Business Brilliant

by Lewis Schiff

  The most disturbing findings in Edmondson’s work on organizational failure have been the result of her research on hospitals. While studying a particularly well run nursing unit she found that the reported rates of errors were unexpectedly high. It made no sense to her, until she dug deeper and discovered that the poorly run nursing units were making far more mistakes, but chose not to report most of them. Despite all the public claims by hospital officials about safety programs and quality-assurance regimes, the hospitals Edmondson studied were not learning from the errors encountered by their workers. She found that more than 90 percent of errors, when they were discovered, were remediated by quick workarounds so that neither the hospital nor the coworkers were able to learn why, within the hospital system, any of those errors had originated.

  These results are reminiscent of the story in chapter 1 regarding Dr. Richard Shannon and his drive to bring the quality record of Toyota manufacturing to his hospital’s intensive care unit. He found that even though several dozen patients were dying in the unit every year from infections, there had never been an effort to identify what was happening. Shannon’s staff discovered that most deaths involved blood catheters inserted in patients’ groin areas. In a concerted effort to prevent infection, Shannon had all catheters moved to the patients’ shoulders, and the infection deaths dropped to zero.

  To this day, few hospitals have ever even attempted to imitate Richard Shannon’s great success in controlling infection. Medicine remains a field that resists learning from failure because, first and foremost, it resists even acknowledging failure.

  The Failure Faith

  The belief that failure is necessary for success, a belief shared among self-made millionaires but not among the middle class, could be the most important finding our survey has uncovered. To believe that failure can be good, that failure can work, is essential to developing your Business Brilliance.

  I call it the Failure Faith. It’s the conviction that failure may result whenever you try to stretch and achieve something special, that failure yields unforeseen lessons and benefits, and that failure sets a bar that your competitors will likely trip over.

  Think for a moment about just two or three of the self-made millionaire habits, traits, and attitudes that have inspired you the most. Now consider what the Failure Faith adds to the mix. Every special talent found among self-made millionaires as thinkers, strategists, negotiators, networkers, and delegators becomes more potent when it is tied into the simple belief that failure is necessary for success.

  When you have the Failure Faith, when you’re comfortable with the idea of failing, it makes sense to risk failure whenever the cost of failure is little or nothing. The Failure Faith puts into perspective any fear you may have of personal rejection, because rejection is a form of failure that has no downside. When you don’t get the job, can’t land the account, or fail to make the winning bid, consider it a practice run for the next attempt. You’ve honed your approach, learned something new, and perhaps made a new connection or two. Rejection is a zero-cost failure. And since the risk of rejection offers only upside, you might as well go out and risk as much rejection as you can.

  The Failure Faith tells you to ask more than once for an equity share in your work because there’s no downside risk in asking. It tells you to ask for a raise and to leverage the request by getting job offers elsewhere. You invite other people to invest with you because it protects you if your business fails. You negotiate hard to make sure a deal is just right because you need to maximize your upside and protect your downside because every deal carries a risk of failure. You delegate everything you can and focus on what creates the most value. And, finally, if you believe that failure is necessary to achieve success, then you will look at every hiccup in your operation, every missed call, and every screwup a little more carefully, with an appraising eye of “What can we do with this?” In the words of Ellen Langer, the Failure Faith lets you “discover meaning” in situations where others may experience only pain, loss, and disappointment.

  And if you lack the Failure Faith? If you don’t believe that failure is necessary? Everything runs in the opposite direction. Without accepting the point or purpose in rejection and failure, you will always tend to hang back and keep a lookout for low-risk pain-free opportunities. You won’t ask for equity or even a raise at work unless you feel sure the answer will be yes. You dream of a big idea that will be your can’t-miss score, instead of trying to grind out your success in a field that you already know well. You invest only your own money because asking someone else to risk their money with you bears too much risk of rejection. You try to settle negotiations on a win-win basis because it matters what the other side thinks of you. You don’t like delegating any of your work because you fear giving up control. And finally, you quit whenever you’ve failed at something because you think that’s the reasonable and logical response. The fact you failed is evidence enough that the project was a poor fit for you or wasn’t worth the trouble. No need to look deeper. No need to cry over spilled milk. Just try to forget that it happened.

  I’ve noted before that when it comes to money, self-made millionaires and the middle class seem to live in separate worlds. When it comes to failure, they live by separate codes. The self-made millionaire believes “Anything worth trying is worth trying over and over and over again.” The middle class believes “Nothing that fails on the first attempt is ever worth trying a second time.” The middle-class attitude seems intent on suffering all the pain and hard work of failing while enjoying none of the benefits of true persistence. It’s like the old joke about the boy who swam halfway across a river, decided he couldn’t make it, so he swam back.

