Thursday, August 29, 2013

Idea to capitalize on mistakes and failure: a "brilliant mistakes" contest

I recently had the opportunity to spend some time with Paul Schoemaker, author of the book "Brilliant Mistakes: Finding Success on the Far Side of Failure" as well as co-author of the HBR Article that was one of the inspirations for this site ("The Wisdom of Deliberate Mistakes," with Robert Gunther). In our discussion I was reminded that, as part of the events surrounding the publication of "Brilliant Mistakes," the Wharton Digital Press created a Brilliant Mistakes contest, which asked entrants to describe "an error that they committed and recognized as a potential source of learning or innovation, and then leveraged as a new concept or idea that helped transform a project or organization."

The winning entry came from Dr. Stephen Salzman of UCLA Medical School, who did a cardiology experiment on athletes and found that his hypothesis was 180 degrees wrong, "forever changing his perspective, not only in the area of adrenaline, but throughout cardiology."

What do you think? Would contests like this within companies help them capitalize on mistakes and failure better? Why or why not?

Wednesday, August 28, 2013

VC Ed Sim: "Never give up but move on quickly"

The title is from a 2011 post from Ed's blog Beyond VC. At first (and maybe second) glance this is a paradox. At the heart of this paradox is one of the deeper secrets for learning from mistakes. Let's deconstruct it:

"Never give up..." This is a mantra repeated over and over again on this site, including Garr Reynolds's "Fall down 7 times, get up 8" and Angela Duckworth's discussions of grit. Persistence is essential to power past stumbles, failures, criticism, ridicule - all conditions that come before worthwhile successes.

...but move on quickly" - this refers to the ability to maturely sniff out a situation that is heading for failure, and not devote endless work cycles to trying to pull a success from the jaws of failure. Overall success requires diagnosing, with evidence, counsel and your own intuition, the smaller failures that come up along the way, and shifting your approach quickly after the diagnosis comes in.

"Never give up but move on quickly" is one of the Scylla-Charybdis balancing acts (per Albert Wenger) necessary to be a good entrepreneur or really senior leader of any kind.

Tuesday, August 27, 2013

20 tips to deal with failure from Leadership Freak

There's nothing in this Leadership Freak post ("When Projects Fail") that you wouldn't know if you had read all the 500 or so posts on this site. On the other hand, if you don't have time to read 500 posts today, Dan Rockwell does a fantastic job of summarizing 20 lessons to use when that project goes awry. I like these tips in particular:

6. Step up to excellence not down to mediocrity. Excuses are the path to ease, insignificance, and irrelevance. “How can we be better?”

7. Pick the scab. Dig into issues optimistically and respectfully. The goal is improving next time, not blaming and putting down.

15. Believe improvement is possible.

16. Don’t assume working harder will make things better. What will you do differently, next time?

18. Explain how you’ll do better next time. Be specific. Clarity is the mother of success.

19. Put it to bed.

20. Re-vitalize momentum. Examine what happened with what’s next in mind. Create a win and celebrate.

The lessons show the balancing act we perform when managing failure. Care, but not too much. Be brutally realistic, but don't lose hope. Learn your lessons, but move on.

If it were easy, it wouldn't be that interesting to study, would it?

Monday, August 26, 2013

VC Mark Suster recalls a painful sales loss, and what he learned from it

This is the second story from Mark Suster's 2010 post "Embrace Learning: It Will Make You Stronger." Suster recalls how one of his startup companies, a collaboration software maker, lost a deal it thought was all wrapped up. I a similar experience almost 20 years ago and many of the lessons are exactly the same.

In the 2003/04 timeframe I was living in the UK and running my first company. I had been competing to win a contract at Thames Water, the largest water company in the UK. They were looking for a collaboration tool to manage all of their large water development projects. The initial contract was worth about $500,000 and the whole value of the contract would have been worth a couple of million over the years. I was working hand-in-hand with my close friend and associate Stuart Lander who was running our UK office and with one of our local sales reps.

We had initially been told that we had no chance because they had previously purchased Documentum and it would mean changing the system entirely. They had a team trained up in Documentum and we certainly had enemies from the inside. But we worked the account tirelessly for months. We helped the write out their requirements for a system. We met everybody in the organization. We had every reference client we worked with call their senior team members (we had already won a major project at Scottish Water, Anglian Water and another at a large water company in Paris, France).

