The 6 Forces of Failure—and How to Protect Your Company from Them

Hannah Bates: Welcome to Hbr on strategy-The Talks and Talks with Best Business and Management Experts, selected manually to help you unlock new ways of business.

Have you ever heard of a failure museum? It contains more than a thousand relics of failed business ventures – such as cookbook Heinz Tomato Ketchup, a bic pencil only for women and certificates of Lehman Brothers’ supplies. Although these flops and flushing could have fun, they keep strong lessons for business leaders.

In this episode, the founder of the museum and the risk capitalist Sean Jacobsohn identifies six failure forces – from bad weather to poor financial management – with the help of artifacts from his caution collection. On the way you will learn how your company can avoid real expensive mistakes.

By the way, if you want see The items that Jacobsohn talk about, go to the HBR YouTube channel, where you will find a video version of this episode.

Here’s Jacobsohn.

Sean Jacobsohn: I have a lot of favorites. The 1998 Pets.com sock puppet could be successful if they had not built a job that loses money. Harley Davidson Kolno from 1996, renewed the smell of tobacco. Here’s an unopened bottle. No, they didn’t joke. They were serious about that. Of course, they made many product extensions. Sparkling water, cheetos lip balm.

Another of my favorites is Allan from 1964. He was Ken’s best friend. Maybe you remember him from the movie Barbie.

Allan: Hi Barbie!

Barbie: Oh, Hi Allan.

Sean Jacobsohn: Here is in the original frame. Allan wore the same clothes. He was his best friend. The problem is that everyone just wanted to own Ken, not Allah. Yes, I have two cans of the new coke. You want me to make them? It was really hard to move people to the mass to something completely different. I didn’t taste it. I have certainly been tempted, but some of these things are 15, 20, 30, so they probably no longer have a good taste.

I am Sean Jacobsohn, a partner in Norwest Venture Partners. I’m on 14 panels. I am also the founder and curator of the Museum of Failure. The failure museum has over 1,000 items and continues to grow. Failed companies, failed products, failed sports subjects and failed toys. I have marked all 1,000 of my items on one or two failure forces.

Product market, team, financial management, time, competition and success of the customer. I will go through all six forces of failure and share one example of each. I have a bottle of champagne from the IPO web date in 1999. For fit products, the webvan is a good example. They were the world’s first food delivery company.

Sounder 4: You have the right to get home from work and find something good that awaits you in the refrigerator.

Sean Jacobsohn: They raised more than $ 880 million to start in 10 cities before proved. The business model required so many capital. They had distribution centers. They hired their own drivers, which is why they had to raise $ 880 million. There is not enough demand for an early version of your product. You should not scalve the market yet.

So, I have a cup of Theranos, and I also have a business card Elizabeth Holmes. Their goal was to revolutionize the blood test industry, and at the height of $ 10 billion. Theranos did not have a strong team or the committee. None of them had an expertise in the domain. They tried to use a blood vest to test, which is simply not enough data. Yes, when they do not have expertise in the domain, hiring other people without the expertise of the domain, you believe that something can be possible when it really is not.

Here’s a copy of Google Glass, and I can put it here. A good example of the customer’s success is Google Glass. They did not choose the right wound customers well. They started with doctors, and doctors could see the records of patients on the glass as they talked to the patient. So they didn’t have to use their computer. He felt invasive.

It didn’t seem personal, and you’re not used to having someone with a strange device on your face trying to communicate with you. Because he missed a cool factor, they could not find any other population segment who wanted to wear something like this. It is important to choose the right wound customers that are representative for your larger market. Many times people choose the most appropriate customers, not those who will help you build a big job. I love this so much that I actually bought two on ebay.

For financial management, ESPN mobile phone. They launched a year before the iPhone. He called all the phone, sharing ESPN mobile content and results. They have been burned through $ 150 million, including several Superbowla ads. Only 6% of the sales goal hit. They probably needed to have more options on the phone. It just wasn’t enough for the phone.

Speaker 5: Introducing a mobile ESPN. Sport lovers, your phone has arrived.

Sean Jacobsohn: I have a few items here, Wework thermos and Koozie from the Weworks Summer Camp. During the time, a good example is Wework. Weworks in the space business with coworking. And when the pandemic hit, the demand for the office space fell off the cliff and they ended up burned through $ 16 billion. The goal was to provide people with a flexible space that allowed you to work a monthly rent and increase in space, depending on your demand.

They also signed 10 to 15 years of tenants at top market prices and then rented them with loss. There is a certain level of unfortunate, but I think they had the wrong business model. You need to have a pulse about what is happening on the market and be able to predict what will happen in the next 12 to 24 months.

And so I donated a few friends to my blockbuster membership card. And then there was a sign in every store that said, “Be kind, rewind.” For competition, the blockbuster is a good example. They are in business to rent movies. At the height, they had 9,000 stores. They missed the opportunity to move online and Netflix ate lunch. After they went out, they had the opportunity to buy Netflix for $ 50 million and refused it, and instead, Netflix beat them.

When I talk about competition, you have to be sure that you do not have a competitor who offers a cheaper, better way to do what you do. You have to be aware of all competitors in your market segment and how you stay differentiated and better than them.

I admire companies because of the risk and try new things. Some of these high risks turn into humorous outcomes, and some do not manage spectacular. I have been surprised many times because of the lack of research they have done before they spent a lot of money to get something out that they will not succeed.

Hannah Bates: It was Sean Jacobsohn, a partner in Norwest Venture Partners and the founder of the Museum of Failure.

We will return next Wednesday with the second handmade interview on a business strategy with Harvard Business Review. If you considered this episode useful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify or wherever you get your podcasts. While you are there, be sure to leave us an overview.

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This episode was produced by Scott Lapierre and I Hannah Bates. Curt Nickisch is our editor. Special thanks to Ian Fox, Maureen Hoch, Eric Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew and you – our listener. See you next week.