Why it's time to thank, not spank, business failure

Dan Martin
Former editor
BusinessZone.co.uk
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I spent a very enjoyable evening in central London last night at the Changemakers event organised by Seven Hills, Enternships, School for Startups, Fresh Business Thinking and the Courvoisier Future 500. In an unusual format which I think more event organisers should adopt, we were split up into five groups of 12 and sat around tables to discuss the issues facing UK entrepreneurs. In the format of dinner party starter, main and dessert courses, we debated starting up, how to grow a business and the exit process. Given the alcohol sponsor, the odd glass of cognac was also involved!

All sorts of issues were raised and too many to cover in one blog post but one point that I thought I'd focus on is how the UK business community embraces failure.

During our chat Laurence John, a venture capitalist working on the Amadeus Seed Fund, said we need to "thank and not spank failure". Once we'd all stopped laughing at the fabulous sound bite, we all agreed that it is a serious issue. Do we need to actually start celebrating failure?

Some of the very best entrepreneurs - including most of the panellists who've appeared on Dragons' Den - have had at least one business disaster in their entrepreneurial career. In fact, in the US it is said that many investors are more likely to back a business owner who has failed in the past and learnt good lessons compared to one that hasn't. Maybe if we started doing that in the UK we'd have many more start-ups and small businesses.

A lot needs to change for that to happen; our whole culture is anti-failure. Look at how Dragons' Den has developed. Many entrepreneurs have appeared on the show only to be completely humiliated on national television. And before you say, 'yes, but it's all about entertainment', I think the way the programme has changed its focus from all about business to more about car crash TV is reflective of our hatred of failure.

I'm not saying that we should encourage people to fail just so they can have the experience. I'm arguing that we need to embrace it, recognised that sometimes it's a good thing and learn from the experience so we can do things better the next time.

Another person on my table - Peter Grigg, head of policy and research at Enterprise UK - also delivered a great sound bite last night. "We should keep the entrepreneurial memory in the system," he said. By that, he meant we should make sure that serial entrepreneurs who have achieved success after success - and indeed failure after failure - are used to teach and guide the next generation of business owners. This needs to start in schools and universities with more established business owners encouraged - perhaps by tax breaks and other incentives - to share their experiences and lessons with young people.

The discussions at last night's event were filmed and a copy is going to be delivered to small business minister Mark Prisk. Let's hope that as well as taking on board the points we made about success, he also starts to examine how we deal with failure.

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By smartamatt
23rd Jul 2010 16:42

LOTS of good points in this which I support and I wish I'd made the event, but I'd challenge the claim lots of entrepreneurs are humiliated on Dragons' Den. I'm really not sure that's the case. Certainly based on the two episodes of the current series I can't think of one case where anyone constituting an entrepreneur has been humiliated. I can think of:

  • Several incidents where people have incurred the wrath of the dragons for asking for a lot of money in exchange for equity in ideas which haven't been thought out and at times are just total non-starters. Some of these are clearly ridiculous and just there for entertainment. But surely, if you've seen the show before and go with a product that doesn't work when you demonstrate it and ask for someone's money, you have to expect short shrift?
  • Several incidents where the dragons instead of criticising the individual have urged them for their own good to stop pursing ideas which will never do anything but cripple them.
  • A couple of investments where the Dragons have taken a punt on far-from-perfect pitches, showing they are rather more forgiving, encouraging and forward looking than you seem to give them credit for.
  • A few funny pitches thrown in for entertainment - clearly a segment of the Dragons' Den audience doesn't watch to see the investments, nor the business lessons of 'what doesn't work' but just the bizarre. It's a little car crash, granted, but this series for me hasn't overstepped the mark. This week's charming old chap with the motorised washing line wasn't humiliated, he was given airtime because he was eccentric, made good TV and left wished all the best by the Dragons.

For me we're a million miles from the X-Factor syndrome of building up then destroying the hopes of 15 year olds or social outcasts for the baying crowds and Simon Cowell. In general anyone who leaves Dragons' Den with anything but investment, fair criticism they should take on board and learn from or best wishes, has incurred the wrath of the dragons by either arrogantly asking for a ridiculous amount of money they can't justify or being so blindly in love with a product that will only cripple them that they simply refuse to listen to people trying to help them.

Sure, Dragons' Den's producers pick with a TV audience in mind and I'm suspicious the internal feuds are manufactured, but discouraging entrepreneurs by humiliating them? Nah, not in my book. Certainly, I'd argue Dragons' Den has encouraged more people to start businesses properly and to look after their cashflow, finances etc  than any it's put off.

Matt Thomas / @smartamatt

www.smarta.com

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By unconsultancy
23rd Jul 2010 18:53

I tend towards thinking that the BBC do want a bit of car crash TV thrown into the weekly mix and that some of the Dragons are a bit too keen to promote their TV personas.  I think that the 71 year old inventor of the motorized rotating washing line who was on this week provided some interesting parallels with SuBo (Susan Boyle).  The Dragons were shown revelling in rolling their eyes and essentially making disparaging gestures...until the back story emerged about his late wife.  Then you could see the Dragons thinking "Oh dear this isn't going to look good that I'm pulling faces and being sarcastic to a chap that the public will have great sympathy with"  so they switched to being rather more concilliatory.

So I think that Dragons Den is an amalgam of interesting business TV / car crash TV / self promotion of five Dragons who have no lack of belief that they are the bees knees!

Tim Latham

www.unconsultancy.com

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