There were about 8 initial contenders for the work and in the end it came down to just 3 of us. As the founder & CEO I personally went and met with as many people at Thames Water as I could. We felt this was a marquee account and one that would help us take our collaboration tool global as Thames owned assets all over the world. Winning the contract meant that we would hit our quarterly revenue figure and be in good position for our annual sales target.

And then the news came. A woman named Trish Hannon called me with the good news that we had won the project. I was to tell noone until the contract was signed. I immediately put a full team on contract management and another on drawing up an implementation plan.

DefeatI later learned one of my biggest lesson in sales. You are most vulnerable right after you have won a deal. It is when you’re competitors have nothing to lose. It’s when the people who are part of the decision making process who don’t support the decision seek ways to undermine you. That is when you potentially become complacent.

Two weeks after winning the deal and well into implementation planning we released a new version of our software. We had made the decision that we would no longer be supporting IE v 5.5 (we would support 6.0 and 7.0, which was in beta). Even Microsoft publicly said that there were security flaws with 5.5 and that people should upgrade. But Thames Water was still on version 5.5. We assumed they would take our advice and upgrade. We had discussed this with Trish.

An internal resource inside Thames Water used our upgrade and lack of 5.5 support as a way to re-open the decision. How could a company like ours be so callous as not to support their software (even one more than 4 years out of date)? Did we really have good change management procedures if we were willing to launch products without backward compatibility. And so on. They decided to re-open the competition for 3-4 more weeks. I knew THEN that we had lost. We fought hard to stay in the game.

They hired a consultant to help them with the review. They stopped allowing us to contact them directly. The momentum had shifted. Something happened and it was clear to me that this IE issues was just a smoke screen. Somebody had gotten to somebody senior in the Thames organization. It just so happened that the consultant they hired to chose a software vendor worked for a company that had owned one of our competitors. It was a tiny little collaboration company that only had a presence in the UK (and therefore couldn’t meet their international needs). And surprise, surprise the decision came back 3 weeks later than none of the preferred 3 vendors had won but rather this tiny little competitor owned by the consulting company charged with doing the review.

Outrage. Scandal. Surely inside Thames they would see it for what it was. Given that it was a public tender the chairman of our board had encouraged us to think about launching a complaint with the UK government agency in charge of such reviews. We talked with lawyers. We felt totally deflated. We decided it wasn’t worth the fight. We licked our wounds and moved on.

I am still not over that loss. I sometimes call Stuart and we recount what happened. But that loss was really important in my career. It taught me a lot of lessons. We spent enough time dissecting it to really learn.

Here are my take aways from the loss:

1. In a sales campaign you always need to call as high as you can. If you don’t, your competitors will. If you don’t know them, somebody else does. They may not overturn decision, but they sometimes do.

2. No deal is ever done until the ink is dry and the money is in your bank account. Never take your win for granted.

3. You are most vulnerable right after it has been announced that you won (I will write a separate post on this). This is the most important lesson I learned from this experience. All other lessons were sort of obvious. This one was eye-opening.

4. We in the tech world extol the virtues of lots of product releases and rapid innovation. I hear Silicon Valley firms bragging all the time about how often they release software. In the consumer world, maybe. In the corporate world this strategy is flawed. Many large clients prefer stable technology and no changes – even sometimes when there are known security flaws. When I was at Salesforce we launched a new version of our UI. We gave users the choice to upgrade or keep with the classic UI. Years later 10% of users were still on classic. Go figure.

5. In every deal where you have serious competitors there is always somebody on the inside against you. You need to find out who that is and neutralize them.

6. No matter how much your customer tells you that they love you and that they favor you it is possible they are telling other people the same thing or some variation of this. (you would have thought I would have learned this lesson in high school ;-)

7. No matter how much large clients tell you they want transparency in pricing, they always seem to fall for the same old trick. Competitors price low to get in the door and then nail them with scope control, change orders, product extension costs and other hidden items. You can try to convince them of your “pay no more once you’ve signed up” model but they fall for the other guy’s pitch every time. Low numbers are sexy. I stopped trying to win this argument and chalk it up as some sort of human condition that I can’t change (like thinking that $14.99 = $14).

