Success is often borne on the back of failure, but few business owners realise there’s a right way and a wrong way to fail.
In the game of poker, Texas hold ’em style, each player has two cards in hand and five community cards laid on the table. Of those seven cards, your hand is made of the best five. The trick is the community cards are dealt as a “flop” (three cards), the “turn” (one card) and the “river” (one card) and you need to pay the ante to see them.
The same goes for the modern business world: you need to outlay a little – that is, be in to win – before you can decide if the hand is agreeable or not. If you like what you see, then commit to following through to the turn and the river. If you don’t, fold – you will only have spent a small amount on the failure.
Make success or failure sample-sized
The lesson from poker is that sampling is a good thing. After seeing the first three community cards, you’ll form a fairly good idea about whether you have a winning hand. While it’s possible to eke out a win from the last two cards with a poor existing hand, the odds are low.
Treat business the same way: invest a little to sample an idea. It costs you less if you need to get out sooner, but without trying you may never succeed. Not only is it a quick and manageable way to start something, it also gives you an idea of whether an idea is viable because when you have a sample of it up and running you can gather feedback, which you can’t do with a plan.
The shift towards small, achievable goals is a generational thing. In the past, structure led to success but it also bred risk-aversion. Today, people are more comfortable with changes as they progress and less often need to see a full plan before they proceed. The agile mindset is about seeing results early. If it’s right, work on it; if it’s wrong, throw it away and start again. Both methods end up costing about the same in time and money – it’s really about how comfortable the organisation is about investing in a sample versus a plan.
Time is opportunity
Another benefit of sampling is that it forces you to begin something. Being quick to start puts you on the front foot for success; if you fail it simply means you’ve wasted less time finding out whether something was a bad idea. Many businesses spend too long analysing details. By the time they get started, the business environment has changed or another business has beaten them to the market. In effect, they’ve taken so long that they’ve already failed.
Success is mostly how you manage your time, and in that we need to remember the opportunity cost of lost time. We all have the same number of hours in the day so those who start, fail and learn quickly are going to be more productive than others.
We work with a customer who uses that mentality to buy technology. They buy it, try it, and if it doesn’t work they’ll buy another. Over the years they found it was cheaper and wasted less of their time to do it this way, rather than spending the money and the time – weeks or even months –evaluating the right solution.
Good failure takes practice
The practice of trying, failing and trying again is very important as it makes you resilient to the effects of change and gives you a way to progress. I’d rather misstep and fail but remain standing than kill my business because I didn’t move at all.
We opened an office in Sydney three times before we got the formula right. Each period represented as much as we were willing to throw away on that particular version. If only one in four ideas worked, then it was still less time and money than if we’d spent it doing lengthier market research.
Practice also gets your team comfortable with failure. You have to create a safe environment where people don’t feel threatened by failure, and where they won’t lose their job or bonus. By minimising consequences and maximising the learning experience of failure you’ll find more people will come forward with ideas that may just form a winning hand.
Five rules to fail by
1. Start fast, fail fast. Spending time chasing the wrong thing has a high opportunity cost.
2. Invest in the chance to see if an idea or product is viable. If it isn’t viable you’ve successfully discovered that it isn’t, rather than bet your business on its success.
3. Know which milestones your idea, product or business needs to hit by what time. Don’t be afraid to kill it or pivot if it doesn’t measure up.
4. Provide a safe environment for your team to generate ideas. Some of these will fail, so make sure they are not punished for trying.
5. Collaborate on ideas so that everyone owns it. If it fails, there is no individual to blame.
*Original Article by Trsitan Sternson: http://www.brw.com.au/p/business/business_as_poker_game_the_entrepreneur_OK8eL5LXwqj2eKN6NYd3wO