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You have to fail in order to succeed

By / August 22, 2018

leadership failure success

When I was 24, I came back from working in corporate America and, with my brother, took over my father’s lumber company while it was in bankruptcy. It was a profitable company, but it had been assessed a $1.6 million assessment from the state revenue service because we had not documented nontaxable sales correctly. We had written down our customers’ tax IDs for tax exempt sales, but we were unaware that you had to have signed sales tax-exempt forms on file. The state had gone back eight years and audited our sales in order to come up with the fine. They knew what customers were legitimate for tax exempt sales, but it was our problem to get their signed resale certificates and prove it.

After four years, we got the tax, interest, and penalty down to $400,000. Next, we had to get our creditors to agree to our plan of reorganization. In the late 1980s and early ’90s, bankruptcy was not a business tool, but a scarlet letter. If you declared bankruptcy, you were shunned and despised by your creditors. My plan was to go out and speak in-person to every single creditor. I took responsibility for getting them some of their money back, albeit cents on the dollar. The end result was that out of 118 creditors, 108 approved our plan. Even the bankruptcy judge was surprised that we had a successful reorganization. I am proud to say that, to this day, our family company is a successful business run by my brother.

Looking back, I realize that there was no way we should have succeeded, but I was too young, too dumb, and too uninformed to know that I was supposed to fail; therefore, I succeeded. This experience had a powerful effect on my attitude and career going forward. I can still remember the day a competitor told me, “Kid, you have no chance in hell. You might as well give up,” and it was a major motivating factor in my continuing the fight.

The problem with being young and dumb is we become older and wiser. With that wisdom comes the fear of making mistakes. In my current company, we have made the decision to charge delivery fees and bill special orders the day we receive them. My leadership team was very apprehensive about these decisions: “I know this customer won’t pay delivery charges.” My response was that we needed to explain the business logic behind our decision to our customers. We needed to explain that this delivery charge was a very small part of the actual cost, and with fuel and equipment prices going up, we only wanted to charge customers who actually used the service. We would deal with those specific customers who complained and make any necessary individual adjustments. The result: 98% of our customers understood our logic and had no problems with it. We worked with the ones who did object, and they eventually came around.

There are two important concepts here. One is what the Marines call the 70% solution. Get 70% of the decision right, and then go back later and fix the rest; just don’t let it slow you down. The other is the idea that taking risks and failing is okay. Michael Jordan, the greatest basketball player of our time, said, “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over again in my life. And that is why I succeed.” We can’t anticipate every possible outcome; sometimes we will fail, but that is what makes us learn. I once had a manager whom I had to relieve of his duties. His response was, “Russ, I am 55 years old, and I have never failed.” My reply was, “Well, it’s a shame that it took you so long.” He took a lower level job and worked his way back up, becoming a better manager—and a better person. He never would have accomplished this if he had not first failed.

I tell my people that I am just as invested in their attempts that fail as I am in their attempts that succeed. I say, “My job is to give you enough rope to hang yourself, and then be there to cut you down before it is fatal.” Now, I might let them linger a bit so they have a mark left over to remind them, for it is the memory of what failure felt like that ultimately makes us successful.

Too often as leaders, we talk ourselves out of taking a risk. We may not give our best effort because doing so might attract more attention, then what would happen if we were to fail? Often we don’t want people to know we failed, so we say we tried. But as the great philosopher Yoda said, “Do or do not; there is no try.” So go out and give 100% of your effort behind every new idea or strategy you decide to implement. You’ll inevitably collect a couple failures that you can proudly hang on your wall as reminders, but in the process, you will also collect a number of successes. And success tastes much sweeter when you have had some sour taste of failure in your past.

Russ Kathrein

Russ Kathrein is the President and CEO of Aurora, Ill.-based Alexander Lumber, which operates 22 locations throughout Illinois, Wisconsin and Iowa.