By Iqbal Thokan
Make mistakes and learn from them. Don’t be afraid of failure because failure is a prerequisite for innovation and success.
Dr Rick Rigsby once gave one of the most motivational and inspiring talks at the California State University Maritime Academy in 2017 titled, “the wisdom of a third-grade dropout” and in it he says, “I am not worried that you’ll be successful. I’m worried that you won’t fail from time to time. The person that gets up off the canvas and keeps growing, that’s the person that will continue to grow their influence”.
As a business owner it had struck me that over the years, I have made many mistakes, as I am sure many of you have too and if we look throughout history, some of the best and innovative ideas have come about because of mistakes made. However, the key to this is getting back up when we are down and learning from those mistakes and growing and as Dr Rigsby rightly puts it, we will continue to grow our influence. For any business, this is what we ultimately strive to do, to grow our influence over our customers and ensure that they continue to support us and purchase our products or service.
For many of us throughout our lives we have been conditioned with the notion that failure is a bad thing and that everything should be perfect, the perfect school results, or the perfect product or the perfect business, but what we fail to realise is that “your best teacher is your last mistake”, Ralph Nader.
As business owners we need to inculcate the value of failure, and learning from it, within our business. For many of us, failure is a frustration and a means of anger rather than a
lesson and a means of finding a new way. History has shown us that failure can lead to success, if the mindset is right. Take the Wright brothers or Thomas Edison or Albert Einstein or Steve Jobs or Bill Gates or Richard Branson, they all succeeded not because of coming up with the right idea in the most perfect way or condition, they succeeded because they learned from their failures and if we look hard enough, we will find that the most innovative and creative people are the ones who are good at failing forward; learning from their failures.
The first part of failing forward is to accept that failure will happen no matter how hard we have worked or how much effort we have put in and as a great business leader we need to be able to create this mindset within our business, of course within limitations of not making the same mistake twice or making catastrophic mistakes.
Every great product or service always gets started through a process of repetition and learnings and in all cases these learnings come from feedback and the most important feedback we can receive is from our end users or our customers. Don’t be afraid to go out with a good product rather than the perfect one and let our customers and the market guide us to adjusting our product or service to what is best suited for them.
One of the best stories that I have come across about failing forward is that of the famous television personality and serial entrepreneur who most of us know from the television series Shark Tank who is worth close to $4 Billion. Mark Cuban did not grow up with a silver spoon nor was he given anything for nothing, rather he worked hard and made a lot of mistakes and learnt from them. Instead of giving up every time he faced failure, he failed forward. His story is the perfect example of how you have to sometimes lose many times before making it big.
One of the first jobs Mark had was as carpet layer where he failed miserably and the lesson he learnt was that no matter how many times you fail, you only have to be right once. Fresh out of business school, he decided that a good market to be in was powdered milk, and his reasoning was that everyone needed milk, why not do it in a cost-effective way with a similar taste; failure again, and the lesson he learnt was that he misjudged the market and the product completely without testing.
After several more failures, Mark did eventually get a break when he started MicroSolutions which he later sold for $6 million, which began a tailwind of success and as we now know he is one of the wealthiest sharks on the T.V series, Shark Tank. Mark didn’t go from zero to hero overnight and as he wrote in his book, “It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you”.
Failure is a part of life and should be a part of your business as well, as long as the lessons are learnt in order to help you stay relevant, survive and thrive.
Iqbal Thokan is an experienced business management consultant and the founder and co-owner of breedingpositivity.com
They all laughed at Christopher Columbus
When he said the world was round
They all laughed when Edison recorded sound
They all laughed at Wilbur and his brother
When they said that man could fly…
For a lyricist, Ira Gershwin was a pretty darn good historian. My bet is he was OK with his failures, too. Sure, he wrote dozens of songs (such as Someone to Watch Over Me, I Got Rhythm, They Can’t Take That Away From Me [and, of course, They All Laughed quoted above]) that are now standards, but he wrote hundreds more that very few people can recall.
