Cutting Your Losses
By Kate Pierson
We have all heard and offered others the advice ‘just cut your losses.’ But like most social idioms of this nature, it’s always easier said than done.
Although persistence is an admirable trait, our quintessential Kiwi determination to never give up can also blind our better judgement.
In many cases, our commitment to holding, when folding is the logical answer, can be detrimental not only to our dignity but the livelihood of our businesses
The notion of ‘fast failure’ is a conceptual sibling to the ‘cut your losses’ analogy. And while the denotative meaning of the word failure is enough to make anybody’s professional pulse race, this phrase is ironically being offered as a key recommendation to New Zealand.
Coined by a high-powered panel that emerged from the 2009 Entrepreneurial Summit, the definition of fast failure is offered by panel member and Designindustry Limited’s managing director, Dorenda Britten. “Fast failure is being brave enough and ego-free enough to let go of ideas,” she says.
“It is about embracing rigorous evaluation of ideas at all stages of a product or service development. Sometimes this can mean throwing out an idea in its entirety and sometimes it may be the goal is good, but the delivery is wrong.”
So is fast failure something New Zealand needs to do more of? “We think so!” Britten says. “New Zealanders admire tenacity above all things, but what’s the point of tenaciously venturing down the wrong path.”
In New Zealand, there is a societal tendency to take criticism personally, Britten says. Therefore, “what is most needed, is for people to be able to stand back and welcome diverse inputs whether it be favourable or unfavourable.
“If the idea is strong enough, it will come through even stronger. The best ideas are often amalgams of many ideas that couldn’t make the cut on their own.
“Killing an idea can be very empowering for a person or an organisation. Ideas are plentiful and cheap; we have no shortage of them. Pinpointing those that have an even chance of meeting future market needs and backing them will, we believe, provide a better return on investment for both public and private funders and contribute significantly to New Zealanders future success.”
Britten says that in the pursuit of long term success, businesses need to have an evaluative process in place which involves measuring the validity of a product against existing or potential consumer demand for it.
“What we are suggesting — and that organisations who regularly develop new products do have in place — is a process for evaluating customer and community needs
and balancing that against company resources and vision.
“Decisions therefore, should be based on diverse and wide knowledge brought to the table early by various stakeholders and measured against mid to long term strategic vision through the use of known and trusted criteria.”
As the director of Designindustry in Christchurch, Britten has a wealth of knowledge and experience in conceptualising strategies and developing skills for success. Working in a panel alliance with members including former 3M boss Maurice Boland, Britten says it is time for New Zealanders to step back from the action to see the bigger picture.
“Too often we are simply in love with our ideas and schemes and this can make us blind to changes in the market and we can become increasingly divorced from notions of risk and return. It is vital that we keep abreast of changing contexts.”