Rising from the ashes

Failure to many is the end of the road, but picking yourself up and starting again is a sign of success

'I could have been a contender," said Marlon Brando to the taxi-driver in the film On the Waterfront. It's a classic line and an Oscar-winning performance. Brando's character Terry Malloy is an ex-prize fighter who threw a career-making fight at his manager's behest. Now struggling to survive as a longshoreman, he's angry, disillusioned, resentful and ashamed of his own failure to "make it".

Management consultants might witter on about creating a "culture of failure" within a company, but most of us, whether we're prepared to admit it or not, tend towards a Brando/Malloy view of our own failures, even if we're not quite so extreme.

But failure is part of life and in the competitive world of business, the ability to move on quickly after a failure is critical to long-term success as the very best innovators understand.

General Motor's Charles Kettering, who is regarded as second only to Thomas Edison as America's leading inventor mogul, liked to tell people that he had been wrong 99.9 per cent of the time. "You must learn how to fail intelligently," he said. "Failing is one of the greatest arts in the world. One fails forward towards success."

Most successful entrepreneurs have failed at some point in their careers and many of them wear early knock-backs as a badge of honour. They consider them a sign that they have served their apprenticeship in the often unforgiving world of business.

Today, Denis O'Brien is regarded as an international success story. He sold Esat Telecom to British Telecom for €2.4 billion. His Digicel mobile phone group has four million subscribers in 22 different markets world-wide.

But go back a few years and you find a school boy who failed maths twice and a young entrepreneur whose first company, a European satellite shopping service also called Esat, went belly-up.

O'Brien has openly admitted that Esat Telecom nearly went bankrupt six or seven times.

While O'Brien is candid about his failures and describes them as learning experiences, his advice to would-be entrepreneurs is painfully direct: "Move on from failures, don't dwell."

And therein lies the rub. To learn from failure requires some form of analysis - if mistakes are not to be endlessly repeated - but analysis can easily degenerate into excessive ruminating which is toxic for those of us not blessed with O'Brien's seemingly unshakeable self confidence.

What the new gurus are really saying is that if some of the stigma attached to failing were removed, if we could create perhaps not a culture of failure but a failure-tolerant culture, talented people would bounce back from a negative experience and bring hard-won wisdom to the next challenge.

As always, the attitude of senior management within a company is critical.

Fault-tolerant leaders enable people to overcome fear of failure and thereby create a culture of intelligent risk-taking and innovation.

Lord Rana arrived in Belfast in 1966 as plain old Diljit Rana and bought a small cafe in the centre of town. He defied the locally-accepted rules of the trade by keeping the cafe open after the pubs closed in the hopes he could attract late-night business. For six weeks pub-goers walked past the still-open cafe and Rana lost money.

Finally, they began to trickle through the door and, eventually, a slap-up feed in the early hours became the latest Belfast thing, much to Rana's delight.

Having risked and come close to failure, Rana's gamble paid off.

Five years later he was enjoying lunch with staff in his newly-bought second restaurant. A new car, financed through hire purchase, was parked right outside the door. Despite the debt he had accrued to finance the expansion, Rana had every reason to feel self-satisfied.

At 33, he was a successful businessman, thriving despite the outbreak of civil unrest in Belfast which, he was sure, would eventually fizzle out.

That afternoon his cafe was blown up and two weeks later so was his first.

"It was quite a shock: mental, physical and economic. One day you have a business and then you have nothing. It was absolutely demoralising and I felt gutted - any capital I had went up in smoke but more than that, I owed a lot of money to other people. Being self employed you have no social security benefits. Because you own your own house, you're not entitled to any other benefits either.

"It was quite a challenge, having a bank loan on the restaurants which had gone up in smoke, hire purchase on the car and a mortgage on the house, with no income whatsoever. I also had three very young children.

"There was no insurance - damage due to terrorism was not covered. Belfast City Corporation was supposed to compensate you and I went to them and they offered me £395 (€585).

"That was a shock. There were so many claims the Corporation didn't have the money to pay out. There was no counselling. Those words weren't in the dictionary at that time. At Christmas that year I hardly had money to buy presents, even for my kids," he recalls.

The family sold pieces of furniture and various possessions to keep food on the table. "It was horrible," he says. They couldn't move, because they were seriously in debt.

As failures go, this was catastrophic. But within a few months, the Ranas were back in business, scrapping together £500 (€740) to buy a bombed out shop.

"I am an optimist. None of us expected that the Troubles would go on for so long. If somebody had told us, this is going to last 25 years, everybody would have left."

Over the next 30 years, Lord Rana's business concerns continued to expand, despite suffering 26 bomb attacks. Real bombs were almost nothing to the damage caused by hoax bomb calls, particularly after he moved into the hotel business.

At 68, he is now one of Belfast's most highly regarded entrepreneurs and an active member of the House of Lords. He recently announced his company was building another five hotels in the city. So, what did he learn from the early failure?

"To diversify - never be dependent on one business," he says.

Fault tolerant leaders are honest about their own mistakes. Roberto Goizueta of Coca-Cola dined out on the story of the New Coke fiasco. Being open with employees about past failures can be far more valuable than giving grand speeches while refusing to admit to the slightest imperfection.

At 3M, Spencer Silver felt comfortable enough to reveal that the adhesive he invented with another colleague was imperfect. If he hadn't, Post-it notes would never have been developed.

IBM's Louis Gerstner actively encouraged staff to e-mail him about problems. Within a few months, he had uncovered several which, when dealt with, transformed the old computer giant into a fast-moving internet star.

Of his failed shopping channel, Denis O'Brien says: "It was a great idea but was four or five years ahead of its time. Being first is sometimes not the smartest. The entrepreneur's motto is, 'always be second'. I learnt that the hard way."

O'Brien was already working on his new telecom venture while the shopping channel was going belly-up. Like Rana, he also learned the value of not putting all his irons in the same fire.

Diversification is critical to managing failure. Despite energy, enthusiasm and hard work, projects will fail. The American professor Alexander Lauer has identified what he calls "simultaneous management" - a system by which two or more projects are launched with a single objective but teams are sent in very different directions.

Such a system can only really work if senior management are prepared to remain loyal and supportive to those teams that fail to come up with the goods. "We reward failure," said Jack Welch when he was chief executive of GE.

Great leaders are rarely to be found sitting in splendid isolation in the boardroom. "Edison made work interesting," said a former machinist who worked with the great inventor.

"He made me feel that I was making something with him. I wasn't just a workman."