Take a positive line on past failure

Rene Carayol, former IT director at IPC magazines and now a management author and consultant, believes people in the UK find it...

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

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