Business-related blogs and newspapers are always mentioning magical success stories that promise millions to business owners if they just follow a few easy steps. Their logic is:
If other successful businesses followed these steps and succeeded, what’s to prevent you from doing the same?
However, they forget to mention the companies that tried their best but failed. No one issues press-releases admitting that capital was wasted and the company has died.
Looking at the modern business environment, you may think that all businesses succeed; however only a small percentage of companies survive longer than two or three years.
Doing business is like running a race: some competitors quit before reaching the finish line, and only a few place at the top. It is the victors who get to tell the story. You will never hear a story that begins with, “I lost the race because…”.
The stories you hear are about success and what was done to overcome obstacles. Sometimes it is a matter of luck, and other players cannot repeat the same experience. When it comes to luck, though, the same situation can lead to either success or failure.
Success has less to do with emulating someone’s positive experience, and more to do with learning from the experience of those who failed. Failure can be associated with a variety of circumstances, but it is frequently a direct consequence of particular actions.
Successful businesses often tell stories about issues that delayed their development or even almost ruined their business. This can provide insights for the successful development of a business. It may seem wise to do what they did, and to avoid the things that cost them resources or time, but that is not the whole picture.
Despite whatever obstacles they faced, these businesses overcame, survived and flourished. This shows that negative experiences do not always completely ruin a business. They may have experienced some damage, but they eventually crossed the finish line.
Would it not be wiser to look at failed businesses that encountered issues which led to disastrous consequences? No one tells those stories, yet there are more stories of failure than success, and they can provide much more valuable insight.
Let us review the case of Target. This well-developed US chain of superstores has cemented its position in the US market, and you can read numerous stories of Target’s success.
Fewer stories explain in detail Target’s failure in its efforts to enter the Canadian market. This case is quite interesting from a business development point of view, and it provides much insight that can protect even developed companies from devastating consequences.
The Canadian failure cost Target $941 million, and it can help other companies learn a few lessons:
- Businesses should not strive for objectives they cannot achieve;
- Businesses should not rely on unreliable sources of market information;
- All decisions should be made in a timely and wise manner.
It is a story of the greatest failure and yet it is valuable for businesses, maybe even more valuable than Target’s numerous stories of success.
I do not mean to say that positive experience has zero value. I want to emphasize that new businesses should not only learn from how successful businesses survived, but also how other companies failed. This may be helpful in designing our own strategies.
From the Target example, a business can learn that it should prepare for any significant venture, and that this preparation should take into account all risks. A proper strategy should be devised to deal with the consequences of failure.
Target neglected to take these vital steps of business development and failed. However, Target can provide numerous positive lessons of proper business development.
Prior to entering a new market, the company studied the expected reaction to its brand, its potential profitability, and the ways other companies operate in this market. This information provides numerous insights for entering a new market, and their approach to studying a new market can be used by larger companies who plan to expand.
Many other companies can tell stories of both success and failure, and all stories matter. Although there are fewer stories of failure, we can find valuable lessons in the reasons strong brands fail. Sometimes it is just bad timing or bad luck. Business is a risky venture, and you cannot control all factors that impact a business’s success. Nevertheless, there are often concrete reasons for failure and they should be considered.