Leading a failed company can often help a career by providing experience, insight, and contacts that lead to new opportunities. We need to differentiate; failure of an enterprise, product, or initiative and the personal failure of an individual executive are two very different things. While the former is a learning experience that can lead to future opportunities, the latter can damn a career. Read this Harvard Business School insight…

1. Why Companies Fail and
How Their Founders
Can Bounce Back?
A HARVARD BUSINESS SCHOOL INSIGHT hbswk.hbs.edu

2. If failure means: liquidating all assets, with investors losing
most or all the money they put into the company
If failure refers to: failing to see the projected return on
investment
If failure is defined as: declaring a projection and then falling
short of meeting it
Many startups fail. Experienced entrepreneurs know that running a company that eventually fails can actually
help a career, but only if the executives are willing to view failure as a potential for improvement.
30-40%
70-80%
90-95%
Analyzing
Startup Failures
Failure as stepping stone to success

3. Reasons Why Start-ups Fail
Forget to look before they leap, surging forward without realizing that the base assumption of the
business plan is wrong
Single-minded with their strategies—wanting the venture to be all about the technology or all about the
sales, without taking time to form a balanced plan
No wiggle room to pivot mid-stream if the initial idea doesn't jibe with customer demand
Matter of timing : This can determine whether a company gets funding and whether it achieves the
startup's elusive measure of success; an exit that involves going public or getting bought
Sometimes this is due to naiveté — the notion that their idea simply cannot fail

4. Funding – Make or break for a startup
To much funding provided room
for trial and error in order to
create a viable business plan
(During the internet boom)
Lack of funding did not provide
room to achieve traction for
companies with a great idea and a
great team; consequently, lack of
time to let a good model mature
(Post boom)
Funding has the potential to turn a little failure into an enormous one:
:
• It covers up all the problems that a company has
• It enables the company and management to focus on things that aren't important to the
company's success and ignore the things that are important

5. Enterprise Failure Can Be An Asset
Individual failures within a company can be an asset, too, in that they can prevent the
whole system from failing
Boards of successful companies often seek out the founders and CEOs of failed
companies because they value experience over a clean slate
Running a company that eventually fails can actually help a career.
Even failed businesses yield future networking opportunities with venture capitalists and
relationships with other entrepreneurs whose companies are succeeding.

6. Revising Expectations
Venture capitalists could help mitigate
personal failures by allowing for the
expectation of company’s growing pains.
Management sees things in black and white,
rather than looking at the whole picture.
VCs are likely to recruit an executive with
experience at a failed company, but they
are less patient with individual failures.
Differences between growing economies
and economies that stagnate is the
acceptance of failure.
The ability to manage failure so that even if
enterprises fail, people can still succeed;
becomes one of the tricks of how you build
a society that can reinvent itself as the
world changes.