How Has Failure Influenced Your Approach to Risk Management?
Failure can be a profound teacher, especially when it comes to refining risk management strategies. We've gathered insights from sixteen seasoned professionals, including CEOs and Directors, to share the lessons they've learned from failed projects. From planning for uncontrollable variables to forecasting potential failures with pre-mortems, these business leaders reveal how setbacks have shaped their current approaches.
- Plan for Uncontrollable Variables
- Implement Early Risk Identification
- Engage Clients in Planning Phases
- Recognize Impact of Stakeholder Support
- Prioritize Market Validation Steps
- Restructure Contracts for Client Compatibility
- Target Correct Audience in Campaigns
- Diversify Feedback for Service Offerings
- Vet Suppliers and Maintain Contingencies
- Learn from Transport Service Setback
- Emphasize Market Validation and Testing
- Align Menu Innovations with Customer Preferences
- Prioritize Due Diligence in Partnerships
- Conduct Comprehensive Site Assessments
- Develop Proactive Risk Mitigation Plans
- Forecast Potential Failures with Pre-Mortems
Plan for Uncontrollable Variables
One time, I negotiated a large, complicated deal with a major client. The deal took months to put together and required substantial resources on my end to deliver our product on an ongoing basis. We were set to deliver according to expectations from day one. However, the client had organizational changes throughout the process that impacted our ability to work together. We saw delays that lasted for several months at a time between deliverables, which required us to pause operations while they sorted things out on their end. Eventually, the project ended with far less of a return for us than we had expected.
Fortunately, I built the fulfillment team using contractors rather than hiring a bunch of employees. It meant that we lost people along the way during the delays because they took on other jobs. But I was able to replace them without incurring costs. I also employed a sort of just-in-time methodology to producing our deliverable, so we didn't invest more time into creating the product than necessary. Sometimes things go wrong that are out of your control, so plan for the worst and hope for the best.
Implement Early Risk Identification
One thing I discovered from an unsuccessful project is that it is very important to identify and plan for potential risks. During a particular task, we did not take into account possible changes in the market and lacked a strong backup strategy; this caused us to experience significant delays when unanticipated difficulties came up. I have since learned always to carry out thorough risk assessments and come up with detailed contingency plans. I now make a point of early risk identification, involving different departments in anticipating problems, as well as creating clear-cut measures for dealing with such issues. This method makes our approach toward managing risks more dynamic so that we are better equipped for future undertakings.
Engage Clients in Planning Phases
A particular project failed because we did not engage the client sufficiently in the planning phase. This lack of client involvement led to misaligned expectations and ultimately dissatisfaction with the delivered product. The lesson here was clear: Active and ongoing client engagement throughout the project is essential not only for clarity and alignment but also for ensuring the project evolves in line with the client’s vision and needs.
The project suffered from inadequate client interaction, which further revolutionized our communication strategy. We have since developed a client-centric project management framework that emphasizes regular updates, feedback cycles, and adaptive strategies based on client input. This approach has significantly reduced miscommunications and unmet expectations, directly decreasing project risks and enhancing client satisfaction.
Recognize Impact of Stakeholder Support
As a business leader, one lesson I learned from a failed project was the importance of thorough risk management. In one particular failed project, I underestimated the impact of a key stakeholder's lack of support on the success of the project. As a result, when that stakeholder pulled out at a critical time, it caused delays and ultimately led to failure. This experience taught me that even if all other factors seem to be in place, one crucial risk factor can derail an entire project. Since then, I have implemented a more rigorous approach to risk management in my leadership style. This includes conducting thorough risk assessments at the beginning of each project,
Prioritize Market Validation Steps
One of the most valuable lessons I learned from a failed project was the importance of thorough market validation before fully committing resources. Early in my career, at Spectup, we worked with a startup that had an innovative product idea but lacked comprehensive market research. We were excited about the potential and moved forward quickly, investing significant time and resources into development.
