Fear of failure is common. No business owner or leader wants to chalk up a record of colossal failures. Nor do owners want their firms to be known for introducing failed products or services. Yet many great successes in business are the result of numerous small and un-heralded failures. Many great outcomes are the result of numerous small failures. The failures are the road to success and the price of success. Yet some business leaders are too afraid to fail. As a result they never try anything new. There are both healthy and unhealthy ways for businesses to deal with the fear of failure.
Large-scale failures are typically fatal for businesses. Big failures are almost always public. Large-scale failures occur when you bet everything on a single effort. A relatively small number of businesses are willing to take this kind of risk today. Would you bet an entire farm on the growth of a single plant in uncontrolled conditions? You probably would not. Nor would you put your company in a position of risking everything on the introduction of a new product if its failure would destroy the firm.
Instead of risking such a large-scale failure, you would insulate the company by producing other revenue-producing products or services and by sinking limited resources into the project. You would ensure that the company would live to see another day and introduce another product. You would also test your product at every stage of development for each function. With the results of each test, you would make corrections and improvements in your design. You would typically build a single prototype (or a limited number), and you would gather feedback from your team and from your market.
You might publicize the fact that you are working on something new, but you would not give many details. After all, you would not want to give a competitor enough information to steal your idea. You might seek customer feedback, but you would not make grand product launch announcements until you were absolutely certain the product could not fail. You would not risk a large-scale failure until you were absolutely certain you had done everything possible to mitigate the risk of failure.
At the other extreme (from those who would risk everything on a single venture) are the business leaders who are so risk-averse that they are unwilling to try anything new. Small incremental upgrades or improvements are the only acceptable risks for these companies. These leaders are too afraid of failure, and so they are unwilling to take any risks.
Fortunately, most business leaders recognize the need to take certain measured risks to achieve business growth and success. These leaders understand that markets and customer needs change. They understand that they must anticipate change and changing needs to survive.
The middle ground in approaching change and new ventures is to accept that risk is part of doing business, especially in times of rapid change. Yet in this middle ground, the organization is insulated and protected from large-scale failure by assessing, understanding, and finding ways to mitigate the risk through appropriate financing and resource allocation, by being willing to endure small failures in order to learn from them and improve the venture, by testing and re-testing at each stage of development to ensure function and reliability.
At each step of this middle ground approach to new ventures, a risk assessment allows leadership to make an informed decision about continuing or ending the project, about investing more or less into the venture, and about how closely the venture itself should be protected from public attention. At each step of the venture, leadership must also analyze the risk of “paralysis by over-analysis.” Leadership must, in other words, continue to push the venture to completion (if warranted) and protect the venture from those who are too afraid to fail.
Risk assessment is a complex undertaking. It can be very frustrating for those who are heavily invested in the idea of a new venture or for those who are inclined to believe sunk cost arguments. Sometimes, outside risk assessment is the best way to protect a company and find creative ways to mitigate the risk of a new venture. Some firms rely upon Trilogy Partners to perform risk assessment in these situations, and trust us to help them mitigate their risks. Don’t risk the future of your company on a roll of the dice. Choose the middle ground for new ventures and call on trusted advisors for risk assessment and mitigation guidance.