Many businesses, both big and small, fail because they do not take adequate risks, fearing failure, proportionate to their ambitions and capability.
There are generally two benefits of failure.
First, you learn what does and doesn't work; and second, the failure gives you the opportunity to try an entirely new approach. If you have made mistakes, even serious ones, there is always another chance. What we call failure is not the falling down, but the staying down.
Not innovative enough
Not having enough failures oftentimes means that you are not being innovative enough and therefore as a consequence you are not taking enough risks.
If you look at most successful businesses they are successful precisely because they have tried something new that has worked. Now what works can’t often be decided based on analysis because if you are creating something new or trying a new process or addressing a new market, there is no historical data. This puts off a lot of entrepreneurs because of the “fear” factor.
It is unknown territory; there is an issue of spending on something whose outcome is uncertain. This leads to a large number of entrepreneurs, both big and small putting off these decisions which is easier to do then justify the investment in a new initiative. It is often these initiatives that help a company to scale up and grow faster.
Taking the plunge
I am reminded of the time when my co-promoters, I and the top management team debated for hours on end before we decided to take the plunge into patent analytics market. We had a large team that abstracted patent documents for a client and as a consequence had a pool of engineers who understood patents.
With some amount of investment in their training, but more importantly a larger investment in sales and marketing, we could potentially target an entirely new service. We took that risk and had a million-dollar business in the very first year of our operations.
This taught me two things:
Do not be afraid to take risks and stare at failure. Possibly such failures also teach you how get it right the next time around. So, as long there is a possibility of a good upside, go ahead and take the risk. Nothing ventured, nothing gained.
But evaluate the risks. As an entrepreneur there are a number of decisions I have taken based on intuition or gut feel. But it is important to then validate such gut-based decisions as one goes along and faces market-based realities or as the assumptions change.
Minimising risk
I have found two things that help in minimising such risks:
A focus on controlling costs and spending only on outward (read customer) facing investment apart from creating a good product/service is extremely important. I have seen many entrepreneurs raising money and then spending them on all the frills (like a great office and luxury cabins etc.) before tasting success with the customer and having a steady stream of revenues. A sure shot recipe for disaster.
Taking incremental steps to the final destination. Make a small investment that gets you to the next post and then decide if such investment is well spent and the route to be taken next. This in a way is what I call “agile entrepreneurship” something akin to the agile development so prevalent in the software industry.
While practising Yoga sometimes one is so inflexible that one can’t straightaway get into a desired pose and maintain it. This means that you need one or more intermediate steps – making yourself both familiar and flexible and that helps to take the next, more difficult step. This is common sense and why should entrepreneurship be any different.
Persistence, focus
Innovation, coupled with risk-taking, and combined with a few lucky breaks which inevitably follow persistence and focus are in my opinion the keys to entrepreneurial success. It took me over 20 years to be an overnight success. There are of course many folks who do it in far lesser time but the numbers of people who do take time to reach their goal and eventual success is far greater.
From my own experience, persistence is something that I want to emphasize to prospective entrepreneurs. I have had more failures than successes (over 70 per cent of my initiatives were failures) but trudge on I did to eventual success.
Never giving up or not knowing when to give up in the face of repeated failures can be a virtue, but then it can as easily be foolishness. Fortunately for me while I learnt from my repeated mistakes, I did not give up. I had focus and stayed the course and while it took us a fair bit of time, I finally succeeded in scaling up and building a team that helped me unlock value and monetise the business.
Basketball analogy
As Michael Jordan once said, “I've missed more than 9,000 shots in my career. I've lost almost 300 games. Twenty-six times I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."
There is an old Chinese proverb, “Vision without action is daydreaming and action without vision is a nightmare. Strategy without tactics is a slow route to victory and tactics without strategy is the noise before the defeat”. In many ways if you really want the true “Secret” to success in life, it is taking action.
Entrepreneurship is not for the fainthearted or for those who give up easily. It is for those who dare to take those calculated risks and that indeed is the thrill of entrepreneurship.