 2021 uncovered three key characteristics of companies that embrace failures to grow:
- Transparent communication across all departments. This allows managers to quickly spot when products or services are failing to meet goals.
For example, if a hardware vendor introduces a new feature that has seen little uptake from current customers, they may have misinterpreted the market. This is the time to bring the team together, talk to some customers and identify where the disconnect lies. It takes empowerment to have these conversations. Put everything on the table. Was the research correct, but the timing was wrong? Did the interpretation of the research is the mark leading to the wrong product
Another example: If a printer develops a new format offering, but no one is buying it, look for how sales and the customer service teams discuss it. It may be that they have missed the value proposition, or their talk track needs some guidance. You can only have this conversation if you know what is being said, and that is where transparency is the requirement.
- Decision weighting. Not all decisions have the same weight. Jeff Bezos of Amazon talks about Irreversible and Reversible decisions. Irreversible decisions are those where failure is not an option. Or, if you fail, the results are irreversible. An ill-considered sale or merger can fall into this category. These are the decisions where you are truly putting the business on the line. Just about everything else is reversible, but you still have to track the results of the decisions and be prepared to alter course.
For example, you can invest in a new press. If it doesn't work out, there are ways to recover, but you have to recognize the problem and take corrective action. You can add features to software suites, but if no one buys them, it's time to ask why and change plans.
In all cases, think about the weight of the strategies and the decisions that evolve from them so that you can identify the appropriate review cycles. The more highly weighted a decision is, the more review points you want to build in. And then, you need to empower the team to raise a flag when results fail to meet expectations.
- Agility in decision making. Agile methods for product design are common today, but the same methods are rarely applied to making business decisions. Think of Agile as Lather, Rinse, Lather, Repeat. Lather represents the initial plan and the adjustments to that plan. Rinsing is the evaluation of results.
Companies that practice agile decision making often begin with small decisions and grow into the larger business decisions once they have their teams trained and review processes defined.
These practices form an infrastructure that permits failure instead of imposing penalties on those who promote strategies or products that fail. The goal is to learn from mistakes, apply the learnings, and move to the next opportunity. That is why failure should always be an option.
Looking for help reviewing your strategies and determining where to embrace failures for positive business impact? Contact us, we would be happy to help.