Why it’s OK to fail sometimes in business

Chances are, you’ve probably never heard of Traf-O-Data. It was a venture started in the early 1970s by a couple of teenagers from Seattle, Washington. Using the Intel 8008 processor, Traf-O-Data analysed traffic data punched into paper rolls, so traffic flow could be improved. The budding tech entrepreneurs tried to market Traf-O-Data to local government.

The venture was founded by William Henry Gates III (now better known as Bill, of course) and Paul Allen, the dynamic duo that would later take their place among the world’s richest business men after setting up Microsoft in 1975.

Flawed business model

In a 2011 Newsweek interview  Allen conceded: “Traf-O-Data was a good idea with a flawed business model. It hadn’t occurred to us to do any market research, and we had no idea how hard it would be to get capital commitments from municipalities. Between 1974 and 1980, Traf-O-Data totaled net losses of $3,494. We closed shop shortly thereafter.”

He continued: “Since then, I’ve made my share of business mistakes, but Traf-O-Data remains my favorite, because it confirmed to me that every failure contains the seeds of your next success.”

Corporate history provides many other well-known business people who failed but went on to achieve phenomenal success. Rowland Hussey Macy had many failed retail ventures, before (aged 36) launching R.H. Macy & Co, which became Macy’s, one of the world’s most successful department stores.

Henry Ford started two automotive companies that failed before he enjoyed enormous success with the Ford Motor Company (reportedly worth US$188bn when Ford died in 1947). Ford is quoted as remarking: “Failure is the opportunity to begin again more intelligently.”

Creative thinking

Closer to home, Sir James Dyson made thousands of failed prototypes which sucked up his personal savings for 15 years before he finally created his hugely successful vacuum cleaner.

Speaking to Fast Company he recalled: “I made 5,127 prototypes before I got it right. There were 5,126 failures. But I learned from each one. That’s how I came up with a solution. So, I don’t mind failure. Schoolchildren should be marked by the number of failures they’ve had. The child who tries strange things and experiences lots of failures to get there is probably more creative.” The renown British inventor and businessman now has his own foundation, which “is dedicated to encouraging young people to think differently, make mistakes, invent and realize their engineering potential”.

Although we’re encouraged to fear failure, hide our mistakes and be embarrassed when we slip up, failure in business and life offers valuable learning opportunities. In many ways, failure is part of the entrepreneurial journey – it can drive us forward to achieve great things. And if you’re not prepared to risk failure by trying new things, you might never achieve great success.

Definition of insanity

In the USA, in particular, there’s a different attitude to failure in business. Indeed, some believe you cannot truly claim to be a success unless you’ve overcome failure. Many highly successful entrepreneurs have endured epic failures. The key is to recognise your mistakes, learn important lessons when things go wrong, don’t let it happen again and seek to improve. We shouldn’t fear failure. Failure reminds us we’re human and that we can’t get it right every time.

Never learning from your mistakes is another matter altogether, of course. Failure can lead to more failure – and eventually business failure. In the words of Albert Einstein: “Insanity is doing the same thing over and over again and expecting different results”.

• This blog appeared originally on the HSBC Knowledge Centre website and was commissioned by Atom Content Marketing.