I think we need to re-look the mind-set of failure and convert it into one of second chances. Too often we get stuck in the past. The chains of our mistakes don’t let us overcome pessimism to grab the future, which is within reach. When you are wallowing in self-pity, reproach and in losses, you won’t have the energy to move forwards. For example there is a conference called “FailCon” that is dedicated to “embracing failure.” Failure is more prevalent in certain industries types but the most common reasons for failure according to Entrepreneur Weekly were incompetence (48%) and experience (41%)! According to a Wall Street Journal article, it is estimated that 3 out of 4 VC backed startups fail.
Let us be honest, life is about being human and making mistakes. There are no guarantees for success, no magic wands and no fairy angel investors (or VC godfathers). Be realistic, what can YOU do that will revolutionise your world? It’s simple – begin with what is controllable – the baby steps. What are you good at (skills)? What do you know about market, product, technology, or the customer? Can you leverage these to make money? I am all for one on focusing on how to leverage your strengths! Too many of my students get lost in their areas of non-competitive advantages and they forget they are good in something others aren’t.
Don’t forget that generalists are better strategist than specialists. In a study conducted by Arizona State University and led by Claudia Custodio, CEOs who were generalists earned 19% more than their specialized counterparts! Elizabeth Holmes, the world’s youngest female billionaire dropped out of University at 19 with a passion for an idea and enough knowledge about how to make it work (key operative word is enough knowledge). So learn and learn (you don’t need a degree). In today’s internet knowledge market, you have information at your fingertips. The challenges will be getting the right technology to the market at the right time and getting the right people who contribute to your team to scale up.
So here was an interesting discussion I had with an entrepreneur – he said he thought in his initial career it was enough to delegate but he quickly realised that if it was his business and he did not know what and why he was delegating, he had lost control of the business! He realised that he had to have at least a rudimentary knowledge of most areas of his business – at least till he was generating enough revenues to hire the best people. The children of a second-generation family business recently recounted how their father made them work their way up in the organisation. While initially they were upset they realised later that this gave them a power – they understood the business and no one could tell them they did not understand every aspect and its importance. So learning is key to success – when you fail or reach a roadblock, pick yourself up, learn from the failure and move forward!!!
Unfortunately, funding won’t be available unless there is a clear purpose and a potential for returns (this may not be money in social entrepreneurship ventures). If you can’t quantify impact and future potential and you have no idea of how to get to future potential, you are going to find the entire entrepreneurial journey uphill. Here is another thought: if you have a clear goal, you will find the most cost-effective way to get there. India’s mission to Mars proved that – not that India is lacking in talent. India’s Mars mission was another feat of frugal engineering (technology is great but a means to an end). So even if you got some great funding, don’t waste it – save it for a rainy day!
In the life of a small business, you find every start-up reaches a point where they need to scale and this unfortunately means another learning curve! Daniel Isenberg and Fernando Fabre have written an interesting HBR blog on this topic and the impact on an economy. They think scale-up is critical for economies to grow! Managing cash flow is enough to survive; to grow you need huge infusions of cash and this means capital. Where does this come from? The Global Attitude Survey conducted by PEW Research in a survey of 44 countries among 48,643 respondents from March 17 to June 5, 2014, found that a good education and hard work were perceived as the most important key success drivers (60% and 50%) followed by networking (37%). Some recent research findings of mine show that good education also gives you access to networks. So doing a short course in Harvard may lead to connections. Join the World Economic Forum, go to high profile conference and develop networks as they give you access to free advice, support structure and business contacts. Who knows you may make some great friends!
So second chances are not always about the failure itself. It is about the learning. In this crisis filled world, very few things are controllable. But you know yourself the best, and people respond to people. Data is rational – people are not, and this surprises me. In business we try and rationalise everything to numbers. Numbers have their place, but insights are what will give you the edge. I have been told that VCs and AIs invest in the person or the team behind the idea because ideas are a dime a dozen. Don’t get me wrong – you do need to know numbers, financial literacy is critical in managing a business, managing growth and quantifying market size and expenses is critical to understand working capital….without this, you are sinking your own ship. And here is something you should know – news is about doom and gloom – be positive. The Global Attitude Survey by PEW Research found that emerging and developing countries were more optimistic about their future than developed countries. The financial centre of the world according to the Economist and Christopher M Schroeder (author of Startup Rising) is moving eastwards! Make the most of this!