25 Lessons Learned through Failure

Close observation and unfortunate first-hand personal experiences have taught me many lessons about why companies fail. Here’s 25.

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Below are the 25 most important lessons I’ve learned through close observation and first-hand experiences in how entrepreneurs and startups fail. The first sixteen primarily address strategic and operational issues, and the last nine deal more with management and organizational issues. I believe the three most important factors for any company are people, product and market, so I’m not sure that the ratio of ways to fail really fits my overall beliefs, but perhaps you’ll have ideas and lessons you’ve learned that will bring the ratio more in line. Read, and then comment: what would you add as reason #26?

1. Dither, dither, dither; plan, plan, plan. Instead: Fail fast. Fire, aim, repeat.

Time is the most valuable asset a person has, and yet it’s the easiest and most common thing wasted. Speed breeds momentum and passion, motivation and a bias for action. Learning through experience is far more valuable than learning through planning, prototyping or researching as Nothing is more direct, meaningful and visceral than seeing how something works (or doesn’t).

What is the second-most important asset? Passion. People only have so much passion, intellect and interest to devote to ideas without seeing results, without seeing the fruit of their labour. Give people the chance to succeed and the opportunity to learn without drowning them in the process. Few things are more demotivating than working on a project for an extensive amount of time just to see it canceled shortly before it would have seen the light of day.

2. Postpone hard decisions until you have to make hard trade-offs. Instead: Make decisions earlier to create options and build flexibility.

Make decisions before you think you need to. You’re probably too late if you come to the point where you realize you have to make a choice between hard trade-offs. By waiting to make a decision you’ve created trade-offs instead of options. Postponing decisions in the attempt to optimise your results is probably a waste of your resources in other ways.

3. Copy tactics. Instead: Create strategies.

Blindly following the tactics and path of other companies is a sure route to failure. The right tactics are indelibly linked to the internal and external environments a company faced at a particular point in time. Companies regularly fail by adopting old business models or basing a business on artificially protecting old business models. Re-applying another company’s tactics neglects to consider the process and path they took to success.

Followers focus on tactics and tools rather than strategies and goals.

4. “Fight the good fight.” Instead: Pick the right battles, at the right time, with the right people.

There is a time and a place for everything. Make prudent decisions based on your present and future situation and capabilities rather than fighting every battle that comes your way. The hardest part for every startup is staying in the game, thus do everything you can do to stay in the game give yourself the opportunity for future success.

Implications:

• Leave big, systemic, intractable problems to big companies with the resources to get knocked down and get up again. Instead, solve simple problems (big and small) where you can have a direct impact.
• Let large companies create standards. Stay away from basing your success on re-creating the wheel for the industry. If your valuable, innovation solutions for your customers are meant to be industry standards, then they will naturally become the standards, but do not depend on systemic change for your success.
• Leave large, cross-industry partnerships between incumbents to large, established companies. Startups will almost always be caught between the old battles and priorities of established companies, better to not depend on having to solve their relationships for your success.

5. Solve your problems. Instead: Solve their problems.

Alternate interpretation: Solve buyers’ problems instead of solving sellers’ problems.