How Startups Survive Costly Mistakes

Mistakes in business can be bad, sometimes even fatal (Blockbuster vs. Netflix). At a startup though, mistakes are key learning tools that often deliver more value in terms of long term results than initiatives that are executed flawlessly.

An example of this is an executive I had the opportunity to work with at a past job. This individual is widely regarded as one of the best sales-oriented executives in his field, and after three decades of experience, he rightly has a tremendous amount of self-belief.

One quarter he devised a sales push based on client feedback that he believed would be successful. It was well planned and well executed and was a tremendous success. This was a great learning experience in terms of executing coordinated initiatives across multiple verticals of business, but when we sat down to analyze the results, there wasn’t a lot to take away from the campaign beyond that our executive team had been on point. We looked at results, identified areas that hadn’t been optimized, and moved on to the the next quarter’s plans.

Good judgment comes from experience, but experience comes from bad judgment. – Bruce Dunlevie

A few quarters later, this same executive devised a similar strategy for the upcoming quarter. This time, however, things quickly went sideways as marketing, sales, engineering, and support all seemed to be on different pages from the beginning. By the end of the quarter it was clear the campaign had been a failure and we had, in fact, regressed since the previous quarter.

As we walked into our quarterly recap meeting, we all sat down braced for an explosion. Looking around, I remember seeing mirrored expressions of frustration, confusion, and trepidation on the faces of everyone at the table.

The executive in question walked in, collected himself for a moment, and then looked at us tiredly, shook his head, and grinned. Stunned silence met this introduction to the meeting. What followed was an example of how great leadership can turn mistakes into huge successes.

You can’t let your failures define you – you have to let them teach you. You have to let them show you what to do differently next time. – Barack Obama

Rather than going over minor things to tweak about a successful campaign, we were forced to take a deeper look into exactly what had gone wrong. We went through each area of execution, each data point we had built the campaign around, and each area that we had underperformed or been outperformed, and came away with a lot of great insights, both about our market, and about how our teams could improve.

It wasn’t from executing well, but from making a mistake, that we were able to identify key customer indicators and operational streamlining that improved our business far past what it had been during our past successful campaigns.

By making mistakes when small, startups are able to put in place mechanisms to prevent similar mishaps as they get larger. Of course, exemplary planning and campaign execution is ideal, but a small company making mistakes forces them to take a granular look at their strategy and make key corrections that will be tremendously beneficial moving forward.

The road to success is paved with well handled mistakes.- Stanley Marcus

Using mistakes as development opportunities can help create a culture of learning from mistakes rather than fearing them. Startups are unique environments where a mistake can create value because of how it forces a team to reassess an assumption in a way that success often cannot.

When a startup has ten people and a mistake happens, everyone is accountable. The whole team pitches in to break down the mistake, how it was made, why it was made, and how to prevent it. Ultimately, a lot of development happens as a result of the mistake as the team learns from the experience.

Startups are highly volatile and small variations in direction can have a tremendous impact on a startups future. Along the way it is natural that mistakes will happen. The best outcome is when mistakes are taken as a moment to learn and develop. Through this mindset, mistakes can become catalysts for great successes.

When have you learned from mistakes? What did you learn?


Graham Moreno

Graham Moreno is rethinking customer service at help.com where they are building the next generation of customer service software. Graham works in Business Operations at help.com as well as running the help.com blog. Prior to joining help.com Graham was an Enterprise Account Manager at Oracle.

  • Patricia

    Nice piece, really enjoyed it. Startups are especially benefitting from lessons learned.

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