8. Time is the enemy of all deals. If you have a chance to close something – don’t let it drift.

9. Losing sucks. But at least it has made me a better competitor.

Thursday, August 22, 2013

"You can't build a web system that will never break"

From a post on Fred Wilson's AVC blog:

Once you have a successful product in the market, you need to turn your attention to scaling it. The system you and your team built will break if you don't keep tweaking it as demand grows. Greg Pass, who was VP Engineering at Twitter during the period where Twitter really scaled, talks about instrumenting your service so you can see when its reaching a breaking point, and then fixing the bottleneck before the system breaks. He taught me that you can't build something that will never break. You have to constantly be rebuilding parts of the system and you need to have the data and processes to know which parts to focus on at what time.

Wednesday, August 21, 2013

VC Mark Suster learns from a failed pursuit of a venture investment

Mark Suster's "Both Sides of the Table" blog is a great resource for startups and managers. I found a 2010 post in which he outlined the positive value of losing - its ability to teach deep lessons. Here's one of the two stories he tells in the post:

Last year I lost a deal in a company that I wanted to invest in and that I thought I should have won. I was angry – mostly at myself. Rather than blame the team that I thought should have chosen me, I became reflective. They were in LA and I was in LA. They had a prominent NorCal investor already so I thought a SoCal lead would make sense – that I could help them in a more hands-on way. They had agreed!

I had lost a previous deal where the team said they liked me but didn’t know my partners well enough so I promised myself never to let that happen again.

So I organized a team dinner with all four of my partners and all three of their founders. I wanted to be sure that they knew how much all of our partners loved what they were doing with their company. I wanted to be sure that they felt they knew all of my partners well so they could see why I joined up with them in the first place – they are smart guys who have a 20-year track record of winning. 15 companies North of $1 billion exit. And they are normal, down-to-earth people as well.

After dinner on a Thursday night I thought we had the deal and that the team knew how hard I would work on their behalf if I were chosen. By Monday morning after their board meeting in NorCal I didn’t get a return phone call. I knew what this meant. Good news always comes quickly, bad news takes time to simmer. By the time I got through to the guys on Tuesday we had lost.

I knew that the, “I’m really sorry” message was coming. I embraced it with honor and didn’t give them a hard time. But I obviously asked, “Why did it happen? I need to learn for next time.”

There were two main reasons that I could distill from their kind words of solace: 1) the existing NorCal investor didn’t know me well enough & 2) the new NorCal investor had a good knowledge of and presence in China, which they believed would be critical.

I decided to put both of those issues to bed in 2010. I came several times to NorCal (where I grew up, actually) and went and met several partners from each Silicon Valley firm. I didn’t want this to happen again – that people didn’t know me. I also made several trips to New York & Boston. Next year I’m going to spend time in Seattle and Boulder in addition. I realized that it is not enough to know one partner per firm and it is not enough for only the management team to like you. VCs have a seat at the table in deciding future investors.

I also spent two weeks in China and vowed to make it back frequently. China is indelibly an important part of the future of the global technology system. Although I had lived and worked in more than 10 countries – it wasn’t good enough. I didn’t know the one that mattered most to their future. And for my own good I vowed to have relationships in China and knowledge of the local markets. I’m not looking to invest there – I’m looking to understand the trends, the people, the innovation, the regions and how China can become an integral part of any of my portfolio companies as they scale.

Monday, August 19, 2013

Improving education by leveraging errors and failure

I was very happy when Bengt-Arne Vedin reached out via email last week. Professor Vedin, a fellow of the Royal Swedish Academy of Engineering Sciences, is exploring the concept of learning via failure, and shared two papers he's authored on the subject. One is published in the July issue of the Journal of Arts & Humanities, and is entitled "Teaching & Learning By Way of Failure?" Near to my heart, he shares personal stories of learning by difficult experience, including this one:

In another field of physics, a new teaching laboratory had been established, with new exercises and experiments employing brand new instruments for advanced and topical measurements, intended to demonstrate advanced physics of a articular type (nuclear physics), reduced to practice. Novel, new is the key word here, novel as in untested: my colleague and I constituted the first group of two to run the gauntlet through all these novelties; we became the guinea pigs and also the troubleshooters, because nothing much worked as it had been designed or expected to. Electricity did not come on, or it went through our bodies, all by chance. Instruments measured something else than what had been intended. In fairness, the professor and his assistants showed us immense gratitude, and gave us good grades, which we had qualified for, though in a way inadvertently, forced to; not by design.

Professor Vedin's general argument is that learning can be accelerated by providing challenges to the student; for example, incomplete instructions, errors introduced in problems to be found and fixed, missing pieces to be filled in. These challenges prevent students from mindlessly memorizing and force them to engage their creativity, with the hopeful result that they learn the material more deeply. There are lots more interesting assertions in the paper, including a recommendation to capture and regularly reflect on mistakes and failure (something that has also been suggested in this space).

What do you think? Could this model improve the learning process?

Thursday, August 15, 2013

"Glass Half-Empty" - managers should focus on things that aren't working

From Adam Bryant's interview with Sunny Gupta, CEO of Apptio, in the New York Times:

We have this phrase that I use a lot: “glass half-empty.” My marketing guys wanted me to change it to “continuous improvement.” But I said to them that “glass half-empty” is not gloomy. It’s all about how, every single day, maybe 85 percent of things are going right, and there are 15 percent that aren’t going right. And if we have an hour, I’d rather focus on the 15 percent that are not going right, because that’s how you become great.

It’s hard for people to get behind that principle because my sense — having managed a lot of people — is that human beings are generally driven by a desire to be recognized every single day. And I absolutely believe recognition is important and you’ve got to recognize people. The culture has to be set right from Day 1 that we are going to recognize you, but our culture also has this maniacal focus on the things that are not working. People can get frustrated because they feel like you may be attacking them or always asking them about the things that are not working.

Wednesday, August 14, 2013

Andre Durand: make sure startup fundraising and ambitions are aligned

Andre Durand, CEO of Ping Identity, in his interview with Adam Bryant of the New York Times, discussed a mistake in his early entrepreneurial ventures:

My aspirations were always bigger early on than our resources. The way that manifested itself was that I never raised enough money early on to make money less of a factor in the way we made decisions. That meant I was either always pressured to ship software that wasn’t quite ready, which is a little bit of a death spiral, or I was always raising money within a few days of payroll — and asking the employees to trust me and to not quit.

So I was trying to be bigger than I could afford to be, and your decision-making is always convoluted by these factors. That was a big early lesson. It ingrained in me the importance of matching the entrepreneurial aspirations with the resources. Those all have to be aligned. And ever since, I’ve always raised money when I don’t need it ahead of time, for a rainy day. I just never put myself in that position again.

Monday, August 12, 2013

Dan Isenberg failure story - the photo-printing company undone by the dot-com collapse

Dan Isenberg is the executive director of the Babson Entrepreneurship Ecosystem Project and the author of the great new book "Worthless, Impossible and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value." As part of our longer interview (available here), after discussing the pros and cons of the culture of celebrating failure, Dan related his own failure story and what he learned from it. He talks about a startup that grew quickly and imploded ever faster than that in the crazy dot-com bubble era of 2000-2001.

Dan Isenberg's online photo printing story (4 minutes).

The failed venture. Lessons from the failure - the sixth sense of business danger; the speed of failure; reading the macro situation; the "Dersu Uzala" story.

Friday, August 9, 2013

Fun Friday: Elvis Costello's "Brilliant Mistake"

There's a brief interview at the start, then the song begins at 1:10. Did you catch the snippet of Dylan at the beginning? Tell us in the comments.

Thursday, August 8, 2013

A fascinating article on machine breakdowns

On this site we focus on human mistakes and failures, but this Wired Magazine article ("Why Things Fail: From Tires to Helicopter Blades, Everything Breaks Eventually") has really cool insights around how machines eventually fail and how companies deal with these imperfections. There are some analogies to how we can engineer our own personal processes to deal with eventual breakdowns.

[Hat Tip to Strategy+Business]

Wednesday, August 7, 2013

Examining reasons for startup failure within the founder's mind

Tom Eisenmann posts over at Platforms and Networks on founder-related reasons for startup failure. It's a great summary post, with lots of useful links, including lessons from MBank favorites Steve Blank, Mark Suster and Jerry Colonna. Here's a taste:

If entrepreneurial success hinges on a founder’s mastery of psychology, it stands to reason that a founder’s flawed ego is often the root cause of startup failure.

Categorizing causes of entrepreneurial failure is tricky. Asking entrepreneurs why their venture failed doesn’t always yield reliable answers. To bolster our fragile egos, we credit our successes to our own brilliance and skill, and we attribute our failures to the shortcomings of others or to events outside our control. This pattern is so deeply ingrained that psychologists have labeled it the Fundamental Attribution Error.

Furthermore, just as a living organism might die for many reasons—for example, hunger, predation, or illness—startup failure has diverse causes. Paul Graham cites 18 reasons why startups fail; in her post, What Goes Wrong, reprinted in Managing Startups, Graham’s partner at Y Combinator, Jessica Livingston, warns founders that they must navigate a “tunnel full of monsters that kill.”

The post is well worth reading in full.

Monday, August 5, 2013

A new academic argument - "Love Rejection"

The Inside Higher Ed site recently published an essay by Brian Martin entitled, "Learning to Love Rejection," in which the author describes coming to terms with the reality that many academic papers are rejected, sometimes many times, before finally finding an outlet. The lessons he learned apply to many other activities where people choose a few and reject many other candidates - hiring, publishing, contests of any sort.

Persistence in seeking publication in a journal has two main steps. The first — the hardest for many — is initially submitting a paper. The second step occurs after a rejection: persistence is a matter of considering the comments from the editor and referees, making changes if desired, finding another journal and sending off the paper. It’s quite straightforward, requiring work to be sure, but seldom an intellectual challenge.

The biggest difficulty is psychological. I know some top scholars who refuse to submit papers to journals because they can’t handle referees’ comments and rejections.

I know many junior scholars who are terrified of rejection and are caught in a syndrome of counterproductive perfectionism and low output. The problem is feeling rejection of a submission as a personal failure. That indeed is hard to stomach.

My approach is to treat the submission process as a game of strategy. It’s about convincing editors and referees that a paper is worthwhile in order to gain access to a credible platform. Submitting a paper to a journal is my move. I wait for the journal’s move, and continue accordingly.

The key here is to distinguish the paper from myself. The paper is my work, not me. If it is rejected, I don’t consider this a personal failing. In playing a game of tennis, it would be silly to give up after losing a point or even a match. The key is to keep practicing and keep playing.

Even so, it can be discouraging to put a lot of work into a piece of work and receive dismissive comments. So I take a few days or weeks to digest the disappointment and plan my next move.

These words from Paulo Coelho, quoted in the Mistake Bank book, might be helpful to academics dealing with this frustration:

I’m never paralyzed by my fear of failure. I say OK, I’m doing my best. After sending a new book or a new article to the publisher or the newspaper, I sit down, I breathe, and I say, “I did my best. I put in all my love, I did it with all my heart.” Whether they are going to like it or not, it is irrelevant. Because I liked it. I’m committed to the thing I did.

Thursday, August 1, 2013

Free the "dark data" from scientific failures

I recently stumbled across "Freeing the Dark Data of Failed Scientific Experiments," by Thomas Goetz in Wired magazine. I had read it years ago, and its thesis still sounds as fresh today as it did back in 2007:

What happens to all the research that doesn't yield a dramatic outcome — or, worse, the opposite of what researchers had hoped? It ends up stuffed in some lab drawer. The result is a vast body of squandered knowledge that represents a waste of resources and a drag on scientific progress. This information — call it dark data — must be set free.

While the usefulness of negative data is being recognized, there are still powerful forces, organizational and human, working against freeing our dark data:

More and more, research is funded by commercial entities, which deem any results proprietary. And even among fair-minded academics, the pressures of time, tender, and tenure can make openness an afterthought. If their research is successful, many academics guard their data like Gollum, wringing all the publication opportunities they can out of it over years. If the research doesn't pan out, there's a strong incentive to move on, ASAP, and a disincentive to linger in eddies that may not advance one's job prospects.

One of the publications cited by Goetz is still going strong: "The Journal of Negative Results in BioMedicine," edited by Bjorn Olsen of Harvard Medical School, has possibly the most delicious description of any journal ever:

Journal of Negative Results in BioMedicine is an open access, peer-reviewed, online journal that promotes a discussion of unexpected, controversial, provocative and/or negative results in the context of current tenets.

When will all the results of scientific research be released into the wild? How can we free up this unused resource?