Business Strategy Failure Examples – One of the hardest things in life is knowing when to move on and when to move on.
On the one hand, perseverance and determination are the keys to success in any field. Controlling their craft will experience moments of doubt and somehow find the inner determination to keep going. If you want to build a successful business, or have a great marriage, or learn a new skill, perseverance is perhaps the most important quality you have.
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On the other hand, telling someone to never give up is terrible advice. Successful people quit all the time. When something doesn’t work, smart people don’t repeat it endlessly. review You adapt. you pan you stop As the saying goes, “Insanity is doing the same thing over and over again and expecting different results.” 1
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Life requires both strategies. Sometimes you need to show firm confidence and redouble your efforts. Sometimes you have to give up on things that aren’t working and try something new. The main question is: how do you know when to stop and when to stick with it?
One way to answer this question is to use a framework I call the 3 Stages of Failure.
In the rest of this article, I will share a history, solution, and summary for each stage of failure. I hope the 3 Stages of Failure help you make the difficult decision of when to quit and when to stick with it. It’s not perfect, but I hope you find it useful.
Sam Carpenter became a small business owner in 1984. With a down payment of $5,000, he bought a struggling Bend, Oregon company and renamed it Centratel.
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Centratel provided a 24-hour answering service to doctors, veterinarians, and other businesses that needed 24-hour phone answering, but could not afford to pay an employee to sit at a desk all the time. When he bought the company, Carpenter hoped that Centratel would “one day be the highest quality telephone service in the United States.” 2
Things did not go as expected. In a 2012 interview, Carpenter described his first decade and a half as an entrepreneur by saying:
“I literally worked 80 to 100 hours a week for 15 years. I was a single mother of two, believe it or not. I was very sick. I took all kinds of antidepressants and so on…
I would lose my pay and lose my entire company. If you can just imagine a mental wreck, a physical wreck, and then multiply that by ten, that’s what I was. It was a horrible time.”
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One night, just before he was about to lose his paycheck, Carpenter had a realization. His company struggled because it lacked the systems it needed to perform at its best. In Carpenter’s words, “We had all kinds of problems because everyone was doing what they thought was best.”
Carpenter argued that if he could perfect his systems, his employees could spend each day following best practices instead of constantly putting out fires. He immediately started writing every process within the company.
“For example,” he said. “We have a nine-step process to answer the phone at the front desk. Everyone does it this way, it’s 100% the best way to do it and we took an organic system and made it mechanical and perfected it.” 3
Over the next two years, Carpenter designed and revised every process in the company. How to create a sales presentation. How to deposit a check. How to pay customer bills. How to process payroll. He created a manual that every employee could collect and follow for every process in the company – system by system, step by step.
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The carpenter’s work week quickly dropped from 100 hours a week to less than 10 hours a week. He no longer had to deal with every emergency as there was a procedure to guide the staff in every situation. As the quality of their work improved, Centratel raised their prices and the company’s profit margin skyrocketed to 40 percent.
Today, Centratel has grown to nearly 60 employees and recently celebrated its 30th anniversary. Carpenter now only works two hours a week.
Failure of tactics is a HOW problem. In the case of Centratel, they had a clear vision (to be the “best answering machine in the United States”) and a good strategy (the answering machine market was big), but they didn’t know how to implement their strategy and vision.
Record your process. McDonald’s has more than 35,000 stores worldwide. Why can they plug and play onboard new hires while delivering a consistent product? Because they have killer systems for every process. Whether you’re running a business, starting a family, or managing your own life, building great systems is critical to repeated success. It all starts with writing down each step of the process and developing a checklist to follow when life gets crazy.
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Measure your results. If something is important to you, measure it. If you are an entrepreneur, measure how many sales calls you make per day. If you are an author, measure how often you publish a new article. If you’re a weightlifter, measure how often you exercise. If you never measure your results, how do you know which tactics work? 4
Review and adjust your tactics. The tiring thing about level 1 errors is that they never stop. Tactics that used to work are becoming obsolete. Tactics that were once a bad idea may now be a good idea. You must constantly review and improve your work. Successful people routinely abandon tactics that do not advance their strategy and vision. Fixing a mistake in tactics is not a one time task, it is a way of life.
It was March 1999. Jeff Bezos, the founder of Amazon, had just announced that his company was launching a new service called Amazon Auctions to help people “sell almost anything online.” The idea was to create something that could compete with eBay. Bezos knew there were millions of people with goods to sell, and he wanted Amazon to be where those transactions took place. 5
Greg Linden, then a software engineer at Amazon, recalled the project saying, “Behind the scenes, this was a Herculean effort. People from across the company were pulled from their projects. The entire auction site has been rebuilt from the ground up with all the features of eBay and more. It was conceived, designed, developed, tested and launched in less than three months.” 6
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Amazon Auctions was a spectacular failure. Only six months after launch, management realized that the project was going nowhere. In September 1999, they tried to launch a new offering called Amazon zShops. This version of the idea allowed anyone from large companies to individuals to set up an online store and start selling goods through Amazon.
Once again Amazon has swung and lost. Neither Amazon Auctions nor Amazon zShops are running today. Referring to the failed projects in December 2014, Bezos said, “I made billions of dollars of mistakes at Amazon.com. Literally billions.” 7
Undeterred, Amazon again tried to create a third-party platform. In November 2000, they launched the Amazon Marketplace, which allowed individuals to sell used products alongside new Amazon items. For example, a small bookstore might list their used books right next to new ones from Amazon. 8th
It worked. Marketplace was a huge success. In 2015, Amazon Marketplace accounted for nearly 50 percent of Amazon.com’s $107 billion in sales. 9
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Strategy failure WHAT a problem. In 1999, Amazon had a clear vision to “be the most customer-centric company in the world.” They were also masters at getting things done, which is why they were able to launch Amazon Auctions in just three months. the
Get started quickly. Some ideas work better than others, but no one really knows which ideas work until you try them. No one knows in advance – not venture capitalists, not the smart people at Amazon, not your friends or family members. All the planning and research and design is just an excuse. I love Paul Graham’s take on this: “You didn’t really start working on [your idea] until you brought it to market.”
For this reason, it is important to implement strategies quickly. The sooner you test a strategy in the real world, the sooner you get feedback on whether or not it’s working. Note the timeline on which Amazon operated: Amazon Auctions was released in March 1999. Amazon zShops was released in September 1999. Amazon Marketplace was released in November 2000. Three major attempts within 20 months.
Make it cheap. Assuming you’ve reached a certain minimum level of quality, it’s best to test new strategies cheaply. If you fail cheaply it increases the surface of your success because you can test more ideas. In addition, cheap trading serves another crucial purpose. It reduces your attachment to a particular idea. When you invest a lot of time and money in a specific strategy, it becomes difficult