Failure - Crucial Factor in Success?

I recently asked a small audience of pretty powerful business types, one of whom had recently received over £1m of bonus while his employer had written off billions, if anyone had ever failed at anything. Not one hand went up. I prodded them asking surely they failed at something - still negative. So I volunteered and said, I fail at something almost daily - often simple things like failing a loved one by devoting just a little too much time to work, or avoiding a potential sale because I was reading the news on the internet. I had also failed at much bigger things. A previous business of mine had failed because I arrogantly assumed a number of things which transpired to be untrue. Failure hit me very hard because I had planned without failure and its consequences in mind.

With the help of a few colleagues at Ecademy.com, notably Rosemary Slosek, Laury Burr, Robert Zarywacz and Nick Bush with whom I debated the subject and by listening to the profound and stimulating recent address by JK Rowling to the Harvard Alumni, I believe recognising and embracing failure can help you succeed.

Understanding the Importance of Failure

So had my audience been denying they failed at things or were they honest they simply have never failed at anything? And why was the question important? I often ask would-be candidates for jobs if they have ever failed at anything and most lapse into interview-speak and say no. They have hit every sales target, achieved every challenge and went on every Chairman's Club etc. I usually avoid such people because they clearly do not understand what I'm asking and at best are fooling themselves if they do and at worst outright lying. The fact is failing at things is very common. The clear learning point is achieved by recognising the failure and modifying your approach or behaviour in order to avoid repeating the failure. I am very suspicious of those who say they have never failed in case they have and just deny it or worse still they don't know they fail at certain things and so will probably fail spectacularly when it all catches up with them.

And that's why failure is important. Many highly successful people like JK Rowling understood when they failed they needed to learn from it and applied themselves in a different way in order to be successful. In her Harvard address, Rowling says:

"So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.

Failure gave me an inner security that I had never attained by passing examinations. Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above rubies.

The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive. You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more to me than any qualification I ever earned."

This is a strong statement. Failure allowed Rowling to 'stop pretending that she was anything else other than what she was', and it helped 'strip away the inessential'. JK Rowling insists she failed cataclysmically but she does point out we all need to define what constitutes failure to us. And that's the essential learning point - understanding when you have failed, accepting you have done so and then making the conscious effort to change and modify your approach will help plot a path closer to success.

Further, failing has a powerful benefit. It makes you truly understand what success really is, help you be able to define it better and it will make it that much sweeter when you attain it.

Failing and Making Mistakes

My illustrious audience insisted that my minor failings in forgetting a birthday or coming home late from work are just minor errors or mistakes with no real consequence. My response was 'Not so'. I believe strongly that my personal foibles are symptomatic of a poor attention to detail on seemingly minor matters which fundamentally affect much more important things. My consideration that these matters are less important is a behaviour pattern that will ultimately bring a catastrophic failure if not dealt with. Should I continue to value work more important than my relationship with my wife there is no doubt it will have an impact on my marriage. This was the gist of my argument. My audience were quick in response that you can easily recover - a nice meal, a bunch of flowers or some perfume will soon rectify the situation.

At that point, I drew their attention to the fact that BA and BAA conspired to bring about the dreadful Terminal 5 saga at Heathrow. In the same quarter as CEO Willie Walsh being named an Executive of the Year by a newspaper and guiding BA to powerful profits, thousands of passengers languished at T5 as 'teething problems' failed to deal with their needs or their baggage. While it was fine to fire a couple of executives, issue platitudes and fob off the press, the failure was of an immense proportion. What is more, the whole plan to commission T5 was almost totally conceived with that level of failure built in because of the symptomatic laissez faire attitude of the executives involved. While the T5 fiasco was a big failure, when married with the high profits, many would argue that BA have weathered the storm and that it was just a blip in progress. My assertion is that if BA do not accept and embrace the failure it will ultimately permeate into everything they do. As long as the numbers are ok, failing the passengers is fine. If left unchecked, the problems could spill over not just onto profitability but, heaven forbid, on safety.

There is a thin line between failing and making mistakes. It may be a genuine error to forget an anniversary or important meeting but that is what planning tools are for. Failure is acceptable in the short term and considered a mistake. Forgetting more than once starts to indicate a trend in behaviour that is beyond a mistake. It is better, in the long run, to consider mistakes as failures and plan not to repeat them.

The Butterfly Effect

I wrote in an earlier blog article on single random events or Black Swans as Nassim Nicholas Taleb would describe them, destroying well ordered systems like the financial market. The interesting thing is that senior people like Stuart Green of HSBC have now come out and said that the business model which led to the credit crunch was fundamentally flawed and 'bankrupt'. Yet in nearly every answer to my blog and Linked In question, people have asserted that the warning signs were there, that the economy had built itself on high gearing and history showed that the model was flawed already. So what compelled the banking executives to pursue that strategy knowing that at some point or another, Black Swan event or not, the market would catastrophically fail causing losses which make Third World Debt look trivial? And even as they speak, the UK Prime Minister pumps £50bn into the asset backed security market to restart it knowing full well it was the finance system which failed us the first time around.

