Failures have a significant impact on our careers and their scars can remain with us for many, many years.
Having spent the majority of my career turning round failing projects and under performing departments, the following are for me the top 3 reasons why things fail.
Too often people are focused on the wrong things, they are too focused on the HOW, and not on the WHAT. If you don’t have a clear picture of the WHAT, then its very difficult to figure out the right HOW.
One of my favourite quotes from Albert Einstein is ‘If I had only one hour to save the world, I would spend fifty-five minutes defining the problem, and only five minutes finding the solution‘.
This is because we need to be sure we have the right focus, that we truly know WHAT it is that we are trying to achieve, only then should we start to look for a solution.
Many companies fail because they focus on Revenue and not on Profit, or they are focused on Gross Profit and not Net Profit.
If we have the wrong focus it doesn’t matter how hard we work, we will never be successful.
Under estimation of effort
Too many projects start without the proper due diligence being taken to truly understand what needs to be done to be successful. I apologise for this example and don’t want to suggest that its true of all women, but often my wife will tell me that she needs $300 for a new dress, and I say okay honey.
It’s not until she comes back with the new dress, the news shoes to go with the dress, the new bag to go with the new shoes, and maybe even a hat that the full price is known, and often it’s significantly higher than just the cost of the dress.
Projects and businesses are the same, often we just see the dress, and we base all of our decisions around that cost, and it’s only when we see the costs of everything else later that we find ourselves in trouble. I worked with one client who had a product which cost him $10 to make, and he wanted to make a 20% profit so he sold it for $12.
The problem was he forgot to take into account the costs of his premises, the cost of his time, the cost of marketing, etc etc, if he had done all of that due diligence he would have known he needed to be selling his products for $20 in order to make a profit.
At $12 his business was on a collision course with failure.
Poor Transparency into Performance
We need to have clear transparency into our performance, if we do not have that then we are hoping that we will be successful, and hope is not a strategy. We need to have clear performance measurement, we need to know how well we are doing, only then will we be able to take the right actions at the right times.
It’s like trying to drive a car without a petrol gauge. If we don’t know how much gas we have in our car then we can run out at any time, and this could be disastrous for us.
I did a webinar 2 weeks ago, and my watch had stopped, and I ran out of time just before the Q&A, this was all because I couldn’t see how much time I had left. If I had had that transparency I could have speeded up and left time for the Q&A.
This is the same with our businesses, we need to have visibility into how much product we have in stock, how many orders we have, because if not we could end up running out of products and disappointing our customers, or we could find that we are producing too much product which is not selling quickly and this can impact our cash-flow.
In order to be successful we need transparency.
There are many reasons for failure, but in my opinion these are the top three causes.
If you’d like to learn more about how we can avoid these failure, please sign up for my free Introduction to FAST Webinar which will give you great advice on how to become part of the Top 20% of leaders and business owners that achieve success.
This will be held on Nov 3rd, at 7pm GMT/8PM CET/2pm Eastern.