Allon Raiz: You need to risk failure in order to succeed

SAMUEL SMITH* and I met at an entrepreneurial conference about 10 years ago. We’ve kept in touch ever since, each following the other’s business. He’s had some truly unique ideas over the years and his business has been very successful, hence I like to refer to him as Successful Sam.

When Successful Sam started his business, he wasn’t afraid to take risks and fail because he didn’t have much to lose. I watched as he became more successful, and was less inclined to take a risk that would jeopardise everything he had worked for. He enjoyed being in his comfort zone where he “knew” that money would always come in at the end of the month. He eventually became so comfortable that he no longer took any significant risks.

The trouble with success is that it plants the seeds of failure. I watched as Sam planted the seeds of his business, tended to the vines through the good times and the bad times, and harvested the fruits of his labour. Once he had these fruits, he became consumed with them and no longer felt he needed to continue planting new seeds.

The trappings of success:

When Sam’s business started thriving, he felt he deserved to indulge in the luxuries he’d had his eye on for as long as he could remember. Suddenly that new Mercedes Benz E-Class Cabriolet, 6-bedroom house with a Jacuzzi and tennis court in the best suburb, and luxury yacht anchored at Langebaan Yacht Club, no longer seemed like a distant dream.

As he became increasingly consumed with these trappings of success, he lost sight of how he had reached a position where he could afford them in the first place. His priorities shifted from managing the day-to-day running of his business and focusing on clients, to managing the trappings of his success, such as finding someone at the yacht club who could help with the repairs on his yacht’s motor.

Before he had his luxury yacht, it was very unlikely that he would have been thinking about a yacht motor instead of building his client base.

The fizzling out of hunger and aggression:

The well-known supermodel, Linda Evangelista, was once quoted as saying that she wasn’t prepared to wake up for less than $10 000. Sam woke up one morning and decided that he too would no longer get out of bed for smaller opportunities. He believed that he didn’t need to because he was successful, and invincible, and the bigger opportunities would come straight to him.

His hunger for pursuing new opportunities soon fizzled out. When he stopped “getting out of bed” for smaller opportunities, other agile competitors jumped at the chance to get them, and in many cases they reaped the rewards because these smaller opportunities often resulted in much bigger ones.

Sam forgot that these smaller deals are what got him where he is today, and helped keep his business afloat all these years. When he first started out he faced the risks associated with small deals and was excited to venture into the unknown to find new opportunities.

When a multi-million rand deal fell through, and then another shortly after that, Sam had little to fall back on. While he was out organising the repairs on his yacht’s motor, his client base had atrophied to an incredibly unhealthy state. He’d turned down the smaller opportunities and they had gone elsewhere.

The danger of working “on” your business only, and no longer “in” it:

Michael E. Gerber’s world famous entrepreneurial myth (e-myth) principle says that entrepreneurs should focus more on working “on” their business than “in” it. After reading up on Gerber’s e-myth, Sam decided that that was exactly what he was going to do with his business. He also started using Gerber’s e-myth as justification for spending a fair amount of time sailing his yacht, and working on his business, instead of being in the office and attending meetings. “It’s more important that I work on my business only, rather than in it,” he told me. “The time I spend on my yacht, away from everything, is productive because it helps me think about my business.”

While Sam was out sailing near the shore, he missed an announcement that the social media manager, who’d, played a pivotal role in developing his business’ digital strategy, had resigned and left. He only found out that Tom had left when he read HR’s monthly report. Sam had sat in on Tom’s interview when he applied for the job, and the two of them had hit it off instantly because their thought processes relating to business were so closely aligned. If Sam had been in the office more often, Tom would have most likely approached him and told him he was unhappy in his role. When an executive asked Sam why Tom had resigned and what was done to change his mind, he wasn’t able to give her any feedback.

In the space of a year and a half, Sam’s business had all but collapsed. He phoned me one evening for support and I asked him how this had happened? His response was simply, “I don’t know what happened?”

On one hand I agree that it’s good when entrepreneurs take some time off and spend a few days away from the office so that they can think about their business, but on the other hand there is a danger to only working on your business and not in it, as Sam found out. He was not privy to many of the things that were happening in his office, and when his MD changed the sales strategy he was not around to tell him why he didn’t agree with the changes that had been made. In its ideal state, there should be constant ebb and flow of working on the business and in the business, creating fluidity between the two, particularly for a growing entrepreneurial business.

Monthly reports will never give an entrepreneur a true feel for what’s going on in their business or keep them updated in real time on the day-to-day running of it, especially when they’re sitting on the deck of their yacht and reading the report. There are times when it is crucial that an entrepreneur work in their business, and do things such as attend sales meetings or write a new proposal.

At times entrepreneurs misconstrue Gerber’s e-myth, especially when using it as an excuse to not have to be involved in the day-to-day running of their business, or as a reason for not knowing what went wrong in their business when it collapsed. Successful entrepreneurs more often than not have a fairly good idea of what is going on in their business.

The paradoxical relationship:

I’ve seen many entrepreneurs lose their businesses and a key observation is that they lost them when they became successful and stopped taking risks. The relationship between success and failure is paradoxical – you need to risk failure in order to be successful.

I believe successful entrepreneurs are successful because they have managed to find the correct balance between being successful and taking risks. They’re aware that if they only cling to success, they are destined to fail, and as much as they may not want to take risks anymore, especially ones that could cost them everything, they know that nothing great will come from staying in their comfort zone. They need to face failure again in order to grow.

Sam is currently working on rebuilding his business and applying the lessons he learned, the good and the bad. He’s being extra vigilant of the trappings of his success so that he doesn’t become consumed with them; regaining his hunger for landing new opportunities, big and small; becoming far more pragmatic about working more in his business than he did last time; and taking significant risks again. He’s confident in his ability to rebuild his business and is making a concerted effort not to become overconfident again about his success.

Do you have the seeds of failure that were inherent in Successful Sam? If you do, it’s probably time you took a risk again.

* Surname was changed for this article

* Allon Raiz is the CEO of Raizcorp. In 2008, Raiz was selected as a Young Global Leader by the World Economic Forum, and in 2011 he was appointed for the first time as a member of the Global Agenda Council on Fostering Entrepreneurship. Following a series of entrepreneurship master classes delivered at Oxford University in April 2014, Raiz has been recognised as the Entrepreneur-in-Residence at the University of Oxford’s Saïd Business School. Follow Allon on Twitter.

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