By any objective measure, we would call them failures, and yet as I said, I am sure Gershwin was all right with that. Why? Because the most inventive people are usually the best at failing forward, i.e., learning from what went wrong.
Columbus did, indeed, insist the world was round and then promptly missed America on his first attempt. And, of course, the Wright brothers claimed flying was possible and nearly killed themselves trying to make it happen. But they failed forward and became the fathers of aviation.
(Time for the obligatory Apple reference: Did you know that Steve Jobs was a repeat failure? He launched NeXT Computer—a hardware failure that most don’t remember because he turned it into a software success. Many believe that the failed Newton eventually became the iPhone. Yep, he knew how to fail forward.)
And, of course, Albert Einstein, whose very name we use as a short-hand for describing someone as a genius, was a lousy student. (As were many successful CEOs and entrepreneurs.) He literally failed his way through academics. I deeply wish I had used this reference during Chemistry I. It might have helped Mr. Peters understand my creative take on chemistry.
My point: Failure isn’t fatal; in fact, it is actually REQUIRED for innovation success—as long as you don’t freak out, make catastrophic mistakes or (ironically) fail to learn from it.
You need to accept the fact that you are going to fail if you are going to do your best work, and you need to make sure that everyone on your team—and, indeed, in your entire company—understands it, as well. You need to free them from the innovation-limiting shackles of perfection; don’t let them ruin good with perfect.
Innovation is Iterative
Great innovation, like great people, typically is not born; it is the result of trial and error. The phrase, “Be patient, God isn’t finished with me yet” is a healthy mantra for most of us—and most of our new ventures.
One reason that’s true is that in order to make a product or service everything it can be, it needs to be repeatedly soft launched with both internal stakeholders and external customers. This means literally sending the idea—be it a product or a service—into a limited part of the marketplace with the full understanding that it will be modified (perhaps extensively) based on how customers and consumers react.
For successful launches to happen, a team must be OK with the premise that they are starting with what some may consider a half-baked idea—one that very well may fail as constituted. You must make this OK. Tell your team that the real failure is fear of launching an idea until it is perfect. (By that time, someone else could have beaten you to the punch, or the market may have moved on. A perfect CD player isn’t going to find much of a market these days.)
To buttress your case, make the following five points:
- We’re only right when the market tells us so. Right now, we presume to be right, and our thinking is based on as-good-as-we-can-afford research, history and gut feel. The market will help us see and hear what we can do to be more right (and also help us eliminate all the things our customers—and potential customers—don’t like or don’t want).
- We can make any changes quickly. We can simulate years of research data in the span of months once we are out in the marketplace. It is the fastest way to learn.
- It has never been cheaper to test ideas. The Internet allows for instant feedback; empty strip malls allow for in-and-out shopping experiences with risk-free short-term leases; technology has made prototyping doable in days instead of weeks; Kickstarters actually let people vote with their pocketbooks.
- It is going to be fun. We’re doing this to learn and improve, not to beat up an idea. To that point, when you hear someone laughing at an idea you have, it usually means that you’ve touched on a raw emotion, which is critical to success. (So there is no reason for anyone to get defensive.)
- We will be making our “mistake” on a small scale. If we find out our idea is completely off base, we’re about to save the company millions of dollars and perhaps our jobs because we’re being calculated and pragmatic.
One more point: Be careful of the language that you use when describing your testing process. We often find that words like “prototype” and “beta” come with too much baggage to overcome. When they hear those terms, many people think it means that certain elements of the product (or service) that you are about to test are locked in place. That’s not the message you want to send. Just about everything should be up for grabs. For our people at Maddock Douglas, “soft launch” sends the message that we expect lots of things about the idea to change. But consider creating your own language that stresses the results you are trying to achieve, e.g., iteration phase 3 or “project optimize.”
If your team still resists the idea of iterative soft launches, just remind them that if this approach was good enough for Christopher Columbus, Steve Jobs and the Wright brothers, it is probably good enough for them.
