Think only of the future and cease analyzing past experience at your own peril.
BY FAISAL HOQUE
There is a lot of emphasis on succeeding. And whether we buy the hype or not, we all want to succeed, especially if you consider success as “it works out the way I want it to.” You know it feels good in the gut and in the heart because it worked out. So failing by that definition is that it didn’t work out the way you wanted it to. And [failing] is what we don’t usually get a lot of preparation for.
She’s right. But there’s this, too: Failure is far from the only thing that entrepreneurs and business leaders don’t get a lot of preparation for — something I know from my own journey. This is a topic we explored extensively in our book, Survive to Thrive.
When you’re running a venture at breakneck speed, it’s hard to pause even for a few hours or a few days, let alone reflect on what’s happened in the recent past–for good or ill. And while most of us know that looking blindly toward the future without heeding prior experience is a sure way to fail, it’s experience itself–including the experience of failing–that (paradoxically enough) is the best preparation of all.
Putting that experience to good use begins with exercising your memory. For entrepreneurs looking for the next opportunity and always thinking ahead, that isn’t as second-nature as it might sound. While experience may be about gut instinct, the ability to recall and analyze your experiences is much more of an acquired skill.
But it’s one worth honing. Here are four reasons why a sharp memory can be a strategic advantage.
1. IT ANCHORS YOU TO A FOUNDING PURPOSE
Founders of any business start with a strong reason why they want to be doing what they do. That sense of purpose should not only motivate you as a leader, it should unify everyone on your team and become the founding principle for your company’s culture. The moment entrepreneurs lose that focus is the moment an entire company’s momentum and direction can get lost.
It’s the return on the specific spend that often dictates future success. If you can’t recall what that is, you’ll be in hot water soon enough.
No matter how far along your company is in its journey, never lose sight of its inception. It’s common for founders to recount their early days as a scrappy young startup, but it’s less common to reflect on the period before the company even existed–and the reasons why it came into being in the first place. Without periodically reminding yourself of that, no recollection of the successes and travails that followed will be enough to keep you wedded to your mission.
2. IT KEEPS YOUR BURN RATE IN CHECK
Far too many founders of failed companies cite cash burn as the reason for their demise. Ambition is important, but getting too fixated on what you hope to do tomorrow or next quarter or next year can spell disaster.
Instead, get into the habit of regularly analyzing all your investments–no matter how small–to keep track of the ones that actually pay off. Burn is a fact of life in just about every startup, but it’s the return on the specific spend that often dictates future success. If you can’t recall what that is, you’ll be in hot water soon enough.
Entrepreneurs who are rigorous about recording and understanding how past performance stacks up against past investments can make better decisions moving forward, even when the variables change.
3. IT BUILDS RELATIONSHIPS AND KEEPS THEM INTACT
When people are under stress, emotions run high and relationships can sour quickly. It’s all too easy for entrepreneurs to have their eyes on the strategy, all the time assuming that the team will play nicely together in order to execute it.
That’s almost never the case automatically. Because they’re new organizations, startups don’t have the cohesive, long-term interpersonal networks that more established companies do. The social glue, so to speak, is weaker. So when issues start to arise, it’s vital for company leaders to step in and remind everyone what you’re all striving for–and what you’ve already achieved together in a relatively short time.
Remind everyone what you’re all striving for—and what you’ve already achieved together in a relatively short time.
Take people back to a time when their relationships were in a better place, and remind them of the optimism they felt then. Don’t hesitate to compare the current situation to past experiences, and break down how the new challenges differ yet build on previous obstacles.
That can help give vent to bad feelings while putting them into context. No good will come if you just let them fester, and deploying a keen memory this way can be the perfect antidote.
4. IT KEEPS INVESTORS HAPPY—FOR THE RIGHT REASONS
Strained relationships, alarming cash burn, and a weakened sense of purpose are just a few of the things that can keep business leaders up at night. But all too often it’s a company’s investors who are left in the dark in the hopes that they’ll sleep more soundly by not knowing every detail of what’s going on.
Investors may have limited day-to-day experience running a company. And they may not know the people, customers, partners, and markets as well as the leadership team. This skill and knowledge gap isn’t necessarily a peril in its own right, but it can result in some perfectly avoidable conflicts–especially when things go wrong.
The more investors know about what the company is going through, the better they can check your own understanding of past events with their own.
This is why it’s so crucial for founders to keep investors looped in on the company’s experience. Think of it as outsourcing your own memory as a leader. The more investors know about what the company is going through, the better they can check your own understanding of past events with their own.
When investors have a clouded view of the past and present, their future vision will be equally clouded. And that’s as sure a route to failure as there ever was.
Copyright (c) 2015 by Faisal Hoque. All rights reserved.
[Image: flickr user Spanish Virtually]
Originally published @FastCompany.