Learning from Failure: An Entrepreneur's Best Tool

Are you afraid of failures? Do you ignore them, burry the evidence and run? If so, stop. Failures hold the secrets to the success. They give successful entrepreneurs energy and advantages. In fact, the more a person can harness failures the more likely they are to succeed.

Today, Dougal Cameron with GSV explains his view of how failures can be an entrepreneurial weapon and path to success.

Overview

At GST, we define experience as the accumulation of lessons learned, both vicariously and direct, into actionable insight. Experience can be gained in many ways. It can be read in books, studied in classes, cultivated from verbal stories, or salvaged from the wreckage of failure. At GST, we are proud of all the ways we gain experience and continually seek to minimize that which we gain from failure.

Failures are real world teachers

People convey experience in a funny way. Just think back to the last time a young person asked you for career advice. If you are like most people, the majority of your advice were things you might not have done yourself. This ignores the ‘cost’ you would have incurred by implementing that advice by only considering it after the fact.

What tradeoffs would you have had to make to follow your own advice? And how do you know your economic decision at the time wouldn’t have been the same? These are questions that impair the usefulness of secondhand experience.

Failures, however, are unique teachers. If leveraged for insight and cultivated for meaning, they can convey a world of lessons. In each failure hides a root cause. This root cause presents an opportunity to the discerning learner. By definition, a failure is an outcome not desired. Hence, you can rest assured that the decisions leading to it were impaired in some way. Whether that impairment is something that can be prevented in the future or not is part of the learning process.

The process of learning from failure

The necessary ingredient to learning from failure is humility. Without humility, failures are destined to slip past unnoticed; hurried hastily by the ignorant into the distant past. But with humility, the learner can start to unpack the reasons behind the failure.

Once one has the necessary ingredient, the rest of the process is one of discovery. While there are many methods to diagnosing a failure, they all come down to ascribing causation. Whether using the ‘5 Whys’ or any number of other structures, the requirement is to keep penetrating the problem with questions until the ugly root cause is extracted. This root cause is brutish and hideous in its raw form.

The next stop in the process is refining the root cause into a gem of insight. This involves more heads than one. Inviting a team of experts on the process or the domain in which the root cause was extracted is preferred. This team’s job is to determine what steps could have been implemented to prevent the root cause from occurring.

This stage of the process is fraught with danger. There are many who fail at cultivating the gem of meaning from the raw root cause. It is easy to fall into the boughs of naivety or unnecessary complication.

But the triumphant will reach the other side with a true gem of great value. They will have insight that few others have. They will know how to avoid the failure they just experienced. Only those who beg, barter or steal that gem or who have gone through the same failure will have it.

The benefits of the failure

Successful organizations are not immune to failures. They are immune to ignoring them. They leverage their failures as rich areas for cultivating gems of great value. And once they have cultivated enough of them, they will have erected a large and effective moat around their business that few can overcome.

A firm’s mastery of learning from failures indicates that the firm may have two characteristics: a learning culture and an innovative culture. The former requires introspection and humility while the later requires risk. Without risk and without a culture of risk, then the firm will fail to fail often enough to do something truly great. However, without a learning culture, the firm will continue failing and never succeed.