A final thought:
“Whoops, that didn’t work, did it?” This type of statement followed by a giant smile is an everyday occurrence for an Idea Monkey. Failing is just part of the journey and a step toward figuring things out. Do you fear failure or have you made it part of your everyday practice?
Credit: www.forbes.com
Let’s face it, no one likes to fail. It hurts. And not just our back pocket. It’s our pride that often takes the biggest hit. Little wonder so many people work very hard to avoid it.
Yet do a little research on anyone who’s accomplished anything and you’ll soon discover, they failed. Multiple times. They just never let it stop them or define them.
After all, if you dissect what it means to fail into its two most basic components.
Based on best thinking at set point in time, person elects to take action A to produce desired outcome B.
Action A does not produce outcome B.
That’s it!
Yet how often do we add in a whole lot more meaning, interpreting our failure to mean a personal and permanent deficiency on our part? A lot. Which is why shifting our relationship to failure is paramount to enabling people to take the risks required to discover better ways of advancing or adding value. If you spend your life running away from any risk of failure you will never have a chance of discovering all that you are capable of achieving. So to help you risk more of the failures that your success is riding on, here’s my top five tips for failing fast, and forward, while feeling good about yourself in the process.
1. Don’t Personalize Failure
Too often people conflate the outcome of failure with their own identity as a person. But here’s the deal: failure is an event, not a person. So you tried something and it didn’t produce the result you wanted. That doesn’t mean you are a failure. It just means you took an action based on the best thinking you had at the time, and it didn’t lead to the outcome you planned on. No more, no less.
Distinguishing your results from your innate worthiness as a human being liberates your energy, otherwise wasted on self-recrimination, to extract optimal learning and sharpen future decision-making. What did you do or fail to do that produced the result? What could you have done differently that may have avoided this outcome, or perhaps just better mitigated the risk? Take the learning. Move on.
2. Don’t Treat Failure As A Permanent Life Sentence
So you failed this time, in this situation, at this point along your life’s long learning curve. This does not mean you should bury all your aspirations and resign to the couch. It just means that on this occasion whatever actions you took did not generate the results you wanted. Again, take the learning.
On recounting Virgin’s launch into the US soft-drink market, Richard Branson recalls how they thought that driving an armored tank around Manhattan, smashing through a wall of Coke cans in a highly engineered publicity stunt to declare war on Coca Cola was a great idea…at the time. Looking back though, not so much. “It was possibly one of the biggest mistakes we ever made,” Branson has shared. “After later analysis, we determined that we were woefully underprepared for Coke’s response.” He said their analysis also highlighted how they’d broken one of Virgin’s cardinal rules… to offer something distinctly unique. However, as Branson has said many times, including during our interview on Necker Island, it’s vital to “pick yourself up, retrace your steps, look at what went wrong, and learn from your mistakes so you can avoid making the same errors next time.”
Note the word ‘next.’ As I share in the video above, recounting my conversation with Branson: Failure is never final, it’s not personal and it’s not permanent. It’s a temporary state so don’t treat it otherwise, Rather, get to work extracting every dollop of learning and then look for the next opportunity to apply it.
3. Embrace Trial and Error
In the book Growth Mindset, Carol Dweck talks about the value of learning by trial and error. If we don’t give ourselves permission to take ‘miss-steps’ as we go along toward our goals, we miss out on invaluable opportunities to learn about what works (and what doesn’t!), to finesse our skills, hone our strengths and fine tune our approach. We may still living by candlelight had Edison not persisted through many trials and errors. As Antarctic expedition leader Rachael Robertson shared with me on my Live Brave Podcast recounting her time in Antarctica, “As we go through life, learning about what doesn’t work is every bit as valuable as learning about what does.Often more so.”
