In life, we win and we lose. Show me a winner and I show you a person who has lost and failed many times. The key is not to stay down when life knocks you to the ground but to learn from your mistakes, get back up, and keep moving forward.
I have failed a lot. I often say (tongue in cheek) that I have a doctorate from the School of Hard Knocks. During the 2007 recession, the building industry I was part of collapsed. The fallout cost me my job, and I lost everything that was built on a flimsy, materialistic foundation. Reeling from the loss, I took stock of what I had left and decided to rebuild my life and career on lasting values and principles.
In the beginning, I failed a lot. I represented the wrong lines, signed bad contracts, and trusted the wrong individuals. My mistakes cost me money and opportunities, but each time I learned a lesson. Applying these lessons has helped my sales agency succeed after 17 years.
If you are an entrepreneur, you will fail. The key is to leverage the failures in a way that allows you to use the lessons as building blocks.
Here are 5 ways to leverage failure to your advantage:
1. Extract the Data, Not the Drama
Every failure carries information: poor market timing, unsustainable pricing, people in the wrong roles, misaligned actions, and weak protocols can take an emotional and financial toll. Instead of emotional post-mortems (“why did this happen to me?”), run data autopsies:
- What assumptions failed?
- What signals did I ignore?
- What worked up until it didn’t?
I worked with a building materials company that was not highly profitable despite large sales volumes. After analyzing their profitability figures, it was discovered their overall profit-margins were extremely thin due to a few high-volume builders they served at a very low cost. When margins are thin, it’s tough to make it up with volume. This company raised the pricing to their top builders, which caused all of them to leave for another distributor who offered low pricing. Interestingly, the result was that the building materials company earned more net profit despite losing 50 percent of their sales volume.
2. Reframe Failure as Market Research
When a product or service flops, it can be a paid experiment that reveals what customers don’t want, which is priceless insight. For example, when YouTube first launched, it was built to be an online dating platform, where users uploaded short videos to attract potential dates. It was a flop. After considering the results, they shifted their focus to being a general video-sharing platform to upload anything, view anything and that unlocked scalability.
Marvel Entertainment filed for bankruptcy in 1996 after their comic book sales collapsed. They reinvented themselves through character licensing and film production, which led to Disney acquiring Marvel for close to $4 billion in 2009.
It has been said that “success leaves clues”… failure can leave clues as well.
3. Build Margin and “Anti-Fragile” Thinking
A company that has margin for error will likely be able to ride out the inevitable mistakes that will occur.
You can build margin and make your business anti-fragile by:
- Testing smaller, cheaper experiments before going all-in.
- Maintaining adequate capital (time, cash, misc. resources) to absorb the shock from a mistake.
- Treating negative outcomes as signal-boosters, not verdicts.
Amazon survived the 2000–2002 dot-com bust with a large cash buffer after raising close to $700 million in convertible bonds just before the crash. They also extended their cash runway by prioritizing customers before suppliers. Amazon survived a 90% stock drop while continuing to invest toward their success. Today, Amazon is an e-commerce powerhouse.
4. Repurpose What Survived
Sometimes 90% of a project burns down, but the surviving 10% might be extremely valuable.
For example: A building exterior company in the Pacific Northwest was active in many phases of exterior construction and they were spread thin with high overhead. The business was bleeding financially, so to survive, they analyzed the parts of their business that produced higher margins. As it turned out, their gutter replacement and gutter cover business had low overhead and provided high revenue. After pouring their energy into their gutter business, they are now making a good profit.
Netflix offers another example. They repurposed their subscription model, data collection and recommendation engine, along with its analytics capabilities. Netflix successfully shifted from mailing out DVDs to one of the largest video streaming platforms.
5. Keep Ego Out, Curiosity In
Our egos hate being wrong. Steeped in ego, we wallow in our failure and become anchored in fear of another failure. Curiosity is more empowering. The questions we pose about an undesirable outcome can open up a pathway to great success. Here are some useful questions to ask, when things don’t go the way, we want:
- What assumptions did we make going in?
- Which of those turned out to be wrong — and how do we know?
- What signals or red flags did we ignore or rationalize?
- Did we have the right people and skills in place?
- Were our roles and responsibilities clear?
- What decisions were made too slowly or too quickly?
- Where did communication or accountability fail?
- What resources were missing or misused?
To conclude, here is a link to short video featuring George Forman and how he dealt with failure:
