We love to talk about our wins, but how often do we wax lyrical about our worst failures? Workspace hosted a Business Insight Dinner at Clerkenwell Workshops to talk frankly about failure in business: how to overcome it, learn from it and factor it into your business model.
Read on to hear from our panel of experts:
Jenny Packwood, Head of Brand Engagement at KFC UK & Ireland
Jo McClintock, Brand Director at Moonpig
Abigail Freeman, Founding Partner of Brink, based at The Frames
Henry Whorwood, Head of Research & Consultancy at Beauhurst
Richard White, Founder/CEO of Pickles, Co-founder/President of Goodlord, Founder of Pet-Tech.org
Let's talk failure
When Abigail founded her first company, she had such a good feeling about it that when the start-up got close to winning its next stage of investment, she did a "mega announcement".
"I was in charge of marketing and wanted to keep that "fast growth" buzz going, so I wrote an announcement and hit Send All to my contacts. But then the investment fell through at the last minute and we didn't have time to secure another investment, so the next email I had to send was that we were closing down the company."
As Head of Brand Engagement for the UK & Ireland at KFC, Jenny found herself in the middle of a PR storm when the fast-food chain famously ran out of chicken in 2018. Hundreds of stores closed for several weeks due to a problem with a new chicken supplier.
Failure is not the end
Even though the KFC chicken crisis was catastrophic from a business perspective, Jenny and her team quickly realised that KFC's social media-savvy audience actually found it quite funny. Customers flooded Instagram and Twitter with humorous memes, so Jenny's team used social media as a primary communication platform to lean into KFC's brand voice: bull*hit-free, honest and irreverent.
KFC tweeted tongue-in-cheek lines like "The chicken crossed the road, just not to our restaurants", which then got picked up by the mainstream media. Jenny says, "From a brand perspective, it ended up being a positive thing for us. We saw success from how people responded to the tone we used, which gave us confidence to run the FCK bucket ad which became shared so widely."
KFC's "FCK" apology full-page print ad hit the right note with its customers and even won an award at the Cannes Lions festival.
"We took the view that we have to lean into the issue, own it and put our hands up. I feel people are generally quite forgiving of failure in other people, it makes us human to have failed and admitted it," says Jenny.
What does the data say?
Statistics even show that failure in business is not as bad as we perceive it to be. A commonly cited statistic is that 95% of start-ups fail but the reality is more nuanced, says Henry from Beauhurst, which has been tracking 1,500 of the UK's most interesting high-growth companies since 2011.
He says, "The rate of failure is quite slow. Only a fifth fail and nearly a third are still at seed stage. 5% have exited successfully like AI start-up Magic Pony, which was snapped up by Twitter for $150m. 2% are zombie companies that can end up dead or even come back to life."
"You don't get big failures without the success that made them big in the first place." Henry Whorwood, Head of Research and Consultancy at Beauhurst
A dying business is not necessarily the end of the line, show figures from Beauhurst, and failure can even fuel business growth. "Phoenix companies" can rise from the ashes by pivoting a failing idea, getting new investors on board and trying something different. A loss-making events business that was on Beauhurst's books now sells tortilla wraps with an annual turnover of £30m, says Henry.
"Knowledge of failure is really useful. If you do it once, hopefully you won't do it again," he says.
Even if you make the same mistake again, it can still be a valuable lesson in business. When Richard White needed to scale up one of his companies' platforms fast, he made the decision to try out the risky "waterfall method".
Richard says, "It means re-platforming all at once, crossing our fingers and doing the swap over. It didn't work the first time, but we got more money in and decided to do it a second time. It was worse, because the company had got a lot bigger so we burned eight times as much. We had to take the company down from 160 to 50 people, which was very painful and upsetting."
How to re-frame "failure"
So how can we think about failure in a more positive light and learn from it to foster growth? The first step is acknowledging that things go wrong. Failure is either planned or unplanned, says Jo. Either you go into a new venture with your eyes wide open, knowing full well that it could go wrong, or you face an unprecedented crisis like a data breach or misconduct scandal.
"I rarely will categorise things as a failure, more "I've learnt something." Richard White, Founder at Pickles, Goodlord and Pet-Tech.org
Brink advises its clients to think about problems before they arise by doing a "pre-mortem", a concept pioneered by cognitive psychologist, Gary Klein. Before kicking off a project, sit the entire team down and pretend it has gone wrong. Give everyone a couple of minutes to write down why they think the project failed.
Organisational psychologist Abigail says, "Having that safety does incredible things to a team. It gets you aligned around the problem and takes away the personal."
When something does go wrong, it can be natural to try and bury it but make time for a post-mortem. Some companies socialise it to take out the stigma, with "Failure Fridays" giving people time to talk about their mistakes. Google encourages its employees to be "canaries in the coalmine" and pipe up about issues when they crop up, to stop them escalating.
Give employees a safe space
Abigail says, "For humans, language shapes our behaviour, so that means being very deliberate about spaces we create to talk about this stuff."
That also means choosing the right words. Richard says, "I don't like the word failure, it's quite final. You can class a lot of what you've done as failures, but it's unhelpful to put labels on things. It stops you unpicking and learning from it."
Fear of failure can hamper innovation and growth, so some companies like Skyscanner actively encourage employees to micro-experiment at work and carry out performance reviews. Employees are encouraged to "fail forward". Card company Moonpig embeds failure into its business model and encourages employees to test out small new ideas and scale up.
Jo says, "We have a check-in process so people don't feel vulnerable and can talk about challenges they face and help they need. It's about setting the right environment, transparency and clear goals so people can go for it."
What if it goes really wrong?
Deal with it honestly, be authentic and lean into failure, agreed our panel of experts. Edelman's annual Trust Barometer shows that people look to businesses over the government, media and NGO sector to take charge. Three out of five Britons believe their views are not represented in British politics, and thus seek leadership elsewhere on society’s most pressing challenges. CEOs are now expected to discuss problems and drive change.
Jo says, "It takes guts and courage. Embrace failure, lean into your problems and be confident about your point of view. For example, Moonpig prints on paper. We could do more to be more environmentally friendly, but we are okay to talk about it.
"No one gives as much of a sh*t about the company as you do, especially at early founder stage. Things can feel huge at the time." Abigail Freeman, Founder, Brink
A sense of perspective helps too. When PR boss Jenny had to deal with a challenging client she popped over a frank email to her boss urging him to help her "knock some sense into them and get them moving", only to wake up the next morning and find she had sent it to the client instead.
"The client was absolutely incensed and kicked off in an email to my CEO. I felt I wanted to die. I was so ashamed, I offered my resignation. My boss at the time refused it and said, "Send flowers and get over it."
Screwing up isn't what matters; it's how you screw up and how you deal with it. A thorough pre-mortem can help expose problems before they even start, while a post-mortem can take the stigma out of failure and generate useful learnings. Bring on failure!
Our panel discussion was a hit with the audience, here is what they took away from it:
"Great tangible insights and stories on interesting topics. Lots of interesting and experienced panellists" Eloise Newnham, Vice President, Business Development & Partnerships at Habito
"I found that the panel discussions were very helpful, honest and we can certainly learn from each other." Kay Cotton, Axxis Consulting
"#WBIDinner is one of those events you don't want to tell anyone about - let's just keep this to ourselves." Lee Rickler, MD at Point & Stare
Do you have a fixed or a growth mindset? Knowing the difference can boost your success in business. Try reading The Growth Mindset by Carol Dweck Long read
Create a culture of compassionate candour and build a cohesive team that achieves results with Radical Candor, by tech leader Kim Scott. Long read
People are less likely to quit a team if they feel "psychologically safe". Find out why in Google’s re:Work guide: “Tool: Foster Psychological Safety” Short read
Did you enjoy reading this piece?
Hear more great insights at our upcoming WBI dinner event, Sustainability & Business: A deep-dive into how business leaders can address the impact of climate change, on Tuesday 19th November at Workspace Brickfields, 37 Cremer St, Hoxton. Join our panel of experts for an evening of thought-provoking discussion about what business leaders can do to combat the impact of climate change in their business.