4. Fail Fast
There’s a saying that goes, if you’re in a hole, stop digging. We’re all wired with what psychologists call ‘sunk cost bias.’ That is, the tendency to continue investing in a losing proposition because of what we’ve already put into it – time, money, reputation, political capital. If you have an expensive, ill fitting, item of clothing hanging in your wardrobe which you can’t bring yourself to throw out because of what you paid for it, you’ve fallen prey to sunk cost bias. So too if you ever stuck to a losing strategy or stayed in a relationship or job or business far longer than served you.
Likewise, if you’re currently continuing down a path of action and that’s not producing the outcome you wanted, ask yourself if doing more of what is already not working ever will? Calling it quits can be painful but putting it off and pressing on in the hopes of a miracle can be exponentially more so. Having the courage to risk failure must be coupled with the courage to fail fast.[/tweet_quote]
5. Just Never Stop Risking Failure
My last word – never stop risking failure. A year or two back I had the opportunity to interview Bill Marriott Jr, chairman of Marriott International. Marriott was well into his 80s when Marriott International made their $13 billion acquisition of Starwood Hotels & Resorts, bringing together its Marriott, Courtyard and Ritz Carlton brands with Starwood’s Sheraton, Westin, W and St. Regis properties in 2016. As Marriott shared with me during our ‘fireside’ chat at Marriott’s Maryland headquarters at the time, “ It’s easy to rest on your laurels but you’ve got to continue risking failure. Failure may not be final, but nor is success.”
The more successful people become the less inclined they are to risk losing what they’ve gained – a ‘winners’ reputation, position, power, status, money. But as John Kennedy once observed, there is a risk to any course of action, but there is a risk to inaction. In other words, if you’re not continually challenging yourself to grow and stretching the limits of what you’ve done before, your future horizons will gradually shrink. Playing it safe can feel safe at the time but over time, it can be the ultimate high risk strategy.
If you were going to give yourself permission to fail in the week ahead, what would you do?
More so, what are you putting at risk if you don’t?
Credit: forbes.com
Credit: collectivevaluecreation.co.za
We can probably all agree that team failure is a tough pill to swallow. But the truth is that it’s also an inevitable part of doing business.
No matter how much micromanaging we do, mistakes happen, whether we like it or not. And while leaders can’t avoid this reality, we can modify the way we approach these metaphorical stepping stones and transform them to our advantage.
In my professional experience, “failing forward” moments are some of the most critical.
So what is failing forward? As a major sports fan, one of my favorite all-time quotes is from basketball great Michael Jordan: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
The concept of learning from your mistakes isn’t a new one. In fact, many leadership books have been written on the topic, including John Maxwell’s “Fail Forward,” Ryan Babineaux’s, “Fail Fast, Fail Often” and many more.
While understanding the idea around failing forward is important, it’s equally essential for leaders to foster a culture (a safe culture) of risk-taking in the workplace.
The Consequences Of Ignoring Failures
One of the worst things a leader can do after a team failure is to not address the situation. Sure, it’s natural to not want to discuss the issue – most team members would like to act like it didn’t happen and move on.
However, avoidance can be risky for two reasons:
• Not talking about the issue can instill a sense of fear. Brushing failure under the rug can lead to an atmosphere steeped in fear. To start, some employees who feel like they’re to blame could fear for the fate of their job. Even worse, others might become averse to taking risks, for fear of a similar outcome. Ultimately, the “ignoring it” approach can hinder your team’s success.
• Past mistakes will be repeated. While failure is painful in the moment, our mistakes can provide us with teachable moments. Deconstruct with team members what parts went wrong in a collaborative, considerate manner to learn together, and to prevent similar mistakes from occurring down the road.
Embrace Failure To Launch Forward
Throughout my career (you can ask all of my bosses), I have always been confident about taking risks and making judgment calls on new strategies to move my organizations’ forward.
My supervisors can also attest that no matter how confident I was about some of those risks, they didn’t always work to my advantage. However, they also didn’t hold me back me from stepping outside of my comfort zone to take another risk.
Instead, these managers focused on making sure that I learned from what aspects went wrong, and that my percentages of wins were much higher than my losses. Those percentages eventually improved for me as I learned how to fail forward.
