S1E9 The Other F-Word

Welcome to Everything Is A People Problem; a podcast that explores the connections between business, culture, and community, uncovering how every business problem has a people-centric solution with host Dia Zafer-Joyce. 

In this episode, Dia discusses how failing is a natural byproduct of growth and the difference between preventable, complexity-related, and intelligent failures.

Thanks for listening! Follow us on Instagram and Facebook and get engaged in the people conversation.

Transcript

Copy Transcript Copied

Hi there. Welcome to Everything is a People Problem, a podcast that explores the connections between business, culture, and community, uncovering how every business problem has a people centric solution. I'm your host, Dia Zafer-Joyce. Let's talk about people. 

Hi there! I'm Dia, and welcome back to Everything is a People Problem. Before we dive into today's topic of failure, I want to remind you that I am now open for questions. The last episode of the season is going to be a Q and A and so if you go to diazaferjoyce.com/podcast, you'll find a new little link that says, “Do you have a question for the pod?” and you can just click here and submit yours. You'll have an email form open that will ask for your name, which is optional, and your question, and give you the opportunity to attach a voice memo if you want to be played on the air.  

Let's talk about the F word, that thing most people try to avoid, but everybody needs. Failure can be a trite topic because it means something different to everyone.  A lot of old timey sayings have been exhausted over our lifetime, like, “If at first you don't succeed, try, try again,” presuming that you didn't succeed because you failed. There are acrostics to help you feel better about the word failure, like FAIL standing for First Attempt in Learning. Some people see failure as a weight on their shoulders every time incrementally they do not succeed. Others see it as steps moving upward so that every time you fail you take a step forward and make progress. No matter how you think about it, if you are someone who enjoys potato chips, post-it notes, pacemakers, penicillin, or silly putty, then you better also like failing because all of those things were failures from their intended first attempt at least. 

Failure and risk are synonymous and even though I haven't accidentally made potato chips while trying to attempt another task, I have certainly learned from my own unintended outcomes when I've taken risks and they haven't gone the way I would have expected.  I want to share my experience with you in opening an enamel pin business. If you're wondering, “Well, Dia, I don't see a link to your shop on your website to this pin business,” that's because it doesn't exist anymore.  

I love enamel pins. Ever since my very first one that I found at a garage sale back in the suburbs of Chicago, that was this unicorn, it is a hard enamel pin, it's very old, and I still have it today, all the way to pins that I find on Etsy and purchase from artists because they put their art in wearable, adorable little formats and allow for deep, thoughtful self expression without even having to say a word. Enamel pins are awesome.  One day I thought I should create my own pin business. I love making art. I love pins. Obviously I should get into the enamel pin industry. I named it Pinup because I love a good pun. And I had branding, a color scheme, an identity. I wanted people to know when my pin arrived in the mail because they would see this small little yellow package with my sticker on the back. And they would know that their moment has arrived and their precious pin was now in their possession. 

The thing is, when you're selling material goods, there's a lot of overhead. You need to buy the envelopes and the stickers ahead of time, so that you have them to send to your customers when they purchase your pins. You also design, contract, and produce your goods, so, that means you have bins of pins lying around waiting to be bought.  And then not to mention taxes and international shipping and all the other things that creep in when you least expect it. And by least expect it, I mean you didn't do enough research before you decided starting a pin business was a good idea. After about a year and a half of running Pinup, I decided to close it.  What I learned from that moment in time was that I loved controlling the experience for the customer. I loved instilling a sense of excitement that everything was meant to be there, from the wrapping, to the tissue, to the note thanking them for their purchase and support. What I didn't like was the volatility of the pin industry's market.  Closing Pinup was a bummer for me. Beyond just the sunk cost, I just really cared about my little enterprise and thought that it could be something that would thrive and at least I'm not alone; 50 percent of small businesses fail in their first 12 months of being open so at least I went beyond the one year mark, but on the flip side 42 percent of those failures are because of lack of demand in the market for their product and that was me. 

Now we've talked about the benefits of failure and of taking risks for both individual development and for business innovation, but business failure is actually good for the economy. Hart Posen of the University of Michigan's Ross School of Business and Anne Marie Knott of Washington University in St. Louis, did a study on the economic impact of failed firms. They focused on the commercial banking industry in all 50 US states and the District of Columbia. They found that the more firms that enter a market, the greater the likelihood that established companies who perform poorly will disappear, and this suggests that failure is just a byproduct that yields the best companies. Posen and Knott are talking about this cyclical effect that happens with excess entry, so a large flood of new companies that come into an industry, they saw that with this influx or an introduction of new companies, there is a greater service provided, which then decreases the cost that customers are willing to pay, mostly because prices get competitive. When that happens, good companies innovate, and when they innovate, they might find a way to be able to provide a comparable or even better service for the same or lower price. They may find ways to persevere, whereas those companies who weren't performing well to begin with, now that there's this competition that is surpassing what they can offer, they naturally die out. 

I'm using the example of small businesses and businesses in general to showcase how important it is to normalize failure. And failure itself is a very strong word, but we're going to use it because people use it and associate different feelings with it that are completely unnecessary. Failure is a learning experience, and there's a great book called “Little Bets; How Breakthrough Ideas Emerge from Small Discoveries” by Peter Sims. It's an excellent read on those little experiments that we should conduct; everything from a small business owner within your business to an individual contributor and a manager, it's taking advantage of small risks that can yield wins so that that way you learn from those little bets that you make. They're little because they're low stakes. That's how you get used to failure is you don't just make a big commitment without doing the proper research like me, don't be me and decide to just start a goods-based small business just so that you can learn from it.  When one small bet  follows another, follows another, follows another, what ends up happening is that you learn so much that before you know it, you look back and you've actually taken a big risk. You have done a lot of little things that have led to a large change, large decision. So, If you did fail along the way, it's a lot easier to understand what part those failures have played as you continue to move forward. 

Back when I attended the Grace Hopper Celebration in 2019 for women in tech, I was completely floored by these young women who were presenting with these brilliant ideas, and I thought, “Oh my gosh, I'm not doing anything with my life,” and  it's not that they woke up one day and said, “Ah, I'm going to make  this change in the world! I'm going to solve this giant problem.”  Every single one of them in their conversations said they started with something small. There was just one thing they wanted to change, one thing they wanted to improve, and that one thing led to another and led to another, and then, before you know it, they're not even graduated from college and they're presenting at GHC because they have followed their failures and their successes to create something that would be beneficial not just for themselves, but for their community and for the world.  

Something funny happens to our brain when we fail.  It expands. Believe it or not, your brain begins compiling information about an experience and throughout the learning scenario of that experience, it gets bigger. Now normally, the brain will return to close to its original size after the learning experience concludes unless you fail, and if you fail, it matures the brain. It results in more efficient synapses and fundamentally altered neurons, so failure can actually make you smarter.  

Not all failure is created equal. Often in order to have a culture where you are allowed to or encouraged to fail, it also coincides with high performance expectations as well. Mostly because if you're going to learn from the failure, You need to articulate what you've learned and apply it into the next attempt. But failure has three broad categories: preventable, complexity related, and intelligent.  

Preventable failures are the ones that shouldn't happen. When they do, it's usually a result of deviance  or inattention or, lack of ability. The good news is that preventable failures are the easiest to fix because maybe you need to introduce training or a checklist. There are very task oriented solutions that can be implemented in order to prevent those failures in the future. Complexity related are unavoidable failures within complex systems, usually due to the uncertainty of work do these failures occur. It might be a new combination of needs and people and problems, and if they've never occurred before, then the output is going to be incredibly unpredictable. Failures in complex systems pave the way to innovation. They are generally around safety and risk management, but they need to happen in order for small failures to help prevent big failures. And finally, intelligent failures; these are ones that provide valuable knowledge that helps organizations move ahead quickly and surpass their competition, which helps ensure that they'll grow in the future. This is a format that encourages small experimentation that produces failures quickly because then you have information to learn from right in the moment. Trial and error may fall into this category as well, although error assumes that there was a wrong way to do something, so more like trial and discovery.  

No matter what failure you either experience or observe, there's one thing you should do and you should start doing it today. Write them down. Record them.  Recording a failure is not with the purpose of assigning blame. There's a difference between failure and fault. It was definitely my fault that Pinup failed, but through the failure, I learned some valuable lessons about the kind of business that I want to run. When you're managing a project, one of the most important steps that gets left off the most is evaluation. Recording our failures is authoring the evaluation of an experiment, and you don't need to be a project manager in order to do that.  When you don't record the failure, you lose the knowledge. Retaining the knowledge and leveraging it into the next experiment is how you're going to turn your failures into intelligent ones, so don't ignore those important, meaningful failures. Embrace and elevate them so that everyone can learn from them.

You've just finished the latest installment of everything is A People Problem. You can find episode transcripts with work cited on diazaferjoyce.com/podcast. Find me on Instagram @EverythingIsAPeopleProblem, and tell me what you thought of the episode.  If you like what you heard, please subscribe so that you're notified when new weekly episodes become available. Once again, I'm your host, Dia Zafer-Joyce, thanks for joining me and see you next week.

Today’s episode was written and produced by Dia Zafer-Joyce. It featured insights and statistics from Forbes, Harvard Business Review, the University of Michigan, and The Zebra, and Royalty-free music provided by Sarah, the Instrumentalist from Epidemic Sound.