Why Companies Fail--and

How Their Founders Can

Bounce Back

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Leading a doomed company can often help a career by providing experience,

insight, and contacts that lead to new opportunities, says professor Shikhar
Ghosh.

by Carmen Nobel
Most companies fail. It's an unsettling fact for bright-eyed entrepreneurs, but
old news to start-up veterans.
But here's the good news: Experienced entrepreneurs know that running a
company that eventually fails can actually help a career, but only if the
executives are willing to view failure as a potential for improvement.
The statistics are disheartening no matter how an entrepreneur defines failure.
If failure means liquidating all assets, with investors losing most or all the
money they put into the company, then the failure rate for start-ups is 30 to 40
percent, according to Shikhar Ghosh, a senior lecturer at Harvard Business
School who has held top executive positions at some eight technology-based
start-ups. If failure refers to failing to see the projected return on investment,
then the failure rate is 70 to 80 percent. And if failure is defined as declaring a
projection and then falling short of meeting it, then the failure rate is a
whopping 90 to 95 percent.
"Very few companies achieve their initial projections," says Ghosh. "Failure is
the norm."

WHY START-UPS FAIL

Start-ups often fail because founders and investors neglect to look before they
leap, surging forward with plans without taking the time to realize that the base
assumption of the business plan is wrong. They believe they can predict the
future, rather than try to create a future with their customers. Entrepreneurs
tend to be single-minded with their strategieswanting the venture to be all
about the technology or all about the sales, without taking time to form a
balanced plan.

IN SILICON VALLEY, THE FACT THAT YOUR

ENTERPRISE HAS FAILED IS ACTUALLY A BADGE OF
HONOR.
And all too often, they do not give themselves wiggle room to pivot midstream
if the initial idea doesn't jibe with customer demand.
"Instead of going into the venture with a broad hypothesis, they commit in
ways that don't allow them to change," Ghosh says. He cites as an example
the failed dot-com-era grocer Webvan, which bought warehouses all over the
United States before realizing that there was not enough customer demand for
its grocery delivery service.
Next, there's the matter of timing, a huge issue that can determine whether a
company gets funding and whether it achieves the start-up's elusive measure
of success: an exit that involves going public or getting bought.
During the Internet boom, companies armed with nothing more than a
PowerPoint presentation of a lousy idea could secure tens of millions of
dollarswhich sometimes gave them enough time to figure out a viable
business plan through trial and error. Eventually successful companies such
as Netscape and Open Market went through several business models before
finding one that worked. But the opposite was true after the boom; a company
could have a great idea and a great team, but still fail to achieve traction due
to lack of funding and, consequently, lack of time to let a good model mature.
(These days, Ghosh says, start-ups often manage to secure a good team and

good financing, they face dozens of lower-cost competitors and fragmented

customer demand.)
Funding has the potential to turn a little failure into an enormous one.
"The predominant cause of big failures versus small failures is too much
funding," Ghosh says. "What funding does is cover up all the problems that a
company has. It covers up all the mistakes, it enables the company and
management to focus on things that aren't important to the company's
success and ignore the things that are important. This lets management
rationalize away the proverbial problem of the dogs not eating the dog food.
When you don't have money you reformulate the dog food so that the dogs
will eat it. When you have a lot of money you can afford to argue that the dogs
should like the dog food because it is nutritious."

ENTERPRISE FAILURE CAN BE AN ASSET, BUT

PERSONAL FAILURE IS RUINOUS
Still, stubborn entrepreneurs continue to found companies, in spite of the
failure rates, which raises the question of why. It's not as if any of them
harbored childhood dreams of launching a search engine optimization
software firm.
Sometimes this is due to navet and hubristhe notion that their idea simply
cannot fail. But savvy entrepreneurs know that running a company that
eventually fails can actually help a career. Even failed businesses yield future
networking opportunities with venture capitalists and relationships with other
entrepreneurs whose companies are succeeding. Ghosh says boards of
successful companies often seek out the founders and CEOs of failed
companies because they value experience over a clean slate. After all, Henry
Ford, Steve Jobs, and Desh Deshpande experienced multiple failures before
achieving success.

IN A START-UP, IF A COMPANY IS DOING WELL, AND A

FOUNDER GETS GREEDY AND TAKES MORE THAN
HIS FAIR SHARE, PEOPLE SORT OF FORGIVE HIM.

BUT WHEN A COMPANY IS GOING DOWN, WHEN YOU

PROTECT YOUR OWN INTEREST ITS ALWAYS AT THE
COST OF SOMEONE ELSE. PEOPLE DON'T FORGIVE
THAT.
"How many search engines are out there that really matter now?" Ghosh says.
"Just a handful! And yet the people who created all the other ones in the
1990s are not living under a bridge somewhere. Many of them now run the big
ones. In Silicon Valley, the fact that your enterprise has failed can actually be a
badge of honor."
Individual failures within a company can be an asset, too, in that they can
prevent the whole system from failingbut only if the executives are willing to
view failure as a potential for improvement. For instance, if the company's best
salesperson is unable to sign a key customer, then the management is likely
to chastise the salesperson for failing. But they could also realize that if the
top talent has trouble with the sell, then maybe there is something wrong with
the product. Small failures can provide the raw material for improvement.
"The more that you can embrace all the little failures you have, and treat them
as ways of improving the system, the less likely that the entire system will
collapse," Ghosh counsels.
That said, Ghosh warns entrepreneurs that failure of an enterprise, product, or
initiative and the personal failure of an individual executive are two very
different things. While the former is a learning experience that can lead to
future opportunities, the latter can damn a career.
A personal failure, as Ghosh defines it, is one in which an individual does
something that violates a fiduciary duty, commits a crime, or acts in a way that
goes against the normal tenets of morality and fair play. Ghosh cites as
example a CEO who fires a bunch of employees in order to pay for his own
severance package. In such cases, a manager's reputation will be tarnished to
the point of rendering him or her un-hirable even if the venture was a financial
success.

"In a start-up, if a company is doing well and a founder gets greedy and takes
more than his fair share, people sort of forgive him," Ghosh says. "But when a
company is going down and you protect your own interests it's always at the
cost of someone else. People don't forgive that."
Ironically, a personal failure often occurs because an entrepreneur is trying too
hard to avoid an enterprise failure. Trying to keep the venture capitalists happy
and the bankruptcy at bay, the founder or CEO will resort to illegal acts such
as fraud, or to morally problematic acts such as blatant misrepresentation of
the company's capabilities or prospects when talking to customers or
financiers . "And when you do that, you're then on the slippery slope of taking
an enterprise failure and making it a personal failure," Ghosh says.
"Executives do that all the time because they do not distinguish between the
two."

REVISING EXPECTATIONS
Ghosh notes that venture capitalists could help mitigate personal failures by
allowing for the expectation of company growing pains. He points out that a
baseball player with a .350 average is considered to be a success, even
though he has a .650 failure rate. But in entrepreneurial management, there's
a tendency to see things in black and white, rather than looking at the whole
picture. And while VCs are likely to recruit an executive with experience at a
failed company, they are less patient with individual failures. VCs rarely
consider their role in establishing unrealistic expectations or an environment
where the ends are more important than the means, he says.
"In any natural system, failure is the engine that causes growth, that causes
new birth, that causes anything to happen," he says. "One of the truly big
differences between growing economies and economies that stagnate is the
acceptance of failure. If you don't let forests burn, if you don't let the old trees
die out and the new trees grow, you don't get a healthy forest. The ability to
manage failure so that enterprises fail but people can still succeed becomes
one of the tricks of how you build a society that can reinvent itself as the world
changes.

ABOUT THE AUTHOR

Carmen Nobel is Senior Editor of HBS Working Knowledge.

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COMMENTS

W. THOMAS HAMLIN

MANAGING CONSULTANT, EXTENSIBLE INFORMATION SYSTEMS

I have experienced business/project failures not from a lack of technology but because of it. Far too
often, the technology far exceeds the ability of a "human organization" to implement/accept/adopt it
and/or a fundamental lack of understanding on the behalf of the technologist about the "true business
problem". These failures are "solutions in search of a problem".
Your article explicitly involves "start ups", but if they survive this phase, then their "business
development staff" hits the seminar circuit, golf courses and bars across the country in search of
"problems".
Because the new technology is sold with excessive hype (Mastering the Hype Cycle by Harvard
Business Press 2008) and since the unsuspecting business process owner does not appreciate the
technology paradigm shift and his new management responsibilities, the project become another
"near miss" that ends up as "shelf ware".
I don't think my "good intentions" and subsequent failure reinforce anyone's idea of a good Karma.
We need to do our homework before we attempt to "help" the business. Today, we have enough
technology to solve most business problems. Let's figure what the problem is before we start coding.

ANONYMOUS

O
I appreciate the discussion of the necessity of failure. As mentioned above, failure allows companies
(and people) to adjust to reality or changing circumstances.
The issue not addressed, though lurking around the corner, is when government interferes and
organizations aren't allowed to fail. This creates a moral hazard, as the penalty/remedy, failure, isn't
allowed to happen.
Without failure, life's most important lessons are never learned.
Nobody likes to fail because of pride, but the lessons are priceless!

NICK CHIPMAN

PARTNER, PWC
Just a few thoughts on why failures occur however we should also recognise that some 60-70 %
succeed based on Ghosh's commentary(interesting that we give primacy to the failures.....)
Anchoring biases and other forms of cognitive bias-when looked at from a starting position make
interesting reading-what did the investors and the proponents believe in the face of alternative views
and facts?
The getting caught mid-stream and failure to adapt and overcome-is this a function of blind
faith,absence of a suitable mentoring model or independent review and challenge of the real state of
play or an absence of metrics and indicators that reflect the truth rather than something convenient-or
something else?
Maybe the false positives,successful failures are an important source of IP for us all-and we should
value the downside events more on the basis of learning and appreciating just how fragile business
can be,when the concept seems so sound to start with?

RISHANT

UNDERGRADUATE ECONOMICS, IIT KANPUR

Great analysis . People or organization that accepts failure have growth mindset . The study done by
Carol S. Dweck on fixed mindset and growth mindset shows that to achieve really great success ,
individuals need to have growth mindset .
Similarly an organization , whose decision makers have this growth mindset in majority tend to be a
growth organization . Therefore the element of team 's mindset can be very important determinant of
success .

AL HOLMES

DIRECTOR, SEQUUS
Very interesting. For organizations at the peak of performance, Adizes tells us that 'success often
breeds failure' due to complacency, inward focus, resting on laurels, arrogance, etc. This article tells
us that at the beginning of the lifecycle, failure often breeds success if founders can learn from the
experience, overcome the founder's trap the next time around and perhaps learn to park their egos at
the door, take advice from others and share the leadership.
Thank you. I will definitely read further.

RAJIV

OWNER, CAPRICORN LIFSTYL

An interesting addition to this article would be the way different cultures view failures on the business
front.
In the USA, a failed venture means you tried.
In China, a failed venture means you lost face, and possibly blemished your family's name.
In India, a failed venture means something in between.
Regards,

PANKAJ SAHAI

O
To me the article seems too one-sided, putting all the blame of the failures on the founders. VCs who
fund these 90% failed ventures, surely, cannot escape the blame (at least in some measure) for the
failures.
The figures are staggering in their impact - "90% of the ventures fail" - but the author has not
apportioned any blame to the hard-nosed VCs . Clearly,the flip side of the 90% failure is that 90% of
ventures funded by the VCs are not screened appropriately, risks are not assessed and managed well
enough, contracts are not structured properly for the timely intervention and rescue of the floundering
ventures and the legendary VC Value-add is just not good enough to help the founders in times of
crisis.To me this article seems more like an indictment of the GPs than that of the founders.
My experience is that the entrepreneurs who get funded , thus having prolonged interaction with the
more savvy VCs, experience great learning about various aspects of managing their businesses and
the innate challenges of moving the ventures through various stages of growth. Even if their venture
bombs, at a personal level the founders seem to gain a lot in terms of entrepreneurial wisdom and
self-awareness, which have the potential to become the cornerstones of their future success.
Pankaj Sahai Author : Smooth Ride to Venture Capital

DOUG WILSON

FOUNDER & CEO, HOUNDDOG TECHNOLOGY LTD

As a founder of a well-funded dot.com (failed - went bust in the 2000 crash) and then a bootstrapped
software company (success - exited to a major PE firm) I wholeheartedly agree with many of the
points in this article, especially those about funding often hiding underlying problems, entrepreneurs
failing to adapt their plan to real conditions, and timing.
Between my failed and successful start-ups, I had the good fortune to read Amar Bhide's 'Bootstrap
Finance: The Art of Start-Ups' in HBR. It also highlights the many hidden risks of venture capital and
postulates that because bootstrapped firms avoid VC-related risks, they have a higher success rate
than VC-funded firms.
At the well-funded dot.com, we effectively hid behind the cash and were not close enough to our
market. We were also unwilling to change our plan in light of the declarations we'd made to funders to
get their cash in the first place. At the bootstrapped software company, we got out into the market
early (because we had to) and often changed course to cope with changing conditions.

There's a mythology going on in the business press fueled by the glitz and glamour of a few VCbacked outliers. The reality, in my humble opinion, is that bootstrapping remains a much more viable
start-up route for the majority.

PRODOSH SEN

MANAGER - PROJECTS, ITC LIMITED

From my personal experience I can share at least couple of reasons why companies fail. The first one
is when companies in a new business environment (e.g. a new country or in a new competitive
scenario) fails to identify / recognize the business risk and can't put any risk mitigation technique in
place, which decimates the company.
Second reason is more relevant in a joint venture scenario, where there is a huge gap in vision
between the 2 partners. Such gap turns out to be impossible to bridge and leads to automatic failure
of the JV.

KAPIL KUMAR SOPORY

COMPANY SECRETARY, SMEC(INDIA) PRIVATE LIMITED

No company is set up without aiming at success. The promoters shell out money with a total belief
that the projected results shall be achieved. The data provided by Shikhar reflects a worrisome state
in US which seems to be in focus. The failures could be the result of weak planning without
considering all pros and cons. If so, we have ourselves planned for failure and other factors cannot be
blamed. At times, despite a good start, companies go into difficulties because of factors beyond
control. Government policies to restrict/ban the product(s) come as sudden shocks for new companies
have never thought of such eventualities. Further, they lack capability of diversifying to acceptable
activities in the short run.This leads to a chaos and companies suffer badly. Corruption due to greed
attempted to be met by adoption of wrong practices also leads to failures but generally this does not
occur in the early life of a company. Yes, the management and the technology also contribute if proper
and optimum advantage is not derived therefrom.

MASON OGHENEJOBO

REGENT UNIVERSITY
I would argue that Government or other institutional interventions are not to prevent or stop the
"benefits" of failures but to enable potentially failing organizations to renew themselves. If failure is not
due to personal leadership poverty (unethical practices, immorality, greed, selfishness etc) then
government or institutional support can actually aid learning or benefitting from potential failures.
The Bible teaches us that "a righteous man may fall seven times and rise again, but the wicked shall
fall by calamity" Proverbs 24: 16.

Overall, I would argue that societies should not support unrighteous leaders. They should be allowed
to fail and die. However, supporting righteous "entrepreneurial experiments" can enable societies to
thrive. I would also argue that societies need improved education for entrepreneurs so as to minimize
organziational failures.

ANONYMOUS

O
And then you have the hidden failure: the company where the CEO has no industrial vision apart from
seeing the company being sold so the investors can recoup their investment. The CEO then finds a
position on a company's board or with a VC and has a good life. For the rest of the employees who
had been waiting for the shareholders to fire the CEO long ago it is a major failure: many will lose their
job as a result of the company being sold. The company as an industrial project will have been a
failure because the shareholders had no drive to make it a success by replacing the mostly
incompetent CEO.

ANDREW MCFARLAND

VP, CA TECHNOLOGIES
Very interesting article. Having been part of a failed start-up (bad timing and a far too-rapid expansion)
and a successful one (customer-centric marketing, selling, product development, and support).
The key difference? A disciplined management team that was able to (1) work together and (2)
operate within tight financial parameters. As is mentioned, "funding has the potential to turn a little
failure into an enormous one."
In the latter venture, because our growth was enabled by success (as defined by the market, not an
investor) we did not fall prey to the maxim: "The predominant cause of big failures versus small
failures is too much funding".

ANONYMOUS

O
Good article. Interestingly, there are few start-ups which failed prematured because the founders lived
in false dreams after founding the firm - having passive supervision, relying too much on employees,
due to not getting the devils in the details of business and due not able to emerge as a leader when
the situation called for the leadership role.