As a result, I was given safe places to fail. Even better, those experiences transformed me into a better decision-maker and someone who has since been relentless on discovering and utilizing best practices in my field.
Here are some practical steps you can take to turn failure around in your organization:
Foster A Growth Mindset
Research shows that those organizations that encourage a “growth mindset” are more likely to equip their employees for success.
Additionally, those individuals who adopt a growth mindset belief can enhance their abilities and skills, resulting in significant improvements in leadership.
One of the key advantages of the growth mindset is how you look at and deal with setbacks.
Those employees and managers that embrace this mindset commonly view mistakes via a learning lens and their initial lack of success contribute to the improvement process.
Create A Safe Environment For ‘Failing Forward’
Set out to create a safe culture of learning and creativity. As Microsoft leaders have noted, “We want to be a learning-all company, not a know-it-all company.”
A Harvard Business Journal author stated: “Only leaders can create and reinforce a culture that counteracts the blame game and makes people feel both comfortable with and responsible for surfacing and learning from failures.”
As such, management should urge their companies to establish a concrete realization of what occurred during the “fail,” and not point fingers when plans go south.
Encourage Experimentation
Some industry experts believe that for effective learning, leaders should plan to strategically produce experimental failures – in the right place at the right time.
After all, every failure bears valuable information. What better reason does your team need than to try and try again to get that winning recipe for success before the competition does?
Why Failing Forward Is Vital For Modern Leaders
To succeed in business today, it’s essential to learn how to fail forward. And of equal significance, it’s crucial to also model and instill this strategy within the culture of your company.
Remember, it’s the art of failing forward that will ultimately drive sustainability, and teach collaboration, empowerment and resilience.
So while team failure can feel catastrophic in the moment, with a growth mindset top of mind the right amount of time and collaborative analysis of “steps that went wrong,” your employees will learn valuable lessons that can transform even the most upsetting failure into something greater than you ever imagined.
Credit: forbes.com
There is no magic formula for getting ahead in business, other than applying the same dedication and devotion you focus on your hobbies. Begin by aligning your profession and your passion.
Through the eyes of an outside observer, other people appear to have all the luck, get all the breaks. But it’s important to remember that you only get a narrow view of their lives. They are showing you an edited version of their stories which intentionally paints a prettier picture of their lives omitting struggles, failures and frustrations. Like the iceberg who keeps the bulk of its mass is hidden beneath the surface, we prevent others from seeing our failures. We want to appear successful and confident, forgetting that facing setbacks, helps us to grow, pivoting to change direction while continuing forward.
Learning to fail forward is a skill which requires us to view failure as a necessary part of learning. Just as the Lottery says, ‘You need to be in it to win it,’ if you want to succeed, you need to prepare to fail. After understanding what went wrong you can refocus and try another approach. By embracing failure, leaders become resilient.
Are women more risk-averse than men?
Women tend to expect perfection from themselves, which creates an aversion to failure. Often women take failure personally, combined with holding themselves to higher standards they are more reticent to fail than men. The resultant behavior includes women who drop a class if they get a lower grade because they see the grade as a personal failure rather than a reflection of skill/effort. As a result, they select things that they know they will be successful doing. But avoiding failure may hold women back from achieving breakthroughs, learning, and growing. Perfectionism does not make you a better leader; it only increases anxiety and suppresses creativity.
What about men?
Because they don’t view performance on a test as a measure of their self-worth, men can be content with a passing grade. Men are more likely to guess on an exam, or if they perform poorly, they may decide that the test was flawed. In the workplace, women apply to jobs which they are 100% qualified, whereas men apply when they are 60% qualified. Women and men receive feedback differently. When men receive positive feedback, their confidence increases more than women. And women tend to take negative feedback personally and ruminate over the implications, unlike men who often take it with a grain of salt, treating it as a suggestion.