  If you look through the previous chapters of this book, starting with Dr. Shannon’s ideas about using factory-floor methods to save lives in his hospital, you will see that perseverance and faith in the productive value of failure were a crucial factor in every success story I tell. It’s Guy Laliberté’s circus failing in its first Canadian tour, Paul Green waiting tables to support his school of rock and roll, and Warren Buffett losing a fifth of his life savings in a shuttered gas station. Painful, humbling failure has, at times, been a fact of life for every self-made millionaire and billionaire.

  All failure is painful, but the difference is that for the self-made millionaire the pain of failure is like a trip to the dentist. You know it happens occasionally, you don’t look forward to it, but you’re better off having gone through it. For the middle class, failure is more like a punch in the mouth. It’s something that should never happen, it takes you by surprise, it’s humiliating and painful, and you’d like to forget it ever happened.

  Here’s one wrinkle in the Business Brilliant survey that I’ve saved for the end of this chapter. Almost everybody in our survey reported at least one setback or failure, including 70 percent of the middle class and 80 percent of self-made millionaires. About 80 percent of self-made millionaires also say that have associates who have had failures and setbacks, which only stands to reason. But here’s the wrinkle. Among the middle-class respondents, just 20 percent say they have associates who have experienced at least one setback or failure.

  Think about that for a moment. About 70 percent of the middle class has experienced failure, but only 20 percent say they know colleagues who have failed. The discrepancy in these two numbers suggests that when middle-class people fail, most try not to tell anyone they know. Whether they are part of the corporate culture that frowns on failure, I don’t know. But I do know from personal experience that if you’re going to experience failure, it’s better to do so with colleagues who have been there, who share the Failure Faith and that it’s all for the best, even if it doesn’t always feel that way.

  For one thing, discussions about failure are almost always more productive than discussions about successes. Don’t take my word for it. Amy Edmondson, Harvard’s resident expert on failure, puts it this way: “When facing an uncertain path forward, trying somethi
ng that fails, then figuring out what works instead is the very essence of good performance. Great performance, however, is trying something that fails, figuring out what works instead, and telling your colleagues about it—about both the success and the failure.” The result, Edmondson says, is what she calls “execution-as-learning.” Discussing failure along the way is how to get work done while also considering how to do it better.

  Chapter 6 discussed the social research on how the desire to conform to group norms of behavior can affect people’s weight, their smoking habits and, of course, their income. I wonder if social conformity is the main reason why the middle class behaves in ways so deeply at odds with the behaviors of self-made millionaires. If you are the only one on your block or in your circle of friends who suffers repeated business failures, you’re not likely to get much sympathy from your friends. They’re likely to wonder why you don’t just give up after the first failure—like everyone else they know. You certainly won’t get any informed advice about what to do next and you definitely won’t raise any investment capital.

  With self-made millionaires, the fact that 80 percent have colleagues who have failed suggests to us that they are surrounded by people who appreciate failure. They don’t have problems admitting setbacks and failure to each other because they share the Failure Faith. Failure is painful for everyone, but the middle-class person who fails is more likely to suffer the additional agony of loneliness and social isolation.

  A business culture that accepts failure, that has faith in its power to educate and create new opportunities, can serve as an important piece of that synergistic system of success we described in chapter 1. “We already live in a world where taking risks is an essential element of everyday life,” says Russ Prince. “I don’t think there’s anything particularly redeeming about trying to avoid failure at every juncture. If you’re lucky, I suppose you might be able to beat your chest and tell others that you never fell down, but you probably have very little to show for it.”

  Or as Norm Brodsky says, “If I had to choose, I’d rather be wise than smart.”

  Brilliant.

  9

  Mastering the Mundane

  Can Business Brilliance be learned? Is it a talent that some are born with or does it rely mainly on a set of habits, practices, and techniques that motivated individuals can adopt as their own?

  Academic researchers studying entrepreneurship—the highest form of Business Brilliance—have long struggled with this question.

  Russ Prince himself is not so sure. As a coach to some of the world’s wealthiest families, he knows that having a knack for Business Brilliance is essential. But he also knows from his own coaching that many of the skills for Business Brilliance can be learned, or at least enhanced, through study and practice.

  Part of the confusion stems from the fact that so many successful entrepreneurs have demonstrated Business Brilliance many times over without ever having gone to business school. It might stand to reason that the people most likely to be Business Brilliant are those who have benefited from years of training in the ways of money. But when a pair of professors at the University of Pennsylvania’s prestigious Wharton School of Business tested this theory some years ago, they were shocked by the result. Their random survey of Penn alumni showed that graduates from the arts and sciences college—with majors in fields such as history, biology, and math—were two or three times more likely to be entrepreneurs than graduates of Wharton.

  Other studies have shown similarly surprising patterns among the self-employed. For instance, people who change jobs frequently in their careers are much more likely to end up going into business for themselves, suggesting that Business Brilliance has something to do with having an innately restless nature. Another study showed that teenagers who deal drugs are more likely than most people to become entrepreneurs when they approach middle age.

