Here is an abstract of a paper I wrote for my MBA Entrepreneurship course.
I thought you might be interested to benefit from. If you want a copy of
the full paper, Rick was so kind to place it @:
http://www.learning-org.com/docs/0010_Dabal_Fail_Learn.pdf
Thanks...Jamal Al-Dabal
Saudi Aramco
'Success is all about going from failure to failure without losing your
enthusiasm." (Winston Churchill)
"Many of life's failures are people who did not realize how close they
were to success when they gave up." (Thomas Edison)
A key difference between entrepreneurial ventures and established large
organizations is the attitude towards failure. Big organizations generally
consider failure as undesirable. This leads to inaction to avoid failing.
Inaction results in reducing innovation which today is the key to
competitive advantage. If there are two lessons organizations need to
learn from entrepreneurs; these are taking calculated risks and not being
afraid of failure.
In 1997, the U.S. alone had more than 83,000 business failures, owing
money to their creditors. Large companies like Kia Motors company in
Korea, and L. A. Gear sporting goods manufacturer in the U.S. are failing
after dramatic growth (Please see Appendix A for some of the major failing
companies in 1997). What lessons do we learn from these? Looking at the
Silicon Valley, an entrepreneur's failure is considered a plus and even
desirable if it shows there is a learning experience from it that helps
the next endeavor. What failure mostly teaches high-fliers is a reality
check to take care of issues entrepreneurs do not like to pay attention to
that could make or break businesses. Sometimes, it is even recommended
that companies dissolve to stop the blood-letting, in spite of an
entrepreneur's spirit of never-say-die.
In Silicon Valley, "The ones with better press are getting big bucks,
acquired, or venture-capital backing. It bears no relationship to the
quality of the product or the quality of the team," says Sernovitz,
president of the Association for Interactive Media. He was commenting
about FreeLoader, a company sold after 9 months for $38 million mostly
because of advertising and publicity, more than actual products.
In this paper, I will be discussing the lessons organizations learn from
the common causes of failure in entrepreneurial ventures, including a
personal experience with a firm failure and lessons learned. In Appendix
B, I collected a number of quotes by very successful people about
failures, the lessons to learn, and moving to success.
I hope you will find this paper as interesting as I found researching and
writing about the subject. I was thinking of moving some parts into
appendices to shorten the paper; I later decided that it was important to
keep these parts in the main chapters of the paper.
--"Jamal K. Al-Dabal" <dabaljk@aramco.com.sa>
Learning-org -- Hosted by Rick Karash <Richard@Karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>
"Learning-org" and the format of our message identifiers (LO1234, etc.) are trademarks of Richard Karash.