Transcript  Episode #141  Four C’s to Avoid Failure by Success

Intro: My husband has a saying: “There are two ways to fail: Failure by failure and failure by success. Take prudent precautions.” In this Arise2Live episode, Scott talks about the Four C’s to preventing failure-by-success and how several growing companies used them win. Let’s get started with today’s episode.

Scott: Welcome to the Arise2Live podcast, episode #141. I’m so glad you are with us today and I think you will gain a perspective why many experienced business owners tell us: be careful when growing your business. If you expand too fast, you can die. That is, failure-by-success.

My name is Scott Weaver. Arise2Live Business Coach, bringing you clarity and perspective into your business so you can increase profits and freedom.

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Jumping right in.

Fear of Failure

Most of us are afraid of failure. That’s fine. Failure is not living up to expectations or not reaching a goal. Nobody like it with things go wrong and have to start-over. However, if that fear of failure caused you to freeze or hold back, it can cause another emotion, regret. Regret is one of the most powerful emotions, much stronger that failure. It’s like the saying ‘I tried and learned.’ Versus “I only wished I had tried…” In the long run, it’s better to try and fail than sit-back and regret.

Winston Churchill, The British leader in World War 2, in a quote often attributed to him said: “Success if not final, Failure is not Fatal. This is the guy who flunked 6 grade, early political setbacks, and became the top 20th Century leaders.

Zig Ziglar said that “Failure is an event, not a person.”

The point here, get out there and try to get your business of the ground, improve your company’s performance, develop your leadership style. So much better to try and fail and sit back regret. And who knows.

Maybe you just might succeed beyond expectations.

That what’s this episode is about: 4 things you can start doing today to prevent failure-by-success.

What do I mean by Failure-by-Success in business?

It’s when a business has so much customer demand that you can’t meet that demand. This usually happens when a company is between start-up positive cash flow and steady maturity.

Over time, a business improved their product or service and customer’s love it. Marketing and sales is on fire, and orders are coming in by the truck load. The revenue is exploding in a good way. Success is fast approaching, arriving faster than ever thought possible.

But inside the company cracks are forming. To meet demand, a litany of Band-Aids are implemented, equipment overused, business process break, and employees stretched. Solutions are to hire quickly. Buy new software and equipment. On-the-job training. Outsource some business process that’s broken. The list goes on and on. So does the spending.

But there’s too many orders, way too many customers for your operations to keep up. Employees tells the owner fixes are a day late and dollar short.

The owner’s stress grows into fear and overwhelm.

Customers first complain and then leave. Revenues fall quickly.

Example of Amazon.com in 1998

Let me give you an example. I think one of the most extreme example of fighting off the ‘Failure-by-Success’ I know. It is from the early days of Amazon.

It was the Christmas season of 1998, Yeah, it’s a while ago and their name was Amazon.com at the time and they only sold books. Still this example useful of the struggles of many business owners trying to breakout and grow.

In the 1998 gift season, Amazon.com had a breakthrough in book orders. It was great getting so many new customers. This is what Amazon wanted and working for. It was awesome.

However, they were so understaffed delivering books that they couldn’t keep up with the orders. Extreme action needed to be taken for the company would fail. The company founders had to fulfill the orders with themselves and Every employee had to work extra hours after doing their own job. Every employee, as in accountants, janitors, managers, IT. They added graveyard shifts, hired family and friends, even hired people just released from jail to ship book order.

By end of the season, they got the books delivered. And it was a very traumatic experience on the employees and they vowed never repeated that again. That season, Amazon.com had fought off failure-by-order-success. They survived and fixed their broken order fulfillment process. The rest is history.

It’s my guess that nearly every mature business has war stories of fighting off failure-by-success. So what are some things a business owner can to prevent failure-by-success?

Well, here are 4 things, 4 C’s that you can do.

The 4’Cs to Avoid Failure:

  1. Core competency

Yes that’s two C’s, but it only count as one. So you get a bonus C for listening. Sticking with Core Competency of your business is very important to success. Core competency is what your company does best, what they are good at. You would not expect a retail store or home-center to be any good at making trackers. Or a professional basketball player to equally good at snowboarding. Yet, there are many stories of business chasing temporary revenue by doing things outside there zone of genius.