  Findings like these, along with the familiar observation that so many entrepreneurs are immigrants with limited formal education of any kind, lend credence to the notion that Business Brilliance is a gift. Like good looks, charisma, or natural rhythm, some have got it and some don’t.

  This same sort of assumption is made often about the very best school teachers. The great ones are great, the thinking goes, because of their profound level of personal commitment, their natural talent for connecting with students, and their creative ways of inspiring students to learn. With movies like Dangerous Minds and Stand and Deliver, Hollywood has helped perpetuate the idea that there can be no playbook for fixing broken schools. To make a difference with children it takes heroic individuals who disregard whatever training they’ve had and rely instead on their passion and unique personal instincts.

  An educator named Doug Lemov was frustrated by this thinking and a little offended by it, too. For years, Lemov has worked for a charter school company that specializes in serving low-income inner-city neighborhoods. He knew from the research that no single factor accounts more for student success than a quality teacher. He also knew that research had failed to identify any teacher-training methodology that reliably produces good teachers. So he set out on a quest to find out what the best teachers in America were doing in order to be successful.

  Identifying outstanding teachers is not that difficult to do. Student test results in primary and secondary schools correlate very closely with family income. This means that schools in which 90 percent of students come from very low-income families almost always produce low average scores on standardized tests, while schools in which 90 percent of the students come from high-income families produce high average test scores. To find exceptional teachers, all you have to do is identify schools with test scores significantly higher than what their student poverty rates would predict.

  Lemov is a self-confessed data geek. He studied countless scatter graphs, and picked the outliers, those unusual public schools with high poverty rates and high test scores. Then he started visiting the schools. He ended up sitting in the back of hundreds of classrooms where high test scores had been achieved against all the odds. Lemov took notes and brought a video camera that generated thousands of hours of tape.

  “He did not find magicians mixing secret alchemical teaching potions or derive the elusive DNA for charisma,” writes Lemov’s friend and mentor Norman Atkins. “His big ‘aha’ was to identify the tools that master teachers used to make their classrooms into cathedrals of learning.”

  It took him a dozen years, but Lemov compiled a list of effective teaching techniques shared by many of these “master teachers.” The list has gone through 25 revisions, and today it totals 49 classroom techniques that include the very best practices for planning classwork, delivering lessons, and maintaining discipline. Lemov presents each of the 49 in a way that is “specific, concrete and actionable.” In other words, they can be replicated. They can be learned. In 2007, Atkins founded Teacher U, a revolutionary teacher-training program that is built around the 49 points. Atkins declares that what Lemov has discovered “is surprising for its simplicity and portends good news for the teaching profession.”

  I see in Lemov’s research some interesting parallels with my own work. I’ve also been at this for a dozen years—Prince has been at it twice as long—and just as Lemov searched for excellence from among resource-constrained public school teachers, I’ve limited my studies of financially successful people only to those who grew up in typical middle-class households. Sifting for signs of the extraordinary from among the ordinary is a very sound method of isolating the precise factors that account for high performance and success.

  And my results are also surprising in their simplicity. My research tells me that there are four broad areas of daily activity that successful self-made entrepreneurs undertake more effectively and consistently than most people. I call the four Learning, Earning, Assistance, and Persistence.

  Together these four words spell out LEAP.

  LEARNING means that self-made millionaires expend more time and ef
fort discovering what they do best and pursuing opportunities related to what they do best.

  EARNING means they take on projects and make deals that maximize the dollar potential of those opportunities while limiting their downside risks.

  ASSISTANCE means that they actively cultivate networks of friends, associates, and partners so they can get help and advice on all the tasks beyond the bounds of what they do best.

  PERSISTENCE means they take an authentic interest in their setbacks as an important and necessary aspect of the success process.

  Inspired by Lemov’s taxonomy of 49 teaching techniques, I’ve broken out these four categories into my own list of 17 Essentials of Business Brilliance, following closely Prince’s own methodology for coaching his Business Brilliant clients. For each of the 17 Essentials I offer a general strategy, followed by a specific technique that, like each of Lemov’s techniques, is specific, concrete, and actionable. Each offers a simple and clear set of actions that help position you to fall into money. Most of these techniques involve ten-minute decision-making exercises. None of them takes more than an hour.

  I believe that if you do your best at executing these 17 techniques on a regular basis, you will find yourself on the path to Business Brilliance and a quantum LEAP in your income. If you set some financial targets for yourself (Essential 1: Write down your goals), prepare a project with those goals in mind (Essential 6: Protect your bottom line), rely on the people around you (Essential 10: Manage your network upward), and engage your natural fear of disappointment (Essential 13: Make friends with failure), your relationship with making money will be fundamentally transformed.