Rene Carayol, former IT director at IPC magazines and now a
management author and consultant, believes people in the UK find it
impossible to face business failure, writes Julia Vowler.
In the US, by contrast, he says, it is seen as part of the training
for leaders and entrepreneurs - an honourable "Purple Heart"
awarded to brave souls who took risk in their hands and wrestled
with it.
"The US values business failure because it means you have learnt
from your failure and you are hungry," says Carayol. "The top 10
richest Americans have failed at least three times in
business."
But, while it is all very well being bullish in a bull market, what
about now, when, as Carayol himself admits, we are seeing the death
of discretionary spending?
"In a recession we must reinvent our business," he says. Taking the
initiative is vital, even for market leaders, or they could find
themselves wrong-footed - and not necessarily by their traditional
rivals.
Nescafé, for instance, used to regard Maxwell House as its number
one ankle-nipper, but in fact the number two rival is now
Starbucks. Similarly, jeans manufacturer Levi Strauss saw off
rivals Lee and Wrangler but is now being chased by Diesel. British
Airways is not up against other national carriers, but low-cost
airlines such as EasyJet and Go.
"[Market leaders] need to forget the strategy that got them to
number one when they come under pressure from smaller rivals with
everything to lose," says Carayol.
One of the key reasons why such rivals come out of nowhere is that
they reinvent the business they are in.
Ryan Air did not take off until it stopped trying to compete
directly with Aer Lingus, giving up Heathrow in favour of
lower-cost airports. It was also ruthless and innovative about
cutting costs. Measures included standardising on one type of
aircraft, getting planes back in the air as fast as possible and
exploiting low-cost sales channels such as the Internet.
But it is not just new brands that show such drive, says Carayol.
Terry Leahy, chief executive at retail giant Tesco, says, "If Tesco
does not speak to customers, someone else will." That attitude
makes the company bold - unlike some.
For years, says Carayol, Marks & Spencer sat on mountains of
valuable customer information contained in religiously saved sales
data. "It did nothing with it for fear of the Data Protection Act,"
he says. "Tesco lives on the very edge of the Act - it launched its
charge card and had six million card holders in six months, and is
now number two in the UK, behind Visa."
Carayol offers the following tips for succeeding in the new
economy:
- You do not have to have the world's best business strategy to
succeed - or the world's most beautifully-coded system. You just
have to be "good enough"
- Fail fast - if a project is going wrong, you want to know as
soon as possible, so that you can kill it quickly. Otherwise, the
longer it takes to fail completely, the more time you have
wasted
- Exploit your temporary monopoly to the hilt - all products have
a period when they are the only ones around, and that position
should be capitalised on - but have plan B ready for when that
monopoly ends
- The legacy of the dotcom frenzy was speed. "However big the
e-burn, we will never go back to the slow pace," says
Carayol.
Rene Carayol was speaking at Business Intelligence's Best
Practice Forum