In the September 2010 Harvard Business Review (HBR.org), Seth Godin wrote a column called Redefining Failure. He observes an important contrast between failure in business vs. the status quo:
“Failure creates urgency. Failure gets you fired. Failure demands a response, but the status quo is simply embraced and incredibly protected.”
The Parable of Risk
According to Godin, business builds layers of management to eliminate risk because the status quo is so highly valued and protected. What I know about business is that the drive to eliminate risk creates the failure of opportunity. Mature and effective investors know that appropriate risk is essential for the growth and stewardship of their assets. This reminds me of the New Testament parable in Luke about the master who gave various assets to his subjects for investment. The one who kept his treasure wrapped in cloth to eliminate risk was stripped of everything and left destitute. Those who invested and produced a return were given many more assets to manage.
The Discovery of What to Quit
Years ago, a friend of mine was the executive director for a non-profit. She lamented to me that her organization purchased a software program that turned out to be a mistake, and she felt terrible for wasting the time and money. The program did not provide what the group needed. I told her that this happens fairly often in business, but not on purpose.
We have researched software extensively, tested software, and then used it for a year, only to discover it was not a good fit. Would it be better to settle for the status quo and not try to improve our process? Progress is learning what works, what doesn’t work, what to quit and when to quit what!
I had the pleasure of experiencing a keynote presentation by National Geographic photographer Dewitt Jones. As a professional, Jones normally shoots and develops 36 rolls of film (1,296 frames) to get 30 useful prints. That is a success rate of only 2.3%. An amateur would consider this failure rate to be unacceptable: out of 36 rolls of film, 1,266 pictures are useless miss-takes. However, for the professional, it is not the number of mistakes that matter; it is the quality of the few prints that make it into the public domain.
The Amateur Question
Dewitt is a very successful keynote speaker. He shows amazing slides of his work during his presentation. The experience is one of transformational pleasure. I lost track of time. Many people come up to speak with him after his presentations. He says he can always spot the amateurs because they ask, “How many frames did you shoot to get the one you wanted?” That is an amateur question. Professionals ask, “Did you get the shot?”
Businesses need to continually ask, do we have the right technology, the right people, the right products, the right customers, the right strategy? What do we need to continue, and what do we need to quit? Businesses that fear change and mistakes won’t succeed. The same is true for investors.
Jim Bell, CFP® is President and Founder of Bell Investment Advisors, Inc. 1111 Broadway, Suite 1630 in downtown Oakland where he co-manages the business with his wife Bonnie. The firm has been providing customized financial planning, investment management and career & life coaching services since 1991. www.bellinvest.com 510-433-1066
Published in Piedmont Post on March 16, 2011