Failure is part of risk-taking for any growing business. It’s what you learn from those missteps, however, that determine future success.
For most businesses, failure is one of the most feared results possible. A failed project often leads to finger-pointing and a return to square one. What many business owners don't realize, however, is that failure can actually help you drive growth.
To achieve robust growth, you have to take risks. And risk-taking inevitably leads to occasional failures. The key is understanding those failures and using those insights to drive value from future investments. Here are three ways that your business can embrace failure.
1. Fail quickly
In order to create the next groundbreaking product or service, you have to take risk. Today, more than ever, companies innovate and compete on a global scale, making it even more challenging to fully vet a product.
Experimentation will allow your company to reach the market faster. These test-and-learn phases can be a great way to learn quickly what works. Trying new ideas can mean failure, but the alternative might mean investing valuable resources in a product that your customers don't want. By quickly building and offering a sample offering, you can learn more about what your customers want. If it doesn't work, move on to the next groundbreaking product.
2. Empower your team to lead through failure
Most people inherently fear failure. But if your people aren't thinking critically and trying new ideas consistently, your organization will fail. The best leaders empower their teams to try new ideas, which empowers them to drive growth.
The key is to balance performance and learning. Employees must feel like they can try new things and fail in the short term without being punished in the medium to long term. The message should be that risk and failure is acceptable - as long as the loss is monitored and there is learning. A positive side effect is that employees will feel like they have your organization's support, which will help innovation continue to prosper.
3. Discover your weaknesses and find your strengths
If a newly developed product or idea doesn't work, your organization has arguably learned more than it would from a successful offering: You now know what your customers don't want. And depending on how adversely your customers reacted, you may understand how far off you really were.
More importantly, failures allow for reinvention and reprocessing to improve on the concepts of a failed product or service. Figuring out why something failed can teach you how to avoid future failures.
Your company can safely aim for incremental improvements, or it can take the risks that lead to significant, sustainable growth. For your team, managing risk and failure can be your true path to value.
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark