As it appeared in the Daily Nation on November 3rd 2020
Dr Lucy Kiruthu
Not every business has a happy ending. Both success and failure in business are common occurrences. Over the years, some businesses have succeeded and yet many others have failed. Survival is one of the indicators of triumph over failure. If your business has celebrated its 1st birthday, consider it a major milestone. If your business is a decade old, consider it an achievement and celebrate the progress so far. Studies over the years show that only a few businesses celebrate their 10th anniversary. Most such businesses have had to overcome certain failures. Unfortunately, other businesses whose existence we might not even be aware of were unable to navigate the turbulences they experienced or died a natural death.
The world atlas lists several Japanese companies among those that have existed for over a thousand years. Such companies include Kongo Gumi a construction company, Nishiyama Onsen Keiunkan, Koman and Hoshi hotels. Unfortunately, Kongo Gumi succumbed to excessive debt in 2006 after 1400 years of existence as was widely reported. The operations were moved to a century-old Takamatsu Corporation. Renowned global brands such as Coca-Cola and General Electric have also been around for slightly over one century. In Kenya, KCB Bank seems to be the oldest business having turned 124 years this year. Others who feature among the oldest in Kenya include East African Breweries, Jubilee Insurance, Diamond Trust Bank, Ramco, Bamburi Cement to name just but a few. These companies have existed for more than 60 years.
Why some business fail and others succeed is a question that everyone in business needs to ponder. Some once-successful businesses no longer exist or had to be bailed out. In 2009, for example, the U.S. government spent billions of dollars to bail out General Motors. In Kenya, many once-successful businesses no longer exist. Most would be quick to point out Uchumi and Nakumatt but the list of collapsed businesses is long. No one starts a business with the hope that it will fail. I believe that businesses fail for different reasons. For many, financial distress seems to be the leading cause of winding up. Others fail because of the poor choices made by their leaders. Others are unable to attract and retain any customers because they lack customer understanding. Others are fully disrupted by changes in their external environment as we have witnessed during the COVID-19 pandemic. Many others are simply unable to learn from their failures and soon succumb to them.
Every successful business has experienced failure at one point in its life. Many business initiatives fail even in smart companies. For example, change management initiatives fail to take off as per schedule, new products fail, mergers fail, a new CEO is unable to fit in etc. It is often not obvious if a business will fail or succeed in the end. Everyone in business must therefore acknowledge that their business is likely to experience both successes and failures. Businesses that hope to survive must be ready to learn from their failures and those of others. The million-dollar question is “what have we learnt from our businesses’ past failures and the failures of other business?”
Dr Lucy Kiruthu is a Management Consultant and Trainer. Connect via Twitter @KiruthuLucy