Entrepreneurs need to change their attitudes about failure, according to a paper out of the University of Albany–State University of New York. In fact, in many ways, those who fail could end up being more successful in the long run than those who experience early success, say Junesoo Lee, former doctoral student at the University of Albany’s Rockefeller College of Public Affairs and Policy, and Paul Miesing, associate professor at its School of Business.
For their study, Lee, now at the KDI School of Public Policy and Management in Sejong City, South Korea, and Miesing studied past scholarship on failure and case studies from industry in order to create a “failure management framework.” They explored failure from many angles, including why and how people learn from failure, what they learn from it, and how they can use it to their advantage.
They draw lessons from several high-profile business failures. For example, they cite the way Lockheed Corporation turned a missed government grant in the 1950s into a highly profitable privately held technology. Other examples include Sony, which used the exposure it gained from its ill-fated personal digital assistant devices to grow the market for future products; and New York City, which transformed an abandoned railroad line into a public park.
Lee and Miesing lay out 16 strategies for turning failure into an opportunity for future success. These include using a failed undertaking to test new ideas, spread or reduce risk, improve efficiency, seek out a superior opportunity, or stimulate greater innovation.
“Failures may be the only way to learn about the underlying issues with a business,” says Miesing. They can “help improve process reliability, reduce error-related costs, and improve the composition of a business’s projects through trial-and-error learning.”
“How entrepreneurs can benefit from failure management” appears in the July–September 2017 issue of Organizational Dynamics.
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