"Learning from failure" | Outlook Business
Home  /  HARDBOUND  / Learning from failure | NOV 16 , 2019

HARDBOUND

Learning from failure
Robin Banerjee decodes the rise and fall of corporates, by giving insights into the blunders committed by some

Most mistakes are sheer errors and unintended, but some are caused with an intent to defraud or make a fast buck. Eventually, the result is similar-blunders and slip-ups do leave dark marks on a corporate's history. Goof-ups often create flutters, generate abhorrent distrust, alienate customers and demotivate employees. Eventually, it may lead to bankruptcy and the end of an enterprise built over time. However, if business bloopers are handled with care and caution, mistaken indiscretions become mortal mis-steps, to be forgiven and forgotten!

Endurance and Ethos 

Not a single company that was listed in the first Dow Jones index (DJI) in 1896 is listed today (General Electric was the last company to lose the DJI listing status in June 2018). Some of the first listers still exist as part of other conglomerates, but most have faded. Why do some companies last for centuries, but most do not? While many do not read newspapers anymore, how does Bennett Coleman and Co. publish one of the most successful newspapers, The Times of India, since 1838? When hundreds of hotels go belly up every year, why is Mumbai's Taj Mahal Palace of Tatas still functioning with glory since 1903? It has been observed that companies in the business for everyday needs such as food, drinks and accommodation have longer life-span. Family-owned businesses seem to last longer and perform better. There are other human institutions such as temples, churches, mosques and educational institutions with longer longevity, with more than the average lifespan of 40-50 years. What makes some businesses last longer than others do? The Copyrighted maten answers to durability mainly lie within us. Just think why many of us live longer than others do. The good news is that what works for humans also works for business enterprises. Sensible eating, regular exercises, maintaining height-weight balance, moderate drinking and no smoking are known to be the elixir of life. None of these are unknown. Yet many of us do not follow the basics. Poor work-life balance, engaging in frequent fun-time binges, long hours of sedate lifestyle and consuming liberal doses of sugar-salt-oil in food are rather common indiscretions that limit our longevity.

Business durability works on similar principles. Not adapting to changing customer habits, inefficient management, debt overload, unresolved conflicts, unethical behaviour, lethargy, overconfidence and a myriad of other reasons of business blunders lead to curtailing of an organization's life cycle. No reason is unfamiliar, yet business basics are often not adhered to, leading to organizations tripping sooner than later. Health, whether it is personal or business, is fundamentally the product of multiple decisions and choices made by us, by recognizing what truly motivates us. We do not always make decisions, even important ones about physical or financial well-being-based on careful calculations of risk and reward. Rather, our conduct is strongly determined by our feelings, character, surroundings and available options. We may be able to nudge one another towards wiser decision-making and healthier lives. Similarly, community pressure and societal acceptance play a wide role in improving an enterprise's endurance, building positive business ethos and a healthy financial performance. Not recognizing this principle of societal pressure would be a miscue.

(Mis)takes (Mis)understood, (Re)defined Unlike success, mistakes are difficult to define

The definition is nebulous, contentious and often misunderstood. In trying to redefine, it is customary to consult a dictionary to find out what it is: 'a thing which is not correct; an error of judgement'. It could involve decisions based on information gap, deliberate act, careless move or pure bad luck. Slip-ups could range from being as minor as typing an incorrect spelling to significant ones of misconstructing a contract clause to convey an opposite meaning. Mistakes can be termed 'macro' and 'micro'. When a doctor misjudges a serious ailment, or an engineer misreads the impact of smoke bellowing from an overheated machine, catastrophic consequences of macro implication could emanate. 'Micro' mistakes are usually correctable, like recruiting an inefficient employee. While errors could be trivial, these could also be calamitous.

Mistakes could be ‘overt' or 'covert'. A rail company can incur a huge damage if its driver, through sheer error, overshoots a signal-this is an overt error. A covert blunder could involve if the railway carriage fails to stop when brakes are applied. The consequences of both are similar-probable loss to lives and properties, but the reasons could be attributed to controllable (driver negligence) and non-controllable (malfunctioning brakes) causes. A serious look, however, would convince you that both the mistaken instances could teach you lessons-drivers to be trained and brakes to be checked properly. Negligence, sloppiness or "lapse' could cause mistakes. The sloppy act of pressing the accelerator instead of the brakes while driving could result in a serious consequence. Negligence leading to an error in 1999 caused a Mars orbiter that Lockheed Martin designed for NASA to be lost in space, as the engineers at Lockheed used English measurements while the NASA team used metric measures. There could also be deliberate' acts of hara-kiri, like doctoring the financial results to raise share price or structuring a Ponzi scheme to dupe unsuspecting investors. Not-so-deliberate acts leading to 'inadvertent' outcomes may include taking a position on a commodity only to find the price judgement going wrong. While mistakes and blunders usually result in 'negative' outcomes, there is something 'good' about these. Tracking why they were made and what led to them could teach us many a lesson to avoid them in the future. Albert Einstein aptly said, 'Any-one who has never made a mistake has never tried anything new. Slip-ups often help us to slip less.

Here's your chance to read the latest issue of Outlook Business for free! Download the Outlook ​Magazines app now. Available on Play Store and App Store