Failure: The Best Thing to Happen to Business Owners?

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How to fail as an entrepreneur

Soichiro Honda, founder of the Honda Motor Company, once said that “success is 99 percent failure.”

Honda’s unique story—one of epic failures, massive success, and everything in between—continues to inspire entrepreneurs and business owners who may be struggling to see how their efforts will eventually pay off.

We live in a world where we crave instant gratification, where failure is often seen as a final destination as opposed to an opportunity to grow and improve. So, how can some people—like Honda—thrive on failure, while others crash and burn?

This depends on the “type” of failure experienced, the underlying reasons for the failure, and being able to assess it in the right way so as to avoid repeating the same mistakes. Above all, the perception of failure in the context of overall success is key. Allow me to explore this further.

How people react to failure

According to Psychology Today, people blame others when things go wrong because they see failure as something that attracts punishment or negative treatment. They, therefore, look to shirk responsibility and pass the proverbial buck.

When failure occurs—whether it is in business or in any other area of life—one of the first things people do is look for who or what to blame.

Sometimes, people don’t want to admit they failed, so they will look for some reason they can give for what happened that doesn’t make them look like the bad guy. In some cases, blame is warranted, particularly if the failure happened due to someone not following protocol or deviating from the plan that was set, or there was a lapse in effort.

Aside from playing the blame game, Harvard Business Journal also cites another common reaction to failure—the assumption that all failures are equal. This is not true; there are actually three types of failure.

The three types of failure

1. Preventable failures

These are the “bad” failures. These are the ones that could have been prevented if they had have been approached in the right way.

These are the mistakes that happen when someone does not follow the prescribed methods of operation due to an inability to follow the set procedures, inattentiveness, or a deliberate divergence from those procedures. In these cases, it is relatively easy to determine what went wrong.

An example of a preventable failure is in which sufficient training in a particular procedure or process would have been enough to prevent a serious incident in the workplace.

2. Failures in complex systems

In complex systems, there are many factors that play into failure, including the people involved, processes, organizational needs, and the introduction of new problems and situations.

These are the systematic failures that generally begin as multiple, small failures that, when left unfixed, turn into a system-wide problem. These small failures aren’t bad in and of themselves—they are simply a reality in a complex system. Dealing with them promptly is what prevents bigger failures from happening.

One of the more infamous failures was the 1986 Chernobyl Accident. The combination of a poorly designed reactor and insufficiently trained personnel created the perfect storm for a major disaster.

3. Intelligent failures

These are the “good” failures—the ones that begin with experimentation and result in knowledge and information that, when acknowledged and acted upon, can propel an organization forward with positive change and growth.

This is the kind of failure that results when organizations are pushing the envelope and trying new things without necessarily knowing the outcome. They are open to the failure so they can move to the next step, the next phase in the plan.

Without Thomas Edison’s trial and error approach, the lightbulb, the typewriter, and alkaline storage battery may never have been invented.

Knowing that there is a failure is not all bad, the question remains: “How do we learn from it?” It is possible, but it isn’t always straightforward. As Guy Winch puts it, failure is a “cryptic” teacher.

The culture of “success at all costs”

The process of trial and error is something many businesses shy away from because the fear of failure is too high. But Jim Owens, owner and CEO of Caterpillar Inc., says that people can learn far more from failure than from success.

According to Owens, our culture has been conditioned to believe that success is rewarded and failure is shunned. As he observes, “Real failure doesn’t come from making mistakes; it comes from avoiding errors at all possible costs, from fear to take risks and from the inability to grow.”

Potential reasons for a fear of failure


We live in a perfectionist society and we learn from childhood to value perfection at all costs. For this reason, we strive so hard for perfection that, if we fail, we slink away in embarrassment. Either that or we never try at all.

Limited number of mistakes

Even though everyone—even business leaders—makes mistakes, it’s often the case that only so many are allowed before serious questions are asked. Rather than seeing failure as a road to success, each one is tallied and scrutinized until there is just one too many.

How can we get past these societal pressures and learn the lessons failure has to teach? Let’s take a look.

How to learn from failure

This is not as easy as it sounds. You cannot simply take failure as it is and try to do better; you need to assess the failure to determine precisely why it happened and you have to use the right metrics to do so.

Fast Company reports how Craig Mullaney, manager of strategic partnerships with global influencers for Facebook, has learned from failure and now follows a four-step plan.

1. Ensure everyone involved reviews the situation

Review after the fact and determine in what ways you can improve. This requires honesty when reflecting on what happened and where things went wrong.

2. Determine the sequence of events

Get everyone involved to determine a sequence of events that resulted in the failure. Use visuals! Get that whiteboard out and invite team members to share their timeline of events. You can then piece together the complete picture.

3. What went right

Even with failure, there are bound to be things that went right. Have people point out these positives and analyze them. This is a form of positive reinforcement through which you can ask what went right or worked out as planned.

4. What went wrong

Once you have determined what went right, you can ask the same questions regarding what went wrong, why things didn’t work, and what can be changed for the next time.

As you can see, a venture-ending mistake—and ultimate failure—to one person can be viewed as the ideal stepping to success for another. For the likes of Honda and Edison, a series of failures created their respective successes.

Remember, all failures are not equal and that it is not necessarily the number of failures that defines you as a business owner or entrepreneur. What counts is how you use these mistakes as a learning tool on the path to success. Own your mistakes, learn valuable lessons, and don’t be afraid to push the boundaries.

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Harriet Genever
Harriet Genever
Harriet Genever is a freelance writer and copyeditor, specializing in blog posts, research articles and customer case studies. As the founder of her Australian-based business, Write Beyond, she works with B2B companies and small business, developing compelling content to attract customers and keep them engaged. With a background in Human Resource Management, Harriet enjoys the personal interaction with clients and their customers when working on writing projects. She is also a true believer that the key to success in any business is its people.
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