Comparatively small failures compound and start to magnify their potential outcome like the butterfly effect as in each cycle they are overlooked. In the competitive world of free market enterprise it would have taken a brave bank to have stepped back and not participated in the boom. But the self same bank would not be in the financial mess that the likes of Northern Rock, Bear Stearns at the extreme end and RBS, Citigroup, UBS, HSBC et al got themselves into.

Failing while Succeeding

I sometimes read with interest how highly successful people, who have all the visible signs of amazing success like money, image, and great careers are often those who court massive personal or business failure. It comes as no surprise that many a great relationship has been destroyed as a cost of success, both on a personal and business level. Again, I wrote a blog article about Denial and there is a link here. It is the successful person's ability to deny failure that allows them to concentrate on success. As an example, how could Willie Walsh feel successful after the T5 fiasco? Easy, his success is based on the numbers which were fine. By simply denying the failures at T5, he can continue to drive his profits. My assertion would be that if BA continue to ride rough-shod over its customers in such a way, ultimately the business will start to fail at the profit level. Perhaps more sadly, how many successful business people like possibly Roman Abramovich who owns Chelsea FC have had a failed marriage while at the pinnacle of their business success? Denying failure, may lead to short term success but long term it adds fuel to a potential catastrophic failure in the business.

Your own Failings Affect the Success of Others

The problem about not being able to recognise, deal with and learn from your own failures will ultimately start to affect the performance of others and potentially lead to failure for them. A good example of this is relationships. Little failings can build up over time and contribute to failure of the partnership. While it takes two to tango as they say, failing and recognising it is a personal thing. As Rowling points out, defining what is failure yourself is personal, but recognising and dealing with it may not be. From a business perspective, failure by an executive or staff member may ultimately lead to failure of another person or part of the business. An argument could be put that failures by say Nick Leeson brought down Barings Bank. It's why it is critical in business to be honest with yourself and recognise when you have failed and do something about it - because it will not only be yourself that's affected.

Recognising and Dealing with Failure in Others

The Nick Leeson example was wrong. Leeson was part of an organisation and industry that continually ignores failures. Self regulation in business is always a danger and in the financial industry where greed pervades more than anywhere, it's like the cat being asked to guard the cream. Leeson was guilty of deception no doubt but those around also failed to recognise the failings because their motivation to make money outweighed their ability to make judgement calls. How history repeats itself - in identical ways the derivative-led business of the banking industry has pretty much caused the current economic climate. Comparatively small failures combining and compounding to produce catastrophic failure and losses. The failure of managers and executives to intervene and recognise failures ultimately caused catastrophic failure.

The problem the financial industry has is that it has shown repeatedly that even when spectacular failure has been attained, they simply point a few fingers, mumble platitudes, make a few cuts, blame the customers for demanding too much service for too little spend and then plan the next frenzied boom. If Taleb has got one thing pretty close to right is that strip away the derivatives, mortgage books, loan syndications and such like and you might have a profitable business ongoing, all the rest just boosts the salaries of a swathe of upwardly mobile gamblers. The inability of the financial industry to recognise failure in itself and others and inaction against the power of greed will continually lead to boom-bust cycles and I believe at some point will lead to a financial disaster that would make the 1930's look like a holiday. No one knows for sure but the combined positions of the world wide derivative book is upward of $516 trillion according to a post on my blog by Eric Leibowitz. Just one butterfly not even a Black Swan and the whole lot could collapse like a house of cards. At every conjoin of the cards, failure stalks.

Back to The Real World

So when I ask if people have failed I am looking for people who recognise what failure is and I am looking for how they dealt with it and did things differently. I am not necessarily looking for whether they became super-successful because of it as people like JK Rowling are rare, although it's worth noting Steve Jobs dropped out of a Stanford degree course, Bill Gates was unsuccessful first time out, and Anthony Hopkins faced all the demons at his lowest ebb before rising to be the superstar he is today. The fact is we fail and recover at some level every day - failing big is not fun but it can become a profound positive force when it is dealt with the right way.

So when I asked earlier in my blog whether people felt degrees or MBAs mattered or made a difference, the answer is yes they can make a difference. But of more relevance is understanding how people deal with failure - this builds a more compelling picture. That someone elects not to go to University to 'experience life' is fine but how they deal with that experience is the critical issue. You can learn all you like or experience as much as you can but if don't act differently because of it then none of it is of great relevance.

Failing is important - in science some of the greatest innovations were by-products (euphemisms for failure to find what they were looking for) of research or as I like to call it 'trial and error'. Acknowledging, accepting and dealing with failure is arguably the driving force that differentiates human beings from any other organism on this planet. Recognise it, embrace it, learn from it and apply the new knowledge and ultimately you will be far more successful in life.