Unfortunately, once the product launched, it became evident that there wasn't a strong market demand. We had overlooked critical consumer insights and competitor analysis. The project didn't meet its targets, leading to a substantial setback for the client and a hard lesson for us.
This experience fundamentally changed our approach to risk management. Now, we emphasize extensive market validation as a non-negotiable step in our process. Before diving into development, we conduct detailed market research, engage with potential customers, and analyze competitors thoroughly.
Restructure Contracts for Client Compatibility
Working in digital marketing for Fortune 500 companies and enterprise-level website build projects can often take a full year to complete, and the success of the project greatly depends on the client you are working with. In earlier agency years, we would structure the contract to be the complete build from start to finish (discovery, content, design, development, testing), which often locked us into a year-long commitment only to later learn what it was like working with that particular client. Bad clients come with hordes of scope creep, minimal profit margins, and can destroy team morale.
The biggest lesson learned and takeaway is that those projects are not worth taking on, but there is no good way to know what the relationship will be like until working with them for a few weeks or more. Because of this, all contracts were restructured so the discovery process was its own billable project, which also allowed for our agency to see what it would be like working with the client. Then the rest of the project pricing could be adjusted accordingly to the client, and each phase of the project was its own billable contract. It allowed us to walk away early from a project if we saw too many red flags, or we could increase our margins if we saw that the approval process was going to get extended, or what they say they have and what they actually have do not align.
Target Correct Audience in Campaigns
I discovered the lesson firsthand when I was running a digital marketing agency and participated in a failed social media campaign for a local retail store.
Regarding the paid advertisement strategy, which we proposed to be very intensive in nature and primarily targeting Facebook and Instagram, we had proposed the following: The aim was to send a lot of people to their website with a view to making more sales. Even though we did succeed in making the website more popular with the targeted audience, the sales did not improve in the same ratio.
Reflecting on the data, I observed that despite reaching a large audience with the ads, we were not targeting the correct clients who are likely to make the purchase at the store. A significant portion of the visitors to the site did not make purchases, thus failed to become customers.
Diversify Feedback for Service Offerings
A significant lesson came from a project where we over-relied on a single client's feedback to shape a broad service offering. When the project did not resonate with the broader market as anticipated, it highlighted the risks of narrow data pools. This failure was a hard but valuable lesson in the importance of diversifying feedback and conducting extensive market research before rolling out new services. It reshaped my approach to how we gather and interpret client feedback, emphasizing a more holistic view to ensure we aren't swayed by outliers.
A valuable lesson we learned was to reshape our risk management by broadening our analytical frameworks. We now integrate a more diverse array of data points and feedback mechanisms before making strategic decisions. This approach has led to the development of a more robust validation process for our services and products, ensuring that they meet a wide range of client needs and are insulated against the risks of limited perspectives.
Vet Suppliers and Maintain Contingencies
A failed project taught me the importance of thoroughly vetting suppliers. Early on, we partnered with a manufacturer that couldn't meet our quality standards, leading to delayed deliveries and dissatisfied clients. This experience underscored the necessity of due diligence and robust contingency plans. Now, we rigorously evaluate all partners and maintain backup options, ensuring we can uphold our promises and manage risks more effectively. This approach has strengthened our reliability and client trust.
Learn from Transport Service Setback
One of our early misses was offering transport services to our own storage units. The issue we ran into with this was that, while storage units are a fairly affordable and reliable game to get into, they also required us to have more staffing and more real estate, and we couldn't always beat the competition on price. Luckily, we only tried it in one city, and we were able to use the space for our own operations until we sold it for slightly more than we paid for it. It definitely reinforced the importance of market research for me, but it definitely didn't turn me off to the idea of diversifying our services in the right context.
Emphasize Market Validation and Testing
One lesson I learned from a failed project was the importance of thorough market research before launching a product. We rushed a new feature based on assumptions rather than validated needs, leading to poor adoption and wasted resources. This experience highlighted the need for comprehensive risk assessment and validation processes.
We now prioritize market validation and pilot testing before full-scale implementation. This approach helps identify potential pitfalls early, reducing the risk of failure and ensuring resources are allocated effectively.
Align Menu Innovations with Customer Preferences
A lesson I learned from a failed project was the importance of thorough market research before launching a new menu concept. A few years ago, we decided to introduce a high-end tasting menu, inspired by the latest culinary trends. Despite our excitement and the effort we put into perfecting the dishes, the project flopped. Our regular customers were not receptive to the drastic change in the menu and pricing, and the new concept did not attract the clientele we had anticipated.
This failure taught me the crucial lesson of understanding our market and customer base more deeply before making significant changes. Now, before introducing any new menu items or concepts, I conduct extensive market research and gather feedback from our loyal customers. We use surveys, focus groups, and pilot small changes rather than overhauling the entire menu at once. This approach allows us to manage risks better by ensuring that our innovations align with customer preferences and expectations.
Prioritize Due Diligence in Partnerships
One significant lesson I learned from a failed project was the importance of thorough due diligence, particularly in the vetting of both potential hires and partners. Early in our platform's development, we rushed into a collaboration with a large firm, excited by the prospect of rapid growth.
However, due to insufficient background checks and a lack of clear communication, the partnership quickly soured, leading to delays, financial setbacks, and a considerable hit to our reputation.
This experience taught us to prioritize more rigorous risk assessment processes, emphasize transparent communication, and adopt a holistic approach to evaluating potential risks. We now rely on a meticulous vetting process and continuously monitor for red flags to mitigate future risks and ensure more reliable, successful partnerships.
Conduct Comprehensive Site Assessments
One critical lesson I learned from a failed roofing project is the importance of thorough site assessment before commencing any work. In one instance, we underestimated the extent of structural damage on a commercial roof, leading to unexpected complications and increased costs. This oversight caused us to lose money on the project once everything was said and done.
This experience has significantly influenced my approach to risk management by emphasizing the need for meticulous planning and preparation. Now, we ensure that every project begins with a comprehensive site assessment, including structural evaluations and potential hazard identifications. This proactive approach allows us to anticipate challenges and allocate resources more effectively, minimizing the risk of project delays and cost overruns.
Additionally, this lesson underscored the value of clear communication with clients about potential risks and uncertainties. By setting realistic expectations and maintaining transparency throughout the project, we can better manage client relationships and avoid misunderstandings. This strategy not only enhances our risk management practices but also builds trust and credibility with our clients, ultimately leading to more successful project outcomes.
Develop Proactive Risk Mitigation Plans
A lesson I learned from a failed project is the importance of thorough risk assessment and mitigation strategies. In the past, I underestimated the potential impact of external factors beyond our control, such as regulatory changes or market fluctuations, leading to unexpected challenges and, ultimately, project failure. This experience taught me the value of conducting comprehensive risk assessments at the outset of any project, identifying potential risks, and developing proactive mitigation plans to address them.
Moving forward, I prioritize thorough risk analysis and contingency planning, involving stakeholders from various departments to ensure a holistic approach to risk management. By anticipating potential obstacles and having strategies in place to mitigate their impact, we can better navigate uncertainties and adapt to changing circumstances, minimizing the likelihood of project failure and maximizing our chances of success. This lesson has shaped my approach to risk management, emphasizing the importance of preparedness, flexibility, and proactive decision-making in achieving our business objectives.
Forecast Potential Failures with Pre-Mortems
Reflecting on a project that failed due to our team's miscalculation of the complexity of integrating a new technology, I realized the crucial importance of meticulous project planning.
I removed the need to give a thorough risk assessment—which goes beyond cursory assessments—priority. We now use a method we term "pre-mortems," in which we get together as a team to forecast potential failure modes and create plans to reduce those risks before beginning a new project. This technique allows one to think more proactively and spot possible problems before they become serious ones.
My attitude toward risk management has been greatly impacted by this event since it helped the team adopt a cautious optimism. We tackle new projects with an appraisal process that is as thorough as possible to moderate our zeal for innovation from overpowering workable implementation plans.