So, in the pressures of growing fast, having a clear understanding of your business core competency prevents making product mistakes and allows you to focus on the strengths of the company.

  1. Careful consideration of opportunities.

Each new opportunity for growth and revenue needs to be reviewed beyond the dollars. Ask yourself can be done? If yes. Ask yourself: Can it be done by you? Your company has limits on people, equipment, time, know-how, will power, cash on hand, etc. The opportunity should make the company stronger at the end of the day.

Here’s one word of advice from many very successful business leaders: Say no to most opportunities, even good ones. If the opportunities is not a no-brainer, the answer is no. That said, in the early start-up and break-out stages of a company, there may be few opportunities and those you have to chase to survive. For example, a tech start-up taking on sub-contract monkey work to pay the bills while developing there first product.

Again, careful consideration of opportunities and picking the goods are important to avoid failure-by-success.

  1. Confidence in delivering on time

The underlining questions is: can you deliver on your promises. You the business owner needs to have confidence that your company will deliver on time and quality to the customer. In the fast growth stage, it’s rarely a 100% confidence, but 80% and some hard work is good enough.

  1. Building capacity, quality, volume, etc.

In almost every case, a growing company must their increase their capacity to deliver to more and more customers. This is more than just sending that same stuff of a new customer. It’s about proving better stuff with the right value and quality, and cheaper. Economics of scale start to come into play. That, buying more expensive equipment so that unit costs go down at larger volumes.

 

Here’s a very quick example of this. In the early days of Microsoft…like almost the very beginning of their company, Microsoft did not do Windows or DOS. In fact, it was by serendipity that got into that business. You see, a team at IBM was building a new personal computer, one that would revolutionize our lives. Yes, IBM came out with the fa PC computer that set the standard that many computers still built today.

Anyway, IBM were building the hardware and was plan to release the computer in about 6 months or so, but did not have a software operation system. That’s kinda of important for a useful computer. Greatly worried, the IBM managers flow out to Silicon Valley to the king of operating systems at the time, a company called DEC. When they got there, the DEC CEO blew them off and completely dismissed them.

So they flew to Seattle and started talks with a young entrepreneur named Bill Gates. At the time, Microsoft did not have a software operating system product or even have the technology in-house. Still, Bill Gates signed the contract with IBM. Was there a big risk to fail-by-success? Yes, especially since IBM could cancel that contract at any time.

So what did Bill Gates and Micorsoft do to prevent failure-by-success? Let’s go through our list of 4 C’s

Core Competency: Microsoft had very good team of programmers and coders. They had been producing software products for several years. They could quickly come up to speed on IBM’s new operating system.

Careful Consideration of the opportunity:  Microsoft, a small, growing software company having the opportunity of a large contract with IBM in their area of core competency. They had the people and cash to invest. From a founder’s viewpoint, this was a no brainer. Sign the contract.

Confidence in delivering on time: This was the biggest risk. In about 6 months, can Microsoft deliver on their promises. Bill Gates had confidence. Surely not 100%, probably more like 50%. But he knew his team and his will power could do it. He also knew he had to build capacity.

Capacity: After Microsoft signed the contract, they went out and bought a simple operating system for a local area programmer. That increased the technology capacity, but a lot of work was needed on it. They also hired people and IBM provided engineers to help with the software talking to the hardware.

As growing company, Microsoft faced the dangers of failure-by-success with their new large customer, IBM. They worked hard, made adjustment in the company, but IBM was their break-out client. By overcoming the challenges, we now have Microsoft Windows and a host of other products.

Remember that “There are two ways to fail: Failure by failure and failure by success. Take prudent precautions.”

It’s likely that your company will, or has, face similar challenges like the early days Amazon and Microsoft. They are an example of what it takes grow your company. They had their own struggles, and you will have your own unique ones. You can overcome dangers to fail-by-success and end-up creating long lasting competitive advantages. You can Arise2Live.

Sponsor: Today’s sponsor is Arise2Live Business Coaching: a professional and structured system to get business owners to grow and gain freedom from the chaos of running a business.

Scott uses a proprietary four step system to get you the results you need. Start running a thriving business, not a self created job. Schedule a call today on the Arise2Live.com website.