But the workplace does not treat failures equally
Women may be judged more harshly for making mistakes in fields which are considered to be male-dominated (such a police chief). Victoria Brescoll, a social psychologist at Yale School of Management made-up a story to study how gender affected peoples’ reactions, creating a tale about a police chief who handled a rally poorly. When the chief was male, his rating of effectiveness dropped by about 10%. When the chief was female it dropped by 30% with some discussing demotion. The pattern repeated with other scenarios. While these stereotypes are changing over time, the consequence of failure may prevent women from considering these fields. Then, there is the ‘glass cliff’ when a woman who has climbed past the glass ceiling is to be pushed off the cliff. In some cases, women leaders recruited to save desperate situations give up when they cannot save the day or takes the blame when the inevitable failure occurs.
What should you do?
- Adopt a growth mindset. Rather than worrying about preventing failure, focus on acknowledging that it will happen, and know how to navigate forward. A great leader creates a safe space for employees to try new things and fail forward. Progress and breakthroughs require developing people who can do things differently. As a leader we model behaviors, and it is important to be comfortable accepting failure as a part of learning.
- Apply the 3 P’s (purpose, practice, and persistence) Know where you are going, visualize what success looks like and push forward. Learn to become comfortable being uncomfortable.
- Expect to fail. Instead of bracing, and avoiding failure, embrace it and fail fast. Avoid delaying the inevitable and devote your time and energy to finding a viable solution. Use failure as a prompt to pivot, to understand the situation and discover your path forward.
- Bounce back. Warren Buffett said that he would not invest in any business where the owner hasn’t failed at least twice. Recovery after a failure provides insights, it teaches you to anticipate the worst-case scenario and to seek outside opinions.
Failing forward is like jumping into a pool. It can be terrifying or exhilarating, it depends on your interpretation. If you fear failure it will increase your stress, which can lead to inaction. So just stay positive, recognize that you already have the skills needed to succeed, and prepare for an adventure. Face your fears and they will disappear. See failure as a step toward success.
Credit: cio.com
It’s easy to imagine Mark Cuban behind a desk, on television or courtside at a Mavericks’ game. It’s more difficult to imagine him fumbling a carpentry job, failing to pay his electrical bills or being on the receiving end of a firing. But Cuban, like everyone else, started somewhere. And he was once laying down carpets instead of million dollar investments.
Currently worth $3.4 billion, Cuban’s massive achievements came on the heels of many failures, all of which were valuable — even if painful — learning experiences.
His story goes to show that sometimes you have to lose 20 times or more before winning big, and what seems like luck is really just grit. Here are six of Cuban’s biggest failures and what we can learn from them:
1. When he couldn’t learn a fall-back trade
While growing up in Pittsburgh, Cuban’s parents encouraged him to learn a trade should he ever need a job to fall back on. Practical advice, except for one small problem. Cuban was pretty bad at most of the jobs he took on.
He worked as a carpenter laying down carpet, and quickly discovered he was terrible at it. As a short-order cook, he could only tell when food was ready by sampling it. And as a server, he struggled to open wine bottles without getting corks in diners’ Merlots.
Lesson learned: It’s okay not to be great at everything. “I’ve learned that it doesn’t matter how many times you failed,” Cuban says. “You only have to be right once.”
2. When his powdered milk gig held no water
Fresh out of business school at Indiana University, Cuban left his first job at a PC store because “they didn’t see a future in computers.” Set on starting his own business instead, Cuban’s very first venture was not destined to be the big break he’d hoped for.
The idea? Powdered milk. He saw an ad for the product and thought everyone needs milk. It’s cost effective and tastes about the same — why not go for it? As it turned out, his parents were among his only customers. “I honestly thought it would make a killer business,” Cuban recalls, “and it lasted minutes.”
The lesson? Don’t misjudge the market or the product. There’s a reason real milk reigns supreme, and judging by your tastes alone isn’t enough to launch something sustainable.
3. When being fired from a software job hardened his ambitions
After making a big move to Dallas, Cuban landed his first sales job at a company called Your Business Software. Knowing little about software, he taught himself on the job by reading all the manuals and went the extra mile to secure new customers.
