STREET SMARTS

A Whack on the Head

A past Inc. 500 business owner explains how, when you're ready to learn, failure can be the best teacher.

Norm Brodsky is a veteran entrepreneur.

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Failure can be the best teacher you'll ever have -- provided you're ready to learn

People sometimes ask me what I think is the most important quality to have when you're going into business for the first time. I can answer in one word: resilience.

I'm talking about the ability to bounce back from failure, to turn a bad situation around, to profit from your mistakes. Because you're going to make mistakes, plenty of them. What's more, you'll keep on making them as long as you're in business. Sure, we all like to think we'll eventually get so smart we won't make mistakes anymore. Forget about it. You will never stop making mistakes. We hope the new ones won't be the same as the old ones, but I promise you, they'll be just as painful. They'll bug you just as much. They'll make you just as mad.

But, as upset as you may get, it's important to bear in mind that failure is still the best teacher. You'll do fine as long as you're open to the lessons it's trying to teach you.

I'll give you an example from our company, CitiStorage, an archive-retrieval business in Brooklyn, N.Y. Six months ago we lost a big customer. I found out about it at 5 on a Friday afternoon. One of my salespeople called me in my car and told me we'd just received a fax from the customer, a major law firm, announcing its intention to move its boxes out of our facility when the contract expired in three months.

Now, in this business, moving your boxes is a big deal. It not only is a hassle for customers but also is costly--there are various removal fees to pay. So the message is loud and clear when a customer leaves, and this one came completely out of the blue.

I was stunned. "What are you talking about?" I asked. "Man, how could we lose this account? What happened?"

The salesperson didn't have an answer, and we couldn't get one from the law firm. The people in charge wouldn't see or talk to us. Our urgent messages brought perfunctory replies: "The decision has been made, and it is final."

Obviously, we had screwed up. The salesperson who had brought in the account had left us five years ago, and we hadn't stayed as close to the customer as we should have. A week or so after receiving the fax, I came up with a proposal that finally got us a meeting with the firm's managing partner--to no avail. The situation was too far gone. We could offer good financial terms, but we couldn't fix problems that had been festering for years. Our competitor matched the terms and got the account.

So I called everyone together and asked, "What can we learn from this? What do we have to do differently in the future?"

The real lesson, I knew, was not that we had made mistakes. You always make mistakes. We failed because we'd waited too long to find out about them. So we decided that from then on, we'd check in with each customer 18 months before the end of the contract and offer to negotiate a new one. If the customer hesitated, we'd know we had a problem while there was still time to fix it.

As soon as we began implementing the new policy, we made a very important discovery. We had unhappy customers and didn't even know it. One customer was upset about our on-line-information system; we fixed it. Another customer thought it deserved a lower rate because it had increased its volume dramatically; the customer was right, and we made amends. A third customer didn't like a particular aspect of our inventory system; we changed it. A fourth customer was miffed because we hadn't been sending regular monthly reports; we started sending them.

So, four months into the policy, we've made four improvements, pleased four customers, and locked up four accounts. And all those benefits have come from one failure. In the long run, that failure may prove to be one of the best things that ever happened to the company.

I myself draw even greater satisfaction from another aspect of this episode, however. There was a time when I would have exploded at the loss of a major customer. I might well have fired the salesperson responsible for the account. I would at least have put all the blame on his or her shoulders.

This time, I responded differently. I knew the failure was my fault even before I understood why. It had happened because of something I had neglected to do. Not that I take responsibility for everything that does or doesn't happen in the company, but I realized the salesperson wasn't entirely to blame in this instance.

By taking responsibility, I was able to make sure we got the full benefit out of this screwup. I would have had a hard time doing that when I was younger. Too bad for me-- I'd probably have learned a lot faster if I hadn't been so quick to blame other people.

That's a difficult lesson to learn, and I'm very happy I've learned it. No doubt, it will help me to be even more resilient in the future.

Norm Brodsky is a veteran entrepreneur whose six businesses include a former Inc. 100 company, a three-time Inc. 500 company, and a start-up that he hopes will become eligible for the list in 1996. His column, Street Smarts, will appear every other month. Readers are encouraged to send him questions care of Inc.
This column was coauthored by Bo Burlingham
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Last updated: Nov 1, 1996

NORM BRODSKY | Columnist

Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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