ANONYMOUS

O
I found it interesting that your article did not consider the impact of management control by the
members of the boards of directors of the companies/examples discussed.
I chose continued involvement with the venture community because I initially felt that the VCs had
seen more companies fail than I ever would and could/would thus help me avoid the pitfalls leading to
failure. I have since come to believe that more companies fail and excess funding is required because
of VC board management. This is the industry that is supposed to be the expert in selecting the best
potential new companies. They choose one in a hundred to invest in and seven out of ten of those fail
- usually after large infusions of cash. The VCs would like to tell you that this occurs because of the
high risk involved in their business. I would suggest that the primary thing these failures have in
common is a board of directors composed entirely of VC investors - many of whom have little or no
operating experience and all of whom have their own agenda regarding liquidation rather that growth.
What is broken is the leadership model. Business success comes from individual management
innovation not BOD dictation of management strategy and action during their once a month visit to the
company.

JAMES W. HARRIS

CEO, SENECA FINANCIAL GROUP

I am a bit put off by the "discovery" that businesses fail, particularly in Silicon Valley. This is bit like
being surpirsed that politicians do not always tell the truth.
A well know venture capitalist once told me that he expected to hit a home on one or two investments
out of ten. Break even on three and lose money on the rest. In other words, failure is built into the very
business model of venture capital firms.
However, Mr. Ghosh hits on another point that every business school should hammer home to their
students. Taking risks includes accepting the risk of failure. Here, it is not whether one fails because
most of us do at some point or another. Instead it is how one fails. Skipping out on colleagues when
things look grim is the most common failing among super-charged exectutives. Lying about the true
condition of a business is another. Acknowledging that things could go sour quickly and staying to
make sure colleagues and investors get the most out of the experience is the toughest thing to do in a
fialing business. I have witnessed it on a few occessions and witnessed less stellar behavior on many
more. Failure is no excuse to chuck ethics out the window.
James Harris

RAM

CEO, EPM WORLD

An excellent and a very important topic indeed.
The failure of any venture starts with the (a) very projections (assumed and not viable) in the business
plan, (b) The cash flow comfort through funding doesn't goad them to work diligently on the plan (c)
In-discretionary deployment of team (d) Functional style of management and many other factors as
others have commented above.

DR.S.B.GITA

PSYCHOLOGIST
it is better to have tried and failed, rather than not to have tried at all. people may have fear of failure
after one unsuccessful venture, which keeps them from becoming overreliant on anything except
themselves.this begining of taking responsibility, is a turning point for success in later undertakings.

TADEO MBABAZI

LECTURER, KYAMBOGO UNIVERSITY

My wife has tried many business ventures failing: some of the reasons being lack of appropriate vision
and strategy, overdependence on my salary to subsidise the activities, failing to persevere when
conditions change for the worse, operational mistakes especially in stocking, using wrong assistants,
and at times long absense of the owner may lead to loss of customers in service sector.

SUSAN RUSHWORTH

LECTURER, SWINBURNE UNIVERSITY OF TECHNOLOGY, AUSTRALIA

I don't think there are many surprises in the content of this article, but business failure and the impact
it has on founders and other stakeholders is not discussed enough and the comments on this article
alone make it worth following.
I'd like to pick up on the thread of 'personal failure'. The author suggests that personal failure only
occurs if the founder has acted unethically. While I don't disagree with this, I think it is a subtle point
that is often lost of the rest of the stakeholders, society in general and - very often - the founder
him/herself. For example, see Dean Shepherd's work which highlights that learning from failure is not
automatic and is certainly not immediate. He argues that it is mediated by the level of emotion (grief)
induced by the failure.
It is all very well to say that an honest failure is not really a failure, but if the founder and the society in
which he or she operates doesn't see it that way, then the impact may be just as bad as a dishonest
failure.
A leader who is assured of their own personal integrity is likely to navigate these trials better than
someone who depends on the approval of others - but let's be honest, how common is that level of
self-knowledge and certainty of personal integrity?
Good discussion - thanks for airing this important topic.