But his initiative wasn’t enough to stop him from getting fired less than a year later. In fact, it was his initiative that would be his undoing. He closed a big deal with a client, and called out of his opening shift to do so against the CEO’s wishes. When he returned to the office with a $1,500 check, he was fired.
For Cuban, this incident made clear to him why he wanted to start his own business. It’s also why the CEO who fired him became his reverse-mentor. Says Cuban, “Even now I think back to things he did, and I do the opposite.”
4. When he couldn’t afford to pay his bills
Cuban was once asked what he thought was the one thing all successful entrepreneurs should experience. “Coming home and having the lights turned off because you couldn’t afford to pay the bills,” he answered. “It’s incredibly motivating and humbling.”
He’s also admitted to Entrepreneur to having his card cut up on one occasion. For Cuban, the lesson was simple. Use the shame and pain of such failures as a motivator to get back up and start winning.
5. When an NBA star reached huge heights without him
Cuban did eventually get his big break when started MicroSolutions and later sold it for $6 million, the first of his many lucrative business transactions. By 2000, he was even able to buy a majority stake of the Dallas Mavericks.
As owner, the Mavericks went from a 40 percent win rate to a 69 percent win rate. But even then, Cuban was not immune to failure. His biggest mistake was failing to re-sign Steve Nash, who left the Mavs to join the Suns and win MVP awards in back-to-back seasons. It was a terrible flaw in judgement, according to Cuban. “We certainly didn’t see him as a two-time MVP. And it was the biggest mistake I made not re-signing him,” he told Fort Worth Star-Telegram. “We thought his body would break down and it certainly didn’t. So, bad advice, bad across the board.”
The lesson? Don’t take bad advice, hold onto your assets, and don’t underestimate what talented people can accomplish with or without you.
6. When his first TV show flopped
Mark Cuban would go on to be the wealthiest shark on ABC’s Shark Tank as of 2012. But it was not his first reality TV rodeo, so to speak. The first, called The Benefactor, was a flop. The 2004 series involved 16 contestants vying for a $1 million prize, with Cuban judging their performances. Due to poor ratings, it was cancelled before the first season aired.
It’s just another example of the old “if at first you don’t succeed” adage, and for Cuban, it worked. Shark Tank is now the most-watched program on Friday nights for viewers aged 18-49.
If at first you don’t succeed …
As Cuban wrote in his book, “It doesn’t matter how many times you almost get it right. No one is going to know or care about your failures, and neither should you.” When you finally get it right, “then everyone can tell you how lucky you are.”
Credit: entrepreneur.com
Sizing up the obstacles overcome by the world’s third-richest man prior to his ascendancy at Berkshire Hathaway
When you think of Warren Buffett, chances are “successful” and “rich” come to mind. Look no further than Wikipedia, which highlights Buffett as being “widely considered the most successful investor of the 20th century.” (While Wikipedia may not always be a beacon of truth, it is certainly accurate in this case.) Buffett is known for his wisdom and patience and people actually make annual pilgrimages to Omaha to hear him speak. What many people don’t know is that his purchase of Berkshire Hathaway – his crowning achievement as the company is now worth more than $300B – was an epic failure forcing Buffett to completely transform the company to make it profitable.
Buffett’s involvement in Berkshire Hathaway started in 1962 as an investment similar to his other purchases. Analysts calculated the stock was worth $19.46 a share, but it could be bought for a mere $7.50, so Buffett bought some “cheap” stock, planning to sell it back to the company when the price rose. After a time, Berkshire Hathaway’s President – Seabury Stanton – got wind of Buffett’s stock accumulation and called him to his Massachusetts office for a meeting. He asked at what price Buffett would be willing to sell, and Buffett said he’d sell for $11.50 a share if there was a tender offer.
Shortly thereafter, Stanton issued a tender offer of $11.37 per share. The young Buffett was livid; he felt that Stanton was trying to pull one over on him. Instead of renegotiating or holding his stock until a better offer came around, he started looking for even more stock to buy, vowing to buy a controlling interest in the company just so he could fire Seabury Stanton.
Berkshire Hathaway in the 1960s was nothing like the powerful conglomerate it is today. It was a lowly textile company that imported raw cotton and turned it into cloth. Before air conditioning was invented, the company addressed an important need, as mills had to be located far away from heat and humidity. But by the 1960s air conditioning was commonplace, labor was cheap, and labor and raw materials were even cheaper overseas. By the time Buffett started buying stock, New England textile mills were in dire straits, including Berkshire Hathaway.
Yet Buffett was determined to own the company, driven by his disdain of Seabury Stanton. He convinced others to sell him their stock until he had collected enough to control the Board. Seabury, seeing the writing on the wall, resigned, and Buffett was elected Chairman of the Board and hired Seabury’s replacement. Despite new management, the textile mill continued to disintegrate. Buffett first poured money into Berkshire Hathaway and then tried to sell it, but no one would buy it.
“His arrogance resulted in failure, but it also gave him enough confidence and persistence to move beyond that failure. More impressively, he succeeded by completely giving up on the original business model.”
HARD LESSONS LEARNED
Arrogance, more than anything else, led Buffett down this path. He was young and full of hubris that clouded his thinking. He felt Berkshire Hathaway was undervalued when it was not, that its CEO was incompetent when he was not, and that he himself would do a better job leading the company than the very managers who understood the business best.
As a result, Berkshire Hathaway was an immediate disaster for Buffett. In his biography, The Snowball, he put it this way:
You walk down the street and you see a cigar butt, and it’s kind of soggy and disgusting and repels you, but it’s free…and there may be one puff left in it. Berkshire didn’t have any more puffs. So all you had was a soggy cigar butt in your mouth. That was Berkshire Hathaway in 1965. I had a lot of money tied up in the cigar butt….I would have been better off if I’d never heard of Berkshire Hathaway.
For better or worse, Buffett was stuck and his business was finished. Where most people would have given up, however, Buffett kept Berkshire Hathaway alive, saved it from bankruptcy, and helped nurse the company back to life. His arrogance resulted in failure, but it also gave him enough confidence and persistence to move beyond that failure. More impressively, he succeeded by completely giving up on the original business model.
Buffett went back to the drawing board and reimagined Berkshire Hathaway, not as a textile company but as an investment company. He diversified its holdings, acquiring companies in different industries to keep Berkshire Hathaway alive. Though it is doubtful that he would consider doing something like that again, the Buffett of today has enough wisdom to know that sometimes admitting defeat is the best path: “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
AGED WITH HUMILITY
Over time, Buffett’s arrogance has all but disappeared. This is all the more surprising given his enormous success: he is the third wealthiest person in the world. He turned Berkshire Hathaway into one of the world’s largest holding companies with ownership in businesses such as Coca-Cola, Apple, and Goldman Sachs. This kind of success would inflate the egos of many people, but for Buffett, the experience was a humbling transformation.
Buffett practices humility and surrounds himself and his family with constant reinforcement of those principles. Most people are surprised to learn how a man worth nearly $70B raised his children:
Our kids had a very normal growing-up. I mean, they’ve only and I’ve only lived in one primary house that I’ve owned in my life, and I bought that in 1958. So they did not see us moving into progressively fancier houses; they did not ride in private planes. They went to school on the bus. Every member of the Buffett family in Omaha has gone to a public school. They went to the same school that their mother had gone to. They went to the same high school that she’d gone to. We were living in an area where, in today’s dollars, our neighbors were making maybe $75,000 a year, or something of the sort. So they never really thought that we were economically different.
Buffett made a series of poor decisions which forced him to fight his way through a hard lesson learned. He remained persistent throughout, and rather than giving up and allowing Berkshire Hathaway to fail, he morphed the business and himself into one of the greatest success stories in history.
Credit: csq.com
