Why knowing when to fail can be more important than knowing how to succeed

About 6 years ago I was approached to become involved in a new business and, as part of my research, enjoyed a fascinating dinner with the senior partner in a Private Equity firm.

His “job” was to invest between £50m to £100m per project – each time in an existing business that had plateaued, with a view to exiting within 4 years at a handsome profit if the turnaround was successful.

The target company was given the funding and a new senior management team appointed, working under the supervision of my dinner companion.

It sounded like a dream job, far removed from my freelancer existence.

As I listened, he began to paint a picture of long hours, extensive travel, high levels of stress and personal exhaustion.

The explanation came when I asked some pertinent questions about their success rate:

out of every 6 companies that we invest in, we expect 1 to make us some serious money, 1 modest return, 2 break-evens and 2 liquidations (we lose our shirts)

It will come as no surprise to find that most of the stress was focused on the 2 turkeys, trying to anticipate and minimise losses. The companies that made money simply needed a watchful eye, the companies that lost money were monster children.

You would think, wouldn’t you, that people with such experience could spot the turkeys early on and avoid them?

Apparently not so – and it seems that even the very best ideas in the business world can be royally screwed up by the wrong people.

It wasn’t the enterprise that caused the problems, it was the people running the enterprise.

And the biggest problem with the people?

The inability to realise and act upon things that didn’t work.

The unfalsifiable hypothesis (as described by Ash Maurya) that “my idea is so good that it is bound to work – so I’m not going to listen to any evidence that it’s going wrong”.

Have you ever worked in an environment where the boss thought she was always right – and couldn’t/wouldn’t listen to any evidence to the contrary?

(show of hands please – I’m waving frantically)

I’ve been involved in businesses like that myself, I’ve worked with clients like that and I’ve been that person in the past.

From the perspective of distance, I can see that what drove me to support my unfalsifiable hypothesis was pride and, yes, it came before a fall.

It may well be that a characteristic of great business owners and great people is the ability to admit that you got it wrong, to change your mind, to ask for help and to sometimes change course.

At worse, to abandon ship early enough to rescue the passengers and crew.

A 1 in 6 success rate from the “clever” Private Equity people makes me feel a whole lot better about some of the ups and downs I have had over the years.

It also means that if your business is doing well – you are a lot more clever than you think – well done.

Just don’t let it go to your head.


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Chris Barrow

Chris Barrow has been active as a consultant, trainer and coach to the UK dental profession for over 20 years. As a writer, his blog enjoys a strong following and he is a regular contributor to the dental press. Naturally direct, assertive and determined, he has the ability to reach conclusions quickly, as well as the sharp reflexes and lightness of touch to innovate, change tack and push boundaries. In 2014 he appeared as a “castaway” in the first season of the popular reality TV show “The Island with Bear Grylls”. His main professional focus is as Coach Barrow, providing coaching and mentorship to independent dentistry.