DR. S.A. VISOTSKY

CHRM. & CEO, VITECH GROUP LLC

It's strange the number of failed businesses we are seeing in China & India. Although, many come to
HBS to study, "with the best", we are seeing few practical applications taken back home, that are
proving to be successful in those countries. Strange this is seldom mentioned, stranger yet, these
countries are not leading the world, what with so many HBS grads. I mean, let's look at the so called,
"booming economies", aka "BRIC" nations. 1) They all lack infrastructure, that is a fact not an opinion.
2) The majority of investment is foreign, also a fact. 3) Nobody is planning 10 years ahead. Short,
medium and long term goals for a company are gospel.
Look at the German automobile companies in China. Once everyone in China has a car, Shanghai will
be another Detroit. When hyper-inflation hits, the first containment issue is cutting out luxury goods,
e.g., Mercedes, BMW, Audi, among other luxury brands. This is a failure in the making that is largely
unaddressed up to this point.
Summary: location is half of the battle, the other half is direct involvement in every single process of
the company from the top, down. You always lead from the top, and demand accountability for all
things both good and evil, that take place within. Risk Assessment matrix in hand, you always need to
plan a "containment strategy", thereby limiting the number of things that can contribute to a failure,
also helping you to avoid one from ever taking place. Always plan for bad weather.

SOUJATYA GHOSH

MANAGER, TATA INTERNATIONAL LTD

During the moment of crisis one is expected to perform with limited resources and at the same time
many commitment fails as a result stake holder gets frustrated,compounding problem for the
enterprise. However to combat the said situation more than the policy of the organisation individual
forte plays an important role i.e. integrity and discipline because it not only delineates confidence
among the coworkers but also among the stake holders.

RON SEIDE

PRESIDENT, SUMMIT DATA COMMUNICATIONS

I strikes me that the article and the comments seem to presuppose that start-ups are inherently VC
funded. They're not, of course, a good portion of them even in the tech sector are bootstrapped. In
those scenarios, failure is anything but a badge of honor, it's a loss of one's savings, one's home, the
savings of others, etc.
This all seems a bit antiseptic, that failure is a virtue, losing the investment of others is somehow a
success. It's not, failure is failure and a belief otherwise breeds a mentality where the prices of homes
in Florida never decrease, tulip bulbs are worth a thousand gilders a piece and dog food is sold over
the internet is a viable business model.

GERARDE DAWE

STAFF NURSE, BELFAST HEALTH AND SOCAL CARE TRUST

The ideas in this article relating to developing our perception of human experience are interesting. A
combination of learning from experience, our own and others and model construction and testing is
shown to have value as a learning opportunity.

DATO AROS OSMAN

CEO, WESPACKONSULT
Some of the points raised in the article such as no proper business model and lack of funding are
universal phenomena. But my observation is that one of the major reasons why businesses fail is that
the entrepreneur himself should not be in business in the first place because he does not have the
characteristics of a successful entrepreneur.

O
O

SUVENDU KR. PRATIHARI

ASSISTANT PROFESSOR-MARKETING, INSTITUTE OF MANAGEMENT AND
INFORMATION SCIENCE
I rather appreciate this as an human failure rather an Business failure, because ultimately human
leads the business. My own experience in building a software company, where I have established at a
point where I can foresee the whole business lying on failure only.
It has now became an old saying. "We learn out of our failure". rather I must say, "We fail how to learn
from the failure", which is quite significant with the logic of my saying that "Human fails, rather
Business fails".
Thanks Mr. Ghosh for such dynamics. Regard, Suvendu Kr. Pratihari Asst. Professor-Marketing

PAUL NICHOLAS

DIRECTOR, SOUL-CHAPLAIN CONSULTANCY

All things fail ultimately. It's just the reality of a changing and evolving universe. Everything that comes
into being - whatever Man or nature creates - eventually passes out of existence. Most of the species
that lived on this planet are now extinct; most of the things we've made - our creations and artefacts are obsolete, decayed, trashed or buried. Most of the organizations and groups we've gathered or
assembled - social, commercial, political etc. - have passed into history.
But failure is a highly formative and powerful learning experience. We can learn more through our
failures than through our successes. Every successful individual should be proud of their failures.
Success is just a kind of deferred failure. Come on, let's celebrate our glorious failures!

MATHEWS DANIEL KAPITO

DIRECTOR, CENTRE FOR CORPORATE MANAGEMENT AND FINANCE

As an entrepreneur, I believe that the article is a revolution for may existing and up coming
entrepreneurs. Where I come from, I never knew the need for or the procedure for preparing a
business plan. I rolled out in to many forms of business each failed, from each failure I Learned
something and every lesson is different. If one is a manager and they have never failed, they fail big
time and must take a break to have a fresh start. Without failing we are nothing. Failing opens our
minds and understanding and build new skills in a manager. In my studies, I have learned that great
men, Leaders and Managers faile many times. Think of Henry Ford, Thomas Edson, BIll Gates, just to
mention a few. Many people settle for mediocrity, once they make a dollar, they are happy and change
their lifestyle. A true entrepreneur move step by step, no rush, no speed. Just one step at a time,
mostly take regular review breaks (identify mistakes and failures to improve) A great manager is
someone who make and is willing to make mistakes, most of all take total responsibility for their
mistakes. I'm eager to make mistakes, fail and start up again.
Great topic. Good for building a positive attitude in this dynamic global environment

O
O

DR. SEAN PATRICK SASSMANNSHAUSEN

LECTRURER AND MANAGING DIRECTOR, SCHUMPETER SCHOOL OF
BUSINESS AND ECONOMICS, UNIVERSITY OF WUPPERTAL, GERMANY
At Schumpeter School of Business and Economics (University of Wuppertal, Germany) our research
scholar Stefan Gladbach conducts research on "new venture abortion". Stopping the process of
starting a venture is emotionally a very hard decision for entrepreneurs. But often such a decision
could protect the founder and the venture's stakeholders from increased sunken costs. However, is
new venture abortion just a certain form of failure or is it a neutral-successful form of exiting a
venture? And how could new venture abortion been done "successfully"? In teaching
entrepreneurship, we are so obsessed with reshaping defaulted projects that we hardly ever assessed
when to better give advice to abort. Early abortion (previous to official new company registration)
might also reduce high statistical new venture failure rates.
As soon as we know more on "new venture abortion" from our research, we need to develop case
studies and include chapters in text books, so that business schools will be enabled to teach how to
abort a start-up successfully (i.e. with no or limited sunken costs). Learning how to fail/abort might
then encourage "wannabe" entrepreneurs who are yet not willing to take the risks of new venture
creation. It might also reduce the negative economic impact of new ventures which have gone wrong.

ANONYMOUS

O
Your article has given me lot of inputs and very close to my business interventions. Thanks for HBS
for posting me such an informative and down to earth article.

DEE

365OUTSOURCE.COM
nice article.. it was really an interesting read...

JOHN LAI

OWNER, START MISSION

School and society needs to change our perception of failure. In fact, we should call it "discover
problems", because that's more pro-active.

ANONYMOUS

O
1- Top management biased, protected certain individual which cannot perform well example some
ladies staffs. 2- Top management protected business partners from same country even bad services
and expensives cost. 3- Top management do not how to judge good performer staffs. 4- Top
management not listen to certain creative and good performer. 5- The most in important is key
operation staffs to manage total operations.One mistake by Top management to select unskilled staff
may cause big loss to company. 6- Key staffs in certain position cannot be removed and it may cause
more worsen.

CURT BUERMEYER, PHD

FOUNDER, STARTUPDYNAMIC, A PRODUCT OF LEADPEOPLE, LLC

Given that 90-95% of startups fail, there are certainly lots of ways failure can happen... Most ways
were not mentioned here, but this is a short blog that's well done.
The lean startup movement, and Steve Blank's work around customer development, have been very
useful in helping founders build products that customers are interested in using/buying. That
increases startups' success likelihood.
But I believe we can further enhance the likelihood of success by helping founders and investors
understand and gain assess to the "mysterious" psychological factors, including team dynamics and
important leadership factors, that are true differentiators of success and failure.
I'd love to hear what readers believe are the top psychological reasons for startup failure (e.g., ego,
over confidence, low conscientiousness, etc.)

DAVID

OWNER, BREAKTHROUGH PRACTICES LLC

Thanks for the article. Failure is a hard thing - but hopefully it provides opportunity for growth.
David, Strategy Keys.com