This first day of the Milken Conference was filled with a daunting array of success symbols: black Armani suits and black Town Cars, entourages of assistants, and the CEO paparazzi (whose flashes exploded in glittering unison each time a session began).
Yet within all the discussion of growth, leadership, and innovation, there was another omnipresent topic hidden into the discussion, one that remained largely ignored, even as it lurked in the corners of every CEO’s mind. The topic was hinted at, skirted around, and implied. Yet rarely was it actually mentioned by name.
This, my friends, is the topic of failure.
At a conference by and for some of the world’s most extraordinary thinkers, leaders, and winners, the general thematic focus was success. Yet perhaps a more valuable topic to explore might be the opposite: the pursuits gone horribly wrong. The bungled policies and mangled balance sheets. The mistaken hires and botched turn-arounds. The screwups so royally idiotic that they drove an entire Board of Directors to collectively gasp in disbelief.
Perhaps no one wants to be the buzzkill, and delve into the precarious economic precipice that so many small businesses perch atop right now. We don’t need to study failure when so many newspaper headlines— so many of our peers—seem to teach us daily about the topic. Yet a hard look at failure, and lessons therein, could just be the session we all need right now to attend.
What lessons on failure might we learn and apply from Day One of the Milken Conference?
1. Sometimes, the most powerful catalyst for success is failure.
To understand why failure ultimately leads to success within a system, let’s take a look at the parenting theory of “natural consequences.”
As children, we learn best by naturally and directly experiencing consequences of our actions. For instance, once you touch a hot stove, you learn not to touch hot stoves in the future. It’s painful, yes, but also necessary to grow more intelligent in adapting to a changing environment.
In a session named “Jobs, Jobs, Jobs,” Carly Fiorina, Republican Candidate for U.S. Senate, California and former CEO, Hewlett-Packard, described the upside of failure within a system. “This economy has been built on risk-taking and innovation. There will be a bunch of ideas that fail.” Fiorina described the necessary failures of previous setbacks, pointing to previous examples of concentrated industries going through very difficult times, such as the dot-com bust, in which there were “thousands upon thousands of lost jobs in one concentrated area, causing great hardship. There was no government bailout. And the industry emerged stronger than ever.”
Fiorina also cited how virtually the entire airline industry had to go bankrupt, with countless employees, supply chain departments. Yet the companies went bankrupt, they renegotiated contracts, and emerged stronger and better.”
Consequences—even failures—help us grow stronger in our decision-making as a whole.
2. Fail successfully.
Not all failures are created equally. Ron Bloom, Senior Advisor to the U.S. Treasury Department, and White House Senior Counselor for Manufacturing Policy, touched on this point. Previously, “we didn’t have ability to fail a bank in a controlled way.” And this was the dilemma facing us with bail-outs. “We had no other way to deal with failed institutions other than to nationalize them. Or to completely let them go into uncontrolled failure (such as Lehman Bros). Given the hands that both parties had, we worked way through in reasonable way.”
3. Expect, and prepare, for personal failures.
As small businesses, we must be supported in innovation and growth, in order for the whole system to succeed. As CEOs, we must be prepared to fail occasionally on an individual level, in order for the company to innovate. Otherwise, we play it so safe that we kill any chance of innovation within our companies.
On a personal level, our personal fear of failure can often work spectacularly against us. We tend to think that, as with everything else, we can pull ourselves out. Achievers become clinically depressed far more so than the average worker, because we expect so much more of ourselves.
Failure isn’t easy.
But greatness isn’t easy, either. It’s not supposed to be easy. That’s what makes it worth doing.
[This article published as a "live blog" from the Milken Conference by Vistage on April 27, 2010]
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Failure 101
We are taught to succeed, to get the highest marks even at the cost of misunderstanding. Failure equals rejection and punishment. When confronted with failure for the fist time, straight students have no clue as to what to do. Some never recover. What if failure was taught at the elementary school level? Wouldn’t it be tremendous to succeed at failure!
Fiorina is right (ouch, hurts to say that, I don’t care for her based on what I’ve heard, which, granted, could be just lies!). In Silicon Valley, you don’t get to be a top manager unless you have royally screwed up several times. And look at the vibrancy of the Valley. Nothing else like it in the whole wide world.
The government bozo is, well, a bozo. Really, he thinks he’s going to have a controlled failure that will create the same long term benefits as actual failure? What a bureaucrat. Oh, and for what it’s worth, we do have a way of dealing with corporate screw-ups: it’s called Chapter 11.