When Failure is an Option

“I have not failed. I’ve just found 10,000 ways that won’t work.” 
— Thomas Edison

I recently read an editorial in the New York Times called “The Power of Failure,” in which the writer addresses how nonprofits are tempted to hide their failures while some for-profit industries have accepted that failure is part of the process.

Sarika Bansal quotes Wayan Vota as saying, “In Silicon Valley, failure is a rite of passage. If you’re not failing, you’re not considered innovative enough.” Mr. Vota is a technology and information expert who recently organized a conference in Washington called FAIRFaire that focuses on lessons learned from projects that failed.

As a turnaround expert, my career is focused on working with companies that are experiencing failure. If a company is thriving, they don’t need me. I’m brought in when things aren’t so rosy.

successI don’t really want any company to be failing to the point where I’m called in to turn the company around.

On the other hand, I don’t think it’s best for any company to enjoy a straight line of success. There are so many lessons to be learned from failure and if CEOs and business owners don’t learn how to deal with failure, they won’t know how to handle it when it inevitably happens.

A few years ago NPR correspondent Eric Weiner traveled the world to investigate where people are the happiest. He wrote the bestselling book “The Geography of Bliss: One Grump’s Search for the Happiest Places in the World.”

One of the fascinating things he uncovered was that people in Iceland are generally happy, which he attributes in part to the fact that failure doesn’t carry a stigma in Iceland. It’s totally normal for a person to have a résumé reflecting multiple careers — from journalist to executive to theologian — failing at some junctions and continuing on a different path.

For a company to grow and flourish, it has to be innovative and creative. Along with that comes a certain amount of failure. As a CEO or business owner, you want to encourage that innovation, while not stigmatizing any failure that may result from trying something new.

Take a lesson from Thomas Edison. “Negative results are just what I’m after. They are just as valuable to me as positive results.”

Confucius said, “Greatness is not achieved by never falling but by rising each time we fall.” Will Rogers said,  “To avoid failure is to limit accomplishment.” Jack Welsh said, “I’ve learned that mistakes can often be as good a teacher as success.”

One of my favorite perspectives on failure comes from basketball superstar Michael Jordan and I urge you to take it to heart if you’re dealing with a setback at your business: “I have taken more than 9,000 shots in my career. I have lost almost 300 games. Twenty six times I have been trusted to take the game winning shot and missed. I have failed over and over again in my life; and that is why I succeed.”

I love the drawing by comedian Demetri Martin about what people think success looks like compared to what it really looks like. Success is not a straight line. But the important point is to keep your company on an upward path, no matter how many times it takes a backward step.

If you’ve made a mistake or failed at something at your business, admit your mistake. Learn from it. Encourage your employees to do the same.

Avoid America’s Bankruptcy by Bringing a Turnaround Guy to Washington and Treating the Country Like a Business

This article was published in its original form in the Atlanta Business Chronicle here.

The United States is a capitalistic society, so I often wonder why the government isn’t run like a business. We had a surplus 12 years ago, but now our debt is astronomical: nearly 14 and a half trillion dollars. This isn’t a political issue. It’s a business one – or at least it should be.

When a business finds itself in this much debt relative to its capacity to repay, the bank, Board of Directors or shareholders say, “No more!” and send in a turnaround professional. We are the shareholders, and it’s time to send a turnaround guy to D.C.

When my clients have problems with cash flow they don’t print money. They raise money, close plants, layoff people or cut spending; they tighten their belts to survive.

Despite insurmountable debt, the U.S. government isn’t doing those things. Businesses with negative cash flow would have been bought, liquidated, merged or otherwise gone at this point, and I don’t want to see us become like Greece or Iceland in five years. Worse still, I don’t want to be a part of the United States of China, since in the business world a company with increasing debt is subject to acquisition or dissolution by a larger and wealthier business.

I always say that 100% of spreadsheets and projections don’t work because the assumptions are wrong, yet people rarely revisit and alter the assumptions regularly to produce more positive results. Even today, the Office of Management and Budget, which hasn’t made an accurate P&L projection in years, thinks that our revenue is going to increase by x if we do a, b and c. But x is an assumption that’s based on the unlikely actualization of a, b and c, possible only if we overcome party politics. And as the deficit skyrockets, the assumptions are increasingly wrong and the parties are increasingly polarized.

The only way we’re going to resolve our financial crisis is by treating the government like a business.

As we repeatedly hear, a balanced budget is the first step. The second step, however, is a repayment plan of our foreign debt. Next, raise taxes. No one likes tax increases – especially me – but it’s part of the solution.

The corporate amnesty program allowed businesses to return profits from foreign soil to the U.S. at lower tax rates, which created more jobs in America. This was a wonderful and creative idea, but it equates to peeing in an ocean: it doesn’t change the levels. While thousands of these ideas will amount to an aggregated long-tail effect, we need to begin with more drastic measures.

Turnaround 101 dictates that we start by slashing all spending by at least 15%. We must tell every division, department and agency that it needs to cut its cash needs – no exceptions. The pain will be shared across the whole country as it would be across an entire business. This kind of mandatory budget cut provides time to fine tune operational requirements based on the improved results.

Before you ask, this 15% cut would affect entitlements, social security, health care, the military, and education – everything.

It’s easy to buck and cry, What about the children? Shouldn’t they be exempt from budgetary cuts? What about the sick and the poor? What about defense?

Here’s what I ask every department at a business: “Do you want your company to survive until tomorrow or do you want to quibble about who’s more deserving of money that doesn’t exist? I don’t care how you do it. Just do it.”

Internal politics kill companies in the private sector because politics and business don’t mix. Similarly, politics has no place in America’s budgetary discussions, and our issues must be addressed by those who can truly set aside political or personal biases and run this country like a turnaround professional in the private sector.

As a turnaround guy, I act like an ER doctor; my first step is to stabilize the patient and prevent shock. As a country, we’re already in shock. Nobody wants to lose an arm or a leg, but if there’s only enough blood for the torso and the leg is gangrenous, you better believe I’ll lop it off to save the body. In five years, the prosthetic surgeon can make us pretty again. I’m in a unique business, but it’s the business of making sure we’re still alive in 2025 with or without a leg.

In addition to the 15% cut, we must freeze all raises and expansions. That means no more foreign aid increases (also subject to the 15% cut), and we put a reasonable mandatory repayment plan in place for foreign aid. We can’t continue to write off receivables and survive. It doesn’t work that way in business, and it can’t work that way in government.

This also means no cost of living increases for government employees, social security beneficiaries and pensioners. In addition, congressmen can enjoy normal health care services – not VIP lifetime benefits for two years of service.

Unfortunately, tenured positions can’t be affected, but we can stop giving tenure. All rules for entitlements (e.g. pensions) must be reviewed. The private sector has largely eliminated pensions because it can’t afford them, and government needs to do the same. In capitalism when you can’t afford something you stop doing it.

I don’t have every last answer for how to save the trillions we need, but by making – and enforcing – these tough moves we can save America from bankruptcy, collapse and ruin. We must empower people to save money, and punish them for spending it needlessly in order to get a line item the following year.

Legislators keep asking that we have faith. Our economic stability has been built on faith: full faith and credit in the U.S. We can’t retain faith after twelve years of increasing debt. We need to deal with hard facts and run America like a business. Business is not about faith. It’s about trusting what works, and what works in business is what I know. Treat America like a business, and we’ll all live to buy another day.

I’m the Turnaround Authority and my bags are packed. Washington D.C., please call!