Fri, 2007 Oct 26
Failure
In less than a week, a business enterprise will come, more or less, to fruition. It is a project that I have spent a lot of time on over the last eight or so months, and it may well continue to be very profitable for years to come. But this week is the week that it turns from a “I hope this works” to a clear success. In fact, by every rational measurement I can think of, financially it is by far the most successful project I have ever embarked on. And yet I feel, more often than not, as though it has been a total failure.
I am certain that some of this feeling is attributable to emotional reactions to unrelated circumstances: including, importantly, the understanding that another business has become a clear financial failure and the frustration with not knowing how to either correct that or exit.
However, I have another culprit that I think is the principle reason for this feeling, and it’s something I want to understand, because I think it probably holds some essential lessons for me if I am to be successful in business. Here’s the background of this business: We produce a product and sell it to a retailer which resells the product. It is unique to each end customer so our direct customer takes the orders, gives them to us, and we fill them. Our direct customer then sends out those orders. This has worked tolerably for the past several years, less profitable and more time-consuming than I liked, but I didn’t feel like it was a failure, anyway.
Two months ago we launched an updated version of the product, due to new legal requirements. The prices were higher and the choices less. But we were ready to serve the end customers. I think, honestly, I did a very good job of meeting, at a reasonable price, the requirements of my direct customer. Indeed, most of their customers have been happy with the product. We provide several things that our competitors don’t, including a better turn-around time. But there have been complaints. Two, actually. The first is price, which is something I expected, and not a major problem since they generally end up buying. They don’t have much choice. The second, given by two of the end customers, has to do with the format. This is two out of hundreds.
(Sorry, I know the anonymization (sp?) probably makes this near impossible to muddle through)
I think the primary reason I feel like this business has been a failure is my direct customer’s reaction to those complaints. Those complaints seem to be far more important to them than the success. And yes, I do expect that, that’s normal. What I hope is not normal is that they routinely act as though they will lose the majority of their customers because of these issues, and they expect me to alter my business because of their fear that they will lose these customers; never mind that altering my business may very well guarantee that fear, whereas currently we are gaining customers.
And there is the crux of my emotions, the trapped feeling. The way to please my customer is by hurting their business and mine. By responding, as they seem to desire, to every complaint, we will deplete our profit margins and destroy the simplicity of the system of production. If each customer can ultimately receive a completely custom product, we will have to raise prices. If we lower prices, we will have to give up the profit and/or lower the quality. I think that the people I work with from my direct customer believe that the ultimate goal of a business is to never lose a customer, regardless of profit or customers gained. The goal of my business is profitability (yes, to fulfill other. more important, goals, but for the business itself, profit).
So, how do I respond? For other reasons, I can’t tell my direct customer to shove it. I can close down the business, but this seems foolish. I can stay where I am, continuing to produce the product as I have, successfully as I have, and just try to ignore what my customer says. I can try to respond to these complaints the way my customer seems to want, but in that case, I’m tempted to rather close the business.
And how to I avoid making other people (including an employee concentrated on this project) from feeling such senses of failure?
Two things that need to be reconciled:
- Definitions of success: by the profitability definition (or increased customers), this business is a success both for me and my direct customer. By whatever measuring stick my customer is using (any complaint == failure ?) the business is at least on the verge of failure.
- Measurements of success: Whatever the definitions, we–including me, personally–have not defined any measurements for success. Well, actually, I did define one and by that have been exceptionally successfully, but I can’t seem to make myself see that right now.
